Tesla, TSLA & the Investment World: the Perpetual Investors' Roundtable

[phoggy123]

If Elon said the 25K car will reveal itself once robotaxi is available, people would just say its not happening. Similar to the feeling of this board when anything related to FSD is discussed. If I were guessing and based of Elon saying "you guys aren't getting this" They have no intention of selling a 25K car to the public. They are going to make this the fleet car for robotaxi. They are selling millions of high margin vehicles to customers and still probably will well into the future. There is no reason to dilute that with a 25K car at this time. They seem to be planning on building a durable 1M car that is cheap to make that doesn't require nickel batteries, high HP motors, etc to cut cost.

If even 10% of global population uses robotaxi as primary transport it will decimate the global auto industry along with insurance, parking, etc. It doesn't have to mean every situation is resolved by robotaxi, just that it is so cheap you need to make the choice to Pay more for that luxury on a per mile basis. This isn't rocket science and its crazy that people keep overreacting.

 

[TSLA_Hopeful]

In terms of production growth, 50% seems to be quite achievable at this time. Are you worried about demand? Are you considering that Tesla has yet to enter a number of large countries and that word of mouth is quite strong?

I think we can grow to the 2-3 million car level at our current 45-60k price range, but I don't think it's possible to go much larger than that. Given the ramp it takes to make a 25K (30K - 35K with inflation), I could see a few years of sub 50% growth, which the uncertainty could cause us to get rerated for a few years.

 

[The Accountant]

Martin Viecha: Question from Toni Sacconaghi of Berstein. Toni, please go ahead.
Toni Saccaghi: Yes thank you. This question is directed at Elon. Elon, without the $25k car, how will you get to 3.2m cars in 2024?
Elon: I'll let The Accountant take this question.
The Accountant: Thanks Elon. Toni, I posted my 5 year plan on TMC on Jan 17. As you can see, the $25k compact is not needed in 2024 to reach 3.2m deliveries. The Model Y will be the best selling car in the world while being produced in 4 factories and the Cybertruck will be in its second year of production. If the compact comes in 2024, it will be icing on the cake. Oh and by the way, you didn't ask but I'll add, Tesla will have industry leading operating margins of 22% in 2024.

Tesla Valuation Based on 5 Year Outlook

Great set of numbers. I should just quit my job now :). Why do residential solar roof sites increase to 1.2m/yr in 2023 before dropping back to 50k/yr from 2024 onwards? Ooops. I made a silly and overwrote the equation in the MW-table that was driven by the #-table. So the MW table is...

teslamotorsclub.com

 

[M|S|M MYP]

Just for context: $TSLA today is still trading at $4320 pre-split....let that sink in if you are crying about the Q4 Conf call.

 

[TSLA_Hopeful]

If Elon said the 25K car will reveal itself once robotaxi is available, people would just say its not happening. Similar to the feeling of this board when anything related to FSD is discussed. If I were guessing and based of Elon saying "you guys aren't getting this" They have no intention of selling a 25K car to the public. They are going to make this the fleet car for robotaxi. They are selling millions of high margin vehicles to customers and still probably will well into the future. There is no reason to dilute that with a 25K car at this time. They seem to be planning on building a durable 1M car that is cheap to make that doesn't require nickel batteries, high HP motors, etc to cut cost.

If even 10% of global population uses robotaxi as primary transport it will decimate the global auto industry along with insurance, parking, etc. It doesn't have to mean every situation is resolved by robotaxi, just that it is so cheap you need to make the choice to Pay more for that luxury on a per mile basis. This isn't rocket science and its crazy that people keep overreacting.

That all assumes that Robotaxis will work and be available at that time (not even the regulatory hurdles). My point is that's not a guarantee. The Model 3 ramp was much more certain because you had a killer concept in Model S that proved the car worked and was desirable. Right now, there's no killer FSD that will provide 5X the utility like Elon said. Therefore, there is much more risk to this plan than continuing down the cost curve plan. This is my last post sorry I have to get back to work.

 

[kbM3]

Of course they did.



Of course many "next years" have come and gone with no details since then.






Elon already mentioned exactly that as a solution.


Though his math is weird here--- if there's suddenly 1 RT replacing 5 cars, there should be less traffic.

Traffic is proportional to miles driven, not number of vehicles.

if the 2B car fleet were replaced by 400M robotaxis each driving 5X as many miles, then overall traffic would stay exactly the same. But obviously cheaper robo-taxis will increase overall mileage, and thus worsen traffic.

 

[StealthP3D]

Overall was very satisfied by the call, although i think conversation about the optimus bot was a bit of an eye roller in this context - sure it's exciting and interesting, but not super relevant to a quarterly earnings call IMO.

Of course, the purpose of a quarterly earnings call is to do more than just look backward. It's to provide a vision going forward. And this was an annual earnings call, so I don't see anything unusual in looking further ahead, particularly when looking at something as earth-shattering as AI migrating into humanoid robots. It makes perfect sense considering that we, as shareholders, are funding the development right now with the superior margins on auto manufacturing. I know of no other company that can fund such exciting initiatives as capitally efficient as Tesla can.

