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

[Gigapress]

100B earnings has what...500B of revenue? I seriously doubt Tesla can grow 250b revenue a year later.

$100B off $500B revenue is 20% net margin. I’d expect Tesla to be at more like 30-40% net margin by that point of their maturity. Tesla is already at about 20% net margin in 2022 if the craziness with the war and Shanghai shutdowns is factored out. Moreover, Tesla currently has a wide gap between net margin at ~15-20% and gross margin at ~28-33% because they only recently hit enough scale to pass break even and earn more gross profit than their slowly growing operating expenses. Therefore, we should continue to see this gap between gross and net shrink.

Gross margin is also likely to continue increasing by a lot. Currently Tesla earns about $17-18k gross profit per car after factoring out temporary extra expenses from Shanghai start-and-stop, logistics expedite fees and extra expenses from Berlin and Austin being in the low-rate initial production phases. I’ve been projecting for a while now that gross profit per car is set to increase well above $20k in the next two years or so for a host of reasons. Here’s one post with detailed analysis for how I’m getting those numbers (open to suggestions for change as always!) . I think the shipping savings, gigapress, structural battery, new factory designs, combined with higher prices finally arriving, etc. will easily add $5k or more to gross profit per car. So $17k will become like $22k or more

If:

• OpEx grows from $7B per year to $9B (that’s probably too high because it implies faster OpEx growth than we’ve seen for years, but the math isn’t sensitive to OpEx once Tesla’s making millions of cars per year)
• and gross profit per car is $23k
• and Energy earns ~$5B from finally selling profitable Megapacks at scale,
• and if Tesla is at a 5 million car run rate by sometime in ‘24 or ‘25:

[ 5M * $23k + $5B - $9B ] * 90% net after tax = $100B net profit

Off of roughly 30% net margin, that would be $330B revenue, up from ~$80B currently if Shanghai hadn’t been shut down so much. So revenue would basically just be quadrupling along with vehicle sales volume.

 

[lafrisbee]

Nah. You can let your horse out in the pasture and it will recharge without you needing to park and plug it in.

Eventually, your Tesla will find its own charging spot and a robot arm will plug it in. Then it will finally achieve technological refueling parity with horses.

I'm afraid the mods might delete all these horse analogies. But at least it's the weekend. So maybe we can get away with a little fun.

Sorry, no. That's just a very poor analogy...
"putting a horse in a pasture" is the equivalent of finding a charger and plugging in. First you have to take of all the gear, walk the horse to the pasture, open the gate, put the horse in, and close the gate. Once the horse is full you have to comeback and put it in a stall/garage.

 

[SOULPEDL]

Can you understand why so many of us are disagreeing with you? If not take only two words: 'Supercharger 'and 'Autobidder', then say "...the network effect is not that strong" again. Then just for fun consider 'dealers' vs 'stores'.

Good examples, but I'm experiencing what @captkerosene was describing by "network" challenged cross-brand right now. Ecosystem might have been a better choice of words over network. More about do my files work in another platform?

I grew up inside Intel Corp. No Macs allowed territory. Meanwhile, I'm a musician type and into graphics and need the good CAMERA phone for business, so I take the leap and picked up the iPhone 12 last Christmas. Nothing ports over as promised from my android. It's been a terrible experience, and I'm still trying to get my media off the phone (tried iTunes, Explorer right click, things not recognized, could be the raw files IDK). What... am I supposed to share all my media in the cloud and pay someone to store it? It's messed up!

Anyway, it is hard to switch ecosystems, and until some of the other technologies come into play, I've got no requirement to stick with Tesla on the vehicle end (but can't wait for my seat position to match at Hertz). However, Tesla is poised in my view to create such as system but it's just not their priority due to focus on FSD. I can't wait for in-car meetings across vehicles on a caravan road trip of Tesla's for example. Tons of revenue streams yet untapped in the Tesla Network.

Also, to others... we don't need to all sound the same, that's boring. (With a grain of salt as I'm routinely off-topic.) I do find it odd people talking about you while you're in the room. It's refreshingly direct, but wow, what a strange world this has become, eh? I imagined this discussion, transposed to in-person discussion. Lol, like what would be said vs written? "Kerosene, you need to go home now." "No, he's not one of them...."

