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

[CHGolferJim]

Uhhhh….that is not at all what has happened in china over the last two months. CV has ripped through the population causing a serious temporary drag in economic activity due to both a disrupted-by-CV workforce and much of the population avoiding going out. We should see the situation reverse soon, as CV wave has already touched the majority of tier 1 city populations.

This seems to be the consensus scenario, but doesn’t it ignore the repetitive infection cycles seen outside of China 2021-2022? What would make China different, speculation about different variants acting differently? I haven’t seen a convincing case that will happen.

 

[Thekiwi]

This seems to be the consensus scenario, but doesn’t it ignore the repetitive infection cycles seen outside of China 2021-2022? What would make China different, speculation about different variants acting differently? I haven’t seen a convincing case that will happen.

Going from “zero covid” to “covid everywhere” Is a very different experience for a country than going from “covid everywhere” to “even more covid everywhere“.

 

[Sancho]

Until recently, investing in TSLA was a slam dunk. Profits were going to skyrocket as production increased.

But BYD has now made TSLA a more speculative investment. BYD has produced a car that competes against the Tesla flagship cars, and is ramping production and sales to multiple continents.

There are still many scenarios in which Tesla and TSLA have an extraordinary bright future selling cars (let alone FSD, robotaxi, robots, energy, etc). There could be so much demand for EVs that both BYD and Tesla can sell everything they make at a healthy profit.

But there are now, for the first time, very plausible scenarios in which TSLA stagnates. A price war with BYD on multiple continents could greatly reduce prices and margins. Future automotive profits are now…speculative.

And all the other lines of Tesla’s business, while tantalizing, remain…speculative.

I still can’t think of a better stock to own right now than TSLA, particularly at this price. But personally, I’m no longer willing to put all my chips on this one bet.

Investors need to reassess their strategy when there are new developments, and the ramp of the BYD Seal/Atto 4 is an unprecedented new development.

 

[mongo]

Price cuts globally in 2023 so earnings/vehicle will probably drop from 10k to about 6k. With 200M vehicle sold, earning is 12B, nearly same as 2022. How about that?

• I assume you meant 2M cars in 2023.
• Tesla's GM of 28% on 50k ASP is around $15k gross profit per vehicle amd $35k cost.
• 2022: 15k * 1.3M = $19.5B Gross
• Operating expense does not scale linearly with production, SG&A has been around $1B a quarter since mid 2020
• Boosting production by 50% while using the same factories and (mostly the same workers) would mean factory cost per vehicle drops 33%

Put together (and guessing factory vs BOM cost ratio): 2023 vehicle internal cost = 35*(4/7) + 35*(3/7)*66% = 35*(6/7) = 30k = 5k less

The first $5k of price reduction puts them at $45k ASP on $30k cost = $15k gross = 33% GM
$15k * 2M = $30B gross

What if they drop the price 10k or 20%?
40k ASP - 30k expense = 10k gross= 25% gross
10k * 2M vehicles = $20B gross, a little more than 2022.

 

[Xd85]

Until recently, investing in TSLA was a slam dunk. Profits were going to skyrocket as production increased.

But BYD has now made TSLA a more speculative investment. BYD has produced a car that competes against the Tesla flagship cars, and is ramping production and sales to multiple continents.

There are still many scenarios in which Tesla and TSLA have an extraordinary bright future selling cars (let alone FSD, robotaxi, robots, energy, etc). There could be so much demand for EVs that both BYD and Tesla can sell everything they make at a healthy profit.

But there are now, for the first time, very plausible scenarios in which TSLA stagnates. A price war with BYD on multiple continents could greatly reduce prices and margins. Future automotive profits are now…speculative.

And all the other lines of Tesla’s business, while tantalizing, remain…speculative.

I still can’t think of a better stock to own right now than TSLA, particularly at this price. But personally, I’m no longer willing to put all my chips on this one bet.

Investors need to reassess their strategy when there are new developments, and the ramp of the BYD Seal/Atto 4 is an unprecedented new development.

1. What are BYD margins?
2. From last few days mega threads, BYD Seal and other comparable BEV, especially for western markets are order of magnitude lower
3. Will margins allow for an price war? Are factories announced? Time lag in exponential growth race is deadly
4. Assumes no growth for Tesla.
5. no IRA for BYD in US
6. Even if all true, as many have said, a BYD sold is mostly an ICE unsold

i'm still waiting for answers on all these with respect to any competitor

 

[2101Guy]

I wonder if Elon is still laughing at BYD now?

 

[SO16]

I wonder if Elon is still laughing at BYD now?

That video is from 11 years ago.

 

[Paracelsus]

This seems to be the consensus scenario, but doesn’t it ignore the repetitive infection cycles seen outside of China 2021-2022? What would make China different, speculation about different variants acting differently? I haven’t seen a convincing case that will happen.

