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

[dhanson865]

While I agree that they shouldn't pre-announce/ take pre-orders for the next Model, I'm not so sure I'd call it the "Osborne Effect". Next model should be less capable than the Model Y, not more appealing. If it competes too closely with the Model 3/ Model Y, Tesla is going to have a huge problem with overcapacity on those lines as their customers flock to the cheaper platform.

There needs to be a big enough gap between the new car and the Model 3/Y for Tesla to continue producing their current lines at capacity and sell them at a profit.


PS: Apologies for the slightly pedantic correction.

Real simple way to make the smaller car not eat into 3/Y sales and make it a better car.

It turns out a chunk of car buyers are whiny cry babies about wheels. Make the smaller car and put 15" aeros on stock (16" aeros if you must) and it'll push any "the wheels are too small" cry babies over to 3 or Y for 18", 19", or 20" wheels.

The wheels and the tires would be noticeably cheaper (keeping costs down) and it would extend range bringing down battery costs (on top of wheel/tire cost savings). It's a virtuous cycle.

Just don't offer any OEM wheels on it within 2" of the size on the Model 3 and it will still sell like hotcakes to the price conscious and the posers will cry about having to pay for a Model 3 or Y to get "real wheels".

Yes some would buy the smaller car and pay for aftermarket wheels, but most buyers would just consider that too much work.

End result Tesla gets to make a noticably cheaper car without having to remove features. It's a first principles win.

 

[dm28997]

Twitter is expanding financial information,
Twitter Financial.
Perhaps better algorithms than Google. Dow, Reuters, Market Watch and WSJ.
Some are willing to pay $100/month for good financial data

 

[Artful Dodger]

Haha, that's the Trojan Mule for you: yesterday he was here telling us that Tesla deliveries in the U.S.A would be up 75% in 2023 vs 2022 (a number he made up, not Tesla guidance).

Now, 24 hrs later, (on a hot-take to a yr-end incentive), its "70% Tesla growth is at risk"

Troy Teslike on Twitter: "Let me simplify: Demand in the US with a $7,500 discount or tax credit = Q4 2022 US sales Tesla plans to increase US sales by 70% next year. The 70% increase is at risk." / Twitter​

Lol! You can't make this *sugar* up. Oh, wait... he did:

1. Demand in the U.S. is NOT equal to 2 weeks of sales at EOQ
2. the IRA subsidy is SEPARATE from December incentives
3. Tesla still has enormous room to cut prices while maintaining margins due to economies of scale as Telsa ramps its new Texas gigafactory
4. there are lots of other ways for Tesla to match demand to production beyond price incentives, such as SuperCharger miles, and free trials for premiums services such as Premium Connectivity, Enhanced Autopilot, and Full Self-Driving
5. No other car manufacturer will be able to keep pace with Tesla's offerings in the U.S in 2023; that's why Tesla will sell all they can make, and make good profits on each one
6. That's something no other manufacturor will do in 2023, since they lose money on every car they make. IRA rebates might help sell their cars, but they won't make profits.

So this constant stream of unprovable except-in-the-long-term negative conjecture demonstrates how any news or event is being used to push his narrative, one which conveniently can not be disproven for a year (but we won't forget).

This isn't analysis, it's peddling FUD. Smart investors will see through what he's doing, and act accordingly. Don't swallow it.

Cheers to the longs!

 

[Thekiwi]

Real simple way to make the smaller car not eat into 3/Y sales and make it a better car.

It turns out a chunk of car buyers are whiny cry babies about wheels. Make the smaller car and put 15" aeros on stock (16" aeros if you must) and it'll push any "the wheels are too small" cry babies over to 3 or Y for 18", 19", or 20" wheels.

The wheels and the tires would be noticeably cheaper (keeping costs down) and it would extend range bringing down battery costs (on top of wheel/tire cost savings). It's a virtuous cycle.

Just don't offer any OEM wheels on it within 2" of the size on the Model 3 and it will still sell like hotcakes to the price conscious and the posers will cry about having to pay for a Model 3 or Y to get "real wheels".