I'll likely catch crap for even posting this, oh well. Here's to being direct!

 

[Snerruc]

W w

You still can’t order one in Europe.

Different subject. Tesla not choosing to sell them in Europe has nothing to do with the current availability in Florida. Fly in to Orlando or Fort Meyers or…. and pick one up. Export it. Yes, I know it isn’t easy. If demand is really slacking here, they will open up export sales. Your time may be approaching. In the meantime, buy a nice car that is available and enjoy it. Good luck!

 

[Gigapress]

The world ceases to exist almost overnight without oil - in six months we're all dead. High prices alone costs millions of lives per year.

For now.

You can't make a Tesla without using a ton of oil (ex: it takes 8 gallons to produce a tire). Add that to steel, concrete, chemicals, fertilizer, plastics and hundreds of other products.

For now, but the Laws of Physics do not dictate that oil (and natural gas) is the sole possible source of reduced hydrocarbon molecules.

I’m still projecting that cheap solar combined with Fischer-Tropsch synthesis (FTS) will wipe out the market competitiveness of the rest of the uses of oil & natural gas beyond fuel. FTS has been in industrial use for a century (mainly for Nazi WWII uses and then SASOL in South Africa since the 1950s), produces chemicals with higher purity than oil, and with much less pollution released from the factory. The only reason FTS hasn’t been the dominant choice this whole time is that using oil and natural gas has been less expensive than any FTS design could be, primarily due to the prohibitive cost of the electricity required. Past a certain price of electricity (hello cheap solar!) then FTS will dominate because this is a commodity market where the lowest bidder wins.

It's like asking the sun to stop shining. How do you guys not understand this? Didn't Elon say we need more oil? Did you think he was joking? I got more bad news for you: when bot comes online and we go through another revolution in industrial productivity, the world will be using more oil ... not less. But, if it makes you feel good, go ahead and vilify the people who are keeping the lights on ... they don't really care what you think.

You know what else Elon wants? Really, really desperately wants? A colony on Mars. And the moons of Jupiter. And in colossal spacecraft each containing their own civilization headed for another distant solar system. There is no oil in any of these locations.

SpaceX publicly stated intentions of using Fischer-Tropsch to produce methane for fuel on Mars 6 years ago when Elon presented on the first proposed version of the Big Effing Rocket. Methane is not the only chemical product of that reaction, and if the Mars colony is going to have self-supplied steel, concrete, chemicals, fertilizer, plastics and hundreds of other products then it’s basically FTS or bust. (Someone here pointed out that using organic waste could also work but I think that’s a lot less efficient and the organic waste will be much more valuable as compost anyway because terraforming will require building topsoil from scratch.)

FTS on Earth using any form of CO2 capture will also benefit economically from greenhouse gas sequestration subsidies from governments because the FTS plants would be providing a positive externality to society that would not otherwise be priced by the free market. Oil is getting by on being subsidized despite producing quite a few negative externalities.

30 years from now, I strongly doubt much oil will be mined and refined, and I expect gas drilling will be performed primarily for the helium instead of the methane and propane.

 

[insaneoctane]

I think most people miss what really sets Tesla apart and what is the defining thing that will hand them the win when everyone is trying to "de-throne" Tesla. It's not that they are cool (even though they are currently considered somewhat cool), it's not that they are better (even though they are measurably and obviously better in the most common metrics). Those two things helped them get to where they are today without failing. But that's not what's important going forward because Tesla is reinventing the car industry. What's important is how much value they can offer the consumer. And most car buyers don't care about "cool". They do care about "better" but "good enough" wins if the price is right enough to make sense.

What's going to ensure Tesla's future success is not how much better they will be, it will be how much value they will offer. It will be Tesla's ability to offer a good quality car for far less money than any competitor while still bringing home the best margins in the industry. You can only do this if your cost to produce and deliver the car is far lower than the rest of the industry. I think the Chinese makers will be the closest to being able to offer the kind of value Tesla does, but close is no cigar and they will have other headwinds. The rest won't even come close for a bunch of reasons I'm not going to mention now.

