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

[Singuy]

I saw someone reporting that it was due to curb weight. (EDIT: Checking for a source) The seven seat model Y is some 300 pounds heavier, which allows it to fall into the truck/SUV category. Thus incentivizing inefficiency .


Tesla is financing now? Is that new, or just in China? We used 3rd party financing as it was our only option in 2019/2020 in California.

Central Bank of China have been cutting rates for the past for quarters. Also we have them slashing auto loan rates, especially for NEV. So I see this trend continuing. How far is 3.5% from regular rates I can't figure out.

China's Move to Slash Rates on Auto Loans Boosts EV Sales - SCMP

China's move to slash interest rates on auto loans is boosting the sales of electric vehicles, the South China Morning Post reported.

www.google.com

 

[Chunky Jr.]

https://twitter.com/x/status/1609115242587656192

So weird to see a knowledgeable bull abandon his thesis. Yes ASP will come down. Like he just decides to forget how Tesla executed BEFORE 2022 when they dropped prices continuously while margins expanded. ASP will come down but so will COGS in a recessions. Austin/Berlin being at 5000/week has major impacts on gross margin…margins might not be consistently over 30% but even if they’re like 27-28%, now Tesla is overvalued and can only be valued more if FSD works or they crank out 4680 in heavy volume?

It’s like he completely ignores the effects of the IRA and Megapack.

Really clear example of someone’s emotions putting them in the despair part of the investing cycle

He's basically saying that all the videos he put out in the past several months are total BS. Day after day he'd put out one or more videos, with detailed numbers, about how Tesla was going to rule the world and now he's completely flipped? That doesn't sound rational at all.

 

[Artful Dodger]

Lee should not be trusted on 4680s. He's been badly wrong on the entire topic since Battery Day. Trust someone like Jordan Giesige (The Limiting Factor), who has put in the work to understand batteries, but sadly that's not the Tesla Economist.

Tesla Economist on Twitter: "The profitably of $TSLA comes down to DBE for cathode. Or FSD to pass regulation. Investing in Tesla is like betting on one of those two scenarios to occur." / Twitter​

 

[bkp_duke]

Lee should not be trusted on 4680s. He's been badly wrong on the entire topic since Battery Day. Trust someone like Jordan Giesige (The Limiting Factor), who has put in the work to understand batteries, but sadly that's not the Tesla Economist.

Tesla Economist on Twitter: "The profitably of $TSLA comes down to DBE for cathode. Or FSD to pass regulation. Investing in Tesla is like betting on one of those two scenarios to occur." / Twitter​

Wonder if we have another neroden situation: bull sells at the bottom and becomes a bitter bear. Hope not.

 

[JSML]

The current market cap is 385 billion. If you look at the historical PE ratio of S&P 500, it averages 16 to 1 since inception.

As a thought exercise, what does this valuation imply? Based on a 385 billion market cap, a PE ratio of 16 would mean an annual profit of 24 billion a year. We can view this as the over / under line for the eventual or terminal annual profit for Tesla. If you believe Tesla will earn more than 24 billion a year, eventually, the stock is a buy.

This seems to be a very low bar (for us bulls at least) given the context:

1) The world is transitioning to EVs. Subsidies will super charge demand for the next few years at least.

2) Tesla will eventually sell more than 6.5 million cars a year. 6.5 million is approximately 5 times 2022 volumes. Tesla has yet to mass produce the Cybertruck, Semi and a lower priced compact. 6.5 millions seems reachable with just the 3 and the Y.

3) Tesla's FSD will generate incremental profits more and more as the the technology improves and the take rate improves. Tesla will continue to increase the price of FSD and therefore the profitability.

4) Tesla energy will continue to grow and generate profits. The demand is enormous.

5) The economy will turn around at some point. We will see another period of prosperity and heightened consumption and demand.

6) There is no other company in the world that has the enormous capital, the supreme engineering capabilities, the experience in manufacturing, the leadership and the clear mission driving the company.

7) Tesla bot maybe the largest business ever.

8) One thing Elon has been consistent about is saying Tesla's execution has been flawless. Given the market opportunity, execution is the key factor driving performance. The bottom line is if Tesla executes, there is no stopping Tesla's growth.

I've been all-in but started selling part of my holdings when the share price broke 180. As of yesterday, I am again all in and leveraged long using margin.

 

[AudubonB]

In the past 24 hours a number of you have posted your lists of items you think - or hope - Tesla will have accomplished by the end of the upcoming year.
These and any more will be enshrined in Tesla Significant Milestones 2023: Your 31/12/2022 lists here which, as shown in the opening post, will remain open through the month of January. It is a “sticky” thread: always at the top of the Investor Sector list of posts.

Please copy, cut/paste or otherwise duplicate the existing ones there and, of course, all others jump aboard. And we’ll all hope there is a better outcome contained in it than in the TSLA price predictions of a year ago….

