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

[MP3Mike]

Last year this time it sounded very much like Cybertruck production would start as soon as Model Y ramp finished… that hasn’t really materialized.

Well, the Model Y ramp hasn't finished yet. And I don't think it was expected to have been finished by now...

 

[wipster]

Solar has plenty of issues with dust. They will need blowers to keep the panels clear of dust. The rovers have issues with this.

So figure out a way to clean them! It ain't that difficult. By the time they're deployed, TeslaBots can handle it, no worries.

 

[aubreymcfato]

The issue with Model 3 for European and Asian markets is NOT its price, it is simply TOO BIG. Tesla must build a smaller car for that segment, or somebody else will. BTW, small cars are the biggest auto segment in Europe.

I am (maybe) in the market for a new car. I already have a Renault Zoe, and I could go all in and buy a Tesla (my first!). That damn car doesn't even fit in my garage.

 

[wipster]

Because a lot of us are super excited by Cybertruck and there have been a lot of delays. Last year this time it sounded very much like Cybertruck production would start as soon as Model Y ramp finished… that hasn’t really materialized. Just feels a lot like a subtle setup for another delay.

Just last earnings I think management said “Volume Production” was year end 2023 and now it seems to have been moved to 2024. Musk’s comments about very slow initial growth did not sound particularly bullish for Cybertruck reservation holders either.

Given the lack of communication around many of the prior delays, there is a lot of frustration.

Mostly, you have over a million people who are dealing with a 18-24 months delay. Frustration is going to be high.

Dude, did you get out of the wrong side of the bed this morning? Maybe CNBS should hire you ;-)

 

[StealthP3D]

The discontinuity lies in that Tesla can hit 50% YoY (1.8m) with basically zero QoQ growth.
Not that there is a problem with that, Cybertruck is a 2024 volume item as is Semi; but it looks a little weird since Berlin and Austin would theoretically increase output to the 2.0m+ level.

Possibilities:
Sandbagging/ expectation management
Lack of factory growth
Some other short term limit
Demand issues
Slow roll due to product step change

If you listen to the flavor of the call, and various details scattered through the call, it looks to me like Tesla might be using 2023, a period that Elon seems convinced will be in recession, to temporarily move the focus from growing auto manufacturing volumes at all costs, to focusing on optimizing the cost to manufacture and making up the difference on Megapack sales. If they can produce enough Megapacks, they might match auto margins, if not exceed them. At that point, they can publish substantially better financials on the auto side, on the energy side, and on the bottom line without having to increase auto production in a big way. It costs a lot of money and impacts margins to always be pushing for higher auto production and while this does lead to volume efficiency gains, they take time to fully filter to the bottom line, which helps hide the margins they are capable of at any given ASP.

The impact on valuations of pulling this off could be tremendous. Not only would analysts begin to realize the profit potential of the energy side of the business, but they would also see just how far ahead Tesla really was on auto manufacturing, something that wasn't fully visible to them previously due to the costs of constantly expanding and doing the dog and pony show that is the "wave".

I think 2024 and 2025 will see a return to 60%+ growth in auto volumes and analysts will have a newfound appreciation for the favorable economics of battery storage right when 4680 production is hitting impressive volumes with a cost structure other battery suppliers cannot touch. Not only in terms of cost to produce but also in terms of being able to continually scale production capacity at a much lower investment.

Of course, this is dependent upon having a readily available supply of raw materials for batteries. But, if Tesla's general plan is what I've laid out, I really like it because the ability to both scale battery manufacturing more cost effectively (due to the reasons given at Battery Day) and the ability to manufacture batteries at a lower cost is what will allow them to outbid others for the available raw materials. Let that sink in. If raw materials become supply limited, new sources, those not spoken for on contract, will go to those who can pay the most. And whoever can monetize those materials most efficiently will naturally be the high bidder. Tesla will not be the only beneficiary of scaling battery production more efficiently, raw materials suppliers will see a bigger boom than expected as prices and volumes ramp higher than most think possible. I think you can see where this is likely going, assuming Tesla's 4680 dry battery electrodes pan out and the process they have been working on perfecting cannot be quickly replicated.

