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

[Singuy]

Chinese stocks apocalypse today. All chinese Ev stocks are getting close to hitting circuit breaker. Baba, Jd, etc also down. Most likely related to not releasing gdp numbers.

 

[Nocturnal]

Chinese stocks apocalypse today. All chinese Ev stocks are getting close to hitting circuit breaker. Baba, Jd, etc also down. Most likely related to not releasing gdp numbers.

I have to imagine this reduces the odds of further lockdowns.

 

[elasalle]

I have to imagine this reduces the odds of further lockdowns.

But Shipping don't care

 

[bkp_duke]

I have to imagine this reduces the odds of further lockdowns.

Only if the Chinese Gov were acting rationally. They have not done that to date regarding COVID (refusing to purchase better western-made vaccines vs. their own in-house one, etc.).

 

[EVWatcher]

I have to imagine this reduces the odds of further lockdowns.

The lack of formal lockdowns doesnt mean the measures to make sure there isn’t an outbreak are very invasive to the economy. Those measures are unlikely to end soon.

 

[Artful Dodger]

James Stephenson comes in with his updated Q32022 Estimates: EPS $1.16 GAAP, $1.27 non-GAAP

My Tesla Q3 Earnings Preview | Youtube (Oct 19, 2022)

EDIT: Paging @The Accountant

 

[Gigapress]

As we all know, such innovations as Octovalve, Gigapress, shared OS across all models and so much more are manifested first with higher quality, second with decreased costs. The Deming/Juran approaches were/are conveniently compatible with Elon Musk's 'first principles' thinking. All three are incentives to never accept 'good enough' nor do they easy;y coexist with delegation to third parties although all three are largely dependent on shared common goals.

Many people are seemingly devoted to a single popular quality process, such as Six Sigma. Those are often handy tools but no benefit at all without highly shared common goals.

We all have difficulty explaining why Tesla and SpaceX can be such overwhelming successes with such a flawed top executive. Forget about FUD follow @Gigapress lessons, then think about how the common elements of Deming/Juran/Musk lead to constant rapid evolution, consistently increasing efficiency and consistent high customer satisfaction. Adding the Musk component to the Deming/Juran thoughts ends out with very rapid evolution and doing impossible things very well, always improving. Safe and efficient Li-ion battery powered cars, Reusable rockets, steadily decreasing parts counts all came from the same principles combined.

For those who don’t know or who may not have read my Tesla-Toyota-Deming thesis (#202), Sandy Munro is a direct intellectual descendent from Dr. W. E. Deming, who pretty much passed the baton to Sandy in the '80s and told him to start running. Here's an excerpt:

"The credit Deming received from NBC [in their 1980 documentary "If Japan Can, Why Can't We?"] for transforming Japan led to a surge in interest for his services in America and throughout the West and also led to his being hired at Ford, where a young tool-and-die maker named Sandy Munro was working. As it turned out, Sandy Munro ended up being directly mentored by Dr. Deming when both of them were employed at Ford in the 1980s. Few seem to understand the profound influence that Dr. Deming had on his protégé. In 1988, Deming directly recommended to Sandy that he leave behind Ford and its clueless, stubborn, arrogant managers and start his own consulting company, and thus Munro & Associates was born.

History Of Lean Design® - Munro & Associates Inc.​

In 1982 Sandy Munro met Dr E. Deming and everything in his career changed. Dr. Deming’s ideas regarding reducing variation to increase quality resonated with Sandy and he became a zealot in reducing variation wherever he could find it. While working with Deming, Sandy started to think about how to tackle and eliminate variation and waste in the design phase that was unique to the product development process...Sandy helped Ford utilize DFA [Design For Automation] to save billions of dollars, improve quality and reduce development cycles during the early 1980’s, most notably in what became known as the “Taurus Shock” where Toyota who was starting to rise quickly and powerfully in the market due to the use of Kaizen and their TPS [Toyota Production System] systems, found itself flabbergasted that in such a short time their competitors created such cost savings and innovation on the Ford Taurus design...With great successes coming from the application of these tools in industry, Sandy was asked to speak alongside his teacher, adding to Deming’s speech that “As variation is reduced Quality will increase” (Deming), “all variation stems from design.” (Sandy Munro). He found that at the heart of it, DFA although very helpful, didn’t cover enough of the shortcomings happening in design and started to formulate and pioneer the concept of Design for Manufacturability (DFM)...No matter how much one uses traditional cost saving tactics, as long as the design was inherently hard to manufacture and riddled with subsequent quality issues (some even arising out of the act of shorting suppliers and receiving lesser quality parts and materials) you couldn’t truly save money....Truly, the underlying Deming spirit and philosophy is evident in all the Munro products and services.

