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

[Knightshade]

As for Berlin, I'll be fine if they begin even by Q2. Again, it's got to fit inside Tesla's 30% Auto gross margin goals. Whether that complete knock-down kit is assembled in Germany, or shipped to Germany from Shanghai makes ZERO difference to the total number of cars that Tesla will build in 2022 (and that number shall be 'comfortably over +50% from 2021').

Say it with me again folks: TESLA IS SUPPLY CONSTRAINED, not GA constrained. Mostly on the supply of chips. Notice I've been agitating for Tesla to acquire a semi-conductor company?

jbcarioca already covered why the first half of this is not accurate..... though I'd add Tesla must be expecting supply of things like chips to improve steadily, because otherwise if you think say Austin and Berlin will make 200k combined cars this year you'd need to agree Fremont/Shanghai will make 200k less. I've not seen anyone suggest that- so they too must believe TOTAL number of available chips will be increasing through the year to increase TOTAL number of vehicles able to be made across the factories, even if with 4 up and running they're all below max possible.

As to the second part, your suggestion makes no more sense than when you've previously given it and belies a deep lack of understanding of the semi industry.

Apart from the exceedingly high costs, the variety of chips requires multiple plants to supply all running on different process nodes and all producing VASTLY more chips in a year than Tesla needs or will need for years to come because unless those plants run at full output nearly 24/7 they lose tons of $, AND they usually have long-ish term contracts with customers such that Tesla couldn't just buy the company and divert all the chips they need to themselves anyway-- and by the time they could a ton more fabs would already be open as Elon mentioned on the recent call.

Again- companies using MORE chips than Tesla, and more unit constrained by lack of them (AMD, Nvidia, etc) and both using more chips AND having more cash (Apple) don't own fabs. It makes no sense for Tesla to own any.

 

[Artful Dodger]

This is not correct. There are no complete knock-down kit (ckd) involved in Grüneheide. We have already had >2000 cars produced there under production testing authorization. We know this is manufacturing, not just assembly, because we have seen the presses in operation and vehicles being produced.

Technically not a CKD, just as Shanghai wasn't either (btys+mtrs came from Giga Nevada). For Berlin, initially battery packs, motors and drive train, and some accessories and electronics will come from Shanghai. We KNOW this; what we don't know is how fast (and it what order) other oomponents will be localized. Shanghai took two years, Berlin will likely NOT be that fast (permits, culture). So right now, stamping body and paint, plus GA is all that's being done in Berlin.

CKD does near zero manufacturing, it is only assembly. Factually both new GF’s operations will initially have less vertical integration than they will have at maturity. Thus production at both Austin and Grüneheide is indeed incremental from Shanghai and Fremont.

Tesla uses an adaptation of the CKD approach. Shanghai demonstrated their approach to localizing production. Going forward, let's watch what happens in India now that they rejected Tesla's requests for tax abatement, and is insisting on local assembly of cars (that is, GA of a true, complete CKD). I suspect Tesla will just say no to India production under these terms and conditions. Their partial CKD approach to "bootstrap" toward local production is their proven method.

New factories are nit a zero sum game.

This is not correct! While Tesla is constrained by chip shortages, Tesla can only build as many units as they have chips. It doesn't matter for total annual production where those cars are assembled (except for capital costs, which favor existing high volume plants while under supply contraints).

Tesla themselves wrote in the 2021Q4 Update letter (pg.3) "Annualized vehicle production run-rate of over 1.22 million in Q4-2021". Even this is a low-ball number for Tesla's current GA capacity, since we have monthly production numbers for Shanghai which increased dramatically in December with the commissioning of the 2nd GA line for Model Y.

