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

[15Peter20]

Is this big push Elon's answer to the critics?
"Tesla is fine, T*****r is not relevant to Tesla, SP is disconnected from fundamentals, just look at the P&D" etc

 

[Discoducky]

I know...we tried to reserve one this summer.

The price isn't high enough, that is too long to wait, there should be a way to get it sooner to pay more. That is how pricing energy in times of need works.

Their site allows up to 1000 Megapacks bought at a time for only $1000 down on a ~$2 billion purchase. That should be corrected. A bad actor could easily manipulate the backlog.

Imagine placing several orders for 1000 MPs in every state. Here's one order for one state

 

[15Peter20]

-3.5%.......
THIS is a simulation. Looks like even the clever fowl misunderestimated the absurd depths the SP could sink -to.

 

[Mengy]

Yeah we could but that’s where the current outlook of $33k gross margin on the Y is so important. Tesla could reduce prices aggressively to be able to keep pushing more volume while making profit margins that still are fantastic. Competitors don’t have that luxury in a recession with cars like the RAV-4 and CR-V, with margins currently more like $5-10k and relatively high operating expenses that need to be covered. Price decreases have nonlinear effects. Every $1k cut from the price invites more new customers than the previous $1k cut.

Troy’s doubt about Tesla potentially not even achieving 70% growth in the US next year due to insufficient demand also neglects that Tesla doesn’t offer the base RWD version these days. It’s not very difficult to add it back to the menu and tool up production. A $50k 2023 Y with 260 miles range and a $7.5k credit making the effective price $42.5k would have a mob of customers beating down a path to Tesla.com and if that one is maybe $2k cheaper to manufacture then Tesla would still be earning about $50k - $36k + $3k = $17k gross profit.

This is why we have a tremendous amount of safety margin for having demand to achieve volume growth plans next year and the demand question really is more about exactly how fat the margins will be.

I agree Tesla is positioned beautifully to weather any deep recession we might experience. They have immense pricing power with the margins they have. Still, 2023 could be an extremely bumpy ride for TSLA what with possible crashing auto markets and Tesla pulling levers to keep sales up, which could become a huge hit to margins.

OR, next year might be a pleasant recovery year with the market going up and everything running fine. We'll all find out over the next couple of months, we just have to hold on no matter what happens.

 

[NooB_cat]

-3.5%.......
THIS is a simulation. Looks like even the clever fowl misunderestimated the absurd depths the SP could sink -to.

Only comfort is it's the whole market this time

 

[tslagreen]

-3.5%.......
THIS is a simulation. Looks like even the clever fowl misunderestimated the absurd depths the SP could sink -to.

All stocks are red today - the color of Santa.

 

[Mengy]

Only comfort is it's the whole market this time

The problem is TSLA is starting from an already exacerbated low point. We go down with the market BUT we go down on up days too. This trend over the past few months has really taken the wind out of TSLA in a huge way.

Approaching a current PE of 40 right now.

 

[SOULPEDL]

Most common theories are the push to try and miss the 50% projected growth by as little as possible-- or that there's some sort of refresh of HW (radar, maybe cameras/driving computer) coming in January and they want to clear as much old HW inventory as they possibly can. Could be some of both, or neither. The fact that they appear to now be offering discounts in Canada and the EU though seems to support one or both of these above simply the "avoid IRA delays" theory that was floating when 3750 came out.

My screen shows this today, quite tempting, would need to sell some shares though.

Is there any chance newest Model Ys have 4680s out of Fremont/Kato? Ya, that would be quite the hardware refresh right under people's noses, but one can dream and it is the stuff that makes Tesla amazing.

 

[Opus BC fan]

Q: Why?
A: Because [insert made up s###]

HODL

 

[Englishman]

I hope we are all right and this thing doesn't go to zero.

/s

HODL

 

[Nocturnal]

I hope we are all right and this thing doesn't go to zero.