People need to stop thinking this is a popularity contest. When every car brand offers nearly the same amount of value, as has often been the case over many decades, then, yes, what's more stylish or has more cachet can determine the winners. That's been true for much of the auto industries existence, you have to go back to Ford and their Model T to find an analogy of what I'm talking about. Or maybe the VW Beetle but let's look at the Model T. It was not the most popular car in the world because it was so cool, it was because it offered so much value. Ford could make it in high volumes for far less than any competitor. There were bigger cars, there were more luxurious cars, there were more powerful cars, some of them you could even order in the color of your choice. The Model T only came in black; it was not cool (everyone had one), it was the opposite of powerful and luxurious, and yet it rose to 60% market share. That's because it could be produced and sold at a low cost. It was practical and reliable. Henry Ford was making money hand over fist while other carmakers struggled to break even.

This is the path Tesla is on. Yes, there is only one Tesla, but it's not because they are "cool", it's because they know how to make practical cars in high volume and at ever declining prices. The current situation of rising prices is a temporary condition caused by a shortage of cars and commodity inflation. As an investor I like that Tesla's ace in the hole is not "cool" factor, it's that they will be able to offer the best value in the industry (they already can as recent earnings have proven). I know it's possible to make a lot of money by investing in fashion or in fads, but both are too fickle for me to consider as good investments. There is no certainty in it. What Tesla is doing has more certainty and more staying power, two things I value highly in an investment.

Agree! Many people have overlooked that Tesla has been busy redefining the automobile with wildly popular, attractive, efficient, fast new vehicles that offer significantly lower total cost of ownership (TCO) while simultaneously completely redefining how vehicles are manufactured.

Tesla's manufacturing approaches likely stemmed from the initial need to approach vehicle costs that were at parity with conventional ICE. This was early in their design phase when battery costs were disproportionately large vs an industry that had over 100 year head start to efficiently manufacturer ICE vehicles.

Using the limited EV tax credit subsidies wisely, Tesla was able to get the Model 3 designed and manufactured in volume that approached cost parity with luxury ICE. This was no easy feat and required extreme due diligence. Only they didn't stop there. Tesla continued to improve every aspect of manufacturing their EVs. Battery day alone revealed how they will reduce the cost of batteries 56% (while increasing range 54% and reducing capital investments 69%)! Tesla continued with relentless improvements. Giga castings, structural packs, improvements to the vehicles AND the factories. Brand new factories in Shanghai, Berlin, Austin...each more efficient than the last. Tesla really has created an innovation and manufacturing moat. All the while legacy auto with their unions complain that they can't get enough computer chips and can't make cars. Tesla's laser-focus on manufacturing costs, efficiency and scale have resulted in unfathomable gross margins. So, while ATM we're enjoying industry leading GMs, Tesla now has the knob to beat any competition on price. Only the competition isn't coming. Not really. The competition might offer a compelling vehicle, but never with better margins. I don't think it's even close. Honestly, we're seeing unheard-of margins and the "Deathstar" isn't even fully operational. Once Berlin and Austin are in the stride of their S-curves with 4680s, where will margins be then?

Enjoy the weekend!

 

[Xepa777]

Two things can be true at the same time:

1. I agree with your assertion that oil companies only care about profit, and everything else be damned.

2. I also agree with CaptKerosene (and Elon) that in the near term the world desperately needs more of the commodities that Big Oil provides.

You two seem to be talking past one another.

Yah what’s wrong with what CaptKerosene said? Elon even agrees that we need fossil fuels in the medium to potentially long term range depending on how far you look out.

Oil alone is hugely needed for so many day to day items and applications like plastics.

Yes we need to move to renewable energy as much as possible but there will be a transition period.

With that said you can…also agree that their anti Tesla lobbying is annoying. I don’t get what’s so opposing here.

 

[Ibreakrules]

Yah what’s wrong with what CaptKerosene said? Elon even agrees that we need fossil fuels in the medium to potentially long term range depending on how far you look out.

Oil alone is hugely needed for so many day to day items and applications like plastics.

Yes we need to move to renewable energy as much as possible but there will be a transition period.

With that said you can…also agree that their anti Tesla lobbying is annoying. I don’t get what’s so opposing here.

How are you doing? Isn’t it great to be able to look forward to viewing our portfolio again, to savor shortz burning? Now on to my 1st post. I usually just enjoy reading the insights of others seasoned Tesla investors. Needless to say, I am also a Tesla supporter, more so for the mission than for dominating all players in EV and renewable energy. I’d love to see Apple, BYD, Ford…step up and create some real challenge to Tesla. We’ve seen examples of near monopoly in industry…Facebook, Microsoft, Boeing…even Google.