Hear Sandy himself describe meeting Dr. Deming and what he learned when he became a self-proclaimed "Deming disciple":

'The best way to fix problems is by changing the design'

'The idea was to make money, not fill up the factory with automation'

So Munro and Associates was formed because of Deming's recommendation, with the explicit purpose of spreading Deming's message far and wide. Sandy basically copied his entire playbook from Deming’s principles, which are almost universally accepted as self-evident but which are, in practice, rarely executed with perfection. Here are some more Munro Live videos discussing Deming's influence on Sandy.

The Lost Deming Stories - Previously Unreleased Sandy Footage

Elon & Sandy: Design Philosophy Parallels | PART 1

Elon & Sandy: Design Philosophy Parallels | PART 2

Deming's philosophy was foundational for building the Toyota Production System and Munro & Associates, and now the Munro team and the man himself are gushing with praise for Tesla's design for manufacturing and overall corporate management and culture.

Think about that.

These are obviously not just hollow opinions, because the Munro team have visited hundreds of factories and are tearing apart the cars and painstakingly reverse-engineering them, so they have all the experience and all the data needed to form an informed opinion. The fact that Sandy Munro is saying this is a primary reason why I'm confident in saying that Tesla is following the same timeless principles that other champions like Toyota have used, except Tesla has raised the bar for execution in a way nobody even thought was possible, making Tesla the new gold standard for quality control and lean manufacturing. Sandy (along with the late Joseph Juran) has been the American champion of Deming/Japanese-style lean design and quality engineering for the last three decades since Deming's death, and he is explicitly telling us that the way Elon does it at Tesla is the best example of quality engineering ever. This matters."

Since there isn’t a single non-flawed person on this planet, it means every single human endeavor is being executed by *gasp* flawed humans. It might behoove certain flawed persons in this room to keep that in mind.

So, no. I don’t have difficulty explaining any of Tesla’s or SpaceX’s overwhelming successes.

Let me sum it up: The flaws of the guy in charge are not relevant to business success.

I think the flaws are relevant. Preferably an organization would be run by a perfect person. However it's not necessary.

In my mind I often compare Elon Musk to Bill Boeing. There are many parallels:

• Immigrant to America who didn’t receive much family support and whose fathers were quite displeased with the decision
• Serial entrepreneur with a string of major successes
• Engineer
• Single-most important leader in getting a new futuristic transportation technology industry off the ground from being a science project for wealthy hobbyists to having viable commercial impact for millions of people to actually use for transportation and freight
• Heavy focus on rapid iteration and scientific mindset
  • "I think we could build a better one" [said to Conrad Westervelt after seeing an early airplane prototype and deciding to co-found an aviation company at a time when "common sense" would've said that was foolishness]
  • "We are embarked as pioneers upon a new science and industry in which our problems are so new and unusual that it behooves no one to dismiss any novel idea with the statement that ‘it can’t be done!' "
  • "Our job is to keep everlastingly at research and experiment"
  • [In 1929] "They will someday regard airplane travel to be as commonplace and incidental as train travel"
  • "Let no new improvement in flying and flying equipment pass us by"
  • "Within a space of 12 years, an infant company with a personnel of less than a dozen men has grown to be the largest plant in America"
  • "We have already proved that science and hard work can lick what appear to be insurmountable difficulties."
• Deep vertical integration
  • United Aircraft and Transport Corporation - Wikipedia

Mr. Boeing achieved monumental success in one of the greatest American technology startup stories of all time. He was also a white supremacist who, after his vertically integrated transportation company was split up by being directly targeted by the F. D. Roosevelt administration, took his money and devoted much of his time in retirement to setting up several “Restricted Residential Communities” a few miles north of Seattle.

Innis Arden Racial Restrictions - Seattle Civil Rights and Labor History Project

I don’t mean to imply that Elon has this particular flaw, and I need to cut Bill Boeing some slack considering his social circumstances living in the early 20th century, but rather I do mean to illustrate that great things that profoundly change the world can be accomplished by people with deep flaws and even hatred in their hearts. Humans have problems. We're working on it.

