BYD was a Munger purchase, after he met with the founder. They've also reduced their share of the company from 20%+ to 15%.
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Tesla, TSLA & the Investment World: the Perpetual Investors' Roundtable
- Thread starter AudubonB
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BYD was a Munger purchase, after he met with the founder. They've also reduced their share of the company from 20%+ to 15%.
StealthP3D
Well-Known Member
It's always difficult to value a company that is increasing in value so quickly because, the shorter your time horizon, the less the current value. That just means it will be worth different amounts to different people. I think even to a trader with a 6-month time horizon it's probably under-valued now in terms of risk/reward but I say that without having a good idea of how much negative or positive pressure the current mix and scale of open options positions will apply to the share price in terms of unwinding market-maker options hedges over the next few months.
The way I look at Tesla is that it's a transformational company that is likely succeed in multiple areas. The automotive industry alone can easily justify the current valuation and then some, even if Tesla continues to represent only a fraction of all automotive market segments. And I would be quite surprised if other very promising revenue streams don't bear fruit. Things like FSD, energy, Optimus, etc. I base that on Tesla's established ability to solve difficult problems in a manner that ends up being efficient and profitable in the market. Essentially, Tesla has good management and obviously now it extends beyond Elon Musk who created it. This is the kind of company that if you don't buy it this year, because you think it's over-valued, you will always think it's over-valued and therefore will never own it. Even as it 5X and 10X in value. I'm betting that, in a lot less than 5 years, people will wish they had invested more in January of 2023, not less. But hindsight is 20/20.
Of course, it could suddenly start failing on all cylinders and languish under $100. But that's a pretty wild projection considering that it's currently best in breed in the most rapidly growing automotive segment (BEV) and the largest visible potential future competitor is BYD who would have to scale rapidly to about 10X their current BEV production (while Tesla continues to expand at projected rates) to provide much real competition to Tesla (fight for the same sales). The market for quality BEV's at affordable prices is much larger than either can supply for years to come.
The following strays away from responding to the comments by @Max Plaid and into addressing the large number of comments about the potential threat of BYD:
One factor that will likely affect BYD's speed of scaling production, looking forward from here, is that BYD is not without some ICE baggage that requires winding down. Those costs and distractions will make it more difficult for BYD to scale at mind-boggling speeds. It does look like BYD will likely be a major automotive player with BEV's, I just don't think they threaten Tesla in a meaningful fashion currently, due to the size of the automotive market relative to the current sizes of both Tesla and BYD. BYD is a rising star but there is no way to predict their relative strength vs. Tesla in 5 years. My guess is Tesla will still have the upper hand based on Tesla's stronger financial position now, their Supercharger Network in all major automotive markets, their rate of original innovation in production and materials science, and their current lead in scale of BEV production. Add to those advantages, Tesla's more mature sales and distribution and service networks in all major markets except for Asia. But these assumptions need to be regularly re-visited. Unfortunately, BYD's financial reporting has even less clarity and trustworthiness when compared to Tesla's. It's just the nature of Chinese companies vs. those listed in the US exchanges. This is not a western bias, it's a well-established fact.
People will always try to find threats to Tesla and that's a good thing. Where it turns bad is when they use ignorance of the facts and faulty reasoning and fear and doubt to convince people that a threat exists when it's only a distant threat that may or may not turn into a real threat. Perspective is everything and things tend to get blown out of proportion when it comes to potential competitive threats vs. real competitive threats. There is a thing called "time" and it's a big deal.
This is not a race that will be won or lost in a year or two, so anyone treating this like a blow-by-blow prize fight, in terms of monthly sales in limited geographical areas, will simply be shouting from the rooftops that they are a newbie investor with too much fear and not enough clue. BYD and Tesla can happily co-exist for a number of years, even if they both scale at breakneck speed. I see no particular advantage that BYD has over Tesla and lots of disadvantages. So, watch it unfold over longer periods of time, resist the desire to get all dramatic while comparing small slivers of data in small geographical areas and update your analysis deliberately and methodically as needed. Like I said, this is not a prize fight that requires blow-by-blow analysis.