5 years ago I did a financial analysis of buying new, 1) Model 3 vs 2) Phev of same size/class. I based on my own usage model, costs and my projection of gasoline cost at $5 at 5 years. The first 3 years I was badly off the mark wrt gas $, but this year I’m right. So much for my forecasting energy $. I have these 2 key factors in my model: We have rooftop solar (cover my trip to work) and I have free charging at workplace (free ride home). Now I didn’t expect the free charging to go on for much longer and indeed it is becoming harder to find an unoccupied charger each month. So long short, a new model 3 didn’t even come close in terms of ROI in 5 years. I got similar, maybe even better $ incentives for the Phev such that it really only costed $20k, and it is a mid level with navig, pwr seats, premium sound and superior warranty both battery and drivetrain. I loved the model 3, however I didn’t love the shoddy production hell quality.

Today, bc all the uproar on this potential EV credit bill, I correct myself, it is “Inflation Reduction Act”. I did a back of napkin update on my 5 year old analysis. To my surprise and dismay, it still does not work out for a model Y. (I actually have one on order, TSLA had been good to me) W-t-h, tell me where I went wrong.

Y vs. / Ioniq Phev (I updated our family preference to suv)

Mpge 119 / 131hw 117cty (I used ave 124)

Range 330m / 29 e 620 total

Start $ 65,990 / $27,845

Ave daily 39 miles (mine was very close to AAA’s average)

Gas $4.23 per gallon, electricity $/kwh is irrelevant since same for both car.

So in summary, I would need to drive 10 miles per day on average, on gas. Which is 0.084 gal/day or $0.355 cost of gasoline for the Ioniq plugin.

It would take 107 years to break even. What am I doing wrong?
It is not Inflation Reduction if $ of wheels doesn't pencil.

 

[cab]

I think most people miss what really sets Tesla apart and what is the defining thing that will hand them the win when everyone is trying to "de-throne" Tesla. It's not that they are cool (even though they are currently considered somewhat cool), it's not that they are better (even though they are measurably and obviously better in the most common metrics). Those two things helped them get to where they are today without failing. But that's not what's important going forward because Tesla is reinventing the car industry. What's important is how much value they can offer the consumer. And most car buyers don't care about "cool". They do care about "better" but "good enough" wins if the price is right enough to make sense.

What's going to ensure Tesla's future success is not how much better they will be, it will be how much value they will offer. It will be Tesla's ability to offer a good quality car for far less money than any competitor while still bringing home the best margins in the industry. You can only do this if your cost to produce and deliver the car is far lower than the rest of the industry. I think the Chinese makers will be the closest to being able to offer the kind of value Tesla does, but close is no cigar and they will have other headwinds. The rest won't even come close for a bunch of reasons I'm not going to mention now.

People need to stop thinking this is a popularity contest. When every car brand offers nearly the same amount of value, as has often been the case over many decades, then, yes, what's more stylish or has more cachet can determine the winners. That's been true for much of the auto industries existence, you have to go back to Ford and their Model T to find an analogy of what I'm talking about. Or maybe the VW Beetle but let's look at the Model T. It was not the most popular car in the world because it was so cool, it was because it offered so much value. Ford could make it in high volumes for far less than any competitor. There were bigger cars, there were more luxurious cars, there were more powerful cars, some of them you could even order in the color of your choice. The Model T only came in black; it was not cool (everyone had one), it was the opposite of powerful and luxurious, and yet it rose to 60% market share. That's because it could be produced and sold at a low cost. It was practical and reliable. Henry Ford was making money hand over fist while other carmakers struggled to break even.

This is the path Tesla is on. Yes, there is only one Tesla, but it's not because they are "cool", it's because they know how to make practical cars in high volume and at ever declining prices. The current situation of rising prices is a temporary condition caused by a shortage of cars and commodity inflation. As an investor I like that Tesla's ace in the hole is not "cool" factor, it's that they will be able to offer the best value in the industry (they already can as recent earnings have proven). I know it's possible to make a lot of money by investing in fashion or in fads, but both are too fickle for me to consider as good investments. There is no certainty in it. What Tesla is doing has more certainty and more staying power, two things I value highly in an investment.

