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

[Thumper]

I have never believed in double stack battery packs. I didn’t believe them when some suggested that was the secret to the roadster II range and I’m not buying it now. Double stack would weigh too much and pose cooling problems.

 

[dhanson865]

This is a great video. An hour long, but mostly filled with meat. And yes, Cory does tell us what Tesla's advantages are (there are many that he explains).

One thing I didn't know was the history for how auto OEMs ended up with a fractured design architecture versus Tesla's current extremely integrated design. In the 1990s, managers doing their spreadsheet analysis realized that if they bought, say, wire harnesses from Ukraine, they could get them shipped to the US for a total cost of like $10, whereas if they built them in their factory with union labor, it would cost $30. So they began outsourcing pretty much everything. And that worked as long as you didn't have huge design changes and innovations in your industry.

Along comes Tesla. Their first iteration, the 2012 Model S, was designed pretty much the same way (remember that the original Tesla business plan with the OG Roadster was to outsource basically everything). But for the mass market Model 3, Tesla had a ginourmous challenge ahead of them in that they had to cut costs massively while still producing a great car. That forced them to do extreme design integration. Their superbottle was one example where the thermal system became highly integrated and shed a lot of parts count cost, manufacturing complexity, weight, etc. The high voltage system was another example where they highly integrated all those components resulting in far less orange wiring everywhere, again saving costs and weight (every weight save has knock on cost reduction effects). They also got smarter in that they had time to look at the way legacy auto did things, and improved upon that - legacy auto had to use heavy and expensive hoses to carry very hot engine cooling fluids. For the model 3, they realized their temperature ranges were far smaller so they could use far cheaper and lighter "plastic" hoses (not an ordinary plastic, of course, you know what I mean).

Anyways, watch the video when you have time. Cory is an engaging speaker when he doesn't have Munro slowing things down (and this interview is just Cory).

cory was fine talking about history in his time range, nothing before the 80s nothing tesla will do in 2024 or after.

Cory was clueless when prompted to think about how Tesla could make a car for half the price of a Model 3.

Hadn't even heard of project Highland.

Not disagreeing with your props in general, just trying to put them in context.

 

[Cosmacelf]

I have never believed in double stack battery packs. I didn’t believe them when some suggested that was the secret to the roadster II range and I’m not buying it now. Double stack would weigh too much and pose cooling problems.

Not sure there would be cooling problems since Tesla uses side ribbon cooling. They would have an insulating layer between the layers and cool the two layers independently.

 

[Cosmacelf]

Cory was clueless when prompted to think about how Tesla could make a car for half the price of a Model 3.

Hadn't even heard of project Highland.

That isn't how I would characterize it. He wasn't clueless, he just didn't think it was the right strategic choice. He thought that making a full sized SUV (maybe even off the Cybertruck platform) would be a larger addressable market (in the US). Now, you may disagree with Cory, but calling him clueless is a bit harsh. It isn't that he didn't think Tesla could make a smaller car, he just questioned whether it made sense to do.

And "project highland" honestly has very thin sourcing. None of us here know what it is or if it is either significant or real. Just tons of speculation.

Personally, I will be disappointed if Elon doesn't give us a product roadmap for the next five years on March 1st which includes a small car, a full size SUV and a commercial cargo van.

 

[2daMoon]

I have never believed in double stack battery packs. I didn’t believe them when some suggested that was the secret to the roadster II range and I’m not buying it now. Double stack would weigh too much and pose cooling problems.

Any reason the battery pack couldn't be as long as the distance from front axle line to rear axle line? Full width under the passenger areas, narrowing at front and rear, and still a structural member mounted between the castings like on the Y, but built further into the front and rear castings. Would that be enough room to solve for 500 miles worth of batteries without double-stacking?

Extending beyond the axle lines could create potential issues with polar moment.

 

[Prunesquallor]

… Honestly most traffic laws are merely a suggestion according to every driver.

As a cyclist, I can attest to this.

 

[Webeevdrivers]

FSDb is student driver grade right now.

Agreed. A student on crack with a 3 second memory.

 

[JRP3]

I have never believed in double stack battery packs. I didn’t believe them when some suggested that was the secret to the roadster II range and I’m not buying it now. Double stack would weigh too much and pose cooling problems.

