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

[UkNorthampton]

I'd like to see the video. Frankly, parts sales by OEMs including Tesla, are significant profit contributors. The single most lucrative category usually is collision parts. Thesladoes exceedingly well with those too. No OEM, to my knowledge, provides enough public information to quantify that. Internal documents do so. For many legacy collision parts aftermarket suppliers thrive, precisely because of that high OEM markup.

There is ZERO artificial inflation in that business. It is, in most jurisdictions, a core regulatory requirement to support manufactured vehicles and that explicitly includes collision parts. Every auto insurance collision coverage pricing gives a hint about the parts. OEM specific requirements frequently force body shops to make significant investment in software, training and hardware that all add to OEM profits as well.

Once again, this is NOT artificial inflation. It is core business. An OEM that fails to support vehicle repair will be out of business very quickly.

As someone helpfully posted, it's @DaveT -

Further points out that this business model makes it hard for new entrants who don't have a large number of out of warranty/crash repair vehicles to sell SOME of the parts needed to fix - "long runway". Includes Elon commenting that it's like razors and blades.

Some points I'm pondering:

1. Makes it harder for legacy to die as they have recurring revenue
2. Makes it easier for legacy OEMs & dealers to bury their heads in sand / hide true situation from outside analysts and investors
3. Likely less profit on EVs (OEM branded worn out parts/fluids)
4. Therefore slows radical change
5. OEMs ripe for asset stripping. Close manufacturing, load up on debt & try to blackmail for maximum government subsidies in each country, default on pension and other liabilities; keep long tail of parts supply, perhaps sell rebadged vehicles
6. Advertising spend by OEMs may drop a lot
7. Media unhappy, lash out even more
8. Will be ugly, lots of lobbying, FUD and anger
9. EVs, robotaxis & world domination (Mars probably)

 

[lascavarian]

Isn’t that going to crash F on Tuesday?

Harley Davidson (HOG) a high brand value product mired in ICE technology, has previously announced (around 2nd wk of December via SPAC method) a similar plan to split off their Livewre EV line.

HOG holds about 74% of new company and HOG CEO will be CEO of new company for up to 2 years. You may find some predictive value in the result on the their stock price.

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The Investor Relations website contains information about Harley-Davidson USA's business for stockholders, potential investors, and financial analysts.

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[Artful Dodger]

Youtuber estimates the number of TSLA shares needed to retire in 2030 based on 4 different Tesla valuation models:

Retire on TESLA by 2030 [How Many Shares??]

TL;dr He estimates as many at 760 shares in a bear case, or as little as 76 shares in a super-bull case (other assumptions described in video; worksheet available for download on Google Docs).

Cheers!

 

[jbcarioca]

On the 3rd Row podcast, Elon explained why parts sales are not significant profit contributors for Tesla. It boils down to 50% + annual growth means 80% of the fleet is always under warranty.

Even Elon can forget about collision parts, the most lucrative parts, skewed dramatically to newish, warranty-active vehicles. From a maintenance perspective there is no argument. Even there for most OEM, older non-warranty parts are often third party supplied.

This discussion, including Elon (a very, very miss for him) imagines OEM parts dominance in perpetuity. We there high vertical integration that would probably be more nearly accurate.

Were that true OEM’s would have much more robust support for older vehicles. Try, say, ignition coils (a wear item, compact, expensive) for a 15 year old BMW. When you find them they will be built, supplied and packaged by a third party (Bosch) and sold to the installer (BMW dealer or any other). That is a tiny example, but typical for out of warranty vehicles. Big business, absolutely, but not so much OEM lucrative. Unless the out of warranty vehicle is a Tesla. Then the OEM is the source and profits accrue to the OEM.

 

[jbcarioca]

Revealing the poor EV margins isn't a big deal IMO. Totally worth it to be rid of dealerships and pensions! They need to be free of the death spiral as it implodes, profitability can come in the future like all their make believe EVs.