Yes some would buy the smaller car and pay for aftermarket wheels, but most buyers would just consider that too much work.

End result Tesla gets to make a noticably cheaper car without having to remove features. It's a first principles win.

No reason they couldn’t announce the smaller, cheaper to build car - but initially only the high end version of it (eg AWD LR/P and maybe FSD as standard) which would take its launch price above that of the entry level model 3 & Y.

Then once capacity has ramped only then start offering the RWD SR model.

 

[Carl Raymond]

This tweet is two things. Just passing it on.

1) Healthy scepticism that Lathrop has ramped to 25 megapacks/day in one quarter, as reported by not-always-accurate Electrek.

2) Possibly some good pocket money for the kids if anybody lives near.

https://twitter.com/x/status/1605766344863006721

btw
Felt like the 137 gap theory still holds after 24hrs. Was today red? Only at the close and a few other moments.

 

[⚡️ELECTROMAN⚡️]

Ode to 2022

Two thousand twenty two, a terrible year.
Full of uncertainty, doubt, and fear.
As Tesla plummeted lower each week,
I could not stem my awful losing streak.
While I doubled down with each fall of Tesla's stock,
Elon tripled down on his incessant crazy talk.
Here's to a hopeful '23,
I mean, how much worse could it really be?

Btw, a man from Nantucket informed me that was a limerick and not poetry.

You should tweet this to Elon.

 

[Gigapress]

He's so full of *sugar* leaving out the context.

Even more importantly, almost all the growth in the USA next year will come from Model Ys made in Texas.

Minimum Y price is $66k. Y Perf min price is $70k. ASP is probably about $68k after accounting for estimated mix and extras.

Average COGS globally (all models, not just Y) from Q1 '21 through Q1 '22 was $36k before inflation kicked in hard and the overhead on the new factories dragged on costs. It was $39.2k last quarter. Balancing out the cost improvements in Texas, some permanent inflation, and the fact that wages are higher in Austin than in Shanghai, I think $38k is a safe estimate for Model Y costs for Texas next year.

Model Y battery is about 80 kWh. With $45/kWh battery subsidy --> $3.6k bonus

68 - 38 + 3.6 = $33.6k gross profit per Y and just shy of 50% gross margin.

Now you might say, "well Tesla can't sustain $68k ASP on Ys next year". Oh really? Even with customers getting a $7500 discount coupon from Uncle Sam? The price might go down as the market is flooded with volume but certainly not by so much that Tesla can't sell everything they can make for 40% margin or more. Tesla could lower the price by 15 grand and still achieve ~35% gross margin and $19k profit per Y.

This is the basic mathematical reality and yet some people (*ahem* @Troy) are actually worried about demand in the US. This estimate might be off by a +/- a few thousand dollars but that doesn't really matter. The point is that we have a hit product to end all hit products and people have so much tunnel vision on Twitter distractions and the current stock price and end-of-quarter discounts that they can't see this. The only serious concern for Tesla's car business next year in the US is how fast Giga Texas can ramp. It's that simple.

Even crazier, the Y will likely claim the title of best-selling car in America in 2023 while earning these 50% margins at $68k ASP. The RAV-4 was #1 (excluding pickup trucks) in 2021 with 407k units sold. This suggests that the Y will even overtake the mighty F-series pickup family by 2024 or 2025 as Giga Texas's output continues to expand and prices are lowered to more affordable levels. Ford loves to run marketing campaigns touting that the F-150 has been America's most popular vehicle for more than 40 years in a row, but they will need a new slogan soon. My question is how many 300-mile range Ys could Tesla sell for $45k and 25% margin in 2026? Probably 1 million+ in the USA alone.

Cybertruck, S, and X will make up most of the remainder of the growth.

CT has demand absurdly far ahead of what Tesla could possibly produce in 2023. It would be a great success if Tesla could make 100k of them next year and they would all sell easily to a fraction of the 1M+ people waiting in line.