It really is all about the batteries and I liked the cautious optimism management displayed on this very point during the call when one of them, I forget who, mentioned they thought 4680 production ramp was on track to ramp just before Cybertruck started ramping up production this year. Specifics were not given but my impression was they felt confident the production issues that have so far prevented them from cutting and pasting 4680 lines and ramping in volume had the end in sight. That they were confident how it was coming together. I wish we had more visibility into 4680 production, but it is what it is. The potential rewards of this playing out as planned are too good to ignore.

I suspect patient investors will be rewarded beyond their wildest expectations while those who have traumatic memories of the disappointment that was 2022 are the ones who will take their money and run after it has only doubled or quadrupled, who will leave most of the gains for those of us who do not have PTSD. That's why it's so important to avoid a mindset that gives you PTSD, because it will ruin your ability to make big gains on generational companies that are rarely this easy to identify.

 

[jerry33]

OK. There's been a couple of derogatory comments about HW4 in here, mainly along the lines of, "Older cars won't get the upgrade!" and such. This is probably not the right thread, but there's a financial bit that may be of interest.

I recall that during the presentation when they did a deep dive into HW3, they indicated that HW4 would be a drop in replacement. (Of course not if it requires new or additional cameras.)

 

[Artful Dodger]

The specter of JPOW looms for next week.

Just sayin...

Large hedge funds and big carbon are in a conundrum right now: if they direct their FED lackeys to crush the economy and induce a deep recession, Tesla is the ONLY car company that survives the storm. It the FED backs down and lets the market return to normal, then Tesla blossoms and eats up the automarket while the others fail to ramp production. They've taken their swings at Tesla, and missed (nice try, Treasury). What will they do next? Shirley they won't give up, as long as they're being paid?

 

[Curt Renz]

Reuters - 12:50 pm EST:
For automakers, the EV surge is everything everywhere all at once

Excerpt:

The surprise leadership shuffle on Thursday at Toyota Motor Corp, renewed urgency at Renault and Nissan Motor Co to restructure their alliance and Elon Musk's declaration that Tesla Inc will be the world's No. 1 automaker by a wide margin have one thing in common: What once defined the global auto industry's center is no longer holding...

 

[Hiline]

If you listen to the flavor of the call, and various details scattered through the call, it looks to me like Tesla might be using 2023, a period that Elon seems convinced will be in recession, to temporarily move the focus from growing auto manufacturing volumes at all costs, to focusing on optimizing the cost to manufacture and making up the difference on Megapack sales. If they can produce enough Megapacks, they might match auto margins, if not exceed them. At that point, they can publish substantially better financials on the auto side, on the energy side, and on the bottom line without having to increase auto production in a big way. It costs a lot of money and impacts margins to always be pushing for higher auto production and while this does lead to volume efficiency gains, they take time to fully filter to the bottom line, which helps hide the margins they are capable of at any given ASP.

The impact on valuations of pulling this off could be tremendous. Not only would analysts begin to realize the profit potential of the energy side of the business, but they would also see just how far ahead Tesla really was on auto manufacturing, something that wasn't fully visible to them previously due to the costs of constantly expanding and doing the dog and pony show that is the "wave".

I think 2024 and 2025 will see a return to 60%+ growth in auto volumes and analysts will have a newfound appreciation for the favorable economics of battery storage right when 4680 production is hitting impressive volumes with a cost structure other battery suppliers cannot touch. Not only in terms of cost to produce but also in terms of being able to continually scale production capacity at a much lower investment.

Of course, this is dependent upon having a readily available supply of raw materials for batteries. But, if Tesla's general plan is what I've laid out, I really like it because the ability to both scale battery manufacturing more cost effectively (due to the reasons given at Battery Day) and the ability to manufacture batteries at a lower cost is what will allow them to outbid others for the available raw materials. Let that sink in. If raw materials become supply limited, new sources, those not spoken for on contract, will go to those who can pay the most. And whoever can monetize those materials most efficiently will naturally be the high bidder. Tesla will not be the only beneficiary of scaling battery production more efficiently, raw materials suppliers will see a bigger boom than expected as prices and volumes ramp higher than most think possible. I think you can see where this is likely going, assuming Tesla's 4680 dry battery electrodes pan out and the process they have been working on perfecting cannot be quickly replicated.

