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

[Artful Dodger]

I see this being posted a lot but just warning you all now this is probably hopium. You can’t quantify how many cars were sold at what ASP only a blend, and when you factor for all the one time events and regulatory credits in a quarter those drastically will affect things more than these edge case ASPs at time of delivery vs purchase.

No need to quantify it. We know with high curtainty that the ASP was less than the prices on the webpage. That was the comparison which is being foised by shortzes right now, and its wrong.

Tesla isn’t going to have the same margins as before, and that’s okay. Sooner people accept that the better calibrated they can be.

Yeah, except "gross margin" doesn't appear on either the Company's top or bottom lines. It's (gross margin per car) x (number of cars sold) that set the two metrics that matter for Wall Street: Revenue and Earnings.

Tesla will increase both of these dramatically in 2023 Q1 because of yesterday's price changes. It's basic economics. h/t @Olle for this chart:

The result of Telsa's pricing moves will be to shift the demand curve to the right, and thus their growth trajectory is secured going forward. This is all positve news for the company, and it's investors.

Cheers!

 

[Buckminster]

I think non Tesla cars will do quite well if:
1) They have a niche (little or no competition in the class) plus being first to market within that niche/class
2) They are similar to an iconic car and made by the original manufacturer - fashionable
3) A design that does not sell because of it's previous ICE characteristics - sound / power (like Ferrari, Mustang or even BMW/Audi)
4) Second/third cars where AP is not required

Porsche Taycan is in a niche not yet covered by Tesla and is similar to the iconic 911 so it will do well. A Porsche SUV would struggle more.

Others that could do well:
1) VW ID - similar to iconic Golf
2) VW Beetle
3) VW camper
4) Rolls, Bentley, Jag, S500, Maybach, Cadillac
5) Mini, Fiat 500
6) Jeep

I feel that their best bet is somehow to convert these niches into serious production quantities. Increasingly, everything that a millennial does or buys needs to be Instagram extraordinary. Sensible/best in class is no longer good enough.

I wrote this almost exactly 4 years ago and it remains as fresh as a daisy. MachE and ID4 are going head to head against the entire platform of Tesla's 4 models. They need to find the niches before Tesla gets to them to stand any chance.

 

[Singuy]

A backlog is not inevitable. People are assuming more elasticity of demand than I think exists. Our products have lost a little of their pizzazz (for lack of a better word). Nobody gawks at a Tesla anymore. We're becoming "common." The price cuts we just had may only be enough to sell out at our current production rate.

Haha yeah that's what I thought the first time I saw a Y..a car with pizzazz.

These are work horse cars geared to get you off gas by saving you maintenance, time, and fuel cost. Their primary objective is for volume push, not to be rare with pizzazz.

Oh and no other car can self drive, like not even lane keep correctly, or stop for traffic with any kind of reliability. This is Teslas' pizzazz. Everyone I showed it to has been impressed by beta because it doesn't exist anywhere else.

 

[MP3Mike]

the $7,500 tax credit in 2023 turns into a $7,500 instant rebate in 2024. I think this makes the folks who don't qualify for the rebate due to their personal tax situation more likely to wait until Jan 2024 to make that big purchase.

While starting in 2024 you can take it as a point of sale credit, you still have to qualify for it, or it will be added to your tax liability and you have to pay it back. So there is really no reason to delay.

 

[Ogre]

He addressed it here:

https://twitter.com/x/status/1613925697168236546

I’m ok with people thinking I’m crazier.

I mentioned the idea a couple days back that Tesla could raise prices and maintain ~25%+ margins. Seems like my estimates about how much they could drop prices were low. Either they are willing to let margins suffer more than I thought or COGs is much lower than I thought.

 

[mongo]

Midnight Silver Metallic is back to costing $1000. If you upgrade to Induction wheels, then you don’t qualify for the tax rebate with a paid color option. I hope those stickers go with white.

You might be able to have the wheels changed at delivery center.

Interesting it says "Excudes software features" that implies to me that FSD wouldnt count against. I dont think that is correct. People should be careful and add after delivery.

