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

[bkp_duke]

This part is important:

“Perhaps the brightest spot in the data for him is that among high-income Americans — defined as those who make more than $100,000 a year — slightly more say Musk has made them more likely to consider a Tesla than less likely.”

I’d say Tesla has more competition on the high end vs low end. So if Tesla can reel in the high end buyers this way and then get the lower end buyers simply by cost crushing measures, that’s a pretty good spot for Tesla to be in.

As we saw earlier this year with the Model Y price drops, a lot of people’s “principles” could be bought for about 15-20k.

It's almost as if someone writing the article (author) and someone making the title for the article (editor) aren't the same person . . .

 

[Olle]

These cars were NEVER meant to be competitive. They exist so GM can shout look at us we do EV's. GM is a marketing / brand company not an engineering powerhouse.

They may change in the future. /s

These were gas cars, not EVs. What keeps happening is probably that management celebrated some quick easy wins by slapping the Cadillac badge on the Impala and thereby show the shareholders "phenomenal synergies" between the brands. Meanwhile depriving the CT6 of its learning curve, but when that played out management already pocketed their synergy and platform utilization bonus.

ID4/ Ford Explorer is an other quick and easy win instead of figuring out the long term efficiency steps for Mach E line duplication in Europe.



But yes your statement is probably correct once more of GM EVs reach production.

 

[bpjod]

It seems to me that TSLA is controlled by options, gamblers, and market makers. It's actually a reason I've considered if I should sell and move on from TSLA. I'm fully confident Tesla will continue to grow, change the world for the better, and become an even more amazing company. But I have no confidence the stock market will ever reflect that reality. TSLA is its own entity that is churned back and forth to make short term money for some, with no care given to actual value of the company.

I realize I'm being cynical and this isn't 100% that simple. I've kept my shares because I do still think they're a good investment, but my confidence in the stock market reflecting that is at an all time low. Of course, in the past, TSLA has behaved like the coiled spring and it may do so again, but there is no guarantee of that.

I do wonder how stock markets would look if options did not exist.

TSLA won't follow Tesla until it does, and on that day I want to make sure I'm still holding all of my shares.

 

[Grifon]

Here is the link to Ford’s presentation: Ford Motor Company - Investors - Information - New Financial Reporting Teach-In. Presentation is an Adobe link within the webpage posted.

On page 33 Ford indicates total worldwide 2022 EV sales of 96,000 vehicles (up from 61,000 in 2021). Ford reiterates a run rate of 600k by the end of this year and 2M by the start of 2027.

My math shows Ford will need to increase sales by 185% YoY for the next four years to hit that 2 million run rate in January 2027.

Best of luck to Ford, I think they will need it.

 

[growler23]

In practice, they are doing both. They are maximizing both production of vehicles and the profit per vehicle. I don't believe for one second that Tesla ever lowers prices due to altruism. Tesla is not a charity.

Your final 5 words really struck a chord with my deeper/slower thoughts (usually I stay on the surface just to keep up with this forum!)

Tesla is indeed not a charity, but their mission is the most charitable one I can think of among for-profit companies!
Are there other companies (serious question, not rhetorical) out there who's mission is to basically change to globe over to a more sustainable and less deadly way of living? And are they anywhere near as impactful to the direction of the world as Tesla has proven to be already?

 

[bpjod]

• It is not realistic to think that Tesla will be the only car company, so the industry average margin is likely to become positive.

I don’t follow this logic at all.

Companies failing due to technological advantage is the natural course of progress. Nokia and Kodak are only the more modern and obvious examples. Similarly, monopolies due to technology happen.

Personally, I find it far more likely that many of the existing auto companies will fail. They are all heavily debt laden and have massive amounts of sunk capital in equipment, processes and facilities which are poorly designed for the next 100 years of manufacturing. Maybe some survive and flatline at a small gross margin propped up by sales into niches Tesla doesn’t pursue.

If FSD/ Robotaxi happens, this outcome is almost certain.