The front of the 85 and 90 Model S packs were double stacked, there are no cooling issues involved. There is also no other explanation for the floor height of the Roadster and no other way to reach the 600 mile range target.

 

[MC3OZ]

I have never believed in double stack battery packs. I didn’t believe them when some suggested that was the secret to the roadster II range and I’m not buying it now. Double stack would weigh too much and pose cooling problems.

The Roadster prototype might have had double stack, but one problem is the extra strain all that weight puts on the tires.

The Roaster body would probably be a lightweight substance like Carbon-fibre or fiberglass.

If Tesla made longer (say 46x120) cells, that is a better than double-stack, but does require a specialised line.

Improving cell energy density is another obvious solution.

If they can get say 150-170 kWh in a vehicle with a total body weight no more than a Model S Plaid, with low drag and rolling resistance that might go close to getting 500-600 miles of range?

 

[⚡️ELECTROMAN⚡️]

but the road rage of people waiting for the car to make a decision at an intersection or traffic circle would probably lead to a serious escalation of traffic shootings in some societies.

Use the accelerator pedal. When you see that it is safe to progress forward use the accelerator pedal. The car tends to be a little paranoid and cautions. Probably too much 420 time. You can help reassure it that it's ok to go. As for the random signaling I think it's just too stoned. Most of the issues seem fairly easy to fix though.

 

[Ogre]

Was there a /s tag missing? Not even close to the same thing. Plaid was just a tweaked version of the existing Model S, not a whole new vehicle. When the 60 came out there was already the 85.

Really annoying when people read your post and want to argue details rather than talk about the main point.

 

[StealthP3D]

Weight would impact cornering, but smooth out the ride. Pack weight might actually help overall though as it lowers CG, reducing body roll. Especially with a full load of passengers/ cargo with a higher seating position.
Will tires (sidewall height) be a limiting factor to handling regardless?

The Cybertruck is going to handle far better than any 1/2 ton pickup on the market. EV's do have lower body roll due to the lower center of gravity but going from 120 kWh (300+ miles range) to 190 kWh (500+ miles of range) is not going to significantly reduce body roll, it's just going to require more expensive tires and suspension. Battery weight has point of diminishing returns in terms of body roll, particularly when the battery weight is only below the center of the axles with the suspension in the low mode.

I think Cybertruck tires will be specified as at least 48 psi recommended inflation pressure, maybe considerably higher. It depends upon which route Tesla takes to address the challenge of appropriate tires. At the Cyber Rodeo in Austin, we saw LT 315/60R20 tires on the CT. Modern tire construction has done wonders for maintaining good tread contact under high cornering forces, even with 60 aspect ratio sidewalls. By historical standards, that's not even a very tall aspect ratio. Some people will, no doubt, put some 40-aspect ratio sport rubber with huge wheel diameters on there and create a Lamborghini pickup truck and it will best the LT315/60R20 tires by a somewhat significant margin on pavement. But then it will be worse on unpaved roads and off-road. Either way, the handling will be revolutionary for a pickup truck.

 

[StealthP3D]

On the other hand they'll pan it for lack of range and especially when towing. If I were Tesla and had the choice there is no question I'd release the longest range first.

The media will pan the initial Cybertruck for lack of range regardless of whether it's a 300 mile or 500-mile version. The media will pan it's aesthetic and everything else that is different from a traditional pickup truck. Not because those are bad things, just because they are different things. The media will probably lament the fact that Sundays can no longer be spent productively by changing oil and filters with your son or daughter and teaching them how to care for things! The older I get, the more the media is becoming less and less relevant. There's a reason for that.

 

[theschnell]

Really annoying when people read your post and want to argue details rather than talk about the main point.

Your main point was still wrong though. 85 came long before the 60. The context is new models. The fact the plaid eventually came out later does not change the fact that the S came out with longer range, highest specced version first at the time of introduction.

 

[StealthP3D]

Interesting! They are not available for order in Sweden and I thought they would not be permitted under EU safety rules, due to how dangerous they will be to pedestrians. But maybe I misunderstood.

I recommend not repeating TSLAQ talking points here as if they are credible.

 

[StealthP3D]

I am not sure what you are asking. Is there even such a thing as the "actual discount rate"? Does it not depend on many factors?