Perhaps China could be 'different' because the media is literally in complete control of the China narrative, and therefor has the ability to optimize impact on Retail Investors for Wall Street benefit.....? If the anything should be learned from the last 2,000 years, its the ability of the human species to weaponize a 'message of fear' for personal/financial gain - regardless of impact on those believing the message.

Uhhhh….that is not at all what has happened in china over the last two months. CV has ripped through the population causing a serious temporary drag in economic activity due to both a disrupted-by-CV workforce and much of the population avoiding going out. We should see the situation reverse soon, as CV wave has already touched the majority of tier 1 city populations.

To my previous point - when a completely different narrative emerges - one that suggests an outcome vastly different from all previous similar situations as @CHGolferJim points out - perhaps we should be more suspect of the messenger (not @Thekiwi , but the media's reporting of horrific doom and gloom stories just before the end of Q4 that would impact almost all tech companies on Wall Street). And we should become extremely suspicious of that message when it emerges at a time that maximizes benefits for those holding the biggest wallets.

Did Wall Street just manage to buy a cubic-metric-butt-ton of TSLA at what is likely the bottom of a 70% drop in share price? Did this 'news' hit just in time to get the last 25% or more out of that crash? And can there be ANY possibility that this 'news' helped drive TSLA and other tech stocks down almost another 33% before the bottom? For anyone saying 'NO' - that this 'news' did not contribute at all to a further drop in TSLA share price, please explain.

So many different threads to post on TMC, but unfortunately no thread was started that contained a running tab of all massive FUD stories that could be reviewed with the benefit of hindsight. We should have started that thread with John Broder's February 2013 Tesla Range Anxiety Story in the NYT's just before Tesla's face ripping stock rally at that time, and we should have never stopped adding to it.

Shortly after the end of this month we will have had the ability to review both the earnings report for Q4 & 2022, and PD for Q1 2023. While I agree with brighter minds that the Human Species is a species that suffers from amnesia, that doesn't mean we have to make ourselves repetitive victims. Let's revisit the performance of Tesla China November 2022 - January 2023 once that data is available, and let's see just how Tesla did. And let's examine the number of retail shares that managed to 'migrate' into the hands of institutional investors during 2022 - particularly during the peak FUD of Q4. There was a time when people were burned at the stake for questioning the dogma from the establishment. Since that doesn't happen too much anymore, let's use the power of hindsight to help preserve our portfolios going forward. Too many of us on TMC lost too many shares to these bastards in 2022 to not examine this closer along the way IMO.

 

[2101Guy]

That video is from 11 years ago.

Correct. Hence the "is he STILL..laughing NOW"

Since he's such a visionary and all....

 

[SO16]

Correct. Hence the "is he STILL..laughing NOW"

Since he's such a visionary and all....

What is Tesla’s mission statement again?

He’s probably congratulating them like he has others.

Tesla's Elon Musk congratulates Ford for 150k Mustang Mach-E milestone

Tesla CEO Elon Musk, who has previously supported Ford's EV efforts, shared a message of congratulations to the veteran American automaker.

www.teslarati.com

Elon Musk praises Chinese automakers as Tesla works to improve company's reputation

Musk's appearance comes as his company works to strengthen Tesla's reputation in China.

www.cnbc.com

 

[ElectricIAC]

What is Tesla’s mission statement again?

He’s probably congratulating them like he has others.

Tesla's Elon Musk congratulates Ford for 150k Mustang Mach-E milestone

Tesla CEO Elon Musk, who has previously supported Ford's EV efforts, shared a message of congratulations to the veteran American automaker.

www.teslarati.com

Clown on Bolt drivers.

 

[traxila]

Correct. Hence the "is he STILL..laughing NOW"

Since he's such a visionary and all....

EM is on record for a few years now that the Chinese are tough competition not to be dismissed.

 

[SunCatcher]

1. What are BYD margins?
2. From last few days mega threads, BYD Seal and other comparable BEV, especially for western markets are order of magnitude lower
3. Will margins allow for an price war? Are factories announced? Time lag in exponential growth race is deadly
4. Assumes no growth for Tesla.
5. no IRA for BYD in US
6. Even if all true, as many have said, a BYD sold is mostly an ICE unsold

i'm still waiting for answers on all these with respect to any competitor

#6 Perhaps should be #1: It might be helpful to consider that both BYD and Tesla together will be mostly eating from the legacy automaker's ICE vehicles' market share buffet table; not so much one another's. Once the ICE competition is kaput, then maybe they'll have one another to worry about.

 

[Unpilot]

Too many of us on TMC lost too many shares to these bastards in 2022 to not examine this closer along the way IMO.