GM tried that gambit with Saturn and gave up before launch. They ended out with both dealerships and pensions. That trick would fail in a spin-off too. If they’d be really lucky they might get some work rule relief. As with Volvo, this is to raise capital.

 

[CaliBear1]

Man I’m glad I’ve been on vacation and haven’t checked this thread much. Talk about going off rails .

My only comment on this………. maybe people like your family should bother to take the time to look into Elon’s past and what has been said about him from the media, wall st, shorts, and everything in between. The man has been attacked nonstop for the past 10-15 years, many times in a very unethical way and sometimes downright disgusting way. But oh let’s turn on turn on Elon because he makes a bad meme joke on Twitter

My honest response to my family if they did what yours did would be “Ok let’s burn down the house of the only company actually changing the dynamic of climate change. We can just hand the keys back to the old guard that will find convenient ways to phase out EV’s once again. “

Because that’s the honest truth about them letting a tweet get in the way of supporting a company doing more change for the world in the past 100 years than any other company has. And that is absolutely what the outcome would be if legacy auto were to be given the keys to drive ev going forward.

The amount of righteousness entitlement and willingness to turn on anyone nowadays astounds me. Elon put everything he had not Tesla, pushed the company to the brink in order to force the issue of renewable energy….oh and donated 5 billion to charities just a couple months ago…….but nope, can’t support a man that posts some meme’s in bad taste.

This required more than a

 

[Matias]

I'm 100% sure anyone can criticize Tesla and Musk at will as long as it's valid and relevant and such criticism will be well received here.

Apparently the post that you quoted was removed as “trolling” and with “official warning“. I’m genuinely surprised. Why was it “trolling “?

 

[brantse]

Is Elon implying that the cybertruck might be in production by August, or saying that it will be on display at the Tesla Takeover event?

https://twitter.com/x/status/1495311848668729346

 

[Prunesquallor]

Where would a Ford EV be serviced if they get rid of the dealerships? And how can a Ford EV be sold direct to consumer in violation of laws designed to protect the parent company from competing with their dealerships? It doesn't make sense that Ford could arbitrarily split some models off and sell them direct simply because they have EV drivetrains. And how can they split off part of the company and not have it contribute to the pension obligation? Why can't companies do that as a matter of course to rid themselves of pension obligations? Just split off the most valuable parts and let the parts with the pension obligations wither and die?

I think this kind of spin-off fails multiple "sniff tests" because the part they want to spin-off is the most valuable part of Ford. What they would really be doing is spinning off the ICE part of the company and letting it fail. What's in a name?

The changes to the dealership law that got stalled in the Texas legislature would have exempted “electric vehicles". I don't know how many other states currently use or are contemplating enacting that kind of exemption. That doesn’t (I believe) require a separate EV company. So if such changes had been enacted, Ford could take advantage of them without a spin-off - just sell EVs direct to customers.

But you're right. Ford would have replace the functions of vehicle repair and financing. perhaps they could convince existing dealerships to cover those, but not sales.

 

[TheTalkingMule]

Where would a Ford EV be serviced if they get rid of the dealerships? And how can a Ford EV be sold direct to consumer in violation of laws designed to protect the parent company from competing with their dealerships? It doesn't make sense that Ford could arbitrarily split some models off and sell them direct simply because they have EV drivetrains. And how can they split off part of the company and not have it contribute to the pension obligation? Why can't companies do that as a matter of course to rid themselves of pension obligations? Just split off the most valuable parts and let the parts with the pension obligations wither and die?

I think this kind of spin-off fails multiple "sniff tests" because the part they want to spin-off is the most valuable part of Ford. What they would really be doing is spinning off the ICE part of the company and letting it fail. What's in a name?

This is the US, corporations can do whatever they want. We just saw Exelon spin off their production arm Constellation Energy.

None of the Germany utilities were allowed to make similar moves when renewables and storage began crushing their production profits in 2014. Merkel made them go thru bankruptcy as whole units just to protect far fewer workers and keep the process fair.