 

[FSDtester#1]

I had a prediction that came through. I was using my son Ryan's name for Tmc and he was born on thr 27th.. hence Ryan27... I knew if he ever peeked over my shoulder he would freak. He did and said Dad change your name right now! So I did.
So when you see posts from this account it isn't some noob trying to suck you in for a Trolling Bonanza. It's a non noob tolling /s.

Happy New Years Tmc... I think we made some $$ on TSLA this week?
Feels good to say that... been a while!

Edit: As goodwill for 2023 I have unignored all on my list except 1 person who shall remain nameless. I believe in giving everyone a second, or 7th chance

 

[StarFoxisDown!]

Poor guy could be on tilt. "There but for the grace of God go I."

Yeah if you read through the guy's tweets from the past few days he's effectively thrown in the towel and essentially bought into the FUD narrative.

He seems to relate a lot of it back to Elon's comments in that Twitter space where Elon made the comment that "Tesla was willing to make zero margin on more volume". What he clearly is lacking here is that Elon is using rhetoric and hyperbole to put pressure on the Fed.

As we've seen time and time again, the market bottoms before a recession and there's still not consensus that we're about to enter a material recession at all. I've said it a few times before, but people acting like a Fed Fund rate of 4-5% is the end of the world....and yet all throughout the 90's the Fed Fund rate varied between 4-6%. The S&P PE ratio was still in the 16-20 range. The markets didn't crash. We're at the peak of the rate hikes and the data has been going in favor of rates dropping in the 2nd half of 2023.

He also seems to completely ignore that Elon has used this rhetoric in the past. In fact, multiple times Elon has stated that Tesla's goal for net income margin is in the mid to low single digits. He's said this multiples times over the past few years...And yet, Tesla posted net income growth and levels way beyond that for many straight quarters. Tesla's pricing over the past year and a half have been direct contrast to Elon's statements about their net income.

And let's not forget that Elon changes he's hyperbole quickly in both directions. Just 8 months ago, Elon was saying we should all get ready for the Roaring Twenties again . You can't take Elon's rhetoric word for word because he puts in a ton of hyperbole...in both directions.

 

[mongo]

I saw someone reporting that it was due to curb weight. (EDIT: Checking for a source) The seven seat model Y is some 300 pounds heavier, which allows it to fall into the truck/SUV category. Thus incentivizing inefficiency .

Curb weight is meaningless.
GVWR only comes into play if using the off-highway criteria and it does not have 4WD. However, it still needs 4 out of the 5 clearance criteria.

523.5: https://www.govinfo.gov/content/pkg/CFR-2017-title49-vol6/xml/CFR-2017-title49-vol6-part523.xml

I may be misinterpreting thos clause though: " Provide, as sold to the first retail purchaser, greater cargo-carrying than passenger-carrying volume, such as in a cargo van; if a vehicle is sold with a second-row seat, its cargo-carrying volume is determined with that seat installed, regardless of whether the manufacturer has described that seat as optional"

I assumed that meant seat up. If it can mean cargo with seat installed but down, then that would explain the other OEM's two row models and the two row Y should be an SUV also.

 

[Max Plaid]

The twitter comments, after ignoring the useless posts, are actually pretty useful and some make good points.
Basically, to summarize,

1. This could be preplanned. Not sure if this is a blackout period, but some claim it is. If that’s the case, would likely be preplanned.

2. He could do this in order to cash out the value.

A more bullish interpretation is that exercising when SP is low is most tax efficient. But if this was preplanned then that might just be a coincidence.

I don’t know. I’m just not ready to get excited about this just yet for those reasons.

Zach normally sells shares on a regular basis, which I suppose all comes from pre-planed sales, probably from granted options

This is the first time I've seen that he's bought and not sold, but maybe I wasn't paying full attention

 

[Stretch2727]

Probably what traditional auto wants, sadly, things to be disputed and in legal limbo for as long as possible.

I think there is a risk of new legislation to cut off the path that a leased vehicle falls under the commercial vehicle section. The republicans may even be on board to cut this off. This clearly was not the intent and completely blows up any need to for local sourcing on the batteries and minerals. The manufacturers that don't meet the requirements will just lease vehicles with juicy low lease payments or will hide the subsidy from some consumers with the complexity of the lease structure.

I know Tesla has some contract restrictions on end of lease purchases, but the law does not prevent you from buying at the end of the lease so this is what most manufacturers will allow. The "sale" restriction is that you cannot have a lease that mimics a purchase with payments over 80-90% of the life of the vehicle.

We basically end up with a $7500 subsidy for any and all EV's sold in the US. Leasing will become the primary mode to acquire and EV, especially those over the price caps. It is also a way to avoid any of the income restrictions as well. This is clearly not what congress intended when they passed the IRA act.

 

[Artful Dodger]

I've been all-in but started selling part of my holdings when the share price broke 180. As of yesterday, I am again all in and leveraged long using margin.

You had me until this sentence. Did you not read what Elon wrote just yesterday? You 100% certain JPow won't take another swing at the economy? Treasury just tried to snuff Model Y sales.