Agreed. I certainly didn't mean to imply that "cool" was the primary reason we all invest in Tesla or even the ultimate driver for their success. I do believe, however, that car buying stopped being just a math equation a loooooooong time ago. New car fever is rarely (if ever?) all about "value". The desirability factor is extraordinarily important in car buying (at least until we end up in an autonomous transportation pod world) and is just another of Tesla's many aces up their sleeve. The fact that they can produce an emotionally desirable product that is also high volume and high margin - friggin' awesome.

 

[MikeC]

How are you doing? Isn’t it great to be able to look forward to viewing our portfolio again, to savor shortz burning? Now on to my 1st post. I usually just enjoy reading the insights of others seasoned Tesla investors. Needless to say, I am also a Tesla supporter, more so for the mission than for dominating all players in EV and renewable energy. I’d love to see Apple, BYD, Ford…step up and create some real challenge to Tesla. We’ve seen examples of near monopoly in industry…Facebook, Microsoft, Boeing…even Google.

5 years ago I did a financial analysis of buying new, 1) Model 3 vs 2) Phev of same size/class. I based on my own usage model, costs and my projection of gasoline cost at $5 at 5 years. The first 3 years I was badly off the mark wrt gas $, but this year I’m right. So much for my forecasting energy $. I have these 2 key factors in my model: We have rooftop solar (cover my trip to work) and I have free charging at workplace (free ride home). Now I didn’t expect the free charging to go on for much longer and indeed it is becoming harder to find an unoccupied charger each month. So long short, a new model 3 didn’t even come close in terms of ROI in 5 years. I got similar, maybe even better $ incentives for the Phev such that it really only costed $20k, and it is a mid level with navig, pwr seats, premium sound and superior warranty both battery and drivetrain. I loved the model 3, however I didn’t love the shoddy production hell quality.

Today, bc all the uproar on this potential EV credit bill, I correct myself, it is “Inflation Reduction Act”. I did a back of napkin update on my 5 year old analysis. To my surprise and dismay, it still does not work out for a model Y. (I actually have one on order, TSLA had been good to me) W-t-h, tell me where I went wrong.

Y vs. / Ioniq Phev (I updated our family preference to suv)

Mpge 119 / 131hw 117cty (I used ave 124)

Range 330m / 29 e 620 total

Start $ 65,990 / $27,845

Ave daily 39 miles (mine was very close to AAA’s average)

Gas $4.23 per gallon, electricity $/kwh is irrelevant since same for both car.

So in summary, I would need to drive 10 miles per day on average, on gas. Which is 0.084 gal/day or $0.355 cost of gasoline for the Ioniq plugin.

It would take 107 years to break even. What am I doing wrong?
It is not Inflation Reduction if $ of wheels doesn't pencil.

What you’re doing wrong is comparing the cars solely on TCO. I would just buy the better car with the superior driving experience and make up the price difference by buying some TSLA at the same time.

 

[SOULPEDL]

How are you doing? Isn’t it great to be able to look forward to viewing our portfolio again, to savor shortz burning? Now on to my 1st post. I usually just enjoy reading the insights of others seasoned Tesla investors. Needless to say, I am also a Tesla supporter, more so for the mission than for dominating all players in EV and renewable energy. I’d love to see Apple, BYD, Ford…step up and create some real challenge to Tesla. We’ve seen examples of near monopoly in industry…Facebook, Microsoft, Boeing…even Google.

5 years ago I did a financial analysis of buying new, 1) Model 3 vs 2) Phev of same size/class. I based on my own usage model, costs and my projection of gasoline cost at $5 at 5 years. The first 3 years I was badly off the mark wrt gas $, but this year I’m right. So much for my forecasting energy $. I have these 2 key factors in my model: We have rooftop solar (cover my trip to work) and I have free charging at workplace (free ride home). Now I didn’t expect the free charging to go on for much longer and indeed it is becoming harder to find an unoccupied charger each month. So long short, a new model 3 didn’t even come close in terms of ROI in 5 years. I got similar, maybe even better $ incentives for the Phev such that it really only costed $20k, and it is a mid level with navig, pwr seats, premium sound and superior warranty both battery and drivetrain. I loved the model 3, however I didn’t love the shoddy production hell quality.