Youtuber Wu Wa provides weekly aerial drone videos of the expansion project now underway at Giga Shanghai. According to environmental impact documents Tesla filed with the local gov't in Nov 2021, that project should be complete in April 2022, and we can assume from the construction of the "BMP-2" structure that this project is to support a 2nd GA line for Model 3. Finally, the now 60% complete CATL LFP bty pack factory rated at 80 GWh/yr is evidence as to their intended output (enough for ~1.2M units/yr, given a 62.3 KWh LFP bty pack)

TL;dr Tesla will increase vehicle production by "comfortably more than 50%" in 2022, and will continue to work to open new factories, beginning with Stamping, Body, Paint, and GA. As Tesla's supply constraints ease, these new factories will each contribute to above 50% continued annual growth through at least 2023 and 2024.

Cheers!

 

[Singuy]

You've spent a lot more and that leads you to believe you'll soon be spending less? What you're observing is inflation. IMO its mostly transitory, but opinions differ.

Look at gas prices. Right now oil is at $92, IMO it'll be at $20 by the 4th of July. If you don't believe me, look around at home Wall Street is trading in every other market.

Can you explain more why you think oil prices will drop that dramatically and what is the cause of current prices?

 

[Silent Ludicrosy]

FSD hits object 3:30

I don’t know why YouTubers think they need to have their hands off the wheel to make a FSD video. The right way to monitor is with hands on the wheel so an unexpected steering wheel movement can be countered by tightening your grip instinctually.

 

[ZachF]

A minor recession that is fixing inflation while having full employment does not sound like some kind traumatic event to the economy that causes a bear market. In fact this is literally fixing the economy, not causing harm.

Bear market is just a 20% drop.

That’s more than possible IMHO during this rate hike cycle. A 20% drop from highs in the S&P would still be above the 2019 peak btw.

It will go back up again after, so just keep acquiring chairs.

What is happening is the echoes and aftershocks of COVID disruption and stimulus. By the latter half of the decade I think we be seeing real growth we haven’t seen since the 60s or the 20s.

In the meantime, we had a huge buildup of inventories 2H last year, and real growth was weak because of inflation causing real wages to shrink.

 

[ZachF]

Can you explain more why you think oil prices will drop that dramatically and what is the cause of current prices?

Oil is not going to $20 this summer unless there is a catastrophic recession in the world economy.

 

[S3XY]

I don’t know why YouTubers think they need to have their hands off the wheel to make a FSD video. The right way to monitor is with hands on the wheel so an unexpected steering wheel movement can be countered by tightening your grip instinctually.

One thing I've noticed is that it's pretty easy to knock it out of FSD on turns. It seems the amount of force required is lower than straight-a ways. And even when driving straight there are occasions where the wheel will jerk unexpectedly. But overall I agree. They shouldn't have their hands on their lap. At least hover over the steering wheel.

I tested 10.10 for the first time yesterday and found it did poorly here. But that was in intermittent, partially snow covered streets. The YT videos on totally clear streets look much improved though. Which reminds me, what did Puxsutawney Phil say the other day?

 

[Skryll]

War as a distraction is definitely not something Russia invented. And who exactly is trying to distract from what? Find it curious that the biggest solution being put forth is for the US to deliver LNG to Europe. What exactly is this all about in the end?

Bingo.

 

[wtlloyd]

'Tis OT weekend, right?

Realizing how shamefully ignorant I was of the origin, meaning and practices of Chinese New Year (Spring Festival), I googled a bit and didn't get far in my reading before I came to a mention of the Chinese zodiac, with it's 12 representational animals.

When I saw 2022 is a year of the Tiger, I took an entirely separate meaning of this tweet from Elon, made a few weeks ago

https://twitter.com/x/status/1477775713172402176

I changed from thinking "here's what's coming for the OEM's" to "2022 is about to get interesting", and in taking that meaning, I mused further in applying to successive years each animals' attributes as it might foreshadow Tesla's growth and success in each coming year. It was strangely affirming.

2022 Tiger
2023 Rabbit
2024 Dragon
2025 Snake
2026 Horse
2027 GOAT

etc. It was all too easy to associate each animals' attributes to devastating success, domination and recognition in the marketplace over the coming decade.