Given the history of auto lobbying and bailouts in the US, I think F will be allowed to do whatever they like. It'll be in their executive's short term interest to just "look like Tesla", then slowly sell off their shares in FordX.

 

[ZsoZso]

Something to lighten the mood - S Plaid vs. Taycan vs. Lucid Air

It is very good that the Toycan was "participating" in this race -- as a camera car.
It has provided a nice moving rear-view of the actual competition.
I am so glad the world has found some actual use for that expensive toy.

 

[jbcarioca]

The changes to the dealership law that got stalled in the Texas legislature would have exempted “electric vehicles". I don't know how many other states currently use or are contemplating enacting that kind of exemption. That doesn’t (I believe) require a separate EV company. So if such changes had been enacted, Ford could take advantage of them without a spin-off - just sell EVs direct to customers.

But you're right. Ford would have replace the functions of vehicle repair and financing. perhaps they could convince existing dealerships to cover those, but not sales.

Sorry to disagree. You have part fo the idea but miss crucial points.
For legacy OEMs, almost all of them, they have multiple constraints other than local/state or other regulatory concerns. Almost all have long standing dealer agreement and practices that cannot be so easily overcome. Remember GM tried it with Saturn and quickly gave up. Ford has tried a few times with specific imports and gave up before actually launching, just like GM. They absolutely cannot escape dealer distribution.

 

[jerry33]

Insightful commentary on Tesla even if it's funny it might make you cry.

oh and I really hate that this forum's media settings auto play videos like this with no visible volume control and volume at max.

The audio is worth listening to this time, but I hate autoplay videos no matter the source or content.

Science_journalism_in_a_nutshell/

Autoplay is usually a browser function, not a forum function. I've never had this happen to me.

 

[Don TLR]

Booking flights for Austin. Any word on how to get tickets or hotel location?

MotoGp is in town that weekend so it already coincided with my trip to Austin, now to get an invite.
Oh and keep HODLing amid all this noise.

 

[jerry33]

Revealing the poor EV margins isn't a big deal IMO. Totally worth it to be rid of dealerships and pensions! They need to be free of the death spiral as it implodes, profitability can come in the future like all their make believe EVs.

Given all the unpaid overtime i've worked over the years, a pension (Mine is really minimal--just about pays for car insurance) is the least they could do, particularly because the 401K had to be invested in only approved funds, so no possibility of more than substandard returns. If it wasn't for TSLA, which I was only able to invested in after they no longer needed me so I could control the 401K, I'd be barely making ends meet.

 

[Electroman]

This is really exaggerated, so much so that it diminishes the basic premise. That advertising-driven auto publications are biased towards their revenue sources is been a factual character of almost all news sources, not just auto. That those advertisers and others make convenient ways to offer non-exactly-bribe inducements is equally established fact. That applies to almost every business category. 'almost' only be cause there conceivably may be an exception. In this piece he barely alludes to advertising revenue itself, or explicitly sponsored stories.

However, it is now uncommon for a press vehicle to be much better than the consumer version. They are now just as likely to have been beat up and abused by previous press users. Still, there are the prototypes and early production versions. As often as not the early production versions are less well finished than are the alter production versions. That 'specially built' is an advantage is a major fallacy. In the industrialized world early production and specially built are lesser, not greater vehicles.

It is very sad to take a perfectly valid issue and so exaggerate it as to make it largely untrue. Sad and stupid. The reality itself tells the story perfectly.

The J D Power, Edmunds et al story is slightly different but equally fraught, as is the used car guide (US mostly NADA). Automotive News is in the same box, with all these almost exclusively depending on auto dealers for their revenues.

Then there are the Munro et al stories. Sandy Munro makes his process explicit and ensures his customers know. It is only by full disclosure of their potential or actual conflicts that they can do work with competitors without alienation. Some others, such as Consumers Union in the US do attest to independence, but still end out rewarding the status quo simply because their customer base is technologically and logically driven by very conservative (NOT political) economic views.

