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

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I can’t predict the manufacturing capabilities of Tesla’s competitors now that there is at least one serious competitor out there.

BYD is a regional automaker right now, with aspirations but no track record of international operations. That's a big ask for a insular chinese company, who's culture may not be able to make the transition easily or quickly.

Further BYD's sales are still composed of half ICE vehicles yet the company as a whole is not profitable. It's not clear that it's EVs can be sold at a profit.

Lastly, BYD's busines model is a bottom-up approach to the auto market. They're selling cheap cars first, and moving up the price ladder to more expensive cars. This (unlike Tesla) means they're expanding into smaller and smaller segments, but don't have the profits from lower level sales to back that move up.

It's not a business, it's a state-sponsored make-work program. One Tesla will easily trounce with better cars at a lower price point as they move into BYD's market (TAM).
 
As I said I am beginning to doubt myself. Am I missing anything here ? What do others think ?
We could take “our internal production potential is actually closer to 2 million vehicles” literally: 2.195 million is also closer to 2M than 1.8M. Not saying that Tesla will achieve that, but maybe even the 2M is sandbagging.
 
Almost everyone active in putting together utility-scale projects is already doing this and has the necessary relationships & knowledge. (And in fact the international standards increasingly require this stuff). Sometimes utility-scale stuff is led by the utility itself using in-house project teams; sometimes there are commercial developers who then (often) flip all or part of the completed project; and in some instances a project development team might be led by the turbine manufacturer. (Often these projects are consortia, and the members bring knowledge & skills to the table as well as capital). So even where (say) RES might be the developer (for a consortium) they would still solicit 'autobidder' bids from the other vendors to evaluate on a level playing field basis against their own in-house 'autobidder', so as to be able to justify the autobidder product selection in exactly the same way as they would need to justify the turbine make/model/etc selection, etc. And the project development lead might not be the operations lead partner and that might also have an influence on these matters. But bottom line, whilst Tesla is a big player in utility scale storage it is by no means the only player.

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In my opinion (i.e. experience) this is actually very well explored territory, but not very fruitful at small scale. Fantastically interesting, but the real usefulness is acting as pilots and model validation for much larger stuff.

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Tesla produced 493,701 vehicles in Q4-2022 plus an unknown number of Semis. Just doing 4x this is 1,758,804 for a full year of steady-state, and that would necessitate zero inventory build beyond the existing 13d, so all production would flow through to become sales. That was a quarter that was not 100% uptime as far as I could see given the month-to-month variability in some of the production data out of China, plus the known ramping volumes in Austin and Berlin, i.e. they exited Q4 at a higher rate than they started.

The Q4-2022 experience corresponds to the slideset's stated capacity that adds to >1,900,000 so this is understandable as the starting point for 2023, minus some capacity factor, although the text below the table suggests that uotime etc are already taken into account in that capacity number.


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Then in the Outlook slide it guides for production of 1.8m in 2023.

View attachment 899952

And then in the Q&A there were the following responses which are a teensy weeny more candid at the 2.0m level.

....... Q&A .......

Rod Lache -- Wolfe Research -- Analyst

OK. Thank you. Firstly, it sounds like your 1.8 million unit volume indication for this year is somewhat more supply constrained than demand-constrained. Then I have a follow-up on cost.

Is that an accurate statement?

Elon Musk -- Chief Executive Officer and Product Architect

Well -- OK. I mean, our internal production potential is actually closer to 2 million vehicles, but we were saying 1.8 million because, I don't know, there just always seems to be some freaking force majeure thing that happens somewhere on earth. And we don't control if there's like earthquakes, tsunamis, wars, pandemics, etc. So if it's a smooth year, actually, without some big supply chain interruption or massive problem, we actually have the potential to do 2 million cars this year.


........ then Q&A later .......