S&X still aren’t yet at peak sales volume achieved in 2017 yet the product is vastly better than it was then, as reflected in the $105k+ price tag customers are currently willing to pay. If prices go down anywhere close to where they used to be, I would imagine S&X sales can blow way past the 100k sales record set in 2017.

There is no demand problem. There is only a question of production ramps and how far above 30% auto gross margins will go in 2023.

 

[Cheburashka]

Tesla to freeze hiring, lay off employees next quarter - Electrek

Another wave of layoffs are coming at electric-car maker Tesla Inc in the next quarter, news website Electrek reported on Wednesday, citing a source familiar with the matter.

www.reuters.com

I think this is kinda bullish. Layoffs should bump the stock a lil even if its only temporary.

 

[kclifton]

I think this is kinda bullish. Layoffs should bump the stock a lil even if its only temporary.

I agree, this "layoff" seems like the typical restructuring where they cut 10% of the fat and reload with new talent.

 

[StealthP3D]

Don't know why Tesla won't just give out EAP for free. That has zero impact on margins, tho not that the last 9 days of deliveries will make a difference in margins with the discount.

If they give out EAP for free, then no one is paying for it. Assuming the underlying take rate is significant, that has a real impact on margins. Also, people who care most about EAP are already buying it so it's probably not as much of a demand lever as cold, hard cash discounts.

 

[wipster]

Tesla to freeze hiring, lay off employees next quarter - Electrek

Another wave of layoffs are coming at electric-car maker Tesla Inc in the next quarter, news website Electrek reported on Wednesday, citing a source familiar with the matter.

www.reuters.com

I think this is kinda bullish. Layoffs should bump the stock a lil even if its only temporary.

Ha. Reuters citing Elektrek who cites a source familiar with the matter... what a load of hooey.

 

[Cheburashka]

Ha. Reuters citing Elektrek who cites a source familiar with the matter... what a load of hooey.

Why? They've been right before.

 

[wipster]

Why? They've been right before.

Who Reuters? Not this month. They're the largest purveyor of FUD in the Tesla world. All this month they've been reporting that GigaShanghai would stop production for a week, according to a source familiar with the matter, even though GigaShanghai denied it. And Fred reported it like it was gospel. Don't trust anything from either of them, especially Reuters, they just post negative headlines that are later proven to be false.

 

[Krugerrand]

It’s between one to two weeks or more of output from Fremont & Austin - that’s tens of thousands of cars. There’s a $75m reduction to gross profit for every 10,000 cars with this current discount. Likely at least 20k cars being delivered in US between today and year end.

People receiving cars today are also reporting receiving the discount on their account (even though when they ordered it the discount wasn’t there or was only $3,750)

It’s mouse nuts. What’s the ASP of the cars x whatever # of cars and what’s it do to the bottom line vs inventory? Ie., 10,000 cars x $50,000 is 1/2B. And how is each situation going to be perceived by everyone who can’t see past the end of their noses? And how might each situation affect the SP? And which one of us is more concerned about how Tesla is currently being perceived?

If it’s all right with you, we can continue to disagree in silence.

 

[SmokyPeat]

You should tweet this to Elon.

Thanks, but I've never tweeted anything- though I do have an account. Consider it public domain if anyone wants to put it out there, lol.

 

[StealthP3D]

I don't know if this video from Lee has been posted here, but it is so good that it is worth viewing twice, and I did.

If anyone can find a flaw in any of Lee's numbers, please post your reasoning.

I think the 53% (best case) profit margin is too high, but in general Lee is in the right ballpark,

Cars and batteries being at the same per kWh margin is worth considering. Again I don't think Lee is far wrong here, but he might be slightly wrong.

I think energy will be a very lucrative market but I'm skeptical of any financial projections people are deriving from so little actual data. At this early stage, I would be happy with 15% margins. However, if margins really were comparable to cars on a per kWh basis, then, as Lee correctly points out, it would really allay the fears of those who constantly think Tesla is running out of demand because they could just allocate the batteries to megapacks and make the same profit.