MSRP is based on original factory Monroney Sticker. Software can be added at the delivery center, and so can be excluded from MSRP:

https://www.irs.gov/pub/irs-drop/n-23-01.pdf

For purposes of § 30D(f)(11)(A), “manufacturer’s suggested retail price” means the sum of:
(A) the retail price of the automobile suggested by the manufacturer as described in 15 U.S.C. 1232(f)(1); and

(B) the retail delivered price suggested by the manufacturer for each accessory or item of optional equipment, physically attached to such automobile at the time of its delivery to the dealer, which is not included within the price of such automobile as stated pursuant to 15 U.S.C. 1232(f)(1), as described in 15 U.S.C. 1232(f)(2). This information is reported on the label that is affixed to the windshield or side window of the vehicle, as described in 15 U.S.C. 1232.

15 U.S. Code § 1232 - Label and entry requirements

(f) the following information:
(1)
the retail price of such automobile suggested by the manufacturer;

(2)
the retail delivered price suggested by the manufacturer for each accessory or item of optional equipment, physically attached to such automobile at the time of its delivery to such dealer, which is not included within the price of such automobile as stated pursuant to paragraph (1);

 

[Nocturnal]

How hard for Tesla to change the color palette?
With high vol, just having some different colors would up the demand .even more ..

Not hard, but adding colors does increase the # of variants which makes matching orders to inventory a little more difficult and increases the number of repair parts (bumpers etc.) that they need to produce and stock.

More colors would be appreciated from an aesthetic standpoint though, especially with the volumes we have and are expecting.

 

[NooB_cat]

GREAT to see such a busy, positive forum here today

I've been monitoring the US inventory throughout the day, it's dropping fast. I wouldn't be suprised if by the end of the weekend inventory will all be sold out (again)!
(It's currently at 400 for M3 and 750 for MY)

 

[wipster]

We are potentially seeing a wait for the Highlander refresh...however, if you look at the inventory cars (dwindling by the minute as best I can tell), there are some long range model 3s....looks like the base price is $49,900 for those. $42,400 for a LR model 3 after rebate is a pretty sweet deal. Heck, I've been considering a Bolt EUV as a decent super cheap electric car after rebate, but the standard range 3 at $36,500 after rebate is pretty darn compelling!

I agree that the prices for the 3 after the tax rebate/credit are pretty damn compelling. However what about those folks that won't owe any taxes? My best friend is retired and normally doesn't owe any FIT (I know as I do his taxes). If the $7,500 were treated as a discount off the price of the car, he'd buy an SR3 in a heartbeat! But not the way it currently works.

The IRA would put way more butts in BEV's if the purchaser had the option of how they received the discount.

 

[FSDtester#1]

Tesla price cuts are the 'right medicine at the right time,' analyst says

“This is a clear shot across the bow at European automakers and U.S. stalwarts (GM and Ford) that Tesla is not going to play nice in the sandbox with an EV price war now underway,” Ives said


A positive yahoo article...

 

[EVNow]

Let's see what legacy car companies will cease to exist.

Actual question is - which companies can the national governments afford to lose.

 

[Artful Dodger]

A lot of the cars delivered in Q3 with 28% margins were actually ordered under the 2021 cheaper pricing.

Indeed, I ordered my Model 7 (white interior, tow-package, 7-seater w.FSD) on July 28, 2021 just 3 days before the price went up.

I paid $91K (CAD) when I took delivery in Q3 2022. At that time, the retail price was over $122K (CAD). It was 9.5 mths from Order to Delivery date.

TL;dr "this is nothing".

 

[thesmokingman]

I agree that the prices for the 3 after the tax rebate/credit are pretty damn compelling. However what about those folks that won't owe any taxes? My best friend is retired and normally doesn't owe any FIT (I know as I do his taxes). If the $7,500 were treated as a discount off the price of the car, he'd buy an SR3 in a heartbeat! But not the way it currently works.

The IRA would put way more butts in BEV's if the purchaser had the option of how they received the discount.

Wait till 2024, iirc it turns into a rebate.

