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

[Discoducky]

Thoughts on production estimates and production constraints:

First, the obvious and above-mentioned references to what we heard in the EC - even with just Fremont and Shanghai factories in operation, Tesla's vehicular output in 2022 will be more than 50% greater than last year's.

Second, the logically obvious statement - sometimes stated but always implied - we have to solve the ___________ bottleneck. As some posters notably have mentioned, there always is a bottleneck. Once Bottleneck A is solved, Bottleneck B appears. It must be that way. In 2022 - at least in 1Q but possibly throughout the calendar year - the bottleneck is a component. Might be a seat-adjusters, might be batteries, but that Tesla can obtain only "X" of these in whatever unit time we're discussing means that only "X" vehicles can be produced (please don't quibble over 'we need 4 of those per car' - thank you).

Put those two together and what do we get?

A: One must never underestimate Tesla's factories qua factories. It might, on the contrary, be almost impossible to overestimate them. How so?

Iteration A: Tesla plans to produce 400,000 vehicles at Fremont; 750,000 at Shanghai; 150,000 each at Grünheide and Austin. Places orders for the appropriate number of components from its suppliers (to ease the statements below, we'll use that sum: 1.45MM.

Iteration B: For the time period under consideration, Grünheide & Austin are a no-go AND suppliers say "Sorry - we get you 1.4MM parts but no more."

So what is Tesla's response? Iteration C: "Very well. We'll increase production at Fremont and Shanghai to 1.4MM and call it good."

Conclusion: The long-disused term "Dreadnought Factory" looks, in fact, to be real. That the entire production line - casting, stamping, assembly, painting and so forth - can be so adaptable that in just these two older factories are not constrained by labor, not constrained by parts, but can increase output given true bottlenecks at the other two factories (Production = 0) - that is for me the really important takeaway from the Earnings Call.

I nominate for merit! I love this thinking!

 

[ZachF]

I'd like to add that it was stunning to me that Tesla can grow Fremont another 50%. That factory was not purpose built and optimized for Tesla production. It was quite a bit of ad hoc changes and crammed production. Incredibly impressive that they can grow it another 50% when it already seemed maxed out. Guessing they did some serious space usage reorg while redoing the model s / x line.

Casting is far more space efficient. I’m guessing S/X/3/Y will all eventually go to single piece front and rear castings which should free up a lot of factory floor space.

 

[Cherry Wine]

Respectfully, I disagree.

Here's the portion of the call (word for word from the transcript)...

...If there is no $25,000 vehicle being worked on, is it really realistic to think that you can sell more than 3 million vehicles with two very high-volume cars and Cybertruck in 2024, or how do we think about that or what else is missing in that equation?

Elon Musk

Yes. I mean, it's apparent from the questions that the gravity of Full Self-Driving is not fully appreciated. If an asset has 5 times more utilization than the -- it's like dividing the cost of that asset by 5....


He literally answers the question about not working on the $25K EV with FSD and how people don't get the math...

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.

This was the aspect of the earnings call that I found the most unsettling. My takeaway from the call was, "They want to do what? Stop working on a lower-priced vehicle because they're going to solve FSD first???" My next thought was, "Please tell me that's just deflection." On a re-read of the transcript, I think it is abundantly clear that my initial read was wrong and Elon was simply deflecting about a lower-priced car (as he should), and coupling that deflection with waxing philosophically about car ownership.

Elon Musk -- Chief Executive Officer and Product Architect

Well, we're not currently working on the -- on a $25,000 car. We -- you know, at some point, we will, but we have enough on our plate right now, too much on our plate, frankly. So, you know, at some point, there will be. I think that's sort of a question that -- it's sort of the wrong question, really.

It's -- really the thing that overwhelmingly matters is when is the car autonomous? I think, at the point in which it is autonomous, the cost of transport drops by, I don't know, a factor of four or five.

The important bit here is: "at some point, we will, but we have enough on our plate right now, too much on our plate, frankly. So, you know, at some point, there will be." Elon then transitions to autonomy and FSD, which was more of a philosophical offshoot of the thought that likely ran through his head of, "When we solve FSD, a $25K car will become irrelevant." At this point in the call, I think it's apparent on its face that their decision to not work on the $25K car is more about current demand for higher margin vehicles and not because of an all-in strategy with FSD, which was more of an offshoot of the concept of car ownership financials.

Later, we get:

Toni Sacconaghi -- AB Bernstein -- Analyst

OK. Thank you for that. Elon, I was wondering if I could just follow up and ask you. You talked about your product roadmap and also your goal to keep growing at 50% per year or better.