@Bouboule said that they don't expect Tesla to be the ONLY auto company - nothing was said about the incumbents or current startups. If there is even one other auto company in existence and it's able to make a go of it, then it will have positive margins too. Bouboule didn't say any of the current automakers, not even any of the newer players.

Let's say in 15 years only Tesla and BYD are making cars and every other carmaker has been relegated to the automakers' graveyard. At that point BYD and Tesla are likely both profitable, therefore Bouboule's premise that the industry average margin is positive will be true.

Hope this helps you make sense of what (I believe) @Bouboule was trying to convey.

 

[mongo]

Here is the link to Ford’s presentation: Ford Motor Company - Investors - Information - New Financial Reporting Teach-In

On page 33 Ford indicates total worldwide 2022 EV sales of 96,000 vehicles (up from 61,000 in 2021). Ford reiterates a run rate of 600k by the end of this year and 2M by the start of 2027.

My math shows Ford will need to increase sales by 185% YoY for the next four years to hit that 2 million run rate in January 2027.

Best of luck to Ford, I think they will need it.

Run rate is extrapolated peak manufacturing capacity and is not tied to actual sales.
The day they turn on a factory that can produce 1.4 million EVs a year they go from 600k to 2 million.

 

[totoro722]

The talk of a Tesla price war seems to me to be sometimes misjudged. I think Tesla is intentionally involved in a price war: against ICE vehicles. The mission is to transition drivers from ICE to electric, so successfully competing against ICE is needed to move the mission forward. How other EV makers, be they new or legacy, manage, and their struggles to get going (expected) is interesting, but not part of the Tesla mission. Any other EV manufacturers who succeed only hasten the transition to electric, so there is no reason to try to undercut them. No, Elon wants to price ICE out of existence. Good luck to him.

 

[Grifon]

Run rate is extrapolated peak manufacturing capacity and is not tied to actual sales.
The day they turn on a factory that can produce 1.4 million EVs a year they go from 600k to 2 million.

Ford’s presentation states a 2M EV production run rate by the end of 2026. I read that as Ford hopes to build and sell 2M EVs in 2027. Maybe I read it wrong, but does not look like a capacity goal to me.

 

[Ogre]

@Bouboule said that they don't expect Tesla to be the ONLY auto company - nothing was said about the incumbents or current startups. If there is even one other auto company in existence and it's able to make a go of it, then it will have positive margins too. Bouboule didn't say any of the current automakers, not even any of the newer players.

Let's say in 15 years only Tesla and BYD are making cars and every other carmaker has been relegated to the automakers' graveyard. At that point BYD and Tesla are likely both profitable, therefore Bouboule's premise that the industry average margin is positive will be true.

Hope this helps you make sense of what (I believe) @Bouboule was trying to convey.

My reply likely came across more negative than should have.

I don’t think you can assume anything about competition at this point. It’s certainly possible there will be a healthy competitive marketplace for cars and trucks in 10 years. Definitely not something you can assume any more.

 

[strago13]

Took one look at the ticker this morning and then now and immediately knew max pain is 190 for the week. Masterful job by the MM's.

 

[bkp_duke]

I really hate quoting Roto-Reuters . . . but they are the source that actually mentions Ford's margins.

Ford yesterday split out, and restated, their earnings, so we now have an idea of how much they were making, or in this case losing, on their EV business.

In 2022, they had margins on EVs of -41%. Mind you that's before Tesla put the hurt on everyone with an ~10% price cut, which Ford dill follow suit on.

Breakingviews - Ford’s path to electric glory requires rocket fuel (the -41% is buried at the end of the article).


They HOPE to get to 8% margins by 2026.

 

[MartinAustin]

Following this survey, Musk recent antics has made Republicans more likely to buy Tesla, Democrats less likely.
Result is a small net negative.

Elon Musk Is Alienating Future Tesla Buyers, Heatmap Poll Finds

A small plurality of prospective EV buyers say Elon Musk has made them unlikely to buy or lease a Tesla.

heatmap.news

Very common in U.S. media... pick silly ways to divide everybody up and act like they all are against each other, to generate ratings/views. Completely irrelevant with regard to how many ICE cars are going to be displaced by Teslas. That number will be climbing fast every year, no matter what.