Today, bc all the uproar on this potential EV credit bill, I correct myself, it is “Inflation Reduction Act”. I did a back of napkin update on my 5 year old analysis. To my surprise and dismay, it still does not work out for a model Y. (I actually have one on order, TSLA had been good to me) W-t-h, tell me where I went wrong.

Y vs. / Ioniq Phev (I updated our family preference to suv)

Mpge 119 / 131hw 117cty (I used ave 124)

Range 330m / 29 e 620 total

Start $ 65,990 / $27,845

Ave daily 39 miles (mine was very close to AAA’s average)

Gas $4.23 per gallon, electricity $/kwh is irrelevant since same for both car.

So in summary, I would need to drive 10 miles per day on average, on gas. Which is 0.084 gal/day or $0.355 cost of gasoline for the Ioniq plugin.

It would take 107 years to break even. What am I doing wrong?
It is not Inflation Reduction if $ of wheels doesn't pencil.

Hi there. ROIs can be helpful. I did one for our Solar/battery setup, and it said we needed to only purchase 50% of my demand so I picked up a smaller system. (Our utility provider SRP, and many others out there, only pay a couple pennies per kwh on the power they buy back, peak or not. So selling to SRP has a negative ROI, so a full system would not be paid for as quickly). What I learned is that I should have bought the full 100% demand system for many many reasons that I did not see only a few years ago with my head in the spreadsheets. It was a mistake.

I stopped chasing the RIO and starting thinking longer term. Having money helps, but I still seem to be buying the discounts like it's in my blood. But that iPhone I got was a rare example of paying way more. The camera and scanner just blew my mind, and so does FSD on a Tesla.

If folks need to count the dollars, the ROI may be necessary (if not for spouse buy-in). But there is a difference between the 2 vehicles you compared besides cost.

Spoiler: Analogy

Maybe a bad example, but I have tried Maddog - it is toxic next day.

 

[Ibreakrules]

What you’re doing wrong is comparing the cars solely on TCO. I would just buy the better car with the superior driving experience and make up the price difference by buying some TSLA at the same time.

I think you're being funny. What is crazy is I got 0dwn0% for my phev in 2017. I put all my "trade in" $ into TSLA in 2019. The question no one addresses is if every American auto maker is battery constrained, even Tesla had to use LFPs from China. How is making one 75 kwh Y better than making 7.5 phev that each essentially gets the same fossil fuel reduction as that one BEV in this 3-5 year period?

 

[Drumheller]

Voice command I tried last year and said it wasn't implemented but it worked today: "Play Elon's favorite song"

It came up with Megan Thee Stallion: God's Favorite for me. I'm not a fan of rap but I looked up the lyrics afterwards. hmmm

 

[Ibreakrules]

What you’re doing wrong is comparing the cars solely on TCO. I would just buy the better car with the superior driving experience and make up the price difference by buying some TSLA at the same time.

I think you are joking. Crazy is we got 0dwn0% for the phev in 2019. The "trade in" $ went in TDAmer acc and the rest is history. Did I say I am all-in TSLA?

 

[deshkart]

$100B off $500B revenue is 20% net margin. I’d expect Tesla to be at more like 30-40% net margin by that point of their maturity. Tesla is already at about 20% net margin in 2022 if the craziness with the war and Shanghai shutdowns is factored out. Moreover, Tesla currently has a wide gap between net margin at ~15-20% and gross margin at ~28-33% because they only recently hit enough scale to pass break even and earn more gross profit than their slowly growing operating expenses. Therefore, we should continue to see this gap between gross and net shrink.