Again a very good analysis!

My layman’s reasoning:

Legacy OEM’s R&D are mostly used for refreshing models every few years, those R&D hardly has any residual value outside of specific model’s lifespan.(Most reusable components are outsourced to suppliers)

While Tesla’s R&D is mainly towards software and chips, new manufacturing techniques and materials, that can be applied to all future products. Thanks to them only having 3 “aging” models(yes, Y is just a bigger 3), model specific R&D is minimal and probably can be ignored in comparison.

Hence, it makes sense for legacy OEM to count R&D in CoG while Tesla does not, and that also explains why Tesla R&D doesn’t correlate to sales.
(Tesla is a software company, yo!)

Plus the R&D Tesla is doing for car models is less for refreshes than for new products, because their portfolio of models is about to double soon with Semi, Cybertruck, Roadster, Robotaxi, Robovan.

Other automakers who already have an established portfolio are not preparing to double their total model count in the next few years.

The ENTIRE Financial Media (fully-funded by shortzes) proves that Wall St. works on emotion as much as on math and science. More, in the short term. And it's ALL short term to them.

This is why they chose to 'play the man, not the ball' years ago by attacking everything Elon says or does. Negative emotions are hard to separate out for most retail investors. Wall St. knows this, and works it. Hard.

Wall St. only cares about the $$$, not the Company. That of course is their bigest weakness, because it makes them blind to the obvious future.

Frankly I think the finance folks from the '80s got it wrong. Cocaine is the wrong drug for investing. 420 can be a performance-enhancing drug in many ways. Absolutely there are many people, places and times for which this substance is inappropriate, due to legal restrictions, medical contraindications, employment risk, needing to operate heavy machinery, etc. But for those of us who can and for whom it produces relaxation and creativity instead of anxiety and paranoia, it actually can be extremely beneficial. It helps with not reacting to FUD, with envisioning non-obvious ways the future might play out, and with making mundane spreadsheets seem strangely interesting. I am not kidding. This is not advice but I am saying it appears to have helped me quite a bit.

 

[AndrewZ]

It's a lot of noise. Wait until after the elections, noise will be reduce substantially. The democratic party knows their ratings are a dumpster fire but being tough on China is bipartisan so it's an easy agenda to get behind.

It sounds like you're bellybutton deep in the sand lol, the earnings call might include some questions/commentary on what might be coming with China and Taiwan or maybe it'll be deftly dodged.

But Elon knows what's coming, the West decoupling from China and the unwinding of this globalization experiment are not tied to US elections

 

[Todd Burch]

I've seen various media outlets reporting that expected EPS is anywhere from $1 to $1.02...so nobody can even get the expected number straight.

Fortunately it should be a decent beat regardless of the actual expected EPS. Also seeing several reports that "demand is in focus" for today's results. So I definitely hope Elon & team give a clear response to the demand concern tonight, and that response is "demand continues to not be a problem".

 

[Krugerrand]

TMC quarterly estimates spreadsheet is filling up! Thank you @Gigapress !

Hoping it is locked at the bell today and then kept for eternity as a historical record of Tesla's quest to rule the galaxy...err...sustainable energy I mean

TeslaMotorsClub Investor Casual Quarterly Estimates Compilation

Q3 '22 TMC Quarterly Estimates - 2022 Q3,. .,Summary Statistics <a href="https://teslamotorsclub.com/tmc/posts/7122581/">Gigapress' post in TMC</a> TMC Username,Revenue,Auto Gross Margin Excl ZEV Creds,GAAP Earnings per Share,Non-GAAP Earnings per Share,Comment,Revenue,Auto Gross Margin Excl ZEV...

docs.google.com

But he marked mine as a joke, which it is but not really. It’s like spreading manure on grass that doesn’t need any because it’s already growing faster than all the neighbor’s lawns. I’d be okay with that happening to the SP instead of the neighborhood dogs peeing all over it.

 

[Discoducky]

Chinese stocks apocalypse today. All chinese Ev stocks are getting close to hitting circuit breaker. Baba, Jd, etc also down. Most likely related to not releasing gdp numbers.

Likelihood the China GDP thing affects Tesla? I looked it up...