It really is all about the batteries and I liked the cautious optimism management displayed on this very point during the call when one of them, I forget who, mentioned they thought 4680 production ramp was on track to ramp just before Cybertruck started ramping up production this year. Specifics were not given but my impression was they felt confident the production issues that have so far prevented them from cutting and pasting 4680 lines and ramping in volume had the end in sight. That they were confident how it was coming together. I wish we had more visibility into 4680 production, but it is what it is. The potential rewards of this playing out as planned are too good to ignore.

I suspect patient investors will be rewarded beyond their wildest expectations while those who have traumatic memories of the disappointment that was 2022 are the ones who will take their money and run after it has only doubled or quadrupled, who will leave most of the gains for those of us who do not have PTSD. That's why it's so important to avoid a mindset that gives you PTSD, because it will ruin your ability to make big gains on generational companies that are rarely this easy to identify.

Kudos to you on your well thought out post. Tesla has the potential to be the most valuable company in the world. I see a future where we can live without Apple, Amazon, or Microsoft, but we can't live without Tesla cars and energy products.

 

[SOULPEDL]

I’d need to see a lot more progress on FSD & Robotaxi to get excited about this idea.

Still feels like Robotaxi is 3-5 years out.

I'm getting an update right now which includes a minor update in FSD.

The timescale of progress shrinks with Dojo and improved the processing speed, capacity, and a fully connected bus system large-scale. Therefore the "Learning Curve" for FSD is accelerating over time. However, soon we'll play the march of 9's with a more limited data set to Train. However again, there will be more cars collecting this data. So it could be relatively linear in progress and think usable robotaxi could start in <1 yr incrementally (like no occupants at first only, limited areas or town, limited capability like no ULT etc...). I give it about 2 yrs before reverse and parking are solid and I trust it enough for a nap at 70 mph, freeway only at first. Think increments, just like we've been getting it so far. It will not happen all at once which is the hairball that limits our thinking.

Edit: Furthermore, is there any question that FSD could already do what Cruise or Waymo has been doing so far - if they wanted to, but are carefully going for the bigger prize?

 

[Dreadnought]

I'm surprised there isn't more of short squeeze going on. Maybe the weak shorts are closing out and the crazy ones are doubling down on their short positions

It'll take a while until anyone who shorted the stock in the 300s will start to feel squeezed. Sure, some will conclude that their party is over and take profits and dumb ones who shorted in the low 100s are under water but this is not a replay of '20/'21.

 

[GhostSkater]

Interesting bit of info

There is a Semi in Nevada with LG 2170 cells. AFAIK LG cells have never been used on the US, maybe a while ago for PowerWalls or MegaPacks, I think the first MegaPack project in Australia was LG cells due to the short time frame they had. Only China, and by consequence Berlin uses them

Could this mean that they are validating LG cells on the Semi to be built at Berlin?

Or the "For the first time we have cells to execute everything we planned" means they are also bringing LG cells to the US for vehicle use?

For 3/Y not so good news, because they usually charge a bit slower than Panasonic packs, but maybe for the Semi it's still plenty for the charging time targets they've set, LG cells can do 10-80% in 30 mins, which is the usual driver mandatory break

https://twitter.com/x/status/1618657685033066501

 

[StealthP3D]

Just last earnings I think management said “Volume Production” was year end 2023 and now it seems to have been moved to 2024. Musk’s comments about very slow initial growth did not sound particularly bullish for Cybertruck reservation holders either.

There was no change yesterday to guidance for the Cybertruck other than it's still on the same schedule. Management knows when the schedule has changed because that requires telling all their suppliers the schedule has changed. Obviously, they didn't do that because that would require they told us the schedule had changed.

I do detect a conscious effort to keep expectations from growing into the unrealistic realm, but nothing they said yesterday is incompatible with Cybertruck entering high volume production by year-end. It's just that the message was tailored for analysts who were getting ready to update their earnings through the end of the year. Tesla was making it clear the cost of the ramp would negate the potential for Cybertruck to meaningfully add to the bottom line (profit) for 2023. Because analysts have repeatedly proven how quickly they fail if management doesn't do a little analyst hand-holding. If it's just ramping into high volume by November or December, that puts the real revenue boost (and especially profits) into 2024. If they can stick to that schedule, it means Cybertruck profits can hit the ground running in 2024.

I can hardly wait and I'm a patient person!

 

[ZenRockGarden]

It'll take a while until anyone who shorted the stock in the 300s will start to feel squeezed. Sure, some will conclude that their party is over and take profits and dumb ones who shorted in the low 100s are under water but this is not a replay of '20/'21.

