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

[StealthP3D]

I won't be donning a party hat until we're back around $900. Even then, I won't crack the fancy beer.

You stopped cracking open the fancy beers?

But why?

 

[Artful Dodger]

Seems like model Y has another price increase.

https://twitter.com/x/status/1537296738322620421

Tesla price increases - EXPLAINED (Ep. 616) | @DaveT on Youtube (1 hr ago)

 

[Max Plaid]

At the last meeting, didn't the Fed say they were going to do 50 points?

Yeah, and my wife said she wouldn't get a new dog and now we have three

 

[cliff harris]

S/3/X prices are up too.

https://twitter.com/x/status/1537298798158004224

Average gross profit per car was $18k in Q1 and the average selling price was still at $52k—basically mid-2021 pricing.

[/SPOILER]

Sadly I occasionally witness random people commenting on news stories about Tesla. You would be AMAZED how many people who think they either still lose money on every car, or only make a profit due to tax credits.
The gap between tesla's financials, and the public perception of them is massive, a deliberate situation brought about by false reporting. However, it gets harder and harder to hide from Tesla's growing price to earnings ration and headline profits. At some point, they will have to give in and report the facts, and I expect a wave of new retail investors when they learn that 'Tesla now turns a profit apparently'.

And $18k is a STAGGERING gross profit per vehicle.

 

[FEERSUMENDJIN]

Agreed and to put it more bluntly, they've either pushed to far with the limits of the drivetrain and were complicit, naive or ignorant. None of those are going to end well.

And I'd bet money there are several engineers who tried to stop it but we're overridden by managers.

For instance, we hired a few engineers who left ICE due to issues that fell on deaf ears before "dieselgate" broke.

The MACHE was already known to have a very poor sustained power output and had a very short cap of rated power ( a few seconds) This would suggest the connectors are massively under specced.

 

[heltok]

In Q3-Q4 with all 4 factories up and running we will have lowered COGS with scale, localization and optimizations. Add improved Y:3 mix with same cost but higher price for Y. This and improved FSD take rates and recognized revenue and insurance might be close to compensating for inflation. So these 20% price increases might go right into GM.

But imo the most important is that this shows that Tesla has a demand lever they can pull whenever they need. And my gut feeling is that the equilibrium is not at 2M 3+Y/year but a lot higher.

 

[2daMoon]

Agreed and to put it more bluntly, they've either pushed to far with the limits of the drivetrain and were complicit, naive or ignorant. None of those are going to end well.

And I'd bet money there are several engineers who tried to stop it but were overridden by managers accountants.

For instance, we hired a few engineers who left ICE due to issues that fell on deaf ears before "dieselgate" broke.

FTFY

 

[CorneliusXX]

S/3/X prices are up too.

https://twitter.com/x/status/1537298798158004224

Average gross profit per car was $18k in Q1 and the average selling price was still at $52k—basically mid-2021 pricing.

$10-25k per car price increases have yet to materialize in the financials, and I strongly doubt this will be the last price hike. I can’t for the life of me figure out why nobody seems to be accounting for this in their models.

$52k + ~$15k = ~$67k

Not even accounting for mix shift away from 3, more FSD revenue, Cybertruck, Roadster, Semi, and more price increases. We haven’t even seen the actual price of Cybertrucks yet, notably the plaid quad motor. If S&X plaids are any guide…

I posted as far back as November that 3/Y gross margin would be approaching 40-50% by the end of this year and prices would keep rising.

On March 31st I showed projections for $100B profit in ‘23 based in part on forecasted ASP of $72k and some thought it was an early April Fool’s joke. It was not. I now think cost will probably be closer to $39k but at the rate we’re going, ASP might be more like $75k. It was not advice then, nor is it now, but I do genuinely predict this as the most likely outcome.

I don't know if we have a clear understanding of the impact of inflation on Tesla's COGS. Many of the inputs are purchased via long term contracts, so hopefully it is minimal, however we don't know what is buried in the details - there could be inflation escalators or other clauses that allow for the price to increase.

In my industry some suppliers have come cap in hand saying that if they sell for the contracted price they'll go broke - this has lead to changes in the agreements for higher prices as it is better to keep the suppliers in a sustainable position than to hold them to the contract and have them fail.

I'm Not saying there will be a large uptick in COGS but I will be reading the next quarterly report with that on my mind.

 

[Budding]

Evidence isn't provided. Possibly FUD. Happy to review when available...

Gone in 130 seconds: New Tesla hack gives thieves their own personal key

You may want to think twice before giving the parking attendant your Tesla-issued NFC card.

arstechnica.com

There is a video here.

 

[mongo]

Gone in 130 seconds: New Tesla hack gives thieves their own personal key

You may want to think twice before giving the parking attendant your Tesla-issued NFC card.

arstechnica.com

There is a video here.

What a ...

Based on the lack of response Herfurt said he received from Tesla regarding vulnerabilities he uncovered in 2019 and again last year, he's not holding his breath that the company will address the issue.


"My impression was that they always already knew and would not really change stuff," he said. "This time, there is no way that Tesla does not know about that poor implementation. So for me, there was no point in talking to Tesla beforehand."

Yeah... according to the linked docs, Tesla did respond previously and chose not to prioritize car's having a unique ID (like their VIN/ license plate already are)

Tesla acknowledged this fact and wrote that this this situation and its implications are accepted risks/circumstances

and that range extension RF attacks are hard to protect against.

Tesla acknowledged this fact and wrote that this this is “a known limitation“ of the Phone Key Feature and that people should use PIN2Drive

Regarding current issue, there is no (good, non-selfcentered) reason not to submit through bug bounty program first. I could easily see soneone making a quick change to set the DRIVE_AUTHORIZED flag (my name) with a timeout and not realizing that also enables key pairing.

