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

[Gigapress]

...or it could not, because of ramp-up cost, not using 4680s, and using Giga Nevada, which might be sub optimized with a lot of manual labor involved. But Semis need to come out to satisfy upset corporate customers and to gain enough confidence in a certain deployment threshhold to invest in a highly automated process.

But naw, everything's automated and Tesla Bots will make that *sugar*, meaning gross margins of >60%. More likely to hear highly upvoted 2000 word posts around that lol.

4) The IRA credits are unfair you can't factor those into anything. Those were created to help legacy auto survive, which need a LOT of help due to their apathy/incompetence the past decade. So of course the IRA is going to print stupid money for everyone in the renewable energy industry, from Tesla to Enphase to ABML, etc.

I would recommend reviewing my post @bkp_duke was referring to. I calculated an estimated $80k IR Act subsidy for each Semi sold. It would be pretty pathetic if Tesla didn't make good margins. You are welcome to think factoring the subsidy in is unfair, but believe it or not, I decided to do that because it's real money Tesla will be actually receiving and I am not claiming the Semi will come out of the gate with excellent margins unsubsidized.

$80k Subsidy for Tesla Semi in USA???

I'm starting to think the Tesla Semi is likely to sell exclusively (or almost so) in the United States for the foreseeable future. I underestimated the benefits of the Inflation Reduction Act with respect to the Semi on my first readthrough. It's looking like the cumulative impact could be roughly on par with Volkswagen's entire market cap.

I am not a lawyer or tax expert and this is not investment advice. Please let me know if you think I'm misinterpreting this.

From what I'm seeing, there's three credits at play here:

• $45/kWh for battery manufacturing
• 10% of value of critical minerals going into the batteries
• 30% clean commercial vehicle credit, up to $40k max

The 30% credit I had missed earlier when presenting this table a few weeks ago in this post. $180k was the 500-mile Tesla Semi list price from back when the order page used to show a price, so we would max out at the $40k limit which is 22% of the price. That's still amazing.

https://www.congress.gov/bill/117th-congress/house-bill/5376/text
Is the Semi a "qualified commercial clean vehicle"? It looks like it to me.

Section 30D(d)(1)(C) requires for eligibility that the vehicle shall be produced by a "qualified manufacturer" which is defined just based on reporting requirements with which I'm pretty sure Tesla is compliant:

Section 30D(d)(1)(D) requires that the vehicle "is treated as a motor vehicle for purposes of title II of the Clean Air Act".

26 U.S. Code § 30D - Clean vehicle credit​

www.law.cornell.edu
This credit lasts through 2032 if the law stays in place.

One question here is whether the "incremental cost" limit will apply instead. I have no insight regarding how the IRS will interpret and enforce this rule or exactly what diesel semi truck would be considered the "comparable vehicle". Some of them cost the same as the Tesla Semi, but most cost like $100-140k from what I can find online. So there's a reasonable chance the IRS might be restrictive and the Tesla won't get most of this credit, but I think that's pretty unlikely since the Tesla isn't a specialty truck or a sleeper cab or anything like that, and it looks like those are the trucks that cost like $180k.

However, this subsidy goes to the customer buying the truck instead of directly to Tesla, but that doesn't really matter because the impact on the supply and demand equilibrium is the same either way (one of the first things I was taught in economics school). Thus, I expect much of the benefit to flow through to Tesla via pricing much higher than $180k. Since Tesla has more power in this relationship due to having the best truck on the market by a pretty big margin, I guess that probably around $30k of the subsidy will come to Tesla via higher pricing. That's fine anyway, because $180k is a freaking steal because of the savings on fuel, maintenance, inspection, insurance and longer vehicle longevity. Tesla could easily charge $250k+ and customers would still want it.

I don't have details on Tesla's material costs for high-nickel 4680s going into the Semi, but I guess it's around $50/kWh or so, meaning that the 10% government rebate is worth $5/kWh in addition to the $45/kWh for $50/kWh total. If someone knows of a good way to estimate I'd like to know. I didn't try hard on this because it's a minor impact of a couple bucks per kWh either way. Tesla hasn't said the battery size but it's rated for 500 miles and "<2 kWh/mile" so that is around 1 MWh. $50/kWh = $50k/MWh = $50k/Semi

$30k + $50k = $80k total subsidy benefit estimate.

If we hoped Tesla would start close to maybe 15% gross margin on the Semi in the next couple years with the $180k price (or maybe $200k with inflation adjustment since 2017 when price estimates originally published, then it's now going to be about 60% gross margin after adding in the subsidies.

$80k total subsidy.
60% gross margin.
$80 BILLION cumulative subsidy if Tesla can sell 1 million Semis in USA by 2032

Tesla's entire market cap was a bit less than $80 billion this time in 2019. Only about 150 companies in the world have market caps greater than this. This is the financial equivalent of Tesla acquiring Siemens for free. $80B obviously isn't a precise estimate but it's gigantic by any measure so I don't care much about the accuracy. This equates to about $20 of direct Semi subsidy impact per share of TSLA.