Gross margin is also likely to continue increasing by a lot. Currently Tesla earns about $17-18k gross profit per car after factoring out temporary extra expenses from Shanghai start-and-stop, logistics expedite fees and extra expenses from Berlin and Austin being in the low-rate initial production phases. I’ve been projecting for a while now that gross profit per car is set to increase well above $20k in the next two years or so for a host of reasons. Here’s one post with detailed analysis for how I’m getting those numbers (open to suggestions for change as always!) . I think the shipping savings, gigapress, structural battery, new factory designs, combined with higher prices finally arriving, etc. will easily add $5k or more to gross profit per car. So $17k will become like $22k or more

If:

• OpEx grows from $7B per year to $9B (that’s probably too high because it implies faster OpEx growth than we’ve seen for years, but the math isn’t sensitive to OpEx once Tesla’s making millions of cars per year)
• and gross profit per car is $23k
• and Energy earns ~$5B from finally selling profitable Megapacks at scale,
• and if Tesla is at a 5 million car run rate by sometime in ‘24 or ‘25:

[ 5M * $23k + $5B - $9B ] * 90% net after tax = $100B net profit

Off of roughly 30% net margin, that would be $330B revenue, up from ~$80B currently if Shanghai hadn’t been shut down so much. So revenue would basically just be quadrupling along with vehicle sales volume.

In this case, you are considering the higher adoption of FSD ?
By end of 2024, we will have nearly 10 million HW 3 cars on the road and FSD will be mature enough that most people will opt for FSD. Let’s assume 50% adoption to be conservative and FSD being priced 20k as upfront 25% opting for this and other 25% paying monthly payment of $300 per month. Then we have 2.5 million * 20k = 50 billion straight to bottom line and monthly 2.5 million * 300 = 750 million per month & approx 2.5 billion per quarter - 10 billion recurring revenue per year.

Will the above 60 billion add on top of your estimates ?

Also, we don’t know margins profile of insurance. On a larger base, we could see some contribution from there.

Edit: I am not even considering Tesla licensing FSD to other automakers. (LOL)

50 PE on 150 billion earnings-> 7.5 trillion market cap ? < Add Escobar waiting meme>

 

[Ibreakrules]

Hi there. ROIs can be helpful. I did one for our Solar/battery setup, and it said we needed to only purchase 50% of my demand so I picked up a smaller system. (Our utility provider SRP, and many others out there, only pay a couple pennies per kwh on the power they buy back, peak or not. So selling to SRP has a negative ROI, so a full system would not be paid for as quickly). What I learned is that I should have bought the full 100% demand system for many many reasons that I did not see only a few years ago with my head in the spreadsheets. It was a mistake.

I stopped chasing the RIO and starting thinking longer term. Having money helps, but I still seem to be buying the discounts like it's in my blood. But that iPhone I got was a rare example of paying way more. The camera and scanner just blew my mind, and so does FSD on a Tesla.

If folks need to count the dollars, the ROI may be necessary (if not for spouse buy-in). But there is a difference between the 2 vehicles you compared besides cost.

Spoiler: Analogy

View attachment 834668View attachment 834667

Maybe a bad example, but I have tried Maddog - it is toxic next day.

Cost of gas is hurting the average American household. Biden knows elections are won by the economy. I can afford the Plaid, but still had a hard time pushing that button for the hedgehog. In fact I had to cancel a M3 RWD last yr.

 

[samppa]

How are you doing? Isn’t it great to be able to look forward to viewing our portfolio again, to savor shortz burning? Now on to my 1st post. I usually just enjoy reading the insights of others seasoned Tesla investors. Needless to say, I am also a Tesla supporter, more so for the mission than for dominating all players in EV and renewable energy. I’d love to see Apple, BYD, Ford…step up and create some real challenge to Tesla. We’ve seen examples of near monopoly in industry…Facebook, Microsoft, Boeing…even Google.

5 years ago I did a financial analysis of buying new, 1) Model 3 vs 2) Phev of same size/class. I based on my own usage model, costs and my projection of gasoline cost at $5 at 5 years. The first 3 years I was badly off the mark wrt gas $, but this year I’m right. So much for my forecasting energy $. I have these 2 key factors in my model: We have rooftop solar (cover my trip to work) and I have free charging at workplace (free ride home). Now I didn’t expect the free charging to go on for much longer and indeed it is becoming harder to find an unoccupied charger each month. So long short, a new model 3 didn’t even come close in terms of ROI in 5 years. I got similar, maybe even better $ incentives for the Phev such that it really only costed $20k, and it is a mid level with navig, pwr seats, premium sound and superior warranty both battery and drivetrain. I loved the model 3, however I didn’t love the shoddy production hell quality.

Today, bc all the uproar on this potential EV credit bill, I correct myself, it is “Inflation Reduction Act”. I did a back of napkin update on my 5 year old analysis. To my surprise and dismay, it still does not work out for a model Y. (I actually have one on order, TSLA had been good to me) W-t-h, tell me where I went wrong.