That would put you at 3.2 million vehicles or more in 2024. And I think you made reference to Cybertruck, you know, maybe being 250,000 vehicles. If there is no $25,000 vehicle being worked on, is it really realistic to think that you can sell more than 3 million vehicles with two very high-volume cars and Cybertruck in 2024, or how do we think about that, or what else is missing in that equation?

Elon Musk -- Chief Executive Officer and Product Architect

Yeah. I mean, it's apparent from the questions that the gravity of full self-driving is not fully appreciated. If an asset has five times more utilization than the -- it's like dividing the cost of that asset by five. So if you have a $50,000 car, it's like having a $10,000 car all of a sudden, but maybe better than that because, still, you don't want to drive.

So the person can be engaged in productivity or amusement instead of having to onerously drive through traffic. So it's probably better than five times, I don't know. Yeah. I mean, basically, if the cost of our cars do not change at all, we would still sell as many as we could possibly make.

Again, Elon is reiterating confidence in the ability to grow volumes with current lineup (remember, he thinks Model Y will be the best-selling car in the world), and then launching from there into a philosophical examination of car ownership and how FSD would change that paradigm.

It doesn't jump out at one on a first-listen or read, and it's easy to conflate the two into "We don't need a $25K car because FSD bro!" But I honestly think what we're getting here is part deflection, and part Elon being Elon and looking out to what he sees as the true endgame.

For now, that's my story and I'm sticking to it.

 

[StarFoxisDown!]

Hey @The Accountant , considering Tesla's statement about current factories being underused and that Tesla thinks they can hit 50% growth (1.4 million vehicles) with just Fremont/Shanghai, have you done a rough ballpark on what that's going to me mean for operating margin in 2022?

Zach continually states that while gross margins may stagnate in Q1/Q2, he's confident operating margin will continue higher. Which if Tesla is planning on getting Fremont/Shanghai up to a 1.4 million run rate, seems not only likely, but practically confirmed.

We already know that due to the one time hits Tesla took between tax hit, warranty reserves, and expedite costs, Tesla's operating margin would have been around 18% in Q4, maybe even a bit higher than that. I think it's realistic that Tesla's operating margin gets all the way up to mid 20's by end of the year and averages 20-22% for the year. That's going to have profound impacts on EPS for 2022.......as in I think everyone, even the bulls are way too low on EPS. I'm thinking $17-19 EPS should be the expectation.

 

[Artful Dodger]

Waiting for 845ish

Yep. Good buy order point for today. Reminder: $937.41 - 10% = $843.66

Imma hold out for the MA(200). It's a long way to the river...

Cheers!

 

[StealthP3D]

i disagree. Employees at the level of "Smart people" in engineering don't give significant weight to the monetary dimension of the job once it gets to "I can easily live with that."
It's, "What am i going to be doing, and with who, and what resources will I have."

That might be how you live in "indialantic Florida" but people in California and most American cities understand that housing, medical insurance and education is constantly becoming more expensive, and they need to create financial security for themselves and their families. Not everyone thinks like this of course, some people are happy living month-to-month, even when supporting a family, but for most people, a more valuable stock options package is going to be a very real consideration, at the very least enough to sway the decision if they were waffling.

Saying that compensation packages don't affect the desirability of various companies to people talented enough to work wherever they want is just nonsense. Elon has spoken on length about what motivates employees to innovate. He says it's pretty simple really, the carrot/stick approach is, by far, the most effective. And I trust the person who appears to be tops at getting the most innovation from his employees.

 

[Artful Dodger]

Elon has contacted them, asked them to stop due to security concerns, and offered $5000. The account owner responded that they want $50,000 from Elon to stop.

Contact the Secret Service, and the FBI.

 

[S3XY]

Unacceptable. Not handwritten, not double spaced, and questionable if that can be considered an essay since you didn’t even use punctuation. Though your points are valid.

If in 6 months I have not chosen the keeper of my fortune upon my death, you may try again.

I can't help but think that your constant references to your cat is code but I wouldn't want to go there in this forum. Or maybe I would if it would help my case for the inheritance.

 

[Sudre]

Cybertruck isn't being delayed due to parts shortages and logistics. It's because there is still a lot of engineering that needs to be done. Elon said it has a lot of new technology and they are still figuring out how to make it work in a way that is affordable.

I am wondering if this new tech is more in the machine that will make the Cybertruck. I think Tesla is very secretly working on an AI assembly line that will scarily look like something out of the terminator. Why else start work on Optimus first?

 

[mrmage]

I reduced my margin by selling some shares at 945 before the earnings call.

This price action is too stupid to ignore though. Bought back most at $854 today.

