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

[82bert]

I placed no bets but I'm shocked the share price isn't up today.

I've had the belief that FSD wouldn't move the share price until "The Market" starts to see the revenue potential. With the videos I saw this weekend, I think it's time for the market to start seeing it. I sent a video to my 87 year old father and he replied "it looks like a Tesla is in my future". He is very concerned about his ability to maintain mobility into his old age. I'm sure he's not alone.

And then there's robotaxi.

Are fanatics like us the only ones watching these videos?

There is a fairly large contingent of naysayers that even frequent these boards. They continue to espouse true FSD is impossible and decades off. They repeatedly ignore the advancements that have occurred in just the past year. And they routinely remind others Elon has promised FSD for years without delivering. But the future is clear to those who do not have secret agendas. FSD is coming. It may not be by Dec 31, 2022, but it’s most certainly coming. This I’m 100% confident.

 

[M|S|M MYP]

Silly question. If I buy a share today although it’s past the split record date, so I still get the extra shares after the 25th? How does that work?

You will still get it...it will reflect automatically in your brokerage account on the 25th. It may take a day or 2 to reflect the correct share count depending on your brokerage.

 

[MP3Mike]

China itself is not a "foreign entity of concern". This is about terrorist nations and organizations, some of which are based in China. So as long as Tesla doesn't use those particular entities they will not be disqualified by that part of the law.

I don't think that is accurate, here is one description I found:

"[A]ny of the applicable critical minerals" contained in the vehicle's battery were "extracted, processed, or recycled" by a "foreign entity of concern" (as defined by the Infrastructure Investment and Jobs Act, (42 U.S.C. § 18741(a)(5)). A foreign entity of concern includes, among other things, any foreign entity that is "owned by, controlled by, or subject to the jurisdiction or direction of a government of a foreign country that is a covered nation" (i.e., China, Russia, Iran, or North Korea). This prohibition would take effect with respect to vehicles placed in service after December 31, 2024.

 

[Nocturnal]

Then why did they put income limits and a price cap on the tax credit? Both of which limit how many vehicles from the Big 3 will qualify?

People have decided that it's not fair to "subsidize the cars of rich people" so that's probably the only way they could sell it. Of course poor people are the most impacted by auto pollution and C02 pollution in general but it's a complicated and political argument.

 

[growler23]

This will disqualify vehicles with literally any battery components coming from China by the end of 2023 and any critical minerals from China by the end of 2024.

It would also apply to things coming out of Russia, North Korea, and other nations "covered" by them, but the EV battery supply chain relies massively on China right now and particularly when it comes to keeping the vehicles affordable.

This is extremely unfriendly to the current supply chain structure.

This was exactly the point of the legislation - and I think they got it half right. For both political- and environmental- risk reduction, the supply chain for batteries has to shorten. Most folks here have seen the map where (effectively all) battery mineral refining is done in China. Thousands of miles of added shipping (terrible for GHG) and political risk with the USA's heightened fears regarding Taiwan and South China Sea.
IMHO they got it about half right. The shortening of the supply chain goal is right for both reasons. The timeframe is wrong, or at least ... interesting. We cannot build a new supply chain in 2 years, but the timeframe shows that the Feds are taking both of these risks (finally!) as immediate and significant. Will enterprising folks dive in try to build it out? I am very much hoping so. Elon keeps asking for it, on call after call...

*Edit: somewhat Ninja'd by @LYTRIDR

 

[MP3Mike]

This was exactly the point of the legislation - and I think they got it half right. For both political- and environmental- risk reduction, the supply chain for batteries has to shorten. Most folks here have seen the map where (effectively all) battery mineral refining is done in China. Thousands of miles of added shipping (terrible for GHG) and political risk with the USA's heightened fears regarding Taiwan and South China Sea.
IMHO they got it about half right. The shortening of the supply chain goal is right for both reasons. The timeframe is wrong, or at least ... interesting. We cannot build a new supply chain in 2 years, but the timeframe shows that the Feds are taking both of these risks (finally!) as immediate and significant. Will enterprising folks dive in try to build it out? I am very much hoping so. Elon keeps asking for it, on call after call...

