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

[verystandard]

Tesla Elon Musk: Tesla's Musk signals optimism for end to 'supply chain hell' - The Economic Times

The Austin, Texas-based manufacturer left unchanged its production forecast for 50% average annual growth “over a multiyear horizon,” but said issues ranging from shortages of supplies and labor to logistical problems kept its factories from running at full capacity in the most recent quarter.

m.economictimes.com

Like I said, have an intellectually honest conversation

Glad a fellow Canadian joined the conversation, not sure how honest this conversation is as clearly you are having agenda

Welcome to my ignore list

 

[NicoV]

Hey buddy in case you didn't know. Just a copy paste below:

The inflation rate in Belgium reached 11.27%, the highest level recorded since August 1975. Now, it rose to levels not seen since June of that year — when inflation reached 12.50% — sitting at 12.27%, the latest figures from Belgium's statistics office Statbel showed.

The general consensus in Belgium is that the official inflation numbers were way too high due to a technicality in the calculation: The main driver for the inflation were spiking energy prices. The inflation calculation is based on the energy prices of new contracts, but it turns out that the majority of the consumers has long term contracts (of multiple years) that shielded them completely from the energy price spike last summer. And with Belgium’s automatic wage indexing system, ever wage got increased as much as the index. So lots of consumers saw their purchasing power increased!
With the energy price spike behind us, we will see the opposite effect of that technicality: the official inflation number will go down, but contract renewals will cause higher real energy prices causing purchasing power to go down.
I guess Tesla’s costs in Belgium are not a lot higher (just the wages they pay). Nominally the consumers can afford more expensive cars (due to higher wages), but Tesla prices are back to what they were 4 years ago.
It’s only the next year or two that the real purchasing power will revert back to historical levels.

 

[SebastienBonny]

I looked up my invoice for my 4 year old Model 3 LR and it cost 3K euro more than today’s price. With all the noise about price reductions, I’d expect it to cost much less than that.

Bought Model 3 LR in March 2020 for 60K. It's 54K right now.
A bit more than your comparison, but even 6K is perfectly explainable (higher production => lower costs).

 

[CarpeDiem00]

Glad a fellow Canadian joined the conversation, not sure how honest this conversation is as clearly you are having agenda

Welcome to my ignore list

So as a fellow Canadian you’re okay with price cuts and seeing the value of your vehicle drop? I don’t understand how what I’m saying is not honest? I also don’t want to see Teslas margins shrink, I think they should be putting more into the vehicles to compete with everyone else. VW, Toyota have more economies of scale and probably better purchasing power. As an investor I don’t like price cuts. I hope it doesn’t reflect poorly on the stock tomorrow.

I’m sorry but I won’t falsely cheer for the company because everyone else is.

 

[Ogre]

So I shouldn’t have bought a Tesla?

LOL. Ford is struggling to sell their new Mach Es now. What do you think Tesla's pricing drops do to the resale value of the Mach E?

Cars are not investments, never have been. They are a thing you buy to use. Buy it, use it for 5-10 years and you don't worry about resale price.

 

[Ogre]

I’m sorry but I won’t falsely cheer for the company because everyone else is.

You are confused here.

Nobody is "Cheering".

This is reality. There isn't a market for a million Model Ys a year in the US + Canada at $65k. That's just the harsh reality. Some people apparently thought insanely high prices were sustainable? I guess not good at economics?

Tesla is competing with the Camry and the RAV4 in terms of volume. They have to be at those price points in order to sell that volume. That's apparently a tough truth bomb for some folks.

EDIT: People are pointing out that the impact on Tesla's margins is not going to be as bad as you think. That's not "Cheering". Them's facts.

EDIT EDIT: In order to minimize temptation to bomb people's inbox with replies to ignored people... following @verystandard and adding a couple folks to the list.

 

[CarpeDiem00]

LOL. Ford is struggling to sell their new Mach Es now. What do you think Tesla's pricing drops do to the resale value of the Mach E?

Cars are not investments, never have been. They are a thing you buy to use. Buy it, use it for 5-10 years and you don't worry about resale price.

I never said Tesla cars was an investment. I have over 300k invested in Tesla stock, I think I know my dollars and cents.

But over night my cars value got reduced by $10k (so did many used car dealerships). I don’t think that’s something anyone had budgeted. The people who clearly have a problem with it might actually be the ones who understand finance and who have skin in the game.