Here Here my good chap....they AIN'T getting any more of mine!

 

[BornToFly]

Why are some people still focusing on the delivery miss? Production is what matters. Troy and others have indicated that there were over 20K cars stuck on ships/ports due to port congestion and ship delays that prevented cars from being delivered on-time. This could not have been predicted back in October. All produced cars will get delivered. And have people seen BYD Seal delivery numbers compared to Model 3/Y? They are tiny. BYD sells a lot of hybrids and really cheap EVs with razor margins. BYD will expand, but Tesla doesn't need to worry - other OEMs do. There is enough EV market growth for both Tesla and BYD.

 

[2daMoon]

This points to human problem not fsd problem

Absolutely.

Not everybody has the intestinal fortitude to trust their own skills enough to actually push the envelope to the extent necessary to gain confidence in the system. Doing so may require on the tester's part a deeper understanding of the physics, design, and ability to predict how far to go before "ejecting" and this is what makes test pilots different from recreational pilots. It is a Beta TEST, emphasis on the "test" part. People not accustomed to risk taking may not be able to perform well in such an environment.

Sounds like this guy is unable to execute the task of letting the system work in order to see how it does on its own. At least not as effectively as many others have demonstrated.

If a Beta participant is unable to channel their inner Chuck Yeager as well as many others in the real-world test of FSD, this could result in the system being blamed when FSD may have successfully completed the task at hand had the driver not chosen to take over in some instances.

This illustrates the difference in comfort level between those able to effectively test FSD Beta and those who are the target cases for FSD to exist.

 

[Gigapress]

Until recently, investing in TSLA was a slam dunk. Profits were going to skyrocket as production increased.

But BYD has now made TSLA a more speculative investment. BYD has produced a car that competes against the Tesla flagship cars, and is ramping production and sales to multiple continents.

There are still many scenarios in which Tesla and TSLA have an extraordinary bright future selling cars (let alone FSD, robotaxi, robots, energy, etc). There could be so much demand for EVs that both BYD and Tesla can sell everything they make at a healthy profit.

But there are now, for the first time, very plausible scenarios in which TSLA stagnates. A price war with BYD on multiple continents could greatly reduce prices and margins. Future automotive profits are now…speculative.

And all the other lines of Tesla’s business, while tantalizing, remain…speculative.

I still can’t think of a better stock to own right now than TSLA, particularly at this price. But personally, I’m no longer willing to put all my chips on this one bet.

Investors need to reassess their strategy when there are new developments, and the ramp of the BYD Seal/Atto 4 is an unprecedented new development.

At what margins? The fact is we have no idea what BYD earns on the Seal, if anything at all, and we have no idea what it looks like underneath until somebody rips one apart and posts it on the internet.

Tesla’s CEO has emphasized that manufacturing will be Tesla’s long-term competitive advantage. Not even autonomous driving; manufacturing. This is therefore mainly what investors should be focused on when comparing to the competitors.

For example, does BYD have any of the following?

• Front and rear gigacastings
• Fully structural battery pack, building up half the cabin on top of it before even mating it with the body-in-white
• Crazy-low part count in general
• Octovalve, tiny high-output heat pump, extremely integrated thermal management system
• Custom power electronics
• Amazingly few meters of wiring and few contacts
• Best motor cost to performance ratio in the industry
• A factory on par with Giga Shanghai making 1M+ cars per year at more than 30% gross margin in a small footprint (let alone a factory on par with Gigas Berlin and Texas)

If credible news comes out that BYD is rapidly catching up in these areas, I will need to seriously reevaluate my TSLA investment thesis. As of now I’m aware of zero evidence that this is the case. In the meantime, could we really expect BYD would survive a price war with Tesla? The fact that they haven’t disclosed their gross margins on their pure BEVs is not a good sign in my opinion.

The Rivian, for instance, is a nice, luxurious, capable electric truck with features and styling aesthetics that lots of people like. Yet it’s hard to build affordably and the company is bleeding money like it’s going out of style. I look at the Seal and the Atto the same way until seeing evidence otherwise. Prototypes are easy but production and design for manufacturability are hard.

 

[MartinAustin]

David Faber today: "Tesla is down 4% for the year"

(it's January 9th)

 

[Artful Dodger]

All produced cars will get delivered.

It's even better than that, at least in Germany. @avoigt informs us that Customers who had orders for MiC vehicles were asked to pay in full when their VINs were assigned (even while the vehicle was still in transit), or that VIN would be reassigned to the next customer in line. This is the kind of pricing powere that Tesla currently wields in Germany.

#NODEMANDPROBLEM

Alex on Twitter: "Tesla China demand goes exponential $tsla" / Twitter

 

[TrendTrader007]

sweet. bye bye love (shorts)