I agree, the other part they got wrong is it should preclude using anything from those countries, maybe just limit it to something like 10% of the value or something. (Some things like PCB assembly are almost all done in China even if the chip is produced here.)

 

[Usain]

How does the IRA help the stock price? Tesla can sell up to the production limit of the factories. They will do that with or without the rebate.... (not trying to be sarcastic)

I believe that Tesla will need to raise prices on qualified vehicles. Also, I believe they will modify the lineup as needed to make sure as many vehicles as possible can qualify. If for no other reason, they will keep prices high or go higher just to keep the wait times manageable.

I don't think this means $7500 extra profit per vehicle. But it does mean some extra profit that provides benefit to both Tesla shareholders and the consumer.

Even if it only impacts US ASP by $2000, that's around $1 billion of extra EBIT for 2023.

 

[AndrewZ]

I don't think that is accurate, here is one description I found:

This is the definition of a "foreign entity of concern" along with the source

Definition: foreign entity of concern from 42 USC § 18741(a)(5) | LII / Legal Information Institute

China fits in as a "covered nation" along with Russia, North Korea, and Iran, defined here

Definition: covered nation from 10 USC § 2533c(d)(2) | LII / Legal Information Institute

Anyone who believes China is not a foreign entity of concern just out of principle, what they're trying to do right now, and what they've been trying to do for a while, well they need to get up to speed in the geopolitical realm. China's attempting to control the battery supply chain should be of concern to all of us, lest we swap out the world's energy reliance on OPEC for the reliance on the PRC.

 

[Knightshade]

While I certainly agree FSD is getting better (I have the beta), there comes a point where I'd struggle to pay so much money in reliance on a future regulatory approval.

This continues to be a nonsense red herrring.

L5 self driving is approved today in half a dozen US states. There is no federal regs at all preventing the other states from doing it either.

The reason there's no L5 cars on US roads today has nothing to do with "regulators" it's the fact nobody has a safe working L5 system yet. if they did there'd be nothing stopping deployment in those states right now- and most others would follow suit pretty quickly.

$15k is a ton of money to spend to sit in the driver seat and oversee the latest iteration of FSD. If I get t-boned 1 day after buying the car and FSD, that software "license" is gone.

Assuming you had decent car insurance your replacement vehicle would get FSD as well (for folks who buy FSD apart from the vehicle purchase though they might wanna check with their insurance company to insure its included in their coverage as the company might consider it an add-on not covered otherwise)

 

[ZsoZso]

Well, if that isn’t the most organized, gentle, covering looking chart on the face of the planet?

Next person to claim the market is irrational gets a virtual throat punch.

TSLA has been drifting down over the past 5 trading days at fairly low volumes.
If we get through tomorrow and Wednesday with no sign of covering rally, does that invalidate all the naked-short manipulation theories that were floating around here ?!?

ps: Paging @Artful Dodger for input on this...

 

[2daMoon]

I agree, the other part they got wrong is it should preclude using anything from those countries, maybe just limit it to something like 10% of the value or something. (Some things like PCB assembly are almost all done in China even if the chip is produced here.)

Plus, there is a significant need for simultaneously encouraging mining permit reform for those specific minerals which contribute to reaching renewable energy independence as quickly as possible.

 

[ZachF]

yikes

UK inflation projected to hit 18.6% as gas prices surge

Bank raises forecast as European gas price sets new record

www.ft.com

How long before the dollar is worth more than the pound too?

 

[Usain]

This is the definition of a "foreign entity of concern" along with the source

Definition: foreign entity of concern from 42 USC § 18741(a)(5) | LII / Legal Information Institute

China fits in as a "covered nation" along with Russia, North Korea, and Iran, defined here

Definition: covered nation from 10 USC § 2533c(d)(2) | LII / Legal Information Institute

Anyone who believes China is not a foreign entity of concern just out of principle, what they're trying to do right now, and what they've been trying to do for a while, well they need to get up to speed in the geopolitical realm. China's attempting to control the battery supply chain should be of concern to all of us, lest we swap out the world's energy reliance on OPEC for the reliance on the PRC.

