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Tesla, TSLA & the Investment World: the Perpetual Investors' Roundtable
- Thread starter AudubonB
- Start date
See above for the link to the comprehensive Twitter thread by The Limiting Factor.
shrspeedblade
Rideshare Monkey
I had a similar thought, if Tesla is committed to growing volume over maintaining margins it creates an even more daunting obstacle for "the competition that's always coming" who I suspect are still struggling to produce EVs at a meaningful profit.
On another note:
A strong, independent person holds their own opinions.
A wise one knows when to keep them to themselves.
I continue to be disappointed in Elon- and yes I know it's Elon- and possibly more so by the board that more wisdom isn't being exercised especially in light of the fact this is a PUBLICLY traded company. That has benefits, but it also has responsibilities.
I'm going to start a separate thread to discuss what we as retail shareholders might do to voice our concern over how those responsibilities are being met. Heck, it can't be any more absurd than many of the proposals I have to vote on for the investors meeting every year!
I will be surprised if one isn’t presented at the Q4 call.
I don't recall him saying they would sell at negative margins, but I certainly got the impression they were laser focused on increasing production even if it mean significant reduction in prices. And I totally agree that this should terrify legacy automakers. If the idea of Tesla selling a Model Y (Perhaps the non LR model) for $45k with $7,500 in government rebates doesn't make them pee their pants, the effect it has on their vehicle sales sure will.
We're eyeballing 2 new Gigafactories coming online in North America in the next 18-24 months. It's very likely one of them will be starting production of the lower cost Tesla model. (Or maybe it'll be produced in Texas which would potentially bring it online faster). Both of these facts should terrify them.
But first, they have to survive the Cybertruck being launched opposite their breadwinning truck lines during a recession.
SunCatcher
Member
I think we need to give Santa the boot.
Cryptkeeper
Member
IMHO a smart financial move, as long as you maintain a long horizon and don't allow the interim roller coaster ride to scare you off.
Prices need to come down for us to have conquered inflation and to return to normal, steady and stable growth. The Fed is mostly focused on Core PCE when it comes to price inflation metrics, and cars (both used and new) + car parts are a not insignificant piece of that pie.
I thought he sounded great and reasonable. It definitely reassured some of my concerns. A lot of the angst concerning the SP is mostly macro related, but Elon certainly added to it with some of his commentary on T, his lack of or curt responses to prior reasonable questions and primarily due to his selling billions of shares at perhaps the worst time possible. Nevertheless, I really appreciated him making time, answering questions in a forthright manner and simply being available to shareholders. Good times ahead.
He already commented months ago about his fears about the macro economy as did many other CEOs like J. Dimon. Nothing new on that end. I feel much better about Tesla as a whole after hearing him speak tonight.
JRP3
Hyperactive Member
I feel like I'm nitpicking here.
Profits and margin are not the same. I feel like negative profits are possible (though unlikely) but I seriously doubt Tesla is going to sell cars at a loss (save perhaps during a vehicle ramp up).
Tesla Megapack data:
www.twitlonger.com
TwitLonger — When you talk too much for Twitter
TwitLonger is the easy way to post more than 140 characters to Twitter
Most companies that grow 50% yoy does not make a positive profit margin. Tesla is in a unique position in which it is making a net income and has a PE while growing revenue that fast, hence why it's special. Elon feels that if the recession hits hard and the feds keep rising rates, Tesla will maintain revenue growth but will maintain a break even net profit margin Amazon style.
Hmmm, Professor Elon? That would be one hell of graduate course... probably the first of many in the University of Mars!
Here's the best synopsis I've seen of the discussion so far:
In my head "Margin" is your per vehicle profit where Net Profits are what you end up with after operational expenses are taken into account. So negative margin would mean selling for less than COGS.
Maybe that's not the official definition. I think it's what we were taught in business school though... but that was 25 years ago so maybe I've crossed things up.
Either way, at this point Tesla posting a loss would but maintaining sales volume would mean massive reduction in the price to consumers. That would be devastating for the rest of the industry.
There's gross margins and net margins. Gross margins is ASP-COGS while net margins is the bottom line.
There is ZERO possible way Tesla will sell a car at a flat or negative gross margin. They have never done, not even during the model S ramping days. And if they were to do this, Tesla will have brutal -1.7B + losses from a net profit stand point every quarter
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