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

[Artful Dodger]

Keeping production costs constant and decreasing the selling price from $66k to $55k would require a 69% increase in sales units just to breakeven.
Increased production does decrease the production cost per car a bit but nothing too significant that would make the $55k scenario work.

Going from 3K/wk for Model Y at Giga Texas to 5K/wk is a 67% increase. That already reaches the break-even point for gross profit, and takes ~100K gas-guzzling PHEVs sales off other's books each year. I fully expect this production milestone to be reached in Q1.

If Tesla can build these additional cars as 4680/AWD 5-seaters then COGS will go down too, so both gross profits and gross margins will go up. And the competition will get locked out of 100K sales. "No soup for you".

I think this scenario will happen by March if the IRS doesn't blink first. I expect the public backlash alone aimed at D.C. to exceed the volume reached during the 'Make-Joe-Say-Tesla" campaign. Be careful what you wish for, Uncle Joe.

 

[petit_bateau]

They sell mainly/mostly/predominately ICE cars. Did you know this before you posted?

32 GWh into cars alone, not so shabby

 

[thx1139]

I suspect the reason he’s anti-subsidy is because he was concerned they won’t be applied equitably after the first seriously lopsided attempt to create this legislation.

Clearly he was right.

Yes it is clear that at the end of 2023 the company that will easily sell the most vehicles that get the tax credit will be Tesla.

 

[elasalle]

https://twitter.com/x/status/1610681726950576128

 

[elasalle]

Tesla shares will bounce back despite poor delivery numbers, says shareholder Gary Black

Gary Black, Future Fund managing partner, joins ‘Squawk on the Street’ to discuss why he thinks Tesla shares could go higher despite all the negative headlines about the company.

www.cnbc.com

 

[traxila]

32 GWh into cars alone, not so shabby

View attachment 892314

You always have the most excellent charts!

Any numbers from 2022?

How can we tell how many BEVs and how many PHEVs?

 

[The Accountant]

How many more Model Y will be sold at $47,500 after the rebate? Also, wouldn't Wright's Law reduce the cost of Goods/car?

Hmm - a 47,500 Model Y LR would sell like hotcakes. How quickly can Austin ramp?
I ran scenarios at units of 400k, 500k and 600k (with small decreases in Cost of Goods to reflect fixed cost per car reductions)
Numbers look interesting. These scenarios would keep the competition up at night.

 

[StealthP3D]

Uncle Leo assumed Elon cares about single individuals. He does not.

"Light of consciousness of humanity" Love in "general"? Thumbs up from Elon.

Tim, Dick, Jane, Harry and Leo? They can F right off. His response to a child disowning him? "Can't win em all!"

Elon's ruthlessness got him to where he is but you gotta call a spade a spade.

I'll call a spade a spade:

If they have goodwill towards humanity, I love ruthless leaders running companies I own! We need more of that, so I wish they were all as ruthless as Elon!

Wallflowers need not apply!

 

[StealthP3D]

And this from GM.

"GM plans to build on this momentum in North America in 2023, growing EV market share with nine EV models on sale, including the Chevrolet Bolt EV and Bolt EUV, which was the bestselling mainstream EV series in the third and fourth quarter."

I just don't know how they can say something like that. Model 3 and Y are not mainstream? First time I realized I am driving an odd ball car.

Models 3&Y sell in too high of volumes to be considered mainstream. /s

 

[NicoV]

Remember Berlin likely should have sold about 30k. With higher production and exports from China, would have expected that total EU number to be higher. This likely means there is quite some inventory in EU too or just in transit.

Europe needs more inventory (in ships at sea) to unwind the wave:
October 5561 deliveries
november 31437 deliveries
december 55342 deliveries
We need tens of thousands of deliveries more in the first month of the quarter to get a more even distribution. Even with Berlin‘s 3rd shift reaching 4500/week, we still need several ships from China in the first month of the quarter.

 

[Artful Dodger]

This assumes they will be able increase production in order to make up the difference in demand. I doubt they can.

Let's apply some simple microeconomics theory, given the assumption that demand increases at twice the rate that price decreases: (could be more, pick your own constants, the math is the same)

• Price before Discount: $64,990
• Price with Discount: $55,000-7,500 = 47,500
• Price Discount % = 27%
• Demand increase w. Discount = 1.27 * 2 = 1.54 x

So this tells us Demand will go up by ~54% if Tesla drops the 5-seater price to qualify for the IRA subsidy. Separately, we've be told "Tesla plans to increase U.S. production by 70% in 2023", and that "demand is an issue".

This excercise demonstrates that it's not an issue, is it? Tesla's pricing power yields near endless demand within the range of possible production, and shows a path to maintaining profitability while doing so.

The Competition? Not so much. If Tesla drops their retail by $10K, then a measley $7,500 subsidy is no longer sufficient incentive to buy an inferior car

 

[15Peter20]

Just landed in my inbox:

Get 6,000 Miles Free Supercharging

Due to logistic delays at the end of last year, we have a limited selection of vehicles arriving this week. In case you missed the opportunity to take delivery in December, the deadline to unlock free Supercharging credits has been extended. Take delivery of your new Tesla vehicle by January 9, 2023, and you'll get credits for approximately 6,000 miles of Supercharging—on us. Terms and conditions apply. *

 

[generalenthu]

Hmm - a 47,500 Model Y LR would sell like hotcakes. How quickly can Austin ramp?
I ran scenarios at units of 400k, 500k and 600k (with small decreases in Cost of Goods to reflect fixed cost per car reductions)
Numbers look interesting. These scenarios would keep the competition up at night.