"due to adjustment to work arrangements"
"GDP was expected to have expanded 3.4% in July-September..."

China delays release of key economic data amid party congress

China delayed the release of economic indicators scheduled for publication this week, including its third-quarter gross domestic product data due on Tuesday, according to an updated calendar on the statistics bureau's website.

www.reuters.com

 

[Words of HABIT]

Same experience with young people, they go bonkers over my Model Y.

Just last weekend we went to pick up a friend and the neighbors kids (both barely over 10 years old) literally came running to check out my car. They had tons of questions and both want their first cars to be Tesla's. It will probably be a decade or so until either of them can get one, but the enthusiasm amongst young people for Tesla is palpable and I've experienced it many times first hand since buying my Model Y.

It is not just the newest generation that is enthusiastic about Teslas. For the last five months I have been fortunate enough to volunteer my driving services one day per week to patients that do not have means of transportation to attend their regular hospital treatments and appointments. Most are elderly, some come together with their adult children. So far in every case, this is their first experience in a Tesla. Win/win. I get to drive my Tesla. They get worry free transportation to attend to their treatments, and take their mind off of their treatments. Most have questions about the car (range?, how to you charge?...), the odd question about Tesla (where is it manufactuered?...), and to date only one single comment on Elon, this from an adult child accompanying their parent who stated "you know, Elon wasn't the original founder of Tesla." They were literally searching Elon on Google in my back seat. Smart ass. Safe to say they all come away with a great first impression of what Tesla really is. No doubt they will talk to their family and friends and coworkers of their experience.

There are many organizations that require volunteer drivers of others needing care. Look up these organizations in your local area, and volunteer if you are fortunate enough to be able to help.

 

[Gigapress]

TMC quarterly estimates spreadsheet is filling up! Thank you @Gigapress !

Hoping it is locked at the bell today and then kept for eternity as a historical record of Tesla's quest to rule the galaxy...err...sustainable energy I mean

TeslaMotorsClub Investor Casual Quarterly Estimates Compilation

Q3 '22 TMC Quarterly Estimates - 2022 Q3,. .,Summary Statistics <a href="https://teslamotorsclub.com/tmc/posts/7122581/">Gigapress' post in TMC</a> TMC Username,Revenue,Auto Gross Margin Excl ZEV Creds,GAAP Earnings per Share,Non-GAAP Earnings per Share,Comment,Revenue,Auto Gross Margin Excl ZEV...

docs.google.com

If we keep using this spreadsheet I will just make a new sheet using the same template and lock the old one. That way it’ll be easy to see historical estimates.

 

[Artful Dodger]

...I'm sure it's confusing for those that are uninformed and is causing a lot of uncertainty.

Curious - if you're privy to why...so why are people doing it to Elon Musk?

Yes, that's the reason they do it: to trigger uncertainty in the uninformed. This is old hat to the Media.

 

[Eugene Ash]

We’re all hoping you won’t consider Twitter to be a prettier girl than TMC and leave her. Other good posters were lured away by Twitter’s siren call and that has made this place a poorer place.

Forgive all those posters who are not able to stay on topic and drown out high quality posts like yours (and those of Gigapress and others). They mean well, but can’t help themselves. And forgive the handicapped moderating team for not being able to keep up.

In other words: please stay.

I took a dive there, and now i feel i have ADHD, and need to soap my brain. Signal to noise ratio is just not there. My gratitude to this forum of sage, thoughtful and optimistic individuals! You positively contribute to my sanity

 

[Krugerrand]

Since you're speaking to me, I absolutely am very flawed and I have always known that. So are you.

Your mistake is in imagining that "flaws of the guy in charge are not relevant to business success".
That phase is quite transparently incorrect. Everyone has them, but by definition 'flaws' inhibit success rather than enhancing it. That is a matter of definition. I need not quote the OED but you can look it up.

So, when this happens:
"Elon Musk can’t help himself. In an interview with CBS This Morning,the Tesla chief executive admitted to overreaching on Model 3 production targets and factory automation, disappointing both investors and customers. Yet in the next breath he claimed matter-of-factly that Tesla will triple or quadruple production rates this quarter, well beyond those initial lofty targets."
Forbes Apr 13, 2018
There were direct material negative financial consequences of Elon's flaws.
Before the world screams too loudly of how stupid I am for that quotation, it does reveal a nearly unique strength Elon has above other people.