 

[UkNorthampton]

So I shouldn’t have bought a Tesla?

Probably better than the likely crash in BMW/Mercedes used prices (& huge operating costs) as people understand how much better EVS are & the lower ongoing costs of EVs, Tesla in particular.

Tesla lowering prices affects all used car prices to some degree. It might not be too obvious, but fossil used prices are likely to tumble.

 

[insaneoctane]

I'm surprised by today's continued price cuts and I'm struggling with a spin that I can believe in. It certainly creates uncertainty and instability in the Tesla market. It feels like multiple, close together price reductions are likely to cause potential buyers to pause and wait for yet another decrease. Quick, successive decreases harms recent buyers and resale values too - due to the instability. People that took delivery of MY LR in early January paid $65,990. Today, just 4 months later, the same MY LR is $49,990 which is pretty steep depreciation by any measure. I really don't understand what Tesla is doing, but I am guessing it will be an exciting conference call. I'm guessing tomorrow morning might be yet another "buying opportunity". Depending on how the conference call goes, their might be more in the future too.

To be honest, I'm wondering if the mission and traditional corporate profitability measures can not be in alignment during this challenging macro environment?

 

[CarpeDiem00]

Probably better than the likely crash in BMW/Mercedes used prices & huge operating costs as people understand how much better EVS are & the lower ongoing costs of EVs, Tesla in particular.

Tesla lowering prices affects all used car prices to some degree. It might not be too obvious, but fossil used prices are likely to tumble.

I think the German electrics are pretty good. The iX especially.

 

[MC3OZ]

I’m upset that he’s running this like a game.

There is a strategy in play, ramp up production volumes as fast as possible, sell every car, and generate sufficient cash to fuel rapid expansion.

We will see how earnings and margins play out... and what answers they provide in the call ... not long to wait.

In terms of car prices, with covid, supply chain crunches, there are been a lot of chaotic prices movements.

Like shares the best strategy with a car is "buy-and-hold", every time you sell a car you normally take some hit.. Teslas have just held their value better than most historically, due to scarcity.

 

[capster]

At least you didn't say "Let that sink in."

What I find ironic is that the observations that I make here that I think are most insightful go unremarked and yet…

 

[CorneliusXX]

I never said Tesla cars was an investment. I have over 300k invested in Tesla stock, I think I know my dollars and cents.

But over night my cars value got reduced by $10k (so did many used car dealerships). I don’t think that’s something anyone had budgeted. The people who clearly have a problem with it might actually be the ones who understand finance and who have skin in the game.

Why did you buy the car if it didn't give you your money's worth?

 

[Ogre]

I'm surprised by today's continued price cuts and I'm struggling with a spin that I can believe in. It certainly creates uncertainty and instability in the Tesla market. It feels like multiple, close together price reductions are likely to cause potential buyers to pause and wait for yet another decrease. Quick, successive decreases harms recent buyers and resale values too - due to the instability. People that took delivery of MY LR in early January paid $65,990. Today, just 4 months later, the same MY LR is $49,990 which is pretty steep depreciation by any measure. I really don't understand what Tesla is doing, but I am guessing it will be an exciting conference call. I'm guessing tomorrow morning might be yet another "buying opportunity". Depending on how the conference call goes, their might be more in the future too.

To be honest, I'm wondering if the mission and traditional corporate profitability measures can not be in alignment during this challenging macro environment?

Steep depreciation? Base Model Y is still $7,000 more than at launch. And it’s a longer range car.

Let that sink in. $7,000 more with Tesla pocketing $3,000 on their subsidy that’s a 25% increase in the base cost of the Model Y since launch.

https://twitter.com/x/status/1648569883075162112

 

[CarpeDiem00]

Why did you buy the car if it didn't give you your money's worth?

Why does anyone buy a car? In the hopes of enjoying it. And I was. But when you realize you’ve purchased the car too early and maybe you should’ve waited and saved over $10k, it leaves a real shitty feeling inside.

When you also have a considerable amount invested in the stock, you want to make sure right decisions are made as that could derail the stock price. They might sell more cars but make less money, the markets don’t like to see profits drop. And the competition is getting started now, e.g the id7 has 700km of range.

 

[insaneoctane]

Steep depreciation? Base Model Y is still $7,000 more than at launch. And it’s a longer range car.

