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

[EVCollies]

Exactly this. My wife ordered a Model Y last August and expected delivery is this July-August. If prices were lower, demand would be higher and wait times would be well over a year.

Prices will come down when production catches up to demand. Hopefully Berlin and Texas can ramp up quickly.

Tesla has correctly used price to keep reasonable delivery times, will be interesting to see how they unwind when/if needed.

 

[EVNow]

Heck, I'm not particularly enraptured by Beta as it is but I'd say it's better than 1 in 10 miles per disengagement.

And your source is ... ?

ps : what do you think the rate is ?

 

[traxila]

So, I have a fundamental question about Tesla's pricing strategy. When the Model 3 was first released, customers had access to the full federal tax credit of $7K. As the rebate decreased and ultimately disappeared, prices continued to decrease. I remember thinking "how will the competition ever catch Tesla if they keep sharing their economies of scale with the customer?" Just after the last price reductions of February 2021, I began to invision the inevitable fulfillment of their mission as Tesla was making the best products AND at the lowest prices! Then it stopped. Prices started increasing and haven't stopped. The LR TM3 is up 22% since March 2021.

Maybe the competition didn't come. Maybe inflation was coming. Maybe margins were too thin. Maybe demand was too high. Maybe supply was too low. Maybe it's those things and many more. But, I don't have the same feeling about Tesla sharing those economies of scale with the customer anymore. I think Tesla's 3/Y products have gotten very expensive and many people that were thinking of stretching can't at these prices. I know margins are epic and I should rejoice as a stockholder. But, what fundamentally changed this trajectory in March 2021?
View attachment 800550

It was the right choice. Demand was too high already. The fastest way to complete the mission is to become flush with cash to pour into new infrastructure. If they had kept prices low the only difference right now would be the amount of cash in Tesla’s coffers. They would not have managed to make a single BEV more. The mission would be no closer to completion and the company’s resources may very well have been in jeopardy.

I think Elon has proven to be willing to risk it all, change it all and turn on a dime. He would have no problem slashing prices if this was suddenly the new path to mission accomplishment.

Another factor to take into consideration with the realpolitik of disrupting a century old industry is that maybe in the end only an unstoppable juggernaut can manage it and Tesla in on the verge of becoming exactly that. Give them another year of ramping while OEMS fiddle and writhe about and we will see that reality as well.

 

[MikeC]

Shanghai at 1200/day:

https://twitter.com/x/status/1522041502565756929

 

[Singuy]

Shanghai at 1200/day:

https://twitter.com/x/status/1522041502565756929

For reference, we were at 2200/day in Jan 2022

 

[TheTalkingMule]

For reference, we were at 2200/day in Jan 2022

I'll take 60% capacity 5 minutes after everyone projected zero output thru May. In Tesla Shanghai time theylle be ar 80% capacity by the time we wake up Monday morning and 120% by the 4th of July.

 

[mongo]

I'll take 60% capacity 5 minutes after everyone projected zero output thru May. In Tesla Shanghai time theylle be ar 80% capacity by the time we wake up Monday morning and 120% by the 4th of July.

2k a day was impressive for Q1 (181k). The listed capacity from the Q1 slide deck is >450k which is right around 1,250 a day (continuous).

 

[TheTalkingMule]

Yes, well had Germany listened to our former President and found alternate sources of energy, Russia wouldn't be receiving about $1B/y day (edit) in oil and gas revenues.

Just so we're clear, you wanted Germany to move off Russian fossil fuels by 2022? That's the suggestion of an absolute moron. We'd all plan to get everything we want and need instantaneously if we were spoiled children.

Cloudy oil-less Germany has shown time and again tmthey can transition to renewables quite rapidly when it's in their interest and physically possible. They're the ones who scaled renewables markets globally from 2000 til now so we can all benefit I have no doubt they'll beat their 2035 target for 100% renewables by at least a couple years.

With battery storage options ramping and getting cheap, they'll put their market to work easing off oil altogether by 2029 and be off coal/gas for electricity 2032. Heat....that's another issue. But they'll cross that bridge too I'm sure.

 

[dhanson865]

This is not a recent video - factory hasn't any walls yet. But I wish I was there!

The video wasn't recorded recently but it was just released by Tesla this week.

You can now watch it on the official Tesla Youtube Channel

 

[heltok]

Exactly this. My wife ordered a Model Y last August and expected delivery is this July-August. If prices were lower, demand would be higher and wait times would be well over a year.

Prices will come down when production catches up to demand. Hopefully Berlin and Texas can ramp up quickly.

And if prices were lower we would have scalpers selling their orders for huge profits. There is only one good solution to high demand, that is to raise prices and invest in production. Any other solution sucks. See any market with high demand, low supply and artificially low prices, these markets sucks. If you want to get a rental apartment in central Stockholm, wait time is currently 35years, with black market contracts selling for tens to hundreds of thousands of dollars illegally.