Are you betting only money you can afford to lose?

Margerine is bad for your lardery.

 

[wipster]

I had a prediction that came through. I was using my son Ryan's name for Tmc and he was born on thr 27th.. hence Ryan27... I knew if he ever peeked over my shoulder he would freak. He did and said Dad change your name right now! So I did.
So when you see posts from this account it isn't some noob trying to suck you in for a Trolling Bonanza. It's a non noob tolling /s.

Happy New Years Tmc... I think we made some $$ on TSLA this week?
Feels good to say that... been a while!

Edit: As goodwill for 2023 I have unignored all on my list except 1 person who shall remain nameless. I believe in giving everyone a second, or 7th chance

It just ain't the same. And #1? When you start pumping out videos like WholeMarsCatalog, then we'll talk about it...
/s

p.s., take advantage of the discount to get the wifey an X before year-end?

 

[Chunky Jr.]

I wonder why Tesla China is already doing incentives for Q1?

https://twitter.com/x/status/1609229632808824832

 

[thesmokingman]

Except that Elon didn't deny the car was setup to easily add air suspension or that they would not decide to add it later. The report Elon denied in 2020 said Tesla is releasing air suspension. Elon replied that is false and they have no plans to add air suspension to the Models 3&Y.

This was obviously to prevent buyers from withholding purchases so they could get one with air suspension. It doesn't mean that in the future they won't decide to add it. I would be interested to know if recent production still has the unused brackets or if they deleted them, at least for the time being.

PPL seem to be obsessed with air but it's a no brainer that it won't exist as it would then directly compete with the X. Bagging it would bring that Y price up 15K ish napkin math and that would destroy the cost/efficiency equation imo. Tesla is better off spending the man hours to tune the coil spring setup, which they did. The first/initial coil spring damping was terribad for real world roads that drove ppl to dream of a bags. /irony

 

[StarFoxisDown!]

Wonder if we have another neroden situation: bull sells at the bottom and becomes a bitter bear. Hope not.

Sure sounds like it.

Pretty much all of his "takes" about the headwinds facing Tesla for the next 1-4 quarters completely ignores the tailwinds which could easily offset those headwinds.

- COGS dropping dramatically in a recession
- US production for the first time increasing thanks to Austin which means more FSD % compared to historical data + every new FSD sale/subscription will have much higher revenue recognition rate, increasing margins. FSD doesn't need regulation approval to realize this
- Currency headwinds for the past 2 quarters will turn into tailwinds if US goes into moderate to deep recession. Already seeing this play out in Q4.
- Austin/Berlin averaging 5000/week for Q1 has massive implications for gross margins and big impact to logistics costs
- Shanghai utilization rate was low in Q2 and Q3. Not only is Shanghai back up to Q1 levels, but it has now exceeded. This has big impacts for gross margins. Possibly enough to offset the discounts that Tesla China has been offering.
- China is going to be coming out of Covid in Q1 and will likely be announcing massive programs to stimulate the economy.
- IRA effects for consumer demand in the US but also direct credits to Tesla for battery production
- Tesla Energy going into it's growth phase. We're essentially going to see Energy go through it's initial Model 3 phase where gross margins exploded due to higher volume thanks to the S curve.
- One massively overlooked thing is the Tesla ecosystem in relation to Insurance and FSD. As Tesla insurance rolls out to more US states, Tesla insurance adoption rate will increase dramatically. Any Tesla owner using Tesla insurance gets discount for having EAP and/or FSD active on their Tesla. Thus this encourages more Tesla consumers to get EAP or the FSD subscription. Tesla could easily lower FSD subscription to say $150/month and we could easily see a massive adoption rate happen in real time which would do amazing things to margins.

The list is massive in 2023. A US recession could mitigate how much those tailwinds impact the share price. But to say it's doom and gloom for Tesla unless they get FSD regulation approval for Robotaxi is beyond ignorant.

 

[Stormy24]

I wonder why Tesla China is already doing incentives for Q1?

https://twitter.com/x/status/1609229632808824832

Hmmmmmm to sell more cars ? Just a hunch.

 

[Chunky Jr.]

Hmmmmmm to sell more cars ? Just a hunch.

It is unusual to have incentives on the first day of a new quarter

 

[StarFoxisDown!]

Will be quite interesting to see what, if any, changes there are to the Tesla website over the weekend. Or at least over the next couple of weeks.

Lots of potential changes.

Is a SR Model Y going to be introduced under 55k?

Will all LR/P Y's have a 3rd row as standard and have a price bump?

Will 3 LR be reintroduced under the 55k price cap?

 

[EVWatcher]

It is unusual to have incentives on the first day of a new quarter

With Chinese new year in the middle of the quarter and an effort to get rid of the delivery wave selling more vehicles than normal at the beginning of the quarter than normal makes sense. Delivery wave made it so beginning of quarter local sales were undesirable before. That’s no longer true.

Just my guess