I was 13 when Apollo 11 landed on the moon. It was the culmination of a decade long cultural obsession with space, a national goal shared. My memories of leaving for school in the morning with the TV tuned to the latest launch countdown were mirrored in countless households. In the evenings, it seemed only the ongoing war could push aside space-themed entertainment, news and advertising.

And it feels like something so momentous, so world changing and important, is again happening, right now, under our feet. And yet, with the world shaking and about to turn upside down, with the never-before about to become the done-and-done-again, there is an emptiness, a void where observation and understanding should be. Perhaps it is most like climate change, a subtle incremental shift that erupts in a phase-change like violence once a tipping point is achieved.

And I feel fortunate that I have tuned in once again in my life, to be an observer of this decade in human history where we have a shot at making it into a future that has a future. I'm sorry for everyone that isn't seeing it, who will miss it happening until it has undeniably arrived.

You missed a great show.

 

[Singuy]

Bear market is just a 20% drop.

That’s more than possible IMHO during this rate hike cycle. A 20% drop from highs in the S&P would still be above the 2019 peak btw.

It will go back up again after, so just keep acquiring chairs.

What is happening is the echoes and aftershocks of COVID disruption and stimulus. By the latter half of the decade I think we be seeing real growth we haven’t seen since the 60s or the 20s.

In the meantime, we had a huge buildup of inventories 2H last year, and real growth was weak because of inflation causing real wages to shrink.

A bear market starts after a 20% drop. A correction drops up to 20%. So in a bear market you can expect between 20 to 60% drop using historical metrics. It's not somewhere we want to be.

It has never happened when we have super low fed rate and super low unemployment. Bear market always tied to high unemployment which is one of the most important qualifier.

 

[Paul_SF]

Which of this companies has a clear path of 20X the revenues from one single product class, let alone everything else they do? ( yeah, it’s a rhetorical question )

https://twitter.com/x/status/1489977337827504135

 

[S3XY]

'Tis OT weekend, right?

Realizing how shamefully ignorant I was of the origin, meaning and practices of Chinese New Year (Spring Festival), I googled a bit and didn't get far in my reading before I came to a mention of the Chinese zodiac, with it's 12 representational animals.

When I saw 2022 is a year of the Tiger, I took an entirely separate meaning of this tweet from Elon, made a few weeks ago

https://twitter.com/x/status/1477775713172402176

I changed from thinking "here's what's coming for the OEM's" to "2022 is about to get interesting", and in taking that meaning, I mused further in applying to successive years each animals' attributes as it might foreshadow Tesla's growth and success in each coming year. It was strangely affirming.

2022 Tiger
2023 Rabbit
2024 Dragon
2025 Snake
2026 Horse
2027 GOAT

etc. It was all too easy to associate each animals' attributes to devastating success, domination and recognition in the marketplace over the coming decade.

I was 13 when Apollo 11 landed on the moon. It was the culmination of a decade long cultural obsession with space, a national goal shared. My memories of leaving for school in the morning with the TV tuned to the latest launch countdown were mirrored in countless households. In the evenings, it seemed only the ongoing war could push aside space-themed entertainment, news and advertising.

And it feels like something so momentous, so world changing and important, is again happening, right now, under our feet. And yet, with the world shaking and about to turn upside down, with the never-before about to become the done-and-done-again, there is an emptiness, a void where observation and understanding should be. Perhaps it is most like climate change, a subtle incremental shift that erupts in a phase-change like violence once a tipping point is achieved.

And I feel fortunate that I have tuned in once again in my life, to be an observer of this decade in human history where we have a shot at making it into a future that has a future. I'm sorry for everyone that isn't seeing it, who will miss it happening until it has undeniably arrived.

You missed a great show.

So Tesla #1 in Market Cap in 2027? Greatest Of All Time!

 

[Cosmacelf]

OT...but, ummm, aren't those boring tunnels supposed to be a little further below the surface? That video depicts a tunnel that is shockingly close to the surface IMO.