View attachment 892317

May be they can do a Lemur type model Y that is midway between the Y SR and Y LR, make it RWD to sell for 55. That will still have insane demand. Price the LR with some decent options at 62k (included hitch, etc.). Add 3 rows at 66k. People will select based on whether the can get the credit or not.

LR 5 seat would still be a great deal with a 4k price cut. Probably good for 50% yoy growth in the US.

Of course the 3 LR AWD Highland comes in at 55 too. Roughly same COGS for Y lemur and 3 LR AWD.

The only problem with this is, the backlog and wait times will probably grow too fast again the in the US. Who knows what will happen with sourcing requirements phasing in next year.

 

[H Mak]

This is now on the front page of The Telegraph website

 

[AndrewZ]

May be they can do a Lemur type model Y that is midway between the Y SR and Y LR, make it RWD to sell for 55. That will still have insane demand. Price the LR with some decent options at 62k (included hitch, etc.). Add 3 rows at 66k. People will select based on whether the can get the credit or not.

LR 5 seat would still be a great deal with a 4k price cut. Probably good for 50% yoy growth in the US.

Of course the 3 LR AWD Highland comes in at 55 too. Roughly same COGS for Y lemur and 3 LR AWD.

The only problem with this is, the backlog and wait times will probably grow too fast again the in the US. Who knows what will happen with sourcing requirements phasing in next year.

I keep coming back to this, even beyond the percentages

A vehicle needs to be defined as a "new clean vehicle" to qualify for any of the credits, and that definition will soon exclude vehicles with batteries containing any components from foreign entities of concern (but of course China is the target).

After next year, a vehicle will be excluded if its battery contains any critical minerals from foreign entities of concern.


Considering China's dominance of the supply chain right now, I seriously wouldn't be surprised if ID4s, Toyotas, and almost all the others will qualify for approximately $0 after this year. If companies want to get this credit and especially get this credit when it becomes a point of sale discount, they need to be moving fast and moving hard like yesterday.

 

[traxila]

Just landed in my inbox:

Get 6,000 Miles Free Supercharging

Due to logistic delays at the end of last year, we have a limited selection of vehicles arriving this week. In case you missed the opportunity to take delivery in December, the deadline to unlock free Supercharging credits has been extended. Take delivery of your new Tesla vehicle by January 9, 2023, and you'll get credits for approximately 6,000 miles of Supercharging—on us. Terms and conditions apply. *

How curious.

Why the cut off of January 9. What is the significance of that?

Looks like Tesla is into using some levers to induce demand, which is fine.

But only for five days?

 

[Ocelot]

TSLA follows Tesla. While fundamentals can be decoupled with price for a while, it all eventually comes together. To see TSLA go back up, they need to accelerate timelines. The semi, they noted deliveries begin 2019! The cybertruck is late. At this point, 2.5 years after last non-commercial vehicle release, another should be released. Where is the small, affordable vehicle?

 

[loquitur]

Better to be complaining to the IRS that the other manufacturers appear to be making questionable submissions.

Makes sense -- if the beef is that gas-guzzling hybrids don't serve the spirit of the IRA, suggest
that the ones that *are* eligible at least register non-trivially better than the national average auto MPG,
which is what, 26 mpg these days?

 

[petit_bateau]

I have not seen any reply from you to someone's objection that Chinese batteries won't dominate grid storage outside China because of national security concerns. Do you have an opinion on that?

Sorry, missed that. Busy with day stuff.

It matters for some people, mostly they buy Tesla Megapack for the comfort blanket.

Most people/utilities it is not a killer for. And the ones who are leery about China but like the price will do due diligence on the software/hardware and control the resulting security risks. In the energy game the big players are well aware of this issue, and have been doing it (managing hacker risk, most especially nation-state hacker risk) a long time.

Anecdote: back in ?? 2015 ?? an Asian nation wanted to buy a load of 'energy' systems (including storage) from me/us. Item number one on their list was do the systems dial home. A big no-no for them They flew three people half way round the world to confirm our answer. When the US Army bought similar systems from us a short while later they simply trusted our answer. I had done my DD on both buyers, they were not the same buyer. There are a lot of layers on the onion in the energy game.

This is not new.

Huawei still sell mobile phone systems to most of the world's nations. I think (memory) it is only US, UK, Aus that blocked them. Energy stuff is ditto, i.e. manageable and tolerated. I could give you many other anecdotes from my HV-grid days on the same subject, all to the same end, i.e. bottom line it will not stop the rise of China LFP OEMs. Whatever the Silly Valley chatter.

 

[thx1139]

May be they can do a Lemur type model Y that is midway between the Y SR and Y LR, make it RWD to sell for 55. That will still have insane demand. Price the LR with some decent options at 62k (included hitch, etc.). Add 3 rows at 66k. People will select based on whether the can get the credit or not.

LR 5 seat would still be a great deal with a 4k price cut. Probably good for 50% yoy growth in the US.

Of course the 3 LR AWD Highland comes in at 55 too. Roughly same COGS for Y lemur and 3 LR AWD.

The only problem with this is, the backlog and wait times will probably grow too fast again the in the US. Who knows what will happen with sourcing requirements phasing in next year.

If backlog gets to big then Tesla stops taking orders and says they will be ready to take orders again starting on X date.