Y vs. / Ioniq Phev (I updated our family preference to suv)

Mpge 119 / 131hw 117cty (I used ave 124)

Range 330m / 29 e 620 total

Start $ 65,990 / $27,845

Ave daily 39 miles (mine was very close to AAA’s average)

Gas $4.23 per gallon, electricity $/kwh is irrelevant since same for both car.

So in summary, I would need to drive 10 miles per day on average, on gas. Which is 0.084 gal/day or $0.355 cost of gasoline for the Ioniq plugin.

It would take 107 years to break even. What am I doing wrong?
It is not Inflation Reduction if $ of wheels doesn't pencil.

well for one you're comparing cars of very different size and utility (not to even mention acceleration..) , so it's not really apples to apples.. and ioniq phev isn't even made anymore.

I bought one of the first Model Ys when they came to europe, a year ago. Today they are selling for about 5k€ more than what I paid, used ones are more expensive than ordering new from Tesla.

So there's that, I haven't checked but I doubt phevs appreciate in price when they age..

 

[bkp_duke]

I think you're being funny. What is crazy is I got 0dwn0% for my phev in 2017. I put all my "trade in" $ into TSLA in 2019. The question no one addresses is if every American auto maker is battery constrained, even Tesla had to use LFPs from China. How is making one 75 kwh Y better than making 7.5 phev that each essentially gets the same fossil fuel reduction as that one BEV in this 3-5 year period?

False.

Studies have shown that because the VAST MAJORITY of PHEV buyers do not bother to plug in, the extra weight and CO2 emissions for construction of PHEVs pretty much negates any savings over their lifetimes.

Sorry, but hybrids had their day, and it is very much in the past.

 

[Ibreakrules]

False.

Studies have shown that because the VAST MAJORITY of PHEV buyers do not bother to plug in, the extra weight and CO2 emissions for construction of PHEVs pretty much negates any savings over their lifetimes.

Sorry, but hybrids had their day, and it is very much in the past.

With due respect, and to Bob M. Why would anyone buy a plug-in and never plugin?
I almost chastise myself in the morning if I forgot to plug night before.
If you fill up gas with benjamins I will guaranty you will remember to plug-in.
The often cited study was UK fleet where the employee gets reimbursed in $ for petro cost while eats the home e-bill himself. Let's not get emotional, use anecdotal hearsay. Gas cost in 5 years is what average joe knows.

 

[Gigapress]

In this case, you are considering the higher adoption of FSD ?
By end of 2024, we will have nearly 10 million HW 3 cars on the road and FSD will be mature enough that most people will opt for FSD. Let’s assume 50% adoption to be conservative and FSD being priced 20k as upfront 25% opting for this and other 25% paying monthly payment of $300 per month. Then we have 2.5 million * 20k = 50 billion straight to bottom line and monthly 2.5 million * 300 = 750 million per month & approx 2.5 billion per quarter - 10 billion recurring revenue per year.

Will the above 60 billion add on top of your estimates ?

Also, we don’t know margins profile of insurance. On a larger base, we could see some contribution from there.

Edit: I am not even considering Tesla licensing FSD to other automakers. (LOL)

50 PE on 150 billion earnings-> 7.5 trillion market cap ? < Add Escobar waiting meme>

Good question! No increase in FSD revenue is counted in that baseline projection. It’s just counting whatever average FSD profit per car that we have now in 2022.

If I remember correctly that model does include a couple hundred $$ extra per car for increased insurance profit.

The biggest factor is what I’ve been harping on for months: Tesla has increased car prices by 15-25%, those increases mostly haven’t hit yet, demand is snowballing into more demand, and inflationary pressures are being fought hard by innovation and the simple increased efficiency from more mass production volume and having a factory near each major market.

Tesla has proven they can make $17-18k per car when the sky is falling in the car industry and when half their production is coming from outdated production lines in Fremont and Shanghai’s Model 3 line. They will almost certainly continue expanding their gross margin. The question is by how much. Every time I calculate that (without extra FSD money) I get a range of like $5-10k above the $17-18k, for projection of $22-28k by around 2024-2025 when Austin and Berlin are rolling.