One parting thought: I wonder how four occupants in a BYD Tang (latest SUV) or the BYD Han would have fared after the 250 vertical foot drop off Devil's Slide in California compared to the Tesla Model Y? I don't have much hope any of them would have survived. Tesla knows consumers are willing to pay for safety and that at high manufacturing volumes the extra engineering and testing costs spread out to just a few dollars per vehicle, giving the safety premium some pretty high margins. Volvo used to "own" vehicle safety. It looks like Tesla is rapidly becoming the new Volvo in terms of the safety they offer to occupants of their vehicles. People are willing to pay extra for that.
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ElectricIAC
Good-Natured Rascal
So did I and so far I likes what I sees.
cliff harris
Member
There are reasons to be happy about Tesla Energy not related to an assumption of huge margins. (I don't see that tesla have any tech advantage in energy storage, but they may have a scale advantage as a US domestic producer. Less obvious that they have a better product globally though).
The good thing about the energy business is its NOT the car business. The same is true of AI. This gives Tesla a place to shelter in a storm. If there are global conditions that severely impact the car market, or if Tesla get suddenly outcompeted somehow by huge state subsidies to rival car companies, they can still keep going through the storm with profits from Tesla Energy and AI.
This is not the case for GM, Ford etc. They are single-sector companies, and thus more vulnerable.
Talking of which, who was the ratings agency that was dubious of a re-rating until the product line expanded? With at least *some* semis on the road now, maybe we are getting closer to a re-rating?
The good thing about the energy business is its NOT the car business. The same is true of AI. This gives Tesla a place to shelter in a storm. If there are global conditions that severely impact the car market, or if Tesla get suddenly outcompeted somehow by huge state subsidies to rival car companies, they can still keep going through the storm with profits from Tesla Energy and AI.
This is not the case for GM, Ford etc. They are single-sector companies, and thus more vulnerable.
Talking of which, who was the ratings agency that was dubious of a re-rating until the product line expanded? With at least *some* semis on the road now, maybe we are getting closer to a re-rating?
I’m more interested in what is SAID on the earnings call.
Gigapress
Trying to be less wrong
Importantly we’d also need a tear down. It’s hard to do a head-to-head comparison without an idea of how much it costs to build. To a great extent a car can be made better by throwing more money at it, but that doesn’t mean it’s economically competitive (looking at you, Lucid).
Regrading handling we also need to bear in mind the Model 3 chassis and suspension design is five years old and doesn’t take advantage of Tesla’s latest technology like the Ys coming out of Berlin and Texas. That would be a better comparison. We were told the front and rear castings and structural pack will noticeably improve handling.
StealthP3D
Well-Known Member
Let's break this down:
If Zerosum33 is telling us to pick the margin we think Tesla will get on Megapacks for any given time period, then it only stands to reason he is also telling us to pick the production volumes for any given period that Tesla will achieve out of their stated production capacity. Because no one will know the volume until it happens.
If he's asking us to pick whatever margin and whatever production volume we think will materialize, then it begs the question, what has he added to the discussion? Because most of us already knew it was a very promising business, we just don't have a lot of clarity yet on the specifics.
I think what would be informative is if someone who finds his analysis compelling could tell us what specific data points he has added (including the sources of that new data) for us to make more informed opinions. I'm bullish on Tesla Energy and think the margins will be strong, but I didn't find his margin analysis to have enough hard data to be useful.
insaneoctane
Well-Known Member
Agree. It does show how much TAM Tesla is missing by only selling premium/luxury segment with MY/M3. If Tesla offered the lower price point vehicle, that graphic might look different. But kudos to BYD for designing the product and managing the supply chain to sell volume into that segment!That graph looks a bit scary, so I googled a bit about BYD’s cars:
and here a couple of links about their pure BEV offering:
BYD Closes Year 2022 With Record Plug-In Car Sales In December
BYD passenger plug-in car sales amounted to 234,598 in December and more than 1.85 million units in 2022 (over three times more than in 2021).insideevs.com
BYD News and Reviews | InsideEVs
Get the latest on new BYD models including spy shots, first drives, in-depth reviews, concept car photos, new features and more.I don’t think there’s a lot of overlap in the markets of BYD and Tesla.
Affordable BYD Dolphin (EA1) Enters The Market In China
BYD starts pre-sales of its all-new Dolphin model, which was introduced under the EA1 code name at the 2021 Shanghai Auto Show in April 2021.
