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

[ZenRockGarden]

Let me correct that. "An eighty thousand pound EV truck under FSD is dangerous to the mission IMO" No FSD no one to blame but the driver. Giant FUD rigs

This mist-have-FSD claim makes me want to raise my hand and ask how we cope with all the existing huge human driven trucks on the road....

 

[StealthP3D]

You shouldn’t completely rely on @Troy. He has constructed a model in which he calculates the order backlog by looking at wait times for all models on all continents. In September wait times in China shrunk to 1 week because that’s the month in which around 80k cars for the domestic market were delivered.

In October almost all of Shanghai’s production is exported and few cars will be delivered to Chinese customers, which had caused wait times to go up to 4-6 weeks again. Did the order backlog suddenly increase on October 1st? No, it didn’t. But Troy’s calculation will show it did (because of the way it works). Just like it showed that backlog dropped in September. Both are not true, as the backlog is pretty steady and if it declines it declines gradually.

I know Troy probably means well, but his model is flawed.

Very good points.

Anyone who thinks Tesla has "demand concerns" in China needs to realize that demand grows massively when you have finished product, ready to deliver on demand, and the price seems reasonable. How much does demand grow when someone with money can just walk in and take one home? It will vary from culture to culture, but I think China and the US are near the top of that list.

The reason legacy auto has stocked millions of cars in big sales lots around the country for many decades is simply to capture all those sales of people who want to see and sit in the car before they buy it. A car is the second most expensive thing most will buy and many will not do it based upon an invisible car that is scheduled to be delivered in a few months, with no guarantees. Buyers are also very price sensitive with as little as $1000 being the difference between sale and no sale.

"The competition is coming" is an old and tired refrain but that doesn't stop it from being continually resurrected and deployed. I want to see another EV maker approaching the same margins Tesla has before I get worried that Tesla will not be able to continually increase profits by absorbing an increasingly large part of all auto sales.

 

[SOULPEDL]

It's a brand new vehicle, on a brand new production line. Worse than say ramping up MY in Austin or Berlin, where there is at least a largely proven design (with some new design details) and supply chains. This is all new, and will be low-volume production (relative to MY or M3 anyway). IMO, first vehicles will be sold at a significant loss-just like every other brand new vehicle on a brand new line. But given Tesla's ability to learn and ramp quickly, that IMO will change quickly. Maybe by Q3 03? Would like to be wrong and see positive GM from the first semi, but I don't think that's reasonable, rather it's Tesla or any other manufacturer.

This isn't pessimism or a negative comment, still VERY positive about the future of TSLA. But just a rational look at how any new product rolls out.

The fact that the Semi order sizes were fairly small (not Hertz fleet sized orders - maybe only 10 or 100 at first). This tells me we have a customer learning curve to process as well. So not a big revenue item until the Pepsi's out there start showing savings and solid use cases. Initially with fuel, then big time with FSD.

But for now, heads will turn and transport all gets re-thunk - all of it - Hydrogen Fuel, Hybrids, Trains, Fedex etc... A lot of competitors and businesses are gonna get crushed. That's the effect we need to see from Semi intro ASAP; and specifically discussions and analysis around the potential now that they're here. Downhill shipping runs especially for free shipping in some instances. They do this in mining today for dirt cheap, where rocks carried off the mountain generate power for the EV tractors to return. Where is this example for Semi, and can it carry water in some cases?

 

[oldTAVguy]

The sale continues. 53 more today.

 

[OrthoSurg]

The sale continues. 53 more today.

60 here @ 230
Orders left at 120@215
And 240@200

Below 200 I sell everything like CGS and wait for 140 to buy back which will never happen.

 

[woodisgood]

I mean technically we’re outperforming our beta *ducks*

 

[redan]

Pepsi confirms Elon's tweet.

https://twitter.com/x/status/1578399762981732352

 

[Mengy]

What is “more aggressive” in the context of shareholder distributions? More money back to shareholders or less?

I feel Gary is probably thinking share buybacks from Tesla themselves. Gary has been pushing for this for some time now, and Elon has stated he's open to the notion of it.

 

[Artful Dodger]

... and there's Johnny! (Lower-BB 226.45)

 

[StarFoxisDown!]

I mean technically we’re outperforming our beta *ducks*

It's actually not.......I used to think the Beta was 2.1 that of the Nasdaq. As was pointed out to me, that's based on the S&P. The beta for the Nasdaq is 1.5

So........................it's still underperforming

 

[petit_bateau]

So, you are saying, "The competition is coming!"?

Yes, I get it, China can make lots of BEV's too! And these BEV's can eat into the bulk of the market that is legacy ICE. Legacy ICE sales in China are cratering! Tesla sales are growing.