The discount rate refers to the rate of return an investor expects. So, by assuming an ending value, and the desired discount rate, an investor can theoretically determine whether they think a stock is fairly valued. Given a known starting value and ending value after a given amount of time, the actual discount rate from the starting value can be calculated. Until then it is just an assumed or desired value.

So in 2019 the TSLA was priced with the expectation that now it would be 223.5 * 1.09^3 to 223.5 * 1.12^3. Obviously the share price now did not meet that expectation, that is perfectly normal because the future contains many unknowns.

It's really difficult to follow nonsense like this. I clearly indicated the $223.5 TSLA share price in 2019 was not adjusted for splits. You should know this. You need to plug $14.90 (instead of $223.5) into your equation for it to make sense. You conclusion will be wildly different.

 

[StealthP3D]

Pretty sure the lawyers are all about enriching themselves rather than having a goal of harming others.

Obviously, the lawyers were in it for themselves, and I never suggested otherwise.

The lawsuit required significant funding for expert witnesses. I don't have the value, but I think it was over $1 million for that alone. It's possible the lawyers invested the money themselves because they judged the case to be low risk of failure. If so, they were pretty stupid as all 12 jurors voted not-guilty and they needed all 12 jurors to vote guilty to recoup any of their investment.

I'm suggesting the case was almost certainly funded by those out to harm Tesla, the attorneys were just in it for a potential payout, and maybe a fee as incentive to risk their time as well. But you can believe any analysis you like as these types of deals are unlikely to ever see the light of day.

 

[MikeAtkinson]

Mmmm .... there are several questions within this ....

- Mathematically an S-curve is a "logistics" curve and that is what almost all the academic literature centres on. Only the early-ish part of that corresponds to something similarish to an exponential, but by no means all. To expect exponential through the full 20-year S-curve is not realistic. What we are unsure of is where either the Tesla automotive S-curve levels off, or the total auto industry one. But focussing on the Tesla one as that is where the TSLA share price comes from, my NPV pricing assumption is that nothing interesting happens after 2030 in either energy or automotive. That simplification is likely to be conservative, but is also why the purple TSLA share price line is in fact an S-curve. You can scrunch the x and y axis to stretch it to fit the standard S-curves for other industry transformations / technology adoptions, but what is being shown there is in fact a classic 15-year S-curve. It is definitely not at all linear, I am not guilty of that error. I have another version which looks out to 2040 for auto, here (below) , but I've not specifically modelled properly that for TSLA shareprice etc (yet) and you'll se it goes to 30m not 20m and so may be a full-cycle - we will see if we live that long. So if you pull the golden Tesla BEV piece out of the graphic below you'll discover it is an S-curve as well.

- In the case of Tesla we have multiple stacked S-curves. Automotive, each of various segments being progressively addressed. Energy, ditto. Insurance (probably financially trivial, I reckon maybe 5% mkt cap). Autonomy in all its guises, massive ramifications. Possibly a wider financial offering, perhaps icw Twitter, who knows. They don't all start at the same time. Maybe other stuff - heating etc. They are not all the same size. The overall effect tends to be to linearise growth more.

- There is some recent literature / study which actually says that it is best to model these things as stacked quadratics and they give lots of examples. Not as exponentials and not as logistics S-curves. . If you look back through the Quarterly thread ( Near-future quarterly financial projections ) several pages you'll see that I've posted a link to that suggestion, and made some comments on it. There are (imho) some good points in that suggestion.

- At the end of the day shareprice depends not on how the company is actually doing; nor even on how you or I think the company is doing; but only on how those who are active sellers/buyers of shares think the company is doing. Tesla didn't change its performance much in the last few years; and I didn't change my view of its performance much in the last few years; but those who were buying and selling ran it up from $100 to $400 and then back down to $120 in just two years or so, then back up to almost $200 in the last few weeks. So it doesn't matter how good a rational model we build for pricing that can get to a 'truth' within say 30-40% accuracy if it can get swamped by 400% of irrationality. Except of course to identify if there is any value at any point in time by selling out to (or buying from) a bigger sucker than ourselves.

- Not every company in a transforming industry survives and thrives, even those that started it. One of the S-curves in your list is air travel. If you take the whole aerospace industry over the last 100-years there was a study I saw a couple decades ago that showed only two made a cumulative net profit for shareholders : Boeing and Airbus. All the others ultimately were costly failures even if they started well and had good patches, each transforming the industry in their time. If one updated that study to today I think Boeing would be eliminated from the list. So Tesla's good position now could go horribly wrong. I hope not.