I guess the big question Tesla doubters will be raising next is how many CEO's of companies in the electricity business would buy megapacks from a man who Tweets things against their highly esteemed idols like Elizabeth Warren and Dr. Fauci? Everyone knows executives in the energy business would be highly offended and would have to buy megapacks at higher prices from other providers who have CEO's who Tweet only sweet things!

/s

 

[SmokyPeat]

Breaking news: Enphase CEO insults the intelligence of his workers, tells them to stop being so stupid. According to persons familiar with the matter, multiple employees say Badrinarayanan Kothandaraman, an immigrant from India, is often over-bearing and rude. He regularly demeans employees when he tells them to "Stop being so stupid". One of them told Investor's Business Daily the entire department is demoralized and productivity suffers under harsh criticisms routinely doled out by the inconsiderate CEO. Also, he recently relocated 150 high-paying Enphase engineering jobs from US soil to his native country of India , without first consulting with the affected engineers or their families. One employee told IBD that his inconsiderate behavior is creating widespread discontent within the company.

/s

Enphase Energy CEO Says You Should 'Stop Doing Stupid Things'

The Enphase CEO has a long name. But his advice for success is short and sweet. It boils down to two traits.

www.investors.com

Enphase Energy CEO Says You Should 'Stop Doing Stupid Things'​

This story could have taken such an unfortunate turn for the worse had Chanos shorted Enphase and incentivized Linette Lopez to do a little "investigative journalism". The point is, anyone can be made to look bad, even if they are not doing anything nefarious. This is the power of the media to construct misleading narratives that tend to feed off each other when done over an extended period. Everything most people know about Elon Musk is filtered through the mainstream media.

Your job, as an investor, is to filter out the stuff that doesn't matter. Elon is still the same person who has built multiple multi-billion dollar successes from nothing. He will never stop.

Wow, thanks for that article. Probably about time I did some due diligence on what is now my largest holding. Badri sounds like a fantastic CEO. Feeling even better about Enphase now!

 

[traxila]

7500 discount for EOQ was in the bag and anyone paying attention knew it. It was either that or have 90% of your buyers wait three or four weeks for the clock to strike 2023 while Tesla sits on inventory.

How this is supposed to affect 2023, I don’t know. It only happened because of the way the IRA is being instituted. Anyone casting shade on 2023 because of what is happening now is full of sugar, they are guessing. 2023 will have discounts built in, and it will be taxpayers funding it, not Tesla.

The bears last hurrah for this round.…. Looks like good chance the lows will be in Q1, unless the P and D pulls through with 460 / 425 which could definitely happen, in which case we should be at or near the low. Right now it is all about random people proclaiming random beliefs with certitude. Some of them will be right and get to play prophet for a while.

Sorry for everyone that is permanently financially damaged because of leverage. I qualify to a degree, but it was off of winnings, so I will ask anyone who cares to look to console other people. Anyone not on margin, your choice is simple. If you really believe Tesla has peaked or is close to peaking as a company then sell and lick your wounds or lost profits. If you believe Tesla will be selling three million cars or so in 2024, not counting any other suddenly found profits in an exploding energy division, then sit back and enjoy the ride.

oh, and one more thing:

CYBRTRK

 

[ElectricIAC]

Don't know why Tesla won't just give out EAP for free. That has zero impact on margins, tho not that the last 9 days of deliveries will make a difference in margins with the discount.

Nobody would buy FSD then.

 

[vikings123]

7500 discount for EOQ was in the bag and anyone paying attention knew it. It was either that or have 90% of your buyers wait three or four weeks for the clock to strike 2023 while Tesla sits on inventory.

The fact that they are offering a $ 5000 incentive in Canada is potential proof that they are aggressively looking to clear inventory. AFAIK there aren't any new tax rebates being offered in Canada. So maybe it's the new highland refresh or something exciting that will be announced shortly.