Let that sink in. $7,000 more with Tesla pocketing $3,000 on their subsidy that’s a 25% increase in the base cost of the Model Y since launch.

https://twitter.com/x/status/1648569883075162112

Not the same vehicle. Today's base MY has bigger battery (with additional 35 mi of range) and AWD vs the one you're comparing- those enhancements make it more valuable.

Yes, the MY LR that I mentioned dropped $16K in 4 months. That's significant.

 

[khill]

It is surprising to me and these continued cuts appear to contradict Tesla's statements earlier this year about how sensitive vehicle order rate is to pricing. Not long ago they insisted that demand is very strong and that the price cuts resulted in orders double the rate of production. They also said they don't want long order backlogs.

So what happened? Maybe the effect was short-lived. Maybe automotive market macros have deteriorated substantially since then. Maybe Tesla expects production is ready to ramp fast at Berlin and Texas. Quarterly reports from Tesla and other OEMs should help us understand more. I hope Tesla will discuss these pricing moves in depth on the call. Right now the only guidance we have was Elon saying a few days ago "Tom, we’re not 'starting a price war', we’re just lowering prices to enable affordability at scale". It would also be helpful if Tesla leaders explain more of their rationale for why they still aren't advertising and whether lack of awareness could be substantially improved with a paid campaign.

Two of the top-voted questions on Say are related to this:

“It would also be helpful if Tesla leaders explain more of their rationale for why they still aren't advertising and whether lack of awareness could be substantially improved with a paid campaign.”

This is the exact same thing I brought up just a few days ago…

 

[khill]

Steep depreciation? Base Model Y is still $7,000 more than at launch. And it’s a longer range car.

Let that sink in. $7,000 more with Tesla pocketing $3,000 on their subsidy that’s a 25% increase in the base cost of the Model Y since launch.

https://twitter.com/x/status/1648569883075162112

Base Model Y then was RWD. Now it is AWD. Just a minor difference…not exactly the same. Also, the standard range Y RWD was only sold for less than one quarter in the US and then it was removed as there was enough demand for LR Y production at that time.

 

[Buckminster]

Some alternative possibilities following price reductions:

• Elon killing the share price ahead of huge buyback
• Elon temporarily sinking the share price to ensure 420 day is green
• Elon is so confident that Tesla Network is imminent that it really matters not
• Elon is single handedly bringing inflation down to save the world
• Elon is sinking the share price so that when he introduces advertising it falsely appears to be a success. He then stops advertising and demand rockets. Advertising across the world instantly dies and with it the traditional media companies (and with them FUD disappears).
• Tesla is forcing OEMs to advertise on his behalf to save their own businesses by ensuring he doesn't drop prices again. VW could advertise ID7 by stating that it is almost as good as a Tesla and compatible with some of Tesla's best in market supercharger network.
• By not advertising, Elon ensures that Tesla's make it into the hands of clever and informed (but poor) consumers. This will allow that group to have more babies thus saving the world.
• IRA credits do not exist (like birds)
• Elon wants to worsen the recession so that he can save the world through the sheer inspiration of us seeing a Starship chopstick catch post Q2 ER in July (walking on the moon moment)
• Optimus has taken over in the factories and COGS are tending to zero

 

[SebastienBonny]

Why does anyone buy a car? In the hopes of enjoying it. And I was. But when you realize you’ve purchased the car too early and maybe you should’ve waited and saved over $10k, it leaves a real shitty feeling inside.

When you also have a considerable amount invested in the stock, you want to make sure right decisions are made as that could derail the stock price. They might sell more cars but make less money, the markets don’t like to see profits drop. And the competition is getting started now, e.g the id7 has 700km of range.

You just lost your 10k sooner than you would've lost it eventually anyway.
Enjoy the car for many years and you won't be bothered by that 10K "loss" at this time.

The way you see competition is not the way I see it.
Competition is coming for ICE cars, not for Tesla. More people will buy EV's and those can't only be Tesla cars.

You really think management is stupid?
Main goal for Tesla is to sell affordable cars. Selling a Model 3/Y at 60k isn't affordable. That once was about the price of a Model S.
Lower prices, more affordability, more sales,... They could make less money on one car (although we don't know that, but a lot of people seem to be sure, don't know how tbh), but the only thing that matters is the bigger picture. If you want to grow, you need to expand your client potential. You can't do that with cars priced at 60K or higher.