Anyone with investment capital can expand production. But to continue to expand production such that it erodes Tesla's China sales requires them to compete directly with Tesla Shanghai which has the highest gross margins of all of Tesla's factories. Tesla has massive pricing power in China while the manufacturer's you think will erode their sales in the future have NONE! They are selling around break-even. They can out-compete when competing with ICE, but there is no good evidence they can out-compete when it comes to Tesla. And you cannot neglect this most important fact when analyzing how this will play out.

Tesla Shanghai will be able to profitably sell all they can make for years to come. The key metric here is Tesla's pricing power relative to other BEV manufacturers.

Yes, I am saying that the information coming out of China suggests that meaningful competion is coming. Or has arrived in China at least.

But you are perhaps making a fair point now. My base case has BEV getting to 50% of the 80m/yr auto mkt in 2030. And ultimately I project that either i) autonomy increases utilisation of vehicles and/or ii) poverty reduces affordability of vehicles (where poverty really means free money at 0% interest rates stops) and/or iii) vehicle longevity increases as BEV enter the fleet; and so ultimately the overall newbuild market becomes 60m/yr.

And the way I sketched the transition the base case also has Tesla at 50% of the BEV market, i.e. at 20m of 40m. It just so happens that the numbers broke cleanly at that point. As you can see I also had Tesla ultimately growing to 30m/yr in 2035 on this trajectory as one cannot realistically get to 20m/yr in 2030 and then do a crash stop - but neither can you get to 20m/yr and still have time left to taper before 2030 2020.

So your suggestion is firstly re volume that ChinaCo will only eat into the residual ICE market faster and not impede Tesla growth at all. So no-one who would have bought a Tesla is tempted away to ChinaCo, or at least to the extent that any are tempted away there is an equal and opposite counterflow. And secondly re pricing power that Tesla's growth (which is currently top-end downwards) is not adversely affected in pricing power terms by ChinaCo product pricing. Because if it were to be affected then Tesla would have to reduce price (and GM%) to maintain volume.

If ChinaCo were only producing low-end vehicles without any premium aspirations then you'd be very convincing and I'd definitely admit I have missed something. But looking at that ChinaCo information, it seems to me those 3/Y segment ChinaCo competition are definitely not low end. I might not like their aesthetic (though I like it a lot more than some of the frugly stuff that ICE-land are pumping out) but it doesn't seem pitched at the low end. So either Tesla has a unmatched secret weapon ( ?FSD ? ) or there will likely be direct competition for Tesla sales and/or pricing. Perhaps 90% of ChinaCo will go to new converts and perhaps 10% will steal natural Tesla buyers. Or maybe it will be 50/50. Hmmmm .....

I guess we will have to watch the data very closely over the next few years for any signs of which of us is more right, and to what extent this impinges on either GM% or volume growth rate, or both. I'd also hazard a guess that China will keep the playing field optimised for their home team by not permitting country-wide autonomy until at least one non-Tesla offering is available in the market - no-one said this was a fair game.

In the meantime I'll run the scenario at the weekend to get some insight into how material an effect it might be for a shareholder. That info helps understand how important it is or is not to scrutinise the ChinaCo data.

 

[PeterJA]

There are a lot of other ADAS systems out there. Whilst I agree that Tesla has a very compelling position at the moment this is an area where things move quickly.

Thanks for the links and your thoughtful reply. But I wasn't talking about Advanced Driver Assistance Systems. I meant completed FSD (Level 4, sleep-in-the-backseat autonomy).

Tesla believes that the only way to achieve such a system is with billions of miles of real-world driving data in addition to the computer simulations that other companies have used. If Tesla's belief is correct, then other companies will not "move quickly" to compete with FSD, because they cannot quickly deploy millions of cars collecting driving data, especially if the cars are festooned with expensive lidar and other sensors like the Waymo and Cruise cars that keep snarling traffic in their small geofenced service areas.

Since you are apparently a knowledgeable researcher of the Chinese auto industry, I asked if you are aware of any Chinese carmakers that are using Tesla's method of FSD development. I take it your answer is no.

I have not so far included a specific line item for FSD value in my modelling, instead it gets rolled up in auto GM% just the same way that Tesla does in the accounts.

I wasn't suggesting that FSD be included as a modeling line item. My thesis is that completed FSD will decimate demand for most cars without it, and ensure overwhelming demand for Tesla cars, regardless of how well other cars compete in other features (colors, fancy interiors, build quality, etc.). I think most folks don't understand this, or won't believe it until they see it.

China is very clear that they will crack this (FSD/etc) as a country and be independent in this area.... They want a factory-droid more than the US does.