 

[Motor Mouth]

It seems to me that TSLA is controlled by options, gamblers, and market makers. It's actually a reason I've considered if I should sell and move on from TSLA.

I have to say this thought has occurred to me often as well. I console myself with the firm conviction that, regardless of all other forms of motivation, virtually all investors want to make money. While manipulation on the margins works for some, for a while, consistent profit rules all for everyone. Inasmuch as I see TSLA getting there some time in my remaining working life, I'm ok with staying the course. The rewards are likely to be incredible. But that's just me FWIW.

EDIT: To clarify, I think Tesla is already there, but TSLA for whatever reason lags in the investor's learning curve.

 

[Gigapress]

Following this survey, Musk recent antics has made Republicans more likely to buy Tesla, Democrats less likely.
Result is a small net negative.

Elon Musk Is Alienating Future Tesla Buyers, Heatmap Poll Finds

A small plurality of prospective EV buyers say Elon Musk has made them unlikely to buy or lease a Tesla.

heatmap.news

The real question is why we would follow this survey in the first place. Surveys are terrible. They seriously suck. I cannot emphasize this enough. There are good reasons why professional social scientists rarely use them as data sources, and the analysis presented in the linked article would certainly not pass any legitimate peer review. Surveys almost always suffer from issues with various forms of bias and construct validity, and the authors of this article do precisely zero to discuss how they addressed any of these problems, or even if they addressed them at all.

In this case, the probable construct validity issue is that the report's authors assert that the survey results indicate likely problems with Democrats not wanting to buy Teslas due to Elon's recent behavior and political participation. However, this hypothesis appears to have had no actual validation, just assumption and conjecture presented as fact or as "the results suggest X" without any further discussion of reasons why the results actually might not suggest X and what research and analysis was done to rule out such possibilities. Jumping to conclusions with insufficient evidence and without proper attempts to falsify is not science, it's opinion and intuition.

Is there any past data indicating, at a minimum, a meaningful statistical correlation between survey results such as this one and actual consumer behavior? Did the researchers actually go try to verify whether Democrats, Republicans and Independents are actually changing their EV buying trends, market research, word-of-mouth promotion rates, or any other important related behaviors as a result of Elon’s choices? That would be the obvious first step for any attempt to establish construct validity here, and the authors of this article presented no indication that they even thought to ask this question, let alone try to answer it by integrating other data sources beyond just the survey itself in isolation. Correlation between the measured variable and the implicit outcome it's supposed to track must be demonstrated before arguing for the likely existence of a particular causal mechanism. This is like surveying people "Does especially hot weather make you more likely to get a second scoop on your ice cream cone?" and then not following up by checking for a statistical relationship between the ambient temperature and actual sales data at the ice cream truck.

Here's another red flag. The article says:

"Democrats are also turning on Musk much more aggressively than Republicans are embracing him. While 31% of Democrats said Musk’s behavior had made them “much less likely” to get a Tesla, only 17% of Republicans said Musk had made them “much more likely” to do so."

Making a declarative statement like this without mentioning the possible influence of negative response bias is bad form. Often survey respondents are more likely to express negative opinions than positive ones. It's possible that this effect explains the entire differential observed in the survey results. The authors have a professional responsibility to discuss this and they failed to do so.

Next, let's look at the Personal Behaviors responses to get a sense of how representative the survey sample group is of the broader US car-buying population. For example, 8% of respondents already drive an EV, 13% have home solar, 13% have an e-bike that they choose to ride instead of driving, and 19% have a home heat pump. Also, 87% of respondents said they are registered voters, far more than the actual US average of closer to 67% of eligible adults being registered, which likely means that the sample group is on average more politically motivated than the general American population. Overall, this group of people obviously differs from the US population in some key ways that might be relevant to how much they care about Elon’s political activism.

