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

[sdtslafan]

Silicon Valley move all the way.

 

[bballshinobi]

Elon is adjusting Tesla car prices to track TSLA so shareholders can buy more cars lol

 

[BillyW]

I'm afraid this will cause a downward spiral

 

[Electroman]

Tax rebate info is now on the website

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These numbers are COMPLETELY WRONG.

With no options selected: Model 3 is $45K Model Y is $54K (this includes destination charges). You then get $7500 on top of that making Model 3 just $37.5K

 

[traxila]

Yes you are right a big COGS decrease would fix this problem.

You reckon they could convince their suppliers to sell them materials at 50% Off? That should offset it.


All this talk about dropping materials costs and volume production is true. But you need to be realistic here. Look at their gross margins and look at their increase in volume. We've gone from what 500k to 1.3 million units. The margins are swinging at most low double digits. Just look at the movements in auto gross margins over 8 quarters. Do you honestly think in the next 4 we'll see some crazy economies of scale and we skyrocket?

Not just about COGs. The continued hard ramping at 50 % plus YOY will yield huge operational leverage. The 4680 will bring more cost reductions. And then there Is the market share grabbing and the Tesla ecosystem in conjunction with FSD and software offerings to boost margins.

Don’t forget the Austin and Berlin factories were big drags on margins until now, and yet Tesla was still pushing 30%. EM was not kidding when he said the prices Tesla was charging were obscene. To have those margins while two new huge barely ramped factories were dragging margins down was ridiculous (unprecedented perhaps?). They will not be a drag in 2023.

It is reasonable and correct to assume margins are hit here, but we just do not know by how much. We do know Tesla has become the Grim Reaper in the auto industry, its volumes will continue to ramp, its new margins will improve from here, and it may have a few cards left to play in the form of CyberTrucks, energy storage and Optimii.

I anticipate the stock going down tomorrow, but do not particularly care at this point. WS is the casino we all know it to be, and the future now belongs to Tesla.

I just want to see BEVs everywhere!

 

[Ogre]

Holy crap. Looking at my early 2021 Model Y outside it just lost $7,000 - $10,000 in value.

Imagine you own a used Car lot and you have 20 Model Ys in stock. Boom…. $150,000 - 200,000 loss overnight.

 

[MrMoo]

I have no idea. But I have confidence that Tesla is playing this right. And I think people underestimate how much economies of scale can impact production cost.

Remember a week ago when Tesla cut prices in China and everyone here freaked out about the stock, then it went up the next day?

Margins have been huge, with huge growth, and the stock still got pummeled.

Tesla energy is ramping too. That will start making a bigger difference with each quarter, and Tesla Energy (with significantly growing margins) will be taking a larger perfentage of Tesla’s total revenue. That’s something most analysts have been assigning nearly zero value.

Now imagine you’re Ford, or Lucid, or GM. How are you feeling?

Tesla’s prices might be at or below your production costs, and for a superior car. Now what do you do?

I Believe that 8% Bounce was actually shorts covering and bears taking profits. We may not have this luxury this time around.

It's a dramatic move for certain, BUT it is the only way the 3 & Y could qualify for the messed up IRA qualifications. Tesla just threw down a massive gauntlet on the OEMs.

By this point I'm sure Ford and GM wish the IRA had listed the Y5 as an SUV and allowed the 3 to qaulify, because NOW Tesla cars are priced to utterly decimate the competition. This will hurt margins for Tesla, but it's going to hurt much more for Ford, GM, and every other automaker.

Maybe... but at this point you are going to see free cash flow plummet. $3billion, now down to $1 billion. Asking for a buyback when the company does $1 billion a quarter on net profit is not going to happen.

Remember when we were saying we are trading at 20 times forward earnings? Now we could be trading at 60 times forward earnings.

 

[SmokyPeat]

I think the price cuts are great. There was enormous price creep last year just to keep demand reigned in. I always liked the idea of a $35k model 3. It also wasn't particularly equitable for Teslas to sell at 20+% discount in China.

 

[ElectricIAC]

Man, am I glad we sold our P3D back in August!

 

[mongo]

Plus Uncle same drops you a $7,500 check at the end of the year. Making it even cheaper than we (I got same pricing) paid 2 years ago.

People, cut your withholdings during the year. Don't wait for a refund at the end.

Not enough taxable income? Consider rolling some retirement to a Roth.