 

[tivoboy]

Yep. Good buy order point for today. Reminder: $937.41 - 10% = $843.66

Imma hold out for the MA(200). It's a long way to the river...

Cheers!

I don't think we get there today, someones saving dry powder (on the short side) for tomorrow or Monday.

 

[Blue horseshoe]

1M miles * 50% utilization (Elon’s own figure for robo-taxis driving to pick up fares) = 500k revenue miles.

Ah that's a more reasonable ~12%

 

[TespaceX]

Time to react ..
added some lotto 930 calls for tomorrow ... playa gotta play the game

Brutal. How much money did that cost you?

 

[Nocturnal]

Our old buddy Jonas is still on board.

https://twitter.com/x/status/1486775979037147137

 

[Krugerrand]

Early results only but when 90% of users on a Tesla forum don't believe level 4 autonomous driving will be a reality this year Elon has a credibility problem to overcome. Hopefully this year will demonstrate significant progress.
Post Elon Update Poll on FSD

​

I contend it makes no difference if Elon is right about the timeline or not and that focusing on that is just someone that needs to complain, throw blame around and be critical about something to be happy in life.

FSD today, tomorrow, this year, next = irrelevant to the company’s today financial stability, bottom line, profitability et al nor ability to continue to decimate the *competition* that isn’t coming, continue to grow as fast as humanly possible and bring us into a sustainable future.

Here’s the punchline: one day Elon is going to be right and FSD will come into being and all you flinging monkeys are unfortunately going to benefit immensely from the person who stuck his neck out on your behalf and risked it all, and you’ll be no more grateful nor apologetic than you’ve ever been. I have seen the future and the humans are just as ugly inside then as they are now. That people think it’s their right to be critical of others doing their best because they have some money on the line and think they know better is disgusting behavior.

 

[elasalle]

Brutal. How much money did that cost you?

lotto plays by definition ... what you can afford to lose.
we did not see the swings like that from yesterday, which was kinda what I was expecting.
Added Jan 24 900 leaps after further price drop.
cheers!!

 

[SOULPEDL]

This was the aspect of the earnings call that I found the most unsettling. My takeaway from the call was, "They want to do what? Stop working on a lower-priced vehicle because they're going to solve FSD first???" My next thought was, "Please tell me that's just deflection." On a re-read of the transcript, I think it is abundantly clear that my initial read was wrong and Elon was simply deflecting about a lower-priced car (as he should), and coupling that deflection with waxing philosophically about car ownership.



The important bit here is: "at some point, we will, but we have enough on our plate right now, too much on our plate, frankly. So, you know, at some point, there will be." Elon then transitions to autonomy and FSD, which was more of a philosophical offshoot of the thought that likely ran through his head of, "When we solve FSD, a $25K car will become irrelevant." At this point in the call, I think it's apparent on its face that their decision to not work on the $25K car is more about current demand for higher margin vehicles and not because of an all-in strategy with FSD, which was more of an offshoot of the concept of car ownership financials.

Later, we get:



Again, Elon is reiterating confidence in the ability to grow volumes with current lineup (remember, he thinks Model Y will be the best-selling car in the world), and then launching from there into a philosophical examination of car ownership and how FSD would change that paradigm.

It doesn't jump out at one on a first-listen or read, and it's easy to conflate the two into "We don't need a $25K car because FSD bro!" But I honestly think what we're getting here is part deflection, and part Elon being Elon and looking out to what he sees as the true endgame.

For now, that's my story and I'm sticking to it.

I think you're saying that the 2 events ($25K and FSD) are mutually exclusive but may overlap in time to potentially diminish the need for a lower priced version? This is not only bullish FSD, but also bullish margins to focus on fewer products needed to get to full autonomy. Risk is still there should macro demand taper and FSD isn't deployed in time. OK, now bring in the $25K version, but there's a better path $$$ if not needed.

 

[ZeApelido]

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.

View attachment 760939

Where have you been all my Tesla life?

 

[Discoducky]

Rob's livestream of the call now has a full transcript for those interested. And it should be known that it has not been edited at all.

 

[mongo]

I am wondering if this new tech is more in the machine that will make the Cybertruck. I think Tesla is very secretly working on an AI assembly line that will scarily look like something out of the terminator. Why else start work on Optimus first?

That's a great point. Cybertruck will be using large, heavy, cumbersome, laser scored, and break bent panels. We've all seen the workers pulling stampings off the press line. Cybertruck panels could be an ergonomic nightmare without a lot of assist equipment (maybe even with it too).
Plus the machinery to do the fabrication will be interesting.

As to why Optimus now, with the vehicles approaching manufacturing stage, the embedded and development people have cycles free.