He is often the first person to admit his own mistake and accept blame for it, ratter than blaming other people. That allows him to take risks and accomplish things very few humans have been able to do.

Still, that does not mean that his flaws have had no negative effects. It means that his flaws do not have the extent of negative consequences that they would ahem if someone else would deny or deflect the mistakes.

We should not have an echo chamber. We should not imagine that any Musk-led enterprise intends to have a monopoly on anything.

As for ever thinking that Mr. Musk is not perfect is a traitorous or stupid statement: Please get a grip on reality! TMC is not a religious organization, it's a group of people who are united in admiration for the finest publicly held enterprise of which most of us know.

Why attack somebody for pointing out a truthful and relevant fact?
If I really thought the flaws were terminally material explain why I've been a Musk supporter since X.com?

A) Wasn’t talking to you specifically unless the shoe fits. I used your post to respond to a prevailing theme of late. Believe it or not this is a public forum on the Internet. There are thousands of people we’re all speaking to. If my post doesn’t apply to you, rest assured it applies and resonates with someone else.

B) Didn’t attack you, disagreed with you and told you why and still disagree with you on virtually every point and your listed reasons.

C) Same old tired arguments, same old repetition of stating the obvious, same old stack of assumptions because someone doesn’t agree with you, SSDD.

D) No, I’m not putting you on ignore. I still have enough respect for people (only God knows why) to not put anyone on ignore. On any given day I can choose to scroll past posts, read them and not respond, or read them and respond. Surprise!

 

[geometro]

I've seen various media outlets reporting that expected EPS is anywhere from $1 to $1.02...so nobody can even get the expected number straight.

Fortunately it should be a decent beat regardless of the actual expected EPS. Also seeing several reports that "demand is in focus" for today's results. So I definitely hope Elon & team give a clear response to the demand concern tonight, and that response is "demand continues to not be a problem".

FWIW, Bloomberg has EPS at 1.011, and EPS (GAAP) at 1.049

 

[ZsoZso]

Except some institutional guy will ask Elon a question about Ukraine or Starlink and then the wheels fall off (e.g., Covid).

We desperately need a flat tire on his car tonight.
Or get his jet grounded if he is planning to fly in for the call.
Anything to keep him away from the call...

 

[Krugerrand]

My theory is that Musk is dealing with worldwide scale. The world isn't evenly distributed and a large part of what Tesla has been doing has been in an echo chamber of the Internet tech industry. As that industry disrupts more (especially into Robots and Transportation with Tesla), there's 100+ years of embedded adoption from Oil & Gas that matches with government, productivity, and (like the US) cultural infrastructure for some, if not, most countries. There's a lot of varied interests just learning about Tesla and there needing to be a lot of education in regards to not only Electric Vehicles, but so much of all the other things that Tesla and Elon Musk does.

...I'm sure it's confusing for those that are uninformed and is causing a lot of uncertainty.

Curious - if you're privy to why...so why are people doing it to Elon Musk?

Negativity, and that’s what this is at its core, all stems from fear. It’s a human biological survival mechanism. There’s actual science to support it.

It takes very real, conscious effort to think and be positive. To see the bright side, to view all things in a positive, productive manner or even neutral way.

And this is where people pipe in about how it’s important, nay, essential to view all sides including the negative/bear/dark et al…. But note I’ve never said otherwise. The assumption that because I won’t criticize Elon and point out his many flaws must mean I deify him is just another fear based negativity.

Money fear, failure fear, insecurity fear, inferiority fear, someone is more than me fear, someone has more than me fear, someone is smarter than me fear, someone has control over my destiny fear, the list and nuances are innumerable.

Every single time someone gets upset that Elon said this or that on Twitter, it’s all based on some type of fear. Mostly here it’s money fear, but we have a few other kinds. He’s ruining the brand, the business, the SP etc… The inability to control him and thus the financial security associated with their bet/shares themselves drives the fear.

There’s more but I *fear* I won’t be able to handle the disagrees.

 

[Buckminster]

Recommended guidelines for posting tonight:

1. If in doubt, don't post or put it in off topic galore
2. Add value - don't post SP or quotes from the presentation
3. Group your points together into bigger posts
4. Don't post until you have caught up and confirmed it hasn't already been posted
5. After posting, check to see if you were ninjaed (someone else posted the same thing before you) and delete your post if so

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