 

[Webeevdrivers]

It’s not that simple.

First, Tesla is massively ramping volume, which brings down cost and increases margin due to economies of scale. Tesla is a master at this.

Second, many who *can* splurge a bit will do it on FSD and autopilot, which is close to 100% margins.

Third, commodity prices have been dropping, which reduces production cost.

Tesla is ramping 4680, which has cost savings as well. Hard to say how it all plays out.

Less margin per car? Probably. Less total company profit? Maybe, maybe not. But factor in the fact that this will kill competitors, then factor in the repeat revenue sources Tesla has that increase with market share (high margin software upgrades, FSD or other subscriptions, Tesla insurance, cross pollination with Tesla Powerwall, etc. and this could actually be very bullish long term.

Excellent post and breakdown. Couple things I didn’t think of there for sure.

“Look honey, now we can afford that self drive thingy.”

 

[Paul_SF]

Holy crap. Looking at my early 2021 Model Y outside it just lost $7,000 - $10,000 in value.

Imagine you own a used Car lot and you have 20 Model Ys in stock. Boom…. $150,000 - 200,000 loss overnight.

Now imagine what will happen with used ICE cars prices this year. The end is here!

 

[ElectricIAC]

Now imagine what will happen with used ICE cars prices this year. The end is here!

Let’s not discount the fact that they still make up a majority of the new car sales..

 

[TN Mtn Man]

This is such a freaking huge flex on the industry.

Got that right. If I were holding significant GM or Ford stock, I'd be feeling sick! This is what we've been saying-Tesla has the margins to price these at a much more attainable, more "mainstream" price, and drive demand through the roof. Hate to say it considering how much we've been off-but with the carryover inventory from Q4, plus production improvements and ramping at TX and Berlin, Q1 could be an utter blowout. To me this isn't indicative of a lack of demand, but finally that we are far less supply constrained. Open the floodgates?

I really wonder if they won't do another price cut on the MYP to put it just under the $55k cap. Now, I just wonder what the government will pull to screw things up again. Sucks though for those that bought at the previous price, resell just took a huge hit.

 

[AndrewZ]

Yes but do you not feel that a 20% drop instantly is a bit of a drawing the line in the sand kind of reaction versus a drop price as necessary reaction?



Yes by the end of 2024 we'll make as much money as we did in 2022. So I guess $100 share price for 3 years?

Look at the end of the day the share price is going to get smashed because this company just made itself look like what the haters have said all along. It's a car company that has to cater to the car market. This year is going to suck and there is no arguing against it. No FSD is not coming out this year so the extra 2 mil cars on the road is not going to make this car a tech company all of a sudden.

Understanding that most want the stock to head relentlessly upwards, especially those engaged in high-risk strategies, you just described a value investor’s wet dream.

If the share price is smashed to the point where I think it’s an absolute no-brainer relative to the 5-10 year outlook, I’m all in. Seriously. Not options, not margin, I’m buying stock and sitting on it.

 

[Prunesquallor]

Might actually be good for lucid as those who don't want to be seen with the hoi polloi will pony up.

It's all good until they get stuck charging next to a bolt on the EA network.

Or next to a Taycan at Walmart.

 

[Webeevdrivers]

Just for the American members. In Canada, a plain Jane model 3 RWD now qualifies for 9000 in immediate rebates of the taxed price in British Columbia. That means out the door after sales tax that base model 3 is 53000 Canadian bucks…ish. Wouldn’t want to be A Hyundai dealer tomorrow. Ugh.

I think tomorrow the stock is going to be slayed, but long term I think this will fill the order books.

 

[ElectricIAC]

Or next to a Taycan at Walmart.

Worse, it’s 11:10PM and they just closed.

So no bathrooms or snacks.

 

[Gigapress]

I Believe that 8% Bounce was actually shorts covering and bears taking profits. We may not have this luxury this time around.



Maybe... but at this point you are going to see free cash flow plummet. $3billion, now down to $1 billion. Asking for a buyback when the company does $1 billion a quarter on net profit is not going to happen.

Remember when we were saying we are trading at 20 times forward earnings? Now we could be trading at 60 times forward earnings.

How did you get an estimate of $1B profit per quarter?

 

[ZeApelido]

If you own a white Model Y you better start putting stickers on it. Pretty soon it will be darn near impossible to find your car in the costco parking lot