The subsidy will be approximately $20k less for the 300-mile range semi due to the smaller battery, but the manufacturing cost is lower in the first place and Tesla can make about 69% more of them with a finite battery supply (500/300= 1.67 plus a bit for better efficiency due to reduced weight). Any way I look at this, I like the numbers a lot.

Is it a coincidence that Tesla has announced preliminary deliveries to PepsiCo starting in December? I'm starting to think it isn't, because the credits come into effect on January 1st.

 

[Singuy]

Pretty sure Musk purposely not addressing if he needs to sell more for Twitter in hoping people will front run him so he can buy back in for peanuts. His silence on the matter and people selling like crazy after his Twitter offer announcement is doing wonders for him. He may end up close to the same number of shares prior to the sell for twiiter if the drop keeps going.

 

[FielderJones]

There are a lot of articles talking about Semi + 4680

Do you have any more current than the nearly two year old elektrek one? I suspect a lot has changed since that statement.

 

[RobDickinson]

Do you have any more current than the nearly two year old elektrek one? I suspect a lot has changed since that statement.

There are plenty here is one from Jan this year

Tesla Producing Semis for PepsiCo With 4680 Batteries | Torque News

Tesla is producing Tesla Semis for PepsiCo and using 4680 batteries and this should be by the end of January, 2022. The Semis were built in Giga Nevada and will use the new 4680 battery cells. Pepsi is installing megachargers at their facility in California.

www.torquenews.com

Truth is no one outside of tesla knows what is going on

 

[Zextraterrestrial]

IMO probably not, there is no need to try funky designs in long distance freight trucks hauling very heavy loads.

So the steel cans of 4680s are potentially additional weight that could be replaced with thinner aluminium cans for 4680s targeted at the Semi or energy storage.

But what about a stainless folded cyber semi . Could look pretty sick
I wonder if the idea of semi & 4680 is just speed of capacity production mainly to get immense semi production starting with Y in TX. Ideal sized egg for all aspects optimized. Density, temperature, charge/ discharge characteristics, cost & materials

 

[Knightshade]

Semi 500 Miles at full capacity with full cargo load on level ground, no cargo restrictions compared to a regular class 8 truck.

When he first said on level ground I thought he was making a Nikola joke.... when he followed it up clarifying he meant it couldn't get that range fully loaded driving UP a hill I guess you could say I was....semi disappointed.

 

[Knightshade]

Now with the statement by Elon that the FSD beta would be released to all new buyers and anyone who previously purchased it, the question I have is will it be recognized as revenue in 4th qtr 22? That was not stated nor asked which I find curious... possibly not going to recognize the revenue while it's still in beta?

So waiting on version 12.69.420?

I would expect wide release (and it'll only be for NA) would allow recognition all remaining deferred revenue for NA buyers who bought after ~March 2019-- because they will have gotten everything originally promised during sale.

I do NOT believe they could recognize remaining deferred revenue from pre-3/19 buyers since they will still need to deliver significant added functionality those folks were promised... but that's a matter of some debate (and probably one better done, as it has been repeatedly, in the FSD specific forum)

That said, the pre-3/19 group ought to be the smaller of the two groups- and they paid massively less in the first place since it was a 2-4k purchase for most (on top of EAP) so I expect it's a relatively small % of the total deferred rev.

 

[RobDickinson]

find me a 500mile long hill.

 

[EVDRVN]

When he first said on level ground I thought he was making a Nikola joke.... when he followed it up clarifying he meant it couldn't get that range fully loading driving UP a hill I guess you could say I was....semi disappointed.

That's a fully loading question.

 

[generalenthu]

Shares outstanding somehow increased only by 4M, despite stock-based compensation expenses

A lot of accounting uses diluted shares that account for options. If the options are in the money it's counted towards shares outstanding. This may have reversed due to drop in stock price.

 

[vikings123]

Pretty sure Musk purposely not addressing if he needs to sell more for Twitter in hoping people will front run him so he can buy back in for peanuts. His silence on the matter and people selling like crazy after his Twitter offer announcement is doing wonders for him. He may end up close to the same number of shares prior to the sell for twiiter if the drop keeps going.

I'm not a Tea leaf reading expert but I thought it was telling that Elon said something along the lines of "It's obvious that me and my investors are overpaying for Twitter but it has potential to be bigger than it's current value".

I took that to mean that financing is either finalized or he believes he has the investors needed for this transaction, aka no more TSLA sales. Assuming blackout period ends in two days Shorties will definitely attack tomorrow and Friday to cause harm to Elon in the anticipation that he needs to sell more. I hope Gary Black continues with his "Elon needs to sell 5B TSLA" narrative.

That said, Elon sold the day after shareholder meeting even urging long term investors to buy the dip so who knows . Good news is we will have a discount regardless and the next 10 days will be popcorn worthy.

 

[Cattledog]

find me a 500mile long hill.