Very exciting times!

 

[Krugerrand]

No they are not. *sugar*. The point of Tesla is to exchange 1 EV to 1 gas car, to switch to sustainable energy. FSD was an after thought. It's a top layer of cake that doesn't need to be there. Making EVs and getting gas cars off the road has been working just fine.

And it will continue with 50%+ growth this year regardless of the outcome of FSD. Relax. It’s going just fine.

 

[TSLA_Hopeful]

Any constructive input you want to put into the discussion? Not trying to call you out, but suggesting anything like the period of 2014-2019 without acknowledging that it would mean Tesla would have a P/E in the teens is fear mongering

Continue prototype development as a derisk. Just like how we derisked with 2170 suppliers vs 4680.

 

[thx1139]

I know that this isn't what other people want to hear, but I've been a bull since '13. What Elon said has shaken me and the bull case significantly, and I think we are in for another period of the lost years from '14-'19.

Imo, Tesla is taking too many gambles to maintain the 50% growth per year, and I think it will ultimately bite back in the ass.

Whats the gambles? Not announcing something that could hurt existing product sales?

 

[The Accountant]

Is the following Interpretation correct?

Running an AP balance increases cash flow only in the case where it is increasing (Tesla is growing). If Tesla had a quarter with no growth, there would be zero cash flow and if Tesla had a quarter with slower growth there would be negative cash flow.

That's partly right. If Tesla stopped growing they would get zero cash flow from payables.
There is a more complicated answer addressing non-cash items like depreciation, stock options etc. But if Tesla stopped growing (meaning Q4 was equal to Q3) and all the working accounts stayed the same (Accounts Receivable, Accounts Payable, Inventory all stated flat), the cash flow would equal net income.
If you are profitable, there is still cash flow with flat growth. Tesla adds to the cash flow by optimizing its A/R, A/P and Inventory.

 

[dl003]

That all assumes that Robotaxis will work and be available at that time (not even the regulatory hurdles). My point is that's not a guarantee. The Model 3 ramp was much more certain because you had a killer concept in Model S that proved the car worked and was desirable. Right now, there's no killer FSD that will provide 5X the utility like Elon said. Therefore, there is much more risk to this plan than continuing down the cost curve plan. This is my last post sorry I have to get back to work.

Let's make something abundantly clear: Tesla DOESN'T need FSD to maintain a 50% annual growth. FSD is the cherry on top. FSD is not the reason Tesla isn't making new models this year. Your "gambling for growth" narrative has no ground. The only reasons Tesla chooses to do what it does are:

1. 3 and Y are selling so well there's no need to go down market for growth.
2. Tesla has to run a tight ship to get through a tough macro backdrop.

If anything, Tesla is ensuring both growth and profit, because they can. Take a look at the "competitors" who are slashing sales by 20-30%. Would you rather be over there?

That's all. Enough FUDs for today.

 

[JRitt]

One other thing I wanted to comment on is that I'm viewing 2022 as Tesla's 'Chipotle' year. If you're not familiar with Chipotle, read up on them to see how they turned the fast-food world on its ear. Their model was/is unique for many reasons, but their focus is on limiting distractions, increasing throughput, and turning a strong profit. Tesla using similar methods makes a whole lot of sense given the current business environment.

• Their current product line is incredibly popular/desirable, and people are lining up to buy it.
• Price increases have not deterred buyers, as there is no clear equivalent substitute from competitors
• Limiting the number of models keeps the array of supply-limited widgets at a minimum (as Biggie said, "Mo widgets, mo problems").

They are doing the right thing.

I'll agree with others that Elon's comments are fascinating, but certainly do not set the proper tone for a traditional earnings call. I don't think he cares one bit though, and I don't much either. Those who are long on Tesla probably shouldn't. We can view them as a gift to buy the inevitable subsequent dip. At the risk of stereotyping...I've experienced both the pleasure and pain of working with numerous extremely talented mechanical engineers during my career. When I look the best ones in the eye I can practically hear a tiny voice emanating from them, "Can't you see what I'm telling you...you idiot!?!" Every fiber of their being wants everyone else in the room to see whatever is under discussion the way they see it. That is completely inherent to their personality, and there is no getting around or suppressing that compulsion. It's foundational to what drives them and makes them effective, and I am incredibly grateful that type of person exists. We can accomplish a LOT more because of them, and I am more than happy to listen to a dreamer dream when she or he is continually backing it up with tangible results that others thought impossible. Elon also happens to be the boss, so his team has no choice but to let him run with it when his gears get turning on a public stage. Frankly, he adds quite a bit of color to an otherwise incredibly bland undertaking. He's having fun with this whole ride, and I'm having fun watching him have fun. For me, some post-call price dips are worth the peek behind the curtain. The day he stops trying to make others see the world through his eyes is the day I'll become seriously worried about Tesla's future.