We cannot fault Tesla, they grew 80% even during a covid pandemic year with lockdowns and supply chain issues. As long as they grow >40%/year imo they are doing their fair share and more and should only get cred for this. And imo they should raise prices even more, selling the first 10k Cybertrucks for less than $100k is just silly, will be so many scalpers selling it to rich people for tens of thousands of dollars of profit.

 

[inconel]

It was the right choice. Demand was too high already. The fastest way to complete the mission is to become flush with cash to pour into new infrastructure. If they had kept prices low the only difference right now would be the amount of cash in Tesla’s coffers. They would not have managed to make a single BEV more. The mission would be no closer to completion and the company’s resources may very well have been in jeopardy.

I think Elon has proven to be willing to risk it all, change it all and turn on a dime. He would have no problem slashing prices if this was suddenly the new path to mission accomplishment.

Another factor to take into consideration with the realpolitik of disrupting a century old industry is that maybe in the end only an unstoppable juggernaut can manage it and Tesla in on the verge of becoming exactly that. Give them another year of ramping while OEMS fiddle and writhe about and we will see that reality as well.

I also think it was the right decision but I hope that Tesla does not become complacent and fat from this supply-induced higher margin situation. If they become fat they won't be able to slash prices when the time comes

 

[Cosmacelf]

Just so we're clear, you wanted Germany to move off Russian fossil fuels by 2022? That's the suggestion of an absolute moron. We'd all plan to get everything we want and need instantaneously if we were spoiled children.

That isn't what I said, and please shove your insults elsewhere.

 

[Cosmacelf]

So, I have a fundamental question about Tesla's pricing strategy. When the Model 3 was first released, customers had access to the full federal tax credit of $7K. As the rebate decreased and ultimately disappeared, prices continued to decrease. I remember thinking "how will the competition ever catch Tesla if they keep sharing their economies of scale with the customer?" Just after the last price reductions of February 2021, I began to invision the inevitable fulfillment of their mission as Tesla was making the best products AND at the lowest prices! Then it stopped. Prices started increasing and haven't stopped. The LR TM3 is up 22% since March 2021.

Maybe the competition didn't come. Maybe inflation was coming. Maybe margins were too thin. Maybe demand was too high. Maybe supply was too low. Maybe it's those things and many more. But, I don't have the same feeling about Tesla sharing those economies of scale with the customer anymore. I think Tesla's 3/Y products have gotten very expensive and many people that were thinking of stretching can't at these prices. I know margins are epic and I should rejoice as a stockholder. But, what fundamentally changed this trajectory in March 2021?
View attachment 800550

One reason: too much demand and not enough output to meet it.

Tesla is well aware that if they reduce prices, they'll sell more cars and thus generate more overall profit. But they can't make more cars right now, lead times are a year long in some cases, so higher pricing is the right strategy.

As Austin, Berlin and yet another Shanghai expansion all ramp up, Tesla will eventually get in front of the demand, maybe in a year. At which point, I expect them to reduce pricing to goose demand again.

Tesla is in an awesome place right now. They have the exact right strategy in place, and it is clear they have lots of demand levers to pull for when their factories hit production capacity.

I always wonder in situations like this, where we here at TMC know what the next three years are going to look like (awesome), why the market doesn't? The answer that always comes back is that we really do know Tesla better than most of the market...

 

[ZenRockGarden]

Yeah, anyone who claims a company has overpriced it's product as there's a waiting line a YEAR long out the door for it... seems to have missed a basic econ course or two.

Tesla adapts price rapidly, and directly. No dealers screwing the customers (and keeping the gouged prices), no locking itself into selling a below-cost price as raw materials go out of control - they simple balance the best product they can make against demand for that product in the marketplace as it exists each day. If Ford can actually make enough Mustangs and keep them reliable to compete, prices will go down. My bet is that aint gonna happen.

 

[Artful Dodger]

Jeffries analyst comments on the Market reaction to the Fed comments yesterday:

This is a standard relief rally, says Jefferies' chief market strategist David Zervos | CNBC Televison

 

[StarFoxisDown!]

For reference, we were at 2200/day in Jan 2022

Article is dated 4/19, it’s two weeks old. The report of Shanghai being back up to 80% production seems more likely/accurate

 

[StealthP3D]

So, I have a fundamental question about Tesla's pricing strategy. When the Model 3 was first released, customers had access to the full federal tax credit of $7K. As the rebate decreased and ultimately disappeared, prices continued to decrease. I remember thinking "how will the competition ever catch Tesla if they keep sharing their economies of scale with the customer?" Just after the last price reductions of February 2021, I began to invision the inevitable fulfillment of their mission as Tesla was making the best products AND at the lowest prices! Then it stopped. Prices started increasing and haven't stopped. The LR TM3 is up 22% since March 2021.