William Stein -- Truist Securities -- Analyst

Yes. It sounds like the 1.8 million units you expect this year is supply, not demand-limited supply, it sounds like, by the lithium batteries. If you were to become demand-limited, can you talk to us about your propensity to use price and your relatively high industry margins to grow units and share?

Zach Kirkhorn -- Chief Financial Officer

Yes. To be clear, the 1.8 million is not cell supply limited. And yes, I mean, we did address that number earlier in the call. Elon, do you want to answer?

Elon Musk -- Chief Executive Officer and Product Architect

Yes. It's roughly -- cell supply is roughly matched with that. And the 1.8 million cars, if we get lucky, it could be more. And then, the rest would go into stationary storage, the Powerwall and Megapack.


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But overall I really don't get this - there is serious sandbagging going on, or (unlikely) there is a serious production constraint that is not being explained or even mentioned. This is a business that grows as fast as it can and that we know has three production facilities in-ramp during 2023 (Berlin, Austin, and the Nevada Semi pilot facility), and they expect us to believe in all seriousness that they are going to sit there and just crank out Q4 for four times over. And they've deliberately lowered prices to maximise fill of the ramp whilst maintaining an adequate operating margin. That guidance for 1.8m is just not plausible in my eyes.

Here is what I had been mulling over and firming up prior to this call. That is for production of 2.279m in 2023. Now I'm beginning to doubt myself. I know I tend to be about 10% high on my forecasts, but this would be more like 27% high. And in a year when Berlin and Austin are supposed to be ramping hard ? And as I've pointed out on the Near Future Quarterly thread, if they miss a ramp in any one year it sets up bigger callenges in subsequent years.

View attachment 899953

As I said I am beginning to doubt myself. Am I missing anything here ? What do others think ?
I have already mentioned a potential reduction in production due to the Model 3 Highland refresh.

And I think that the 4680 ramp at Austin may initially just free up 2170 cells for the Semi. When the Semi is being ramped, each Semi takes a lot of cells.

I can see Austin producing enough 4680 cells for 5,000 Model Ys per week.
But 2,000 - 3,000 Model Y 2170 packs freed up might only be enough for around 200 Semis per week.

So my question is Austin producing enough 4680 cells for more than 5,000 Model Ys per week and the relative priority of Model Y / Semi production / Cybertruck production.

Also see my post here :- 4680 Cathode & Anode discussion for investors
 
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As I said I am beginning to doubt myself. Am I missing anything here ? What do others think ?

Lol, you're definately overthinking this. First question to ask is what kind of cells are inside Megapack? If they are CATL LFP cells sourced from China (as many of us here suspect), then Tesla has nearly unconstrained upside for TE.

As far as Auto goes, those 2170 cells are not going into megapack, but maybe a few lower-profit powerwalls w. xtras. But Tesla wants to switch those to LFP too. So it'll be fine, just relax and let it happen.. ;)


Cheers!
 
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You’re missing something important in “what changed.” Besides Tesla production and macro environment, another factor is competitor production, particularly BYD. It is no longer true that Tesla has no competitors. So supply and demand is impacted by the production of all competitors, not just Tesla.

I’m still long TSLA, and will buy more chairs tomorrow, and my investment thesis is that there is enough demand to support multiple EV makers, and Tesla’s manufacturing and software prowess will give it industry leading margins.

But I am being more cautious than before on leverage, because I no longer feel this thesis is bulletproof. I can’t predict the manufacturing capabilities of Tesla’s competitors now that there is at least one serious competitor out there.
When are we going to get over "other BEVs are competition"? The competition is ICE and will be for several years.
 
I was trying to gently point out why Tesla wouldn't go in that direction of small scale wind. Maybe I should have have been clearer, less gentle.

Uh, because ALL of Elon's companies exist to create and support the technologies he will need to build a city on Mars during his lifetime. There's no suitable source of wind energy on Mars. he's not going to waste Tesla's limited resources creating tech he can't use. Others will solve wind power. Same reason Elon is building a global satellite communications network; he'll need one for Mars.
 