Does the survey report disclose how this sample of individuals was selected, how the researchers motivated respondents to spend time answering a detailed 50-question survey about climate change topics, what the purpose of the study was, how it was funded, or what potential ethical conflicts of interest may have affected Benenson Strategy Group's ability to conduct this research in an impartial, objective manner? No, no, no, no, and...no.

You know what, since they didn't discuss this whatsoever, let's look at some of their clients in the political and lobbying sphere. Hmm...I see 100% of the listed political campaign clients were for Democrats or major organizations within the Democratic Party. I see David Axelrod quoted as thanking Benenson for helping President Obama get elected. I see lobbying groups almost entirely in support of American leftist politics, with a couple nonpartisan neutrals like AARP and Pew Charitable Trust. I also see 100% of the ballot initiative campaign clients were in support of Democrat-sponsored causes such as Medicaid expansion and minimum wage increases. I'm not making a personal statement of my own affiliation here but this does indicate that Benenson is very unlikely to be a neutral, unbiased research organization for answering questions regarding US politics and this point raises a lot of concerns about what agenda Benenson may have had in publishing this article about Elon/Twitter/Tesla.

Further, in the article about Elon and Tesla, the authors cite a heavily biased Vox article that, among other things, presented this graph from YouGov, the other organization that recently did widely publicized political polling in relation to the EV market and Tesla. The results apparently indicate that Toyota and BMW are now more preferred than Tesla by more prospective EV buyers in America and that even in March 2022 (before the announcement of Elon’s intent to buy Twitter) Tesla was preferred by only 17%. I can't help but notice that this polling result does not remotely align with actual sales data and other more reliable indications of EV interest like Google search trends. Also, bear in mind that Vox is a consistently left-leaning media company, which adds more suspicion of bias and perhaps ulterior motives affecting this article.

In summary, I would recommend that everyone completely disregard this survey.

 

[growler23]

What I really miss around here is the constant drumbeat of "winding the spring". Isn't it about dang time the spring sprung? Spring has sprung around here, but (judging from my portfolio) apparently not "the" spring. Or are we now at a fair evaluation of Tesla with regard to TSLA, so the spring has no more ... spring to it?

Spoiler: Strangely OT

And another thing that has always tickled the back of my mind: how does "the spring" relate to a certain oft-discussed mythical machine of Big Time's? Is it an integral component, or an external source of tension?

Anyway, sorry to spring all that spring talk on you good folks anyway. Back to more pertinent discussion like the Fall of Troy or something.

 

[Todd Burch]

Macros macros macros.

TSLA will rebound once rate hikes stop and start heading the other way.

 

[Bet TSLA]

Useful forecast is one that DOES NOT NEED TO CHANGE when new data becomes available.
Because that new data does not conflict with that forecast.
This is a definition of forecast.

Forecasts that need to be changed when new data shows up, are shitty forecasts.
Worse than useless.

All respectable forecasts should have error bars. The best forecasts will get smaller error bars over time, but be otherwise unchanged.

 

[bpjod]

What I really miss around here is the constant drumbeat of "winding the spring". Isn't it about dang time the spring sprung? Spring has sprung around here, but (judging from my portfolio) apparently not "the" spring. Or are we now at a fair evaluation of Tesla with regard to TSLA, so the spring has no more ... spring to it?

Anyway, sorry to spring all that spring talk on you good folks anyway. Back to more pertinent discussion like the Fall of Troy or something.

Last time it took from mid-2013 to Fall 2019 to wind the spring - a bit over 6 years. So far we're not even 1.5 years past the last peak...

 

[M|S|M MYP]

The real question is why we would follow this survey in the first place. Surveys are terrible. They seriously suck. I cannot emphasize this enough. There are good reasons why professional social scientists rarely use them as data sources, and the analysis presented in the linked article would certainly not pass any legitimate peer review. Surveys almost always suffer from issues with various forms of bias and construct validity, and the authors of this article do precisely zero to discuss how they addressed any of these problems, or even if they addressed them at all.