I can also see Tesla making the code change to check the drive authorization source to prevent this and releasing that fix in the next update.

 

[traxila]

The market that demanded 75 basis points because otherwise it would crash… is now crashing as the Fed raised 75 basis points and how can you trust them?

The puzzling aspect for me is there are multiple signs that the economy is rolling over right now. The problem is energy prices which are notoriously volatile and also seem to be at inflection point to at least ease off their recent highs. But the Fed can’t bring down oil prices without causing a recession. Demand destruction is their only tool.

Which seems to be where we are headed.

I predict that the upcoming CPIs will continue the downward core trend. As to what the Fed will do? Who Knows? When was the last time they got a prediction right anyway?

 

[lascavarian]

When was the last time they got a prediction right anyway?

I think that would be yesterday. Seems like interest rates went up today just as suspected yesterday.

 

[TheTalkingMule]

It's triple witching eve, this kind of shovedown was to be expected. And it's already moderating as we move past 8am to 8:30.

Sure looks like MM's are committed to hold 700 for TSLA this week and likely have similar goal for the other big names.

I suspect they'll eat quite a lot of buying volume today and tomorrow to protect options profit. Then the unwind Monday moves us northward toward $800.

That's where the big call walls are for both weeks. 700, then 810.

 

[Discoducky]

What a ...

Yeah... according to the linked docs, Tesla did respond previously and chose not to prioritize car's having a unique ID (like their VIN/ license plate already are)

and that range extension RF attacks are hard to protect against.


Regarding current issue, there is no (good, non-selfcentered) reason not to submit through bug bounty program first. I could easily see soneone making a quick change to set the DRIVE_AUTHORIZED flag (my name) with a timeout and not realizing that also enables key pairing.

I can also see Tesla making the code change to check the drive authorization source to prevent this and releasing that fix in the next update.

Assuming this is a valid attack and the appropriate vectors and surface vulnerability was shown/demonstrated, I would also expect an OTA update fix.

Remember, Tesla has specific requirements for submitting security issues. If this does meet those criteria, a fix will be made and I hope those responsible for submitting get a bounty.

The white hacking community is the best way to keep software strong long term and I know Elon believes that as well.

 

[StealthP3D]

Sadly I occasionally witness random people commenting on news stories about Tesla. You would be AMAZED how many people who think they either still lose money on every car, or only make a profit due to tax credits.
The gap between tesla's financials, and the public perception of them is massive, a deliberate situation brought about by false reporting. However, it gets harder and harder to hide from Tesla's growing price to earnings ration and headline profits. At some point, they will have to give in and report the facts, and I expect a wave of new retail investors when they learn that 'Tesla now turns a profit apparently'.

And $18k is a STAGGERING gross profit per vehicle.

Agreed, but be careful for what you wish for, as soon as it becomes common knowledge how profitable the company is, the new mantra will be that Tesla price gouges. That other manufacturers only mark their EV's up 1-5% because they are trying to encourage the transition to EV's but greedy Tesla has started marking their EV's up 35-40%!

You know they will say this, it's just a matter of time. Currently, they are torn between letting people believe Tesla hangs by a thread on government handouts and calling them greedy price gougers.

 

[The Accountant]

I don't know if we have a clear understanding of the impact of inflation on Tesla's COGS. Many of the inputs are purchased via long term contracts, so hopefully it is minimal, however we don't know what is buried in the details - there could be inflation escalators or other clauses that allow for the price to increase.

In my industry some suppliers have come cap in hand saying that if they sell for the contracted price they'll go broke - this has lead to changes in the agreements for higher prices as it is better to keep the suppliers in a sustainable position than to hold them to the contract and have them fail.

I'm Not saying there will be a large uptick in COGS but I will be reading the next quarterly report with that on my mind.

My thoughts:
I believe key raw material/parts contracts have a clause that allow pricing to go up and down within a band based on commodity price movements.
For other supply contracts, Tesla needs to gauge where the supply price will be in the future when contracts are up for renewal as their backlog sits at 6-12 months out.

Tesla's finance team likely has auto gross margin estimates/targets for the next 3 years (broken down by quarter) embedded in their long term plan.
For example, their targeted auto margins could be 32% for 2022, 33% for 2023, 34.5% for 2024.
These margin increases come mainly from labor efficiencies and lower fixed overhead per vehicle and some from lower prices on parts as they continue to scale. Higher raw material price inflation would eat into the labor and overhead efficiencies.

Some observers are surprised that Tesla will comment that they are raising prices due to supplier price increases and yet show margin improvements quarter after quarter. When we see Tesla taking price increases, it is to stay on track with their growing margin targets so that raw material inflation does offset the hard work they are doing on labor and overhead productivity.

 

[SN_8]

CNBC is suggesting that the tech selloff overnight was due to the Swiss Bank selling billions in tech stocks (and absolutely was not volatility driven by the wall street options market).

 

[Electroman]

It’s funny how tesla tops all of the customer satisfaction surveys but bombs all of the awards and “reliability” studies done by editorial staffs.

It’s almost like the editors aren’t measuring anything which owners actually care about. It’s so consistently off, you might suspect it is deliberate.

/s

Spot on. I honestly don't care about a paint scratch under the bumper, or a 2mm panel misalignment somewhere. I just want the car to drive, give me good range and not get me stranded.

 

[Accident]

OTA updates are easy, they said:

Lucid Air OTA Software Update Leaves Car Temporarily Inoperable

A Lucid Air owner initiated an OTA software update, after which he waited three or four hours only to find the car seemingly dead.

insideevs.com

 

[Words of HABIT]

The market went up? Reminds me of a Happy Days episode.

View attachment 817002

@The Accountant, no need apologize. The Fonz is never wrong.