They are. This is the tunnel exit/entrance. People don’t seem to know that Loop is a hybrid system with underground tunnels, but using existing above ground infrastructure for stations. So the Resorts World expansive above ground parking lots and drive through front lobby area will be leveraged for the Resort World station. Loop can do this because it uses Tesla electric vehicles which can go through tunnels and drive in unprotected surface streets using Autopilot.

I get so tired of people (not you, others) snarking that a rail system like a subway is superior when they have no idea how Loop even works.

 

[AudubonB]

'Tis OT weekend, right?

Realizing how shamefully ignorant I was of the origin, meaning and practices of Chinese New Year (Spring Festival), I googled a bit and didn't get far in my reading before I came to a mention of the Chinese zodiac, with it's 12 representational animals.

When I saw 2022 is a year of the Tiger, I took an entirely separate meaning of this tweet from Elon, made a few weeks ago

https://twitter.com/x/status/1477775713172402176

I changed from thinking "here's what's coming for the OEM's" to "2022 is about to get interesting", and in taking that meaning, I mused further in applying to successive years each animals' attributes as it might foreshadow Tesla's growth and success in each coming year. It was strangely affirming.

2022 Tiger
2023 Rabbit
2024 Dragon
2025 Snake
2026 Horse
2027 GOAT

etc. It was all too easy to associate each animals' attributes to devastating success, domination and recognition in the marketplace over the coming decade.

I was 13 when Apollo 11 landed on the moon. It was the culmination of a decade long cultural obsession with space, a national goal shared. My memories of leaving for school in the morning with the TV tuned to the latest launch countdown were mirrored in countless households. In the evenings, it seemed only the ongoing war could push aside space-themed entertainment, news and advertising.

And it feels like something so momentous, so world changing and important, is again happening, right now, under our feet. And yet, with the world shaking and about to turn upside down, with the never-before about to become the done-and-done-again, there is an emptiness, a void where observation and understanding should be. Perhaps it is most like climate change, a subtle incremental shift that erupts in a phase-change like violence once a tipping point is achieved.

And I feel fortunate that I have tuned in once again in my life, to be an observer of this decade in human history where we have a shot at making it into a future that has a future. I'm sorry for everyone that isn't seeing it, who will miss it happening until it has undeniably arrived.

You missed a great show.

Wonderful final 3 (+1) paragraphs. Thank you for that.

 

[Beltsbear]

Guys, we're having a recession.

If you don't believe Elon, believe your finances. Compare you're cost of living for 2021 vs 2020. I spent the last 6 months hearing 6-7% inflation, didn't like it but brushed it off as not that bad.

I just added up my families spending for 2021 and was shocked to see it went up by $14,500 with no vacations and no big purchases. Same husband, same wife, same 3 kids doing the same activities. In 2020 we bought a new fence. Back that out and our spending went up $20,000 which for us is a 20 percent cost of living increase. Other people are crunching the numbers the same way I just did and they are shocked the same way I am. In my opinion, this will lead to a lot of people cutting back on spending which will lead to recession.

My housing,fuel, electricity and most things I buy have remained nearly the same Or 3% higher. Only cars and meat have really gone up For us. We now have less meat and Tesla will benefit when we finally spend on a car. No way 2021 had 20% real world inflation just because you find one category higher. Eggs are still $1, milk still $2.30 a gallon. Anyone who wants a job and capable of actual work can get a job around here for $15 an hour starting. The same place where rent can be as low as $600. we are not in a recession when that is true.

 

[Artful Dodger]

I was 13 when Apollo 11 landed on the moon. It was the culmination of a decade long cultural obsession with space, a national goal shared. My memories of leaving for school in the morning with the TV tuned to the latest launch countdown...

OT:

Spoiler: To the MOON...

Haha, you went to summer school?! The Apollo 11 moon landing was on July 20.

Perhaps you're thinking of Apollo 12, which was in November 14 – 24, 1969.

I often have to remind myself of the correct chronlogy, having lived through that thrilling and inspirational experience at school too

Cheers!