In this case, the probable construct validity issue is that the report's authors assert that the survey results indicate likely problems with Democrats not wanting to buy Teslas due to Elon's recent behavior and political participation. However, this hypothesis appears to have had no actual validation, just assumption and conjecture presented as fact or as "the results suggest X" without any further discussion of reasons why the results actually might not suggest X and what research and analysis was done to rule out such possibilities. Jumping to conclusions with insufficient evidence and without proper attempts to falsify is not science, it's opinion and intuition.

Is there any past data indicating, at a minimum, a meaningful statistical correlation between survey results such as this one and actual consumer behavior? Did the researchers actually go try to verify whether Democrats, Republicans and Independents are actually changing their EV buying trends, market research, word-of-mouth promotion rates, or any other important related behaviors as a result of Elon’s choices? That would be the obvious first step for any attempt to establish construct validity here, and the authors of this article presented no indication that they even thought to ask this question, let alone try to answer it by integrating other data sources beyond just the survey itself in isolation. Correlation between the measured variable and the implicit outcome it's supposed to track must be demonstrated before arguing for the likely existence of a particular causal mechanism. This is like surveying people "Does especially hot weather make you more likely to get a second scoop on your ice cream cone?" and then not following up by checking for a statistical relationship between the ambient temperature and actual sales data at the ice cream truck.

Here's another red flag. The article says:

Making a declarative statement like this without mentioning the possible influence of negative response bias is bad form. Often survey respondents are more likely to express negative opinions than positive ones. It's possible that this effect explains the entire differential observed in the survey results. The authors have a professional responsibility to discuss this and they failed to do so.

Next, let's look at the Personal Behaviors responses to get a sense of how representative the survey sample group is of the broader US car-buying population. For example, 8% of respondents already drive an EV, 13% have home solar, 13% have an e-bike that they choose to ride instead of driving, and 19% have a home heat pump. Also, 87% of respondents said they are registered voters, far more than the actual US average of closer to 67% of eligible adults being registered, which likely means that the sample group is on average more politically motivated than the general American population. Overall, this group of people obviously differs from the US population in some key ways that might be relevant to how much they care about Elon’s political activism.

View attachment 920601
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Does the survey report disclose how this sample of individuals was selected, how the researchers motivated respondents to spend time answering a detailed 50-question survey about climate change topics, what the purpose of the study was, how it was funded, or what potential ethical conflicts of interest may have affected Benenson Strategy Group's ability to conduct this research in an impartial, objective manner? No, no, no, no, and...no.

You know what, since they didn't discuss this whatsoever, let's look at some of their clients in the political and lobbying sphere. Hmm...I see 100% of the listed political campaign clients were for Democrats or major organizations within the Democratic Party. I see David Axelrod quoted as thanking Benenson for helping President Obama get elected. I see lobbying groups almost entirely in support of American leftist politics, with a couple nonpartisan neutrals like AARP and Pew Charitable Trust. I also see 100% of the ballot initiative campaign clients were in support of Democrat-sponsored causes such as Medicaid expansion and minimum wage increases. I'm not making a personal statement of my own affiliation here but this does indicate that Benenson is very unlikely to be a neutral, unbiased research organization for answering questions regarding US politics and this point raises a lot of concerns about what agenda Benenson may have had in publishing this article about Elon/Twitter/Tesla.

View attachment 920631
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View attachment 920636


Further, in the article about Elon and Tesla, the authors cite a heavily biased Vox article that, among other things, presented this graph from YouGov, the other organization that recently did widely publicized political polling in relation to the EV market and Tesla. The results apparently indicate that Toyota and BMW are now more preferred than Tesla by more prospective EV buyers in America and that even in March 2022 (before the announcement of Elon’s intent to buy Twitter) Tesla was preferred by only 17%. I can't help but notice that this polling result does not remotely align with actual sales data and other more reliable indications of EV interest like Google search trends. Also, bear in mind that Vox is a consistently left-leaning media company, which adds more suspicion of bias and perhaps ulterior motives affecting this article.


View attachment 920592


In summary, I would recommend that everyone completely disregard this survey.

Toyota makes EV's?