 

[juanmedina]

Is no one buying today? is everyone out of powder?

 

[lazybot]

Many people here seems to want a more regular public company CEO who spends a lot of energy on influencing short term share price. As a long term investor, I do not care much about that. Musk is a maverick and an amazing entrepreneur with some obvious flaws, in my view, but that he does not seem to care much about how his words influences short term share price I find rather liberating.

Don't get me wrong, I am a long term investor. I want Elon to focus on the long term which is what he would like to do anyway and not have any influence either positive or negative on the short term share price. He had said he would not be joining the earnings calls going forward and he did not need to be on this earning's call as there was no product road map update. The insane share price volatility may not make a difference for long term investors (myself included) who already built the conviction to hold and may be an opportunity to add more. But for a lot of retail investors getting into the stock recently this would be a big filter and it is unlikely many will pass through it. They will end up selling and loosing a lot of money in the process. As a consequence I think TSLA will continue to be the choice of stock for HFs, algos and traders to manipulate and Elon either knowingly or unknowingly seems to perpetuate this cycle.

 

[MABMAB]

TMC post earnings crowd be like getting on an airplane...

 

[LiveLong&Profit]

Of course they did.



Of course many "next years" have come and gone with no details since then.






Elon already mentioned exactly that as a solution.


Though his math is weird here--- if there's suddenly 1 RT replacing 5 cars, there should be less traffic.

Hm.
Perhaps RT will over a couple of years become so cheap that it will steal customers from public transportation. And generate more demand.
Also the standard pattern now is: Drive to work - park. Drive home - park. The cars are parked a lot of the time.

New pattern will be: Drive customer - drive empty towards new customer - drive customer - drive emtpy around the city core, where demand is likely to occur. That is a lot more miles driven (in peak hours).
Some of the empty miles can be mitigated by AI prediction. But how much remains to be seen.

But yeah - the math is tricky 'cause this is a new, weird paradigm with few precedents.

My guess is that in peak hours a lot more cars than today. driving customers or looking for customers. In off-peak hours: Significantly less cars than today.
If true, this pattern can actually become useful in urban design:
Like in the first corona-waves, we can se pop-up serving or other activities on a part of any given city road. On weekdays, the pop-up additions are removed in order to facillitate smooth traffic.
(The alternative is to do weekend shutdown of part of urban roads, converting the full road to a pedestrian road - weekend only)

 

[MikeAtkinson]

Exactly. I think the entire premise of the $25K Tesla model was that the size of the addressable market expands as the price is lowered. The idea being that if Tesla was to hit their planned production growth of 50% plus per year, that would necessitate going down-market. But that was when the ASP of a car sold domestically was around $36K. The current average price of a new car is about $46K so things have changed quite quickly with COVID.

It appears Tesla dramatically under-estimated demand for their more expensive Models 3 and Y to the point that it looks like they can continue to expand production of the more expensive, more profitable models, as much as a limited chip supply will allow, without running out of demand. If you are production limited because of chips, it's doesn't move the mission forward to trade production of more expensive cars for production of cheaper cars with lower profit margins.

While the limited availability of chips is obviously a negative, the need to not have to go down-market as quickly, to continue selling increasing numbers of higher margin cars, more than makes up for it from a profitability standpoint. This should be like music to investors ears, not a wet rag on a smoldering fire.

I think Tesla also dramatically under-estimated the effects of a very low total cost of ownership, depreciation and running costs are very low. This makes a Model Y affordable to anyone who was previously able to buy a new ICE car. Reducing the purchase price to $25K has only limited effect on total cost of ownership, buyers would look at it and decide the compromises needed to get that low price are not worth it, at least in America and Europe.

 

[lafrisbee]

Perhaps, but Elon has said that he tries to be very literal so people don't need to read between the lines. I have no doubt that they're going all in, but that doesn't mean it's guaranteed to succeed. In any case Dojo's advantage over GPU at this point does not seem to be a sure thing - because Elon literally said that.

When Elon tries to communicate whether literally, figuratively or however else there is I always throw in the component of Asperger's.
No matter what he states I have to change the words into what I think he meant and why. I am still waiting to hear from Elon at the Earning's Report.....

 

[WattsHappening]

Yesterday did nothing to my long-term investment thesis on TSLA. As typical, it will take some time for Wall Street to figure things out. But as others have pointed out, TSLA is no longer a 'pie in the sky,' 'just bet on Elon' company. Numbers are going to speak loudly going forward (thank you @The Accountant for your stellar models!).

The future is incredibly bright, and I am more bullish than ever. And thanks to short-term traders, we are being given the opportunity to buy low.

I traded in 100 shares for 3x Jan 2024 $950 LEAPs. I'm pretty conservative by nature; in the past, I have only bought DITM LEAPs. This is the first time I'm buying OTM LEAPs. I am very confident I will be happy with this move 6-12 months from now.