People short at 300 won't get "squeezed" but they very much would be looking at taking profit since Tesla has now proven it can relentlessly print money even in difficult quarters.

 

[ZenRockGarden]

Interesting bit of info

There is a Semi in Nevada with LG 2170 cells. AFAIK LG cells have never been used on the US, maybe a while ago for PowerWalls or MegaPacks, I think the first MegaPack project in Australia was LG cells due to the short time frame they had. Only China, and by consequence Berlin uses them

Could this mean that they are validating LG cells on the Semi to be built at Berlin?

Or the "For the first time we have cells to execute everything we planned" means they are also bringing LG cells to the US for vehicle use?

For 3/Y not so good news, because they usually charge a bit slower than Panasonic packs, but maybe for the Semi it's still plenty for the charging time targets they've set, LG cells can do 10-80% in 30 mins, which is the usual driver mandatory break

https://twitter.com/x/status/1618657685033066501

Yeah, for supply and charge-rate reasons, they may have to go 2170 on the Semi's at least initially. 4680 just not mature and in wide enough supply to do both Semi and Cyber-Truck yet, and the CT design I think requires it.

 

[Steven_H]

To pick a nit: 1.8 million production does not equal 50% YoY growth. Rather, you would need 2.05 million production.

The aim is to gain half "compounded" over a multi-year time horizon. 1.8 million production is on pace for continued 50%+ growth based on compound annual growth rate (CAGR). If you gain only 35% for 3 consecutive years, that is a compounded annually rate of 49%. Some "dim" analysts call it a miss when a single year is below 50% growth.

 

[Ogre]

There was no change yesterday to guidance for the Cybertruck other than it's still on the same schedule. Management knows when the schedule has changed because that requires telling all their suppliers the schedule has changed. Obviously, they didn't do that because that would require they told us the schedule had changed.

I do detect a conscious effort to keep expectations from growing into the unrealistic realm, but nothing they said yesterday is incompatible with Cybertruck entering high volume production by year-end.

My comment was pointed to the question of “Why there was so much negative media about Cybertruck timeline?”. The big answer is simple. There are a million people frustrated by their new toy being in a holding pattern for 18 months. Seeing progress has gotten a lot of people excited and I think rumors and some cheerleaders have been drumming up excitement that the timeline might be accelerating. Musk popped that bubble.

I said at beginning of year I thought we’d see around 10k trucks rolling off the line. I think Musk’s comments plus the GP install are right in line with that expectation.

Maybe a simpler, better way of saying it is the fairly slight difference in tone and more conservative language have put some people off. Doesn’t take much to set frustrated people off.

 

[Webeevdrivers]

I was hoping somebody would bring up the subject of adding CCS facility to Superchargers, or if there was any kind of road map in place for that. Maybe a topic better suited to investors day.

 

[Buckminster]

Threads of the day:
Tesla Investor Day Discussion Will the factory tour include CT line?
Tesla Insurance New info from call
Impact of nuclear fusion on TSLA New thread
H/W 4.0 discussion (investors) Retrofitting

 

[Ogre]

I'm getting an update right now which includes a minor update in FSD.

The timescale of progress shrinks with Dojo and improved the processing speed, capacity, and a fully connected bus system large-scale. Therefore the "Learning Curve" for FSD is accelerating over time. However, soon we'll play the march of 9's with a more limited data set to Train. However again, there will be more cars collecting this data. So it could be relatively linear in progress and think usable robotaxi could start in <1 yr incrementally (like no occupants at first only, limited areas or town, limited capability like no ULT etc...). I give it about 2 yrs before reverse and parking are solid and I trust it enough for a nap at 70 mph, freeway only at first. Think increments, just like we've been getting it so far. It will not happen all at once which is the hairball that limits our thinking.

Edit: Furthermore, is there any question that FSD could already do what Cruise or Waymo has been doing so far - if they wanted to, but are carefully going for the bigger prize?

Being better than Cruise and Waymo is not the challenge.

Being good enough that my mom is comfortable letting it take her home at night is.

Even if it’s safe, it needs to be so safe and predicable that it’s boring to ride in.


I’m bullish on FSD, just not on any particular timeline. Once FSD is “I can sleep on the drive down to my parents house” safe, then I think it’s reasonable to talk about Robotaxi.