/s

HODL

Once unemployment numbers go up a bit I hope the market will realize that the baby has been thrown out with the bath water.

 

[Discoducky]

Don't, if you get margin called, 'make it right' by adding leverage to further increase margin. I dug myself a deeper and deeper hole with every trade, up until the stock price dropped so low that I couldn't go any further.

So sorry to read your post and you've nailed the lesson here. Margin, like any other tool, can be used in different ways.

All the best!

My status is that I have margin on a tiny fraction of my accounts and have been adding collateral to them for about 3 weeks now. While this isn't fun or easy, it isn't digging a deeper hole.

 

[jschwefel]

Once unemployment numbers go up a bit I hope the market will realize that the baby has been thrown out with the bath water.

I’m with you!! I keep hoping TSLA will stop this relentless downward spiral! Then the voice in my head screams “HOPE IS NOT A STRATEGY!!!”

EDIT: Pretty soon however, hope is all I’ll have left.

 

[mongo]

The price isn't high enough, that is too long to wait, there should be a way to get it sooner to pay more. That is how pricing energy in times of need works.

Their site allows up to 1000 Megapacks bought at a time for only $1000 down on a ~$2 billion purchase. That should be corrected. A bad actor could easily manipulate the backlog.

Imagine placing several orders for 1000 MPs in every state. Here's one order for one state

View attachment 887863

With the current backlog of 18 months, bad actors will be filtered out before they have an impact.

Agreement calls out a 90 day max project review and 30 day max acceptance period.

Your Reservation and Pricing.

The price and other terms in your Megapack Reservation Summary (attached) are non-final estimates based on the information you submitted when placing the Reservation. Tesla will contact you soon and begin working with you to complete the scope of Tesla’s obligations and the design of the System, for 90 days or longer if necessary (the “Diligence Period”). If Tesla does not contact you to finalize the scope and design of the System within 90 days, you may terminate this Reservation upon notice to Tesla, and Tesla will refund your Reservation Fee. You agree to cooperate with Tesla during the Diligence Period including by promptly providing information and documents reasonably requested by Tesla. Delays in receiving requested information may delay Tesla’s diligence or result in Tesla declining to proceed with the System as permitted in Section 2.

2. Project Agreements. After Tesla completes the design of your System, Tesla will send you Project Agreements including the preliminary System design, schedule, and performance tests and guarantees for your System, finalized pricing for the System. You must sign the Project Agreements, or reject them in writing, within 30 days after Tesla’s delivery of the Project Agreements. If you don’t execute all of the applicable Project Agreements within 30 days, you will be deemed to have rejected them, and these Terms and the reservation of your System may be terminated by notice from Tesla, without liability to Tesla.

 

[Gigapress]

I agree Tesla is positioned beautifully to weather any deep recession we might experience. They have immense pricing power with the margins they have. Still, 2023 could be an extremely bumpy ride for TSLA what with possible crashing auto markets and Tesla pulling levers to keep sales up, which could become a huge hit to margins.

OR, next year might be a pleasant recovery year with the market going up and everything running fine. We'll all find out over the next couple of months, we just have to hold on no matter what happens.

Even if Tesla needs to pull those levers (mainly price reductions) overall average auto margins are almost certain to rise in my estimation.

Ys cost about as much to make as 3s, if not a bit less, but with current differences in prices, Ys sold at today’s ~$68k ASP earn about double the profit that 3s do. Almost all the growth next year will be coming from Ys, so the upcoming mix shift alone is a huge tailwind. S&X also make huge margins and early CT deliveries will probably be the high-margin premium variants like it was with the 3 in 2018.