Commerical vehicle will definitely be a van. Calling it now. That form factor would also serve well as a Robotaxi in some markets and perhaps in some tunnels...
Globally several van types, Roughly similar is size to:
Ford Transit and many others.
serve as delivery vehicles, busses, campers and others.
That class is full of best sellers from Stellantis, VW, Ford and many others.
many have BEV versions but none are ground-up BEV except;
The slightly larger Rivians designed and built for Amazon.

Were Tesla to offer this class using now-traditional Tesla skills there should be massive opportunity. In some ways analogous to Model Y, squarely aiming at a very large market seemingly populated by almost every competitor.
 
It was made clear that early adopters will not get version 4 hardware, software or sensors. I would “bee” lying if I said I did not get a lot of criticism for having this opinion. We are just history and long investors believing the snake oil. This should help bolster profits, I don’t know about investors. Tesla’s autopilot is ranked #7, which is sad for a company with No real competition. I am so glad I have a futureproof Tesla.


IMG_4906.jpg
 
What is the typical cost of Tesla insurance? 100/month? I am looking at 250k people already on Tesla insurance without even opening up FL, the 2nd biggest Tesla market?
Maybe the most informative part of insurance was Elon’s ramble about repair costs, speed of repair and redesign to simplify repair and reduce damage. In the real world those are the things that reduce collision and property damage premiums. Those are rarely heard sentiments from the manufacturing and design sides.
 
As I said I am beginning to doubt myself. Am I missing anything here ? What do others think ?
I think they are trying to underpromise, overdeliver as best as they can, because they know they/share price will get punished if other way around.

Now their underpromise is quite accurately in accordance with the 50% average growth number anchored in 2020. (Edit: actually for 50% average growth since 2020 they should have forecast 1690000 deliveries in 2023)

And now their underpromisine is being scrutinized. They can’t win, can they?

(Except, of course, they can and will win, in the end 😁)
 
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TSLA After-Hours Quotes​


Data last updated Jan 25, 2023 08:00 PM ET.
This page will resume updating on Jan 26, 2023 04:00 PM ET.

Consolidated Last Sale$152.35 +8.46 (+5.88%)
After-Hours Volume23,385,490
After-Hours High$153 (07:03:17 PM)
After-Hours Low$141.69 (04:06:34 PM)

The positive 2022-Q4 Earning Report, and especially the guidance for 2023, saw heavy TSLA trading in today's After-hrs sesson, with Record Volume of >60.4% more After-hrs than the previous highest record of 14.6M shares (split-adjusted).

TSLA was the 8th-highest gainer in the NDX during the After-hrs session:

Components of the S&P 500

#CompanySymbolWeight PriceChg% Chg
428MarketAxess Holdings Inc.MKTX0.036729
up.gif
363.63
34.11(10.35%)
190Capital One Financial CorpCOF0.121134
up.gif
116.09
9.58(8.99%)
253Warner Bros. Discovery Inc. Series AWBD0.086992
up.gif
14.51
1.13(8.45%)
436Seagate Technology Holdings PLCSTX0.035968
up.gif
67.00
4.77(7.67%)
110Equinix Inc.EQIX0.197989
up.gif
774.01
54.39(7.56%)
54AT&T Inc.T0.406009
up.gif
20.45
1.29(6.73%)
452Paramount Global Class BPARA0.031164
up.gif
22.08
1.25(6.00%)
12Tesla IncTSLA1.148317
up.gif
152.35
8.46(5.88%)

Fun Fact? The company which owns this Stock Exchange was down -5.9% After-hrs: (the 2nd-worst loser) :p

314Nasdaq Inc.NDAQ0.062197
down.gif
58.26
-3.66(-5.91%)

Cheers to the Longs!
For those forecasting severe recession, explain the COF(Capital One) movement. They‘re as pure a credit card play as exists in the US. Given their generally down-scale positions, one would expect larger loan loss reserves now. The new Basel reports will update this but the increased losses are not yet appearing to be material. Perhaps the Tesla worries are well above the COF market, with Tech industry layoffs and the like.
All this is well worth careful monitoring.
 