Waymo and Cruise have been very clear that they will crack self-driving with their computer simulations and small fleets of lidarmobiles. They want it very badly. But wishes ain't fishes. All the failed attempts have proved that self-driving is a very hard problem, for which Tesla has built a world-class software team, millions of data collectors, and their own phenomenal supercomputers for driving and neural net training. I don't think anyone will "move quickly" to match them.

 

[Tony73]

Pepsi confirms Elon's tweet.

https://twitter.com/x/status/1578399762981732352

Looks like Pepsi is eager to push this as well. Great publicity for Tesla.

 

[Webeevdrivers]

I was thinking a nice 5 percent rise would be nice for tomorrow. But with the announcement of the semi going into production I’ll call a 12 dollar drop. Remember, you read it here first. /s

Woohoo. I’m quoting my own post here. I nailed it. (Well, off by a few cents). So going forward I’ll be offering my services as a stock prediction specialist. The cost per prediction will be one tesla share. The good news is that since Tesla has some great things coming down the pipe in the next year or two the stock price should continue to go down, so long term my advice will be relatively cheap. And if tesla gets FSD sorted out it will probably down around 20 bucks. /s

 

[Dutchie]

RU effn joking?! Pres. Biden said within the past 24 hrs that the world is now closer to a nuclear exchange than at any time since the Cuban Missile Crisis.

I personally don't think it'll happen if the West keeps its nerve, but that is a FAR CRY from 'nearly guaranteed'.

Just for everyone else, DO NOT gamble any money you think you'll need in the next few years, DON'T use margin, and even consider keeping some cash and clean water at home.

That the market is affected by that is irrational. If nuclear armagadon takes place, money doesn’t matter at all anymore.

 

[tslagreen]

... and there's Johnny! (Lower-BB 226.45)

View attachment 861115

Does feel like we are in the middle of The Shining movie when Jack Nicholson screams, "Here's Johnny!"

 

[StealthP3D]

I took a look at PACCAR Inc. financials. They are owners of DAF, Leyland, Kenworth and Peterbilt.
Their financials show GM% at 16.5%. I will double that for Tesla at 34%; however, I won't assume 34% until Q2 or Q3 2024.
I will probably start at -10% in Q4 2022, +5% in Q1 2023, +15% Q2 2023 and so on.
There is not much detailed support for my approach. I use 2 pieces of knowledge: Tesla delivers better margins than ICE and that it takes time to ramp to peak gross margins. I am likely conservative here.
Perhaps @unk45 or members with knowledge of this industry can help shed some light on this business.

My wife and I have known three PACCAR engineers over the years. One has quit and moved away, so we lost touch with him but the other two are recent (over the previous 4 years) senior engineers and both are focused on diesel powertrains, emissions, efficiency, etc.

The amount of smug denial is entertaining. They think Musk has no clue and that BEV semi-trucks are simply not viable. They have extensive and very detailed knowledge on internal combustion engineering specifics, but many TMC members understand electrical powertrains better. About 3 years ago, one of them commented that autonomy will not be possible without LIDAR (I live 10 miles away from a PACCAR track that has been used for their autonomous development efforts). I know from the first PACCAR engineer we met over 20 years ago that PACCAR spent money as if it grew on trees and most of it was completely wasted due to managerial incompetence and that management did not respect or understand engineering. This was long before Tesla made their first car, and he portrayed the company as ripe for disrupting.

It's clear to me that people at PACCAR view Musk as a threat and deal with it using denial, by saying/believing he is not a threat.

 

[2daMoon]

This feeling in my gut is reminiscent of the one felt during the COVID dip, and it holds simultaneous twinges of both discomfort and expectation which unbalances one's emotions as if they are playing on a teeter-totter.

The Discomfort comes from the "kick me while I'm down" nature of the recent dive. Which some suggest to be part of a plan designed to shake out the weak hands prior to a potential launch the people behind the curtains might see looming on the horizon. Ala post-COVID.

The Expectation I feel derives from possession of facts supporting the fundamentals of this remarkable company, which haven't budged in Tesla's steady march toward world domination.

HODL y'all!​

 

[samn]

This is just getting silly. In for 27 more at $224.68 on margin. Odd number but I'm trying to keep my total share counts ending in a lucky numbers. This brings it up from ..42 to ..69.

 

[generalenthu]

Its pretty crazy how the volume spikes up every time tesla falls through a round number. about 600k sold on the 230 and 225 breaches. We were running lighter on volumes than yesterday and we are solidly outpacing them now, while underperforming beta.

Hopefully will get some respite from options expiry where there are a lot of open puts that are in the money that need to be closed.