Then we still have:

• Fremont’s relatively inefficient production and expensive labor being diluted by the other factories
• Berlin and Texas producing Ys for even less cost than the previous generation, thanks to front castings, structural 4680 packs, better factory layout, etc.
• Plummeting logistics costs from the 2021 freight cost spike cratering back towards historically normal levels and Berlin and Texas reducing the average shipping distance.
  • It’s not cheap to transport Ys from Shanghai all the way to Belgium and pay a 10% import tariff upon arrival. This ridiculous journey around the planet is required only because Tesla doesn’t build enough of them locally in Europe yet.
• $3k-$4k per vehicle battery subsidies in USA
• ASP in Q3 still having been mostly from orders placed before the massive March and June price hikes
• Economies of scale in general
• Deflation of prices for raw materials and parts relative to peak in Q3 (according to guidance from Elon and Zach).
  • Also, a severe recession scenario would tend to come with even lower prices for parts and materials because of shrinking aggregate macroeconomic demand easing pressure on the supply. If other companies are reducing or canceling orders then that gives Tesla more negotiating leverage if they are once again the only growing car company amidst an economic downturn.

With all these positives that are pretty much guaranteed to happen, it’s hard to come up with an estimate of margins not increasing next year. That would require basically a historically severe recession, the ramp of Berlin and Texas being totally FUBAR on both volume and cost, and collapsing demand for Tesla vehicles all happening simultaneously. I put the odds of that being so low not to be worth considering.

 

[jkirkwood001]

I would add even more caution on the CT. Lots of those reservations are "want to have" discretionary spends. I find the expansion of Energy sales more hopeful for profit, if it is expanding as quickly as some posted also the Semi deliveries (say $400k each?) will help.

Just noise from the field but we are heavily dependent on business activity and we've been informed of deep cutbacks in orders from our mills, price cuts have started and production quotas, some extreme will be implemented in January. Largest buyer went under 4 weeks ago, 2300 lost jobs directly and it will close 10 large sawmills indirectly. At least in construction things seem to be looking very bleak for 2023. At the same time all the builders new equipment and truck fleets that are financed have become more expensive due to rapidly rising finance charges. They'll wrap up projects this winter but then the summer looks to be brutal and we'll see lots of used equipment hit the auction block. Anecdotal info from the field. I think @Mengy is spot on regarding the possible need to temper expectations on vehicle demand and pricing.

To me the Semi and energy products that are business friendly ie have a positive ROI are the products that will differentiate Tesla in 2023 and maybe 2024. The semi production of 50000 units at $400000 would deliver $20B in 2024 if they can do it.


I think you'll see price compression on the megapacks next year, lots of competition coming but if they can even run that assembly plant at half capacity that would be great.

On your point about energy, the Tesla Economist has a good update on prospects for Megapack's contribution to the bottom line in 2023-24 - up to $22 B in annual revenue at 53% profit margin:

It would be a nice surprise - and a very good omen - to see Energy add $1B in Q4.

 

[nativewolf]

The price isn't high enough, that is too long to wait, there should be a way to get it sooner to pay more. That is how pricing energy in times of need works.

Their site allows up to 1000 Megapacks bought at a time for only $1000 down on a ~$2 billion purchase. That should be corrected. A bad actor could easily manipulate the backlog.

Imagine placing several orders for 1000 MPs in every state. Here's one order for one state

View attachment 887863

all orders get calls, at least this summer. We held off as there is a flood of competition coming and at that time did not know what ira would do.

Thrilled to see the demand. Frankly they need 2 more facilities today.

 

[Sancho]

What is the opposite of irrational exuberance?

 

[ElectricIAC]

What is the opposite of irrational exuberance?

A Chevy Bolt.

 

[tslagreen]

I agree Tesla is positioned beautifully to weather any deep recession we might experience. They have immense pricing power with the margins they have. Still, 2023 could be an extremely bumpy ride for TSLA what with possible crashing auto markets and Tesla pulling levers to keep sales up, which could become a huge hit to margins.

OR, next year might be a pleasant recovery year with the market going up and everything running fine. We'll all find out over the next couple of months, we just have to hold on no matter what happens.

Can we just get to 2023 already. 2022 has been brutal.