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This. Can’t be hypocritical about this it works both ways, and I see people looking at q4 run rate as a base all the time including today for the bull thesis.

I think tesla growth rate slows down below 50% for years to come until the gen 3 platform (the cheap car) comes out. With the reason/excuse being “we’re reallocating batteries to semi, truck, and energy which all require more.” Perfectly valid? Of course.

But I’m saying this to point out every hyperbull who were treating the 50% number as the law of Moses here all the way until earlier this year (for many years) and absolutely TRASHING analysts for having growth rates of 30%. TRASHING.

When look, let’s not rewrite history, earlier this year Elon and Zac were talking about 50% growth this year, which was just redefined as 50% from the base year because they failed to meet it this year (and Rob Maurer pointed this out).

The level of bull I read here is bad.

Look at this chart from yesterday's slide deck and absorb its message.
The blue bars represent 50% targets for each year. The red are what actually happened.
Read the "Note" in fine print at the bottom of this chart for further clarity.


1674735084664.png

Now, go look on page 12 of the previous Q4 slide deck for 2021 and see the same description of a "multi-year horizon" to further support how nobody has redefined anything.
 
With max pain at 138$ and a wall of call options at 150$ it sure will be interesting to see where this week ends.


View attachment 899939
But don’t ignore the nearly 10,000 put options at $160. MMs wouldn’t complain too bad if they just had to buy shares as they move through the $150 wall, if they can screw all those put holders at $160.

My guess is that we get close to $160 today, but then move back down close to $150 by tomorrow.
 
Maybe the most informative part of insurance was Elon’s ramble about repair costs, speed of repair and redesign to simplify repair and reduce damage. In the real world those are the things that reduce collision and property damage premiums. Those are rarely heard sentiments from the manufacturing and design sides.
This is not been my experience at all. Their proprietary approach to service has only caused delays and incompetence. They are finally coming next week, allegedly, because it usually gets pushed to fix my passenger restraint system. The price has gone up $20 since last fall when they didn’t have the parts.

This is the service appointment for my girlfriends Tesla, to come and flip the cabin view camera. It’s amazing that this was not caught during Tesla’s QA. We did not know till the new in cabin view was available on the app. I’m sure it didn’t affect the safety score.

A normal person would try to schedule both service visits at the same time. Since they are coming to the same house twice in a week. Not sure how I can do this with Tesla.



0B86E4A7-D0F8-4C30-AE89-E627366F14D6.jpeg

4230C3A5-6483-4B3F-800B-208AD9DD9F8D.jpeg
 
But don’t ignore the nearly 10,000 put options at $160. MMs wouldn’t complain too bad if they just had to buy shares as they move through the $150 wall, if they can screw all those put holders at $160.

My guess is that we get close to $160 today, but then move back down close to $150 by tomorrow.
Or it’s entirely possible to just keep ramping up. MMs can buy shares if needed to cover those naked calls.
 
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Thank you AD. I was a shareholder of OSTK in circa, 2003-2006, and followed the travails of Patrick Byrne. Being a broker at the time, I became very familiar with OSTK's tangle with the naked shorts...

Here's his latest video, which includes a list of Top-5 All-time Wall St. frauds (53 min ago):

Wall Street's #1 Fraud: Stealing Your $$$ Today | Roger James Hamilton

 
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Just heard over the ship's intercom:

"This is your captain. We are beyond the CG Event Horizon and our velocity is increasing. If we maintain current thrust and trajectory the safety margin for Starship TSLA increases exponentially. Disregard any smell of Burnt Hair as it is residual and will dissipate over time. A brief memorial service for the Shorties will be held in the cargo bay once we reach a comfortable distance from the CGEH. For now, HODL. We remain at Yellow Alert."