 

[EVNow]

I got some disagrees for this post (which admittedly was partial humour with a hint of reality like so many of my posts). Let me go more woke:

I can only imagine that this 10-20% drop is a subtle reminder to the fine OEMs that have served us so well down the years that they have an opportunity to reduce their prices to aid the biggest crisis facing humanity by putting aside the greedy capitalistic ideals of their filthy boomer shareholders.

I won't address your political hit job.

But to the other part - Tesla didn't reduce price to put BYD out of business. If they try something like that, Chinese government will not tolerate it.

It is obvious to any neutral observer that Tesla dropped prices in China because at the old prices the volume was lacking. They dropped prices in US to get the tax credit. In both cases they were forced to drop prices.

What happens to competitors as a consequence is a different matter. No need for conspiracy theories.

 

[MP3Mike]

My best friend is retired and normally doesn't owe any FIT (I know as I do his taxes).

Most people that can afford a Tesla pay at least some tax every year... So he has pretty much no income and pays the IRS $0 in federal tax for the whole year? (Or do you not understand that the tax credit is not related to how much you owe when you file, but based on your total tax liability for the year?)

Wait till 2024, iirc it turns into a rebate.

No it doesn't. You can just get an advance on the credit, which you have to pay back if you don't qualify for it when you file your taxes.

 

[KBF]

It reads like you are describing a demand problem to me. When other OEMs put money on the hood to move cars its a demand problem. Yet when Tesla does it its not?

Tesla is about have a whole lot of product hitting the streets, and it means nothing unless there are orders for them.

You are technically right (there was a demand 'problem') while being off in your analysis and understanding of motivations and processes.

The demand problem was that in the past couple of years Tesla's demand was way too high for their production rates. Because building factories and ramping takes time, the logical solution was to raise rates in order to reduce that excessive demand problem (if waiting lists are too long, you run into major issues around locked-in pricing, especially when inflation hit and supply chain disruptions were happening - they had to honor prices locked in 6-9 months earlier).

This gave them time to address the root cause of the initial excess demand problem, and now we have multiple gigafactories that have finally ramped up. This means they are free to stop the temporary price increase to allow natural demand to return - and they are still making more margin than any other EV as far as we can tell.

The scary thing for the OEM's is that Tesla is still definitely making a decent (likely above industry average) margin and could lower prices even more and still make a profit. AFAIK, not a single other EV maker has published positive margin numbers for pure EV's (we've only seen profits when lumped together with hybrids).

 

[FielderJones]

Last night there were 33 Model Ys in the Chicagoland area in inventory. Right now there are 21.

 

[Artful Dodger]

Wowsers, 119.3M shares of TSLA traded by half-time (12:45 pm ET).



Note: Volume as reported on the chart above, has a 15-min delay, due to their data provider, so the 1:00 pm share price is paried with the 12:45 pm trading Volume.

Cheers!

 

[wipster]

rhi
Most people that can afford a Tesla pay at least some tax every year... So he has pretty much no income and pays the IRS $0 in federal tax for the whole year? (Or do you not understand that the tax credit is not related to how much you owe when you file, but based on your total tax liability for the year?)


No it doesn't. You can just get an advance on the credit, which you have to pay back if you don't qualify for it when you file your taxes.

All he receives is SS, very little FIT withheld. He built and owns his home and lives very frugally.

All I receive in "regular" income is SS, along with long term capital gains when needed.

There are many people in the US who don't pay taxes and with more baby boomers like he & I retiring every year, there will be a lot more in the relatively near future.

 

[advocate8]

This thought occurred to me also.

1. They only had to drop the price of the Y to 55K but they went lower.
2. They didn't need to drop the S & X, as you point out.
3. They may know that the Govmint still has some tricks up their sleeve and these price drops are partly to stay competitive even if they end up excluded from the IRA.

To be fair, they may have taken what their algorithms were telling them for elasticity and tinkered slightly with the Y price so as to leave some room under $55k for color and wheel options. ....that little bit, say, 1k or 1.5k, could have an outsized effect on demand given not everyone wants white.
But I guarantee this is just super intelligent pricing based on the best data they have for projecting demand and the economy. Not that anyone ever gets that right exactly. But its not mainly about slapping around Ford/Hyundai or the tax credit. It’s just smart business.