This is the best I got, knowing the longest downhill has to also be the longest uphill. Right? Right??? After earnings humor to help the mood here...

Where is the longest downhill stretch of road I could ride my bike without ever having to pedal?

Answer (1 of 7): A short google search allowed me to find that the longest uninterrupted road descent in the world is is 117 km (72 miles) long and it is in Peru between Concocha and Paramonga. The starting point is at 4095 m (13440 ft) of altitude, the end at 16 m (52 ft). Incidentally, if you ...

www.quora.com

 

[wipster]

I would expect wide release (and it'll only be for NA) would allow recognition all remaining deferred revenue for NA buyers who bought after ~March 2019-- because they will have gotten everything originally promised during sale.

I do NOT believe they could recognize remaining deferred revenue from pre-3/19 buyers since they will still need to deliver significant added functionality those folks were promised... but that's a matter of some debate (and probably one better done, as it has been repeatedly, in the FSD specific forum)

That said, the pre-3/19 group ought to be the smaller of the two groups- and they paid massively less in the first place since it was a 2-4k purchase for most (on top of EAP) so I expect it's a relatively small % of the total deferred rev.

Hope you're right, still interesting that it wasn't addressed in the call. Maybe everybody was stunned as it's a pretty big deal IMHO.

 

[MC3OZ]

But what about a stainless folded cyber semi . Could look pretty sick
I wonder if the idea of semi & 4680 is just speed of capacity production mainly to get immense semi production starting with Y in TX. Ideal sized egg for all aspects optimized. Density, temperature, charge/ discharge characteristics, cost & materials

https://www.truckinginfo.com/10133366/trends-in-class-8

“While there’s certainly ongoing uncertainty, we’re encouraged by recent positive trends in the market, and hope that the effect of COVID-19 on Class 8 North American sales continues to subside moving into 2021,” says Mack’s Walsh. “We expect the total North American Class 8 market to be 220,000 vehicles this year, and currently anticipate a market in the range of 250,000 vehicles next year.”

40K semis per year for the US market might be a good initial production rate, it may be smarter to add new production in China and Europe before expanding US production capacity.

If the average factory has a run rate of 40-50K per year, that probably factors into the design of the production line.

If demand really takes off, then a second much larger Semi factory in the US can be built.

 

[jhm]

Blind Faith!

$4T market cap for Tesla is not hard to arrive at. Here goes:

Revenue in 2022 ~$84B
Annual growth rate 50% for 8 years
Revenue in 2030 $2.15T = $84B×1.5^8
Profit margin 10%
Earnings in 2030 $215B
Price/Earnings ratio 20X
Market Cap $4.3T

These are identical assumptions from the original Blind Faith Price Target of $700B for 2025, only difference is starting at 2022 with $84B in revenue and looking out to 2030.

When Musk says that he sees a path, I take that to mean that he sees more than enough product opportunity to keep growing revenue at 50% per year for another 8 years. And furthermore this portfolio of products excludes Optimus.

I'll leave it to others to speculate about a product mix that hits $2T in revenue in 2030. I am sure there are multiple paths for Tesla.

This time Blind Faith is not so blind. We actually have the track record of 50%+ annual revenue growth from about 2013 onward. We know that Musk and Tesla can handle this pace of growth. We also know that Tesla sits on a product pipeline that has much more potential than what 50% annual growth can realize. How long have we been waiting for the Semi, Cybertruck, and Roadster. These could have been brought to market sooner, if Tesla had had the bandwidth and supply chain for it. There's plenty of pent up demand just waiting for Tesla to bring it to market. I am quite willing to believe that Tesla has more product opportunity for the next 8 years than it can realize growing at only 50% per year. That's how it's been for the last 8 years, and I see no reason why it can't continue another 8 years. Musk sees a path.

Believe it!

 

[Zextraterrestrial]

250k class 8 semis sold in US per year(from the 2020 article 2 posts up…lots of info in there!)
20% of the market of semis is a good target for a few years out probably?

Props to all of the badass analysts here! Execellent work @Papafox @The Accountant @Gigapress & several others not as ‘vocal’ .Like Elon,finance is not really my thing. It’s only because of ‘this’ that I got into stonks and carstelsas…and hillclimb racing
To Mars and beyond! Not for me but whatever floats ur lotus

 

[RobDickinson]

50k PA would put them second in USA in terms of sales volume for class 8 trucks

 

[Boomer19]

Looking back at some numbers, Drew said they were making 1,000 packs per week (4680 cells). This suggests the current run rate is 4.25 GWh. And Musk said growing exponentially. Wasn’t clear what the split in terms of location, but feels like 4680 ramp is finally hitting it’s stride.

i thought he said they were doing 1k/wk a quarter ago (or was that kato rd?)

 

[Zextraterrestrial]

50k PA would put them second in USA in terms of sales volume for class 8 trucks

View attachment 865565

First probably…
More beer than water today

 

[wipster]

50k

I believe that was the number for 2024