Maybe the competition didn't come. Maybe inflation was coming. Maybe margins were too thin. Maybe demand was too high. Maybe supply was too low. Maybe it's those things and many more. But, I don't have the same feeling about Tesla sharing those economies of scale with the customer anymore. I think Tesla's 3/Y products have gotten very expensive and many people that were thinking of stretching can't at these prices. I know margins are epic and I should rejoice as a stockholder. But, what fundamentally changed this trajectory in March 2021?
View attachment 800550

You would have a point if lowering prices would allow the technology to deploy faster to more new owners. But it won't, it would just reduce the amount of free cash-flow Tesla has to work with to continue to expand production as quickly as possible.

Even if I were not an investor, I would want to see Tesla in such strong financial shape that money was no object to whatever issues they decide to tackle. This also gives legacy auto a little more breathing room on their EV pricing which could result in more investment in batteries and EV production.

But one thing you can be sure of is that if push comes to shove, Tesla will lower prices and erode competitors car sales before they will slow down production growth to match demand and Tesla has the pricing power to do that in a big and growing manner as illustrated by their declining cost to build each car that is driven by manufacturing innovation and maximizing production from each factory. Tesla will lower prices as soon as that's necessary to continue displacing ICE vehicles in ever larger numbers. In other words, high production and the need to continually increase sales is what lowers prices and makes EV's more affordable. As long as EV's are only 4% of all cars produced and sold and buyers are joining waiting lists, there is no incentive or benefit to selling cars below market value and it will not accelerate the mission at all - if anything, it would slow it down.

 

[CLK350]

Very dense/ informative recap of Q1 Earnings call by The Limiting Factor. There were *a lot* of points covered in that call and ensuing Q&A session. Hugely positive details confirming continued >50% year over year growth with at worst a slowdown in rate of growth in 1Q 2023 if the 4680 ramp hasn't finished by then. Lots of details, how Tesla probably designed a 2170 structural battery pack that can be a shoe-in substitute for the 4680 battery pack - thus avoiding inefficiencies in line production, etc.

How Tesla made the best of the situation by having extra 2170 packs in inventory, taking advantage of the slow 4680 ramp up to streamline that process while it is being implemented (instead of having to rush and have to wait for an opportunity to change the product lines).

Most impressive is how Tesla is so far ahead in working at removing future limiting factors, currently in Lithium mining years from now - being ready to get into it themselves if the mining industry (which they are helping, see Indonesia) isn't taking up that challenge/ opportunity fast enough. How Elon / Drew avoided answering that veiled question re other car makers prospects (they're really really dead, except for the Chinese EV manufacturers)

That video is over an hour long, but watching it seems like it didn't last so long as it is so interesting. Still, for those who need a quick recap, watch here

Hats off to Jordan Giesegi who has provided the Tesla community w/ remarkably insightful in-depth research on many technical aspects of Tesla, w/ battery production as a primary focus. See his Patreon support, which provides more benefits to subscribers and helps support his research.

From The Limiting Factor:
" This video covers the Tesla Q1 Earnings Call, which answered so many questions about the 4680 ramp and the raw materials needed for extreme scaling.
..
*Timeline*
00:00 Introduction
00:59 Slide Deck // Battery and Powertrain
03:47 Slide Deck // 2170 and 4680 Packs
05:33 Pack Interchangeability
09:45 50-80% Growth Rate?
10:39 Robotaxi
13:19 50% Per Year for Several Years
14:03 Elon’s Confidence
14:47 FSD and the Path to AGI
16:30 Raw Material Cost Exposure
18:10 400- vs 800-Volt Architectures
22:31 4680 Cost and Performance
28:11 Raw Materials for Extreme Scale
33:53 Recycling Battery Materials
35:52 Recycling Aluminum into Gigacastings
37:06 Berlin and Austin Ramp Rate
40:11 Don’t Wait for the Best Tesla
41:51 Leadership All Pulling in the Same Direction
42:58 4680 Run Rates
48:29 Will Legacy OEMs Secure Materials?
50:52 Tesla’s Limiting Factor
53:35 Tesla Pushing Miners, but Will Mine if they Must
57:17 Cybertruck Number of Parts
59:46 Giga Nevada Expansion
01:01:01 LFP and Alternative Cathodes
01:02:26 Iron Availability
01:03:54 Time Required to Ramp Raw Materials
01:08:52 Tesla Insurance
01:09:34 Full Summary // 15 Key Points

For those not familiar with Jordan's YouTube channel, it is one of the most informative and entertaining ones, notches above the follow the growing crowd of YouTube fans and rehashers

 

[MC3OZ]

I don't know if this has been posted previously, but this Limiting Factor video is very good.

A deep drive into a lot of comments made on the earnings call about the 4680 ramp.

 

[JusRelax]

It's a good thing that mainstream media are completely unbiased in their reporting:

https://twitter.com/x/status/1522076684413173760