 

[SOULPEDL]

jbcarioca already covered why the first half of this is not accurate..... though I'd add Tesla must be expecting supply of things like chips to improve steadily, because otherwise if you think say Austin and Berlin will make 200k combined cars this year you'd need to agree Fremont/Shanghai will make 200k less. I've not seen anyone suggest that- so they too must believe TOTAL number of available chips will be increasing through the year to increase TOTAL number of vehicles able to be made across the factories, even if with 4 up and running they're all below max possible.

As to the second part, your suggestion makes no more sense than when you've previously given it and belies a deep lack of understanding of the semi industry.

Apart from the exceedingly high costs, the variety of chips requires multiple plants to supply all running on different process nodes and all producing VASTLY more chips in a year than Tesla needs or will need for years to come because unless those plants run at full output nearly 24/7 they lose tons of $, AND they usually have long-ish term contracts with customers such that Tesla couldn't just buy the company and divert all the chips they need to themselves anyway-- and by the time they could a ton more fabs would already be open as Elon mentioned on the recent call.

Again- companies using MORE chips than Tesla, and more unit constrained by lack of them (AMD, Nvidia, etc) and both using more chips AND having more cash (Apple) don't own fabs. It makes no sense for Tesla to own any.

Agreed, but maybe a Research FAB would be in order - eventually.

I just looked up how long it takes. TSMC says 2 yrs from a muddy field (assuming the equipment is ready to go in). However, a research FAB might be a good thing to have around. Some of these chips are pretty small (fit 1,000 on a single wafer), so a 1,000 wafer run for 1M chips is in the realm of a smaller FAB with hybrid production/prototyping setups. The Assy/Test could be done as foundry at first (more generic) or build your own with molds, ovens, and testers, lol. (Grohman knows how actually - now Tesla owned, formerly doing R&D for Intel's Assy/Test pathfinding group). For first silicone, this could be useful for security reasons). This is why most FABs at Intel are in the USA and the ones overseas aren't doing the highest tech (except maybe Israel's FAB in a limited way).

FYI, from the SemiWiki...

"Here is how 28nm ramped. In June 2010 fab 15 was a muddy field in Taichung. For 12 months the building and clean rooms were created. In another 10 months equipment move in and qualification took place. 22 months after breaking ground phases 1 and 2 of fab 15 started production output, TSMC’s first 28nm volume fab (of course there is a technology development research fab where the process was developed but that has very limited capacity)."​

 

[Bouboule]

I have talked before about how FSD can be very unpredictable and how it can add value to the stock extremely quickly and at any time. Today, I believe that most assume that the take rate is low and that it will slowly increase over time. However if demand is strong and FSD take rate starts to increase, Tesla could well impose FSD on ALL cars, just as they did with Autopilot back in 2019. This also goes with Elon's saying that it makes more sense to buy FSD than to pay each month.
If Tesla went this route, it would pretty much double the operating margins instantly.

 

[SOULPEDL]

OT:

Spoiler: To the MOON...

Haha, you went to summer school?! The Apollo 11 moon landing was on July 20.

Perhaps you're thinking of Apollo 12, which was in November 14 – 24, 1969.

I often have to remind myself of the correct chronlogy, having lived through that thrilling and inspirational experience at school too

Cheers!

OT... I watched one of the last Apollo's leave earth all the way from the west coast of Florida. As a 12yr old, my brain changed that day. I started with my own rockets and models, tools, then figured *sugar* out. Always jealous of my friend who had the complete Saturn V rocket model. Anyway, Tesla and SpaceX both will do the same on steroids! Kids everywhere are gearing up for this new wave.

 

[wtlloyd]

OT:

Spoiler: To the MOON...

Haha, you went to summer school?! The Apollo 11 moon landing was on July 20.

Perhaps you're thinking of Apollo 12, which was in November 14 – 24, 1969.

I often have to remind myself of the correct chronlogy, having lived through that thrilling and inspirational experience at school too

Cheers!

No, we were watching the Mercury and Gemini programs all the way through. And of course, there were 10 Apollo launches before the ONE. But ya, I saw the landing with it's hair-raising last minute save by Armstrong, at home, in glorious black and white.