I good webcast would have describes these issues in equal time or even less, replete with short videos and pertinent quotations. It's all there, easy to get. Check Car and Driver, Autocar, Quattro Rodas and myriad others. Their own articles tell this story. Nobody hides it, they describe their most excellent road trips, wining and dining. Their long term tests invariably describe sending their vehicles back to their sources.

His premise that these outfits have very little integrity and are easily bought is spot ON. Heck even I would do the same thing and would go extra lengths to never upset my customers. Remember my primary customers are auto companies that pay me and not their subscription base.

In the scheme of things the wining & dining, and luxury boarding & lodging is the last push but the real wind beneath their writing are the advts dollars which puts food on their table. Take their advts $s out, they are dead.

The reviewers getting a much better cars with better engines is baloney.

 

[Bobfitz1]

Anyway, when we moved in, we were pretty much the only Tesla owning family in our subdivision. Lot of oil and gas workers here (great, hard working people). But we roll in in our Tesla and I’m I’m 220 lbs of knotted fury. Plus I’m super smart, cool, good looking, smart, did I mention smart and cool, and awesome and most importantly humble.

Why pick nits on a company that’s trying its hardest to save the g-d world??

@Tommy O you shouldn't be so humble! You've managed to summarize paragraphs about the correct perspective on Musk tweets into a single sentence perfect to use with friends who only get exposed to Tesla media FUD.

When I use it on my politically correct friends I'll just add " and it's leader" after 'on a company'. Kudos.

 

[DaveT]

Let's not ignore the real 800 lbs gorilla in the room: @DaveT recently came up with this long list of questions about Elon's "methodology" which clearly is NOT how Elon runs his closely held projects. Unless Dave is willing to give up that mindset, he doesn't really stand a good chance of getting to any deeper truths about Tesla (which is what Dave advertises as the basis of his investing method).

Dave: here's some hints:

1. Elon is practical (that's why they "fail quickly", fix, and move forward)
2. Elon is pragmatic (that's why he "closed all retail stores everywhere", then changed his mind within 4 weeks when he saw the problems)
3. Elon is tied to "outcomes", not "methods" (we're going to build a city on Mars, not we're building a carbon-fiber rocket and won't even consider steel because "we only future")

TL;dr Don't try to stuff Elon into your little box; his mind doesn't fit. Maybe pick a specific historical episode which is not well understood, and do a deep dive on it. AND: Give Elon a least 1 night's sleep on the topic BEFORE you ask the question. That'll maximize your chances of getting at the deep answers.

One possible topic for example, "EXPONENTIAL GROWTH", how it affects Tesla (ie: how to battery scaling to 2TWh/yr), and the outcome for Renewable Energy.

Good luck, and

Cheers!

Hey thanks, actually I'm curious how Elon runs his not closely held projects. For closely held projects, it's clear he's super involved in directly leading the project and making design/engineering decisions and problem-solving. But how about all the other areas of the company?

 

[AudubonB]

DAYS AND DAYS of posts about Ukraine, Canada strikes and other geopolitical miscellany, and message after message from Moderators regarding same -

Since too many of you are too rude and too stupid not to sit on your hands, ALL further such posts will result in bans.

 

[dhanson865]

Media files in this forum NEVER play in my browser unless I click on them. And that's true of the Reddit link you provided as well. I think you might need to adjust the settings in your browser.

I didn't leave it the way that TMC does it now, here let me put it in that format and see if you see the difference.

funny/comments/swot7e/oc_science_journalism_in_a_nutshell/

vs

https://www.reddit.com/r/funny/comments/swot7e

the line with red text is me manually setting a link, the box with the video embedded is the obnoxious thing TMC does that I say is autoplaying in my browser.

edit: on my home PC with Firefox the imbedded video has no volume slider, on my work PC with Chrome it does. Either autoplays as soon as I save the message or refresh the page for any reason.