- Yes the red line (on PE x 40) to $2400 in 2030 is a real possibility. Take your pick. I for sure do not know. That is why I also plot the line towards $400 derived from the NPV analysis to ground myself in another view that may be equally rational, perhaps even more so. Everyone is very sniffy about going from $120 to $400 in 'only' 8-years. Maybe they are sniffy because they've seen $400 already (and lost it). Maybe they are sniffy because it has just run up from $120 to almost $200 in just the last few weeks. I don't know how or why those buyers and sellers who are active in the market today are reaching their decisions. My best guess is that a lot of them are driving on 40x trailing PE. But maybe some of them are operating on 30x fwd PE. Or maybe some are looking for the unity balance point in the fwd vs trailing PEG. Or maybe some are building an NPV model. Or even building a full industry adoption model with feedback loops. Or throwing darts and juggling animal bones. Overall that 40x trailing PE looks like a lot of folk may be using as their driver assistance - at least for now :

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Mostly agree but:

1. PEG is a stock's price-to-earnings (P/E) ratio divided by the growth rate of its earnings for a specified time period (Price/Earnings-to-Growth (PEG) Ratio: What It Is and the Formula)
2. There are good reasons to think that adoption of a new technology approximates to the normal distribution (central limit theorem), the intregal of that looks similar to the logistics curve. The real world is messy (wars, recessions, etc.) and we only have good data for a limited number of products, so it is difficult to know which is best, or even if there is one best which covers all cases. The logistics curve is a reasonable approximation and easy to compute. I usually just say S curve, because it does not give the impression of false precision for messy real world data.

3. The graphs usually shown of adoption (as above) are for a whole product class (e.g. smart phones), that does not say much about how individual products (e.g. iPhone 6), or companies (e.g. Apple) fit on the adoption curve. For some product classes no one company becomes dominant (e.g. microwaves), for others early leaders fail (e.g Video consoles, Atari).

 

[nesroht]

I read Papafox’s Daily TSLA Trading Charts with great interest, not the least because of the great insight into what goes on behind the scenes and the manipulations that occurs all the time.

There is one thing I don’t quite understand though, perhaps someone here can explain it: It is apparently quite normal that eg. market makers short TSLA during the day to keep the price down and then cover for the shorted stocks during the Closing Cross at the end of the trading day. I would expect a somewhat symmetrical effect on the stock price, I.e that the price would go up with approximately the same mount when covering as it went down when shorting. I don’t see any signs of that, so did I miss something or what Is the explanation for that? Thanks!

 

[MikeAtkinson]

The discount rate refers to the rate of return an investor expects. So, by assuming an ending value, and the desired discount rate, an investor can theoretically determine whether they think a stock is fairly valued. Given a known starting value and ending value after a given amount of time, the actual discount rate from the starting value can be calculated. Until then it is just an assumed or desired value.

Yes, I know what the "discount rate" is but what is the "actual discount rate"? As it varies from investor to investor, there is no one figure, also you confused the issue by bringing in the current share price, in 2019 the share price in 2023 is not known by investors so is irrelevant to what they use as the discount rate.

It's really difficult to follow nonsense like this. I clearly indicated the $223.5 TSLA share price in 2019 was not adjusted for splits. You should know this. You need to plug $14.90 (instead of $223.5) into your equation for it to make sense. You conclusion will be wildly different.

I misread what you meant. The discount rate used in 2019 cannot take into share price in 2023, the discount rate in 2023 is only weakly dependent on past share prices (it effects the additional risk factor a bit). A share price at a random date in the past + todays share price can be used to compute rates of return, but is just about meaningless in general, in particular individual investors may have bought at that date then it is meaningful for them.

This is not nonsense, in 2019 the expectation (weighted sum of all investors, i.e the market) was for the share price to be between 19.2 and 20.3 now, it is obviously much higher. "Obviously the share price now did not meet that expectation, that is perfectly normal because the future contains many unknowns."

The above paragraph assumes efficient markets. For TSLA the market is not efficient, FUD, short selling, FOMO, etc. all cause the share price to deviate widely from the what rational analysis discounting back from future expected earnings are computed from bottom up analysis, company guidance, estimates about future technology disruption, etc. would lead one to expect.