In Europe it would be competition for Dacia.
Since Giga Texas is making 3000 cars/week in addition to whatever amount of cars they make in Fremont weekly it's not surprising that some cars end up in inventory.
Near-future quarterly financial projections
If inventory grew with >> 3000/week and kept on doing that then I might start to worry.
You're entitled to that, but so is anyone who has a contrary view. Neither is the point though.
Blaming MSM or FUD for the Elon backers who became unhappy with his actions in 2022 is certainly not always the case, definitely not for myself, and likely for many others.
StealthP3D
Well-Known Member
Good interview! For those short on time, I particularly recommend spending 5 minutes and watching from 5:25-10:40 where Buffet shares his breakthrough moment at a very early age in terms of how to invest. He started at age 11 putting his entire net worth of $147 into 3 shares of one American company.
Dang! I can only imagine how many shares of Tesla I would own today if I had focused on investing starting at age 11!
Didn’t Leo tweet something about some complex trade a couple months back? I’m guessing Leo might have had to dump a lot of shares when his aggressive attempts to raise his stake went South (which presumably his magic time machine should have prevented
)—contributing to the rout. It will be interesting to see what any discovery might show.Maybe he did buy a bit back later as he says. Still, a lawsuit from him is one reason why I don’t want him to have a large stake. Another being the possibility the CCP strong arms him into using his shares to influence Tesla or Elon in a counterproductive way—he’s based in Hong Kong iirc. Though his lack of industry relevant knowledge and crackpot ideas are other reasons to be wary of his having much sway.
Ah well, that’s fine then. You go ahead and keep venting your spleen, if it helps you redirect your recriminations away from yourself—or not. Be careful that the poison you pour in the well doesn’t fester and curdle inside you when the manips you’ve aided, witlessly it seems, turn and push the stock price in the other direction.
As for me, I pay attention to Tesla’s fantastic execution rather than getting hypnotized by the scaremongering of his enemies. I’ll keep holding and I’ll vote my shares in Elon’s favor.
Likewise.
⚡️ELECTROMAN⚡️
Village Idiot
And on the flip side, no one is thanking Tim Cook for the buying opportunity of the biennium. Be careful what you wish for.
thesmokingman
Active Member
Really, we have to go thru more Elon whining? I thought everyone got it out of their system already?
Curious - would Apple ever work on a Heat Pump or Smart Electrical Panel?
Edit: I read this primer, below, on batteries and CES this morning and had this question.
techcrunch.com
Edit: I read this primer, below, on batteries and CES this morning and had this question.
A big CES 2023 trend: All battery power, everywhere, all the time | TechCrunch
As we were roaming the halls of CES in Las Vegas, one product category stood out across the board: There's a lot of focus on portable (and less portable) power storage.
techcrunch.com
not Apple, but Google with it's Nest brand could ....Curious - would Apple ever work on a Heat Pump or Smart Electrical Panel?
Edit: I read this primer, below, on batteries and CES this morning and had this question.
A big CES 2023 trend: All battery power, everywhere, all the time | TechCrunch
As we were roaming the halls of CES in Las Vegas, one product category stood out across the board: There's a lot of focus on portable (and less portable) power storage.
...can you explain why not Apple? I wouldn't know any better. Google makes sense.
It’s not so different now. Just go back and read some of the comments about the 420 buyout and pedo guy back then. Lots of complaining about and blaming the pre-22 Elon you want back.
I held, though the bulk of my Tesla shares were underwater for about 2 years then—at times the shares‘ value was below half of what I paid. Elon had my support then and he has it now.
You and Leo are misguiding yourselves when you assert ‘old’ investors are unsupportive of ‘new’ investors. Those of us who held are still here and those who didn’t mostly aren’t. We—those who held—have been encouraging to new buyers and unstinting in offering the best of what we know and that is usually “Buy and hold."
Many of us don’t think highly of speculation and for the good reasons we seen in the last few months.
And many of us will vote against hot headed, bad ideas like putting Ross (who can offer little useful guidance for Tesla’s business activities) on the board or messing with Elon‘s role at Tesla.
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Not to be macabre, but between this pic and the Devil's Slide incident, I wonder how much better we would have fared in our accident in a Tesla as opposed to the rental car we were in...
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