Thanks AndrewZ. I do believe that clears it up.

Since that part doesn't go into effect until 2025, I think that gives Tesla time to adapt.

 

[unk45]

Chase analyzed based on credit card data that for every 10% rise in stocks, customers spend 1% more. Now the covid rise was parabolic so it definitely juiced up spending.

Redirect Notice

That had nothing implied with individual share ownership. The only thing that suggests is that similar factors might be influencing both individual behavior and stock market behavior. In short, they've observed a slight statistical correlation. Even the article implies no causality, Nor even any any individual share purchasing behavior correlating with consumer purchasing power.

 

[MP3Mike]

Since that part doesn't go into effect until 2025, I think that gives Tesla time to adapt.

I think it will take more time than that to get mining and refining up and running. Especially in the US permitting moves very slowly in most jurisdictions.

I would just assume that for the most part the tax credit ends after 2024 unless it is modified prior to that time. (Or there are some kind of work-arounds put in place where you can "launder" the minerals by some fairly simple/easy/clean process in a free trade country.)

 

[Usain]

I think it will take more time than that to get mining and refining up and running. Especially in the US permitting moves very slowly in most jurisdictions.

I would just assume that for the most part the tax credit ends after 2024 unless it is modified prior to that time. (Or there are some kind of work-arounds put in place where you can "launder" the minerals by some fairly simple/easy/clean process in a free trade country.)

It's all so complicated and up in the air, it's hard to know what will really happen.

But I'm an optimist on this. Ford and GM have such tremendous clout with the government that I think the kind workarounds you speak of will be allowed as needed. Or maybe there will be other creative solutions.

And Tesla will be in the best position no matter what because of their robust supply chain advantage.

 

[Dreadnought]

FSD 10.69 nailed Chuck's unprotected left during rush hour, too. One glitch when FSD was unavailable (S/W crash?) but some impressive turns as well.

 

[2daMoon]

Filed using the official request form in the Snappy Answers to Stupid Questions (SASQ) department of TMC...

How long after the number of stocks triple will we see the SP triple in our account?​

/s

 

[hacer]

I don't think a single vehicle right now will qualify for the $7500 and imagine getting the $3750 earmarked for raw materials will be a massive challenge for manufacturers. And then we have this...

By December 31, 2023, a vehicle containing any battery components manufactured by a "foreign entity of concern" will not qualify period.

By December 31, 2024, a vehicle containing any critical minerals that were extracted, processed, or recycled by a "foreign entity of concern" will not qualify period.

Source and quote:

https://www.congress.gov/bill/117th-congress/house-bill/5376/text?q=%7B%22search%22%3A%5B%22inflation+reduction+act%22%2C%22inflation%22%2C%22reduction%22%2C%22act%22%5D%7D&r=1&s=1

This will disqualify vehicles with literally any battery components coming from China by the end of 2023 and any critical minerals from China by the end of 2024.


It would also apply to things coming out of Russia, North Korea, and other nations "covered" by them, but the EV battery supply chain relies massively on China right now and particularly when it comes to keeping the vehicles affordable.

This is extremely unfriendly to the current supply chain structure.

The definition of Foreign Entity Of Concern is flexible. The last clause allows the Secretary [of the Treasury] a lot of flexibility to put a whole country on it. The Entity-list has a number of Chinese companies on it, but doesn't presently define all of China as a Foreign Entity of Concern.

Edit: Missed that China is on the list of "covered nations" as pointed out by @AndrewZ

 

[Krugerrand]

Silly question. If I buy a share today although it’s past the split record date, so I still get the extra shares after the 25th? How does that work?

Buy with impunity until I say otherwise.