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

[Nakata]

Comments from last quarter’s call regarding commodity prices and input costs

Zach Kirkhorn
The Austin and Berlin ramp inefficiencies in 4680 will make a substantial amount of progress on that over the course of the year, and that's within Tesla's control. We're doing a lot of work on cost reduction outside of that. And we talked about supply chain costs, expedites, logistics, attacking everything. On the raw materials and inflation side, where lithium is the large driver there and this was a meaningful source of cost increase for us, we'll have to see where lithium prices go.

And we're not fully exposed to lithium prices, but I think in general, as what we've seen from our forecast here, cost per car of lithium in 2023 will be higher than 2022. So that's a headwind that would have to be overcome to return back to those levels. So I don't think we'll get there this year, but I think we'll make progress. And we'll continue to find ways to offset these raw material costs that we don't have control over.

The cost of lithium has been decreasing significantly:
November 2022 : 600000$
April 2023 : 180000$

This decline must be one of the reasons why Tesla believes it can lower the prices of their cars.

 

[Artful Dodger]

Or CT deliveries start in May

Yeah, that could happen. All they'd need to do is build a big ramp from the end of the production line to roll them gliders into the parking lot at the UNFINISHED CATHODE FACTORY.

TL;dr Volume production won't start until Q1 next year when the industrial processes are ready to build the product at scale, profitably. This isn't FORD.

 

[TSLA Siempre]

How do the IRA manufacturer credits show up on the financials? Are they considered regulatory credits?

I have sense of dread for tomorrow and the Q1 report. But I suppose it’s possible that operating margin and EPS might turn out better than consensus if those credits are being under appreciated. But I don’t see why analysts wouldn’t model that in since it is a known quantity so maybe it’s baked in. Nevertheless not much discussion on Rob Maurers Q1 preview about that unless I missed it.

It’s also possible that Tesla may want to de-emphasize gm ex reg credits if the reg credits get pretty high with the IRA. Or it’s possible that the GM ex reg credits is disappointing and management.

Energy gross margin also a big question mark.

 

[Max Plaid]

I don’t get this.

The whole time prices were in the $60k range Musk was talking about “Embarrassingly High Prices” and how they would lower them when they had the chance. The commodity bubble was exceedingly well plotted out with lithium, nickel, steel, and other commodities selling for 5-10 times what they have been.

Tesla has said the plan was to bring prices down so these cars are more affordable.

They are making good on their promises. Now people want to whine about it? Like suddenly they should ignore what they’ve said and do a huge money grab?

Yep, Tesla doing exactly what they said they would

Also sends a strong and positive message to consumers that Tesla aren't greedy with their profits and playing their part to bring down inflation

 

[hobbes]

Elon Musk to get the last laugh as ultra-ambitious Tesla Model Y prediction comes true

Elon Musk is getting the last laugh as his ultra-ambitious prediction about the Tesla Model Y becoming the best-selling car...

electrek.co

 

[Artful Dodger]

So what happened? Maybe the effect was short-lived.

THE IRA. April 18, 2023. All-day.

 

[SebastienBonny]

Yep, Tesla doing exactly what they said they would

Also sends a strong and positive message to consumers that Tesla aren't greedy with their profits and playing their part to bring down inflation

It is getting ridiculous how people seem to forget what has been said days or weeks ago and how short term their memory is.
Even analysts are jumping on that boat now.

 

[Artful Dodger]

High chance after the leak new refresh, orders have slowed drastically as people are waiting for the new reveal.

Highland will be a Model 3 refresh, not Model Y. Yesterday's U.S. price cuts were all about rebalancing the product line after the IRA cuts took effect. Notably, Tesla DID NOT change prices on either Models 3 or Y in Canada.

 

[cliff harris]

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.

I bought a model Y performance with FSD in the UK. I paid a tiny bit more than the current price. I was lucky, because the performance meant a 1 year (RHD) wait time, so the price crawled up and up, then fell to slightly below my purchase price a month after I got mine.
So in theory I should feel cheated but...
I got my car when I got my car. Suddenly realizing you can ORDER a new car now at a different price is great, but its not the same as already having one in the garage.

...That being said (in rob maurer's voice)...

I do think Tesla underestimated the impact that the price cut news would have, and did not manage it well. There should have been some change, maybe to the spec, maybe to the styling, anything to make it harder to compare the post-price cut model with the pre price cut model. One really silly but obvious example is the wood dashboard in the Y. Apparently thats changing to be some black fabricy thing to cut costs.... ok... well make the price cut happen alongside that. Then everyone who paid $10k more can look down their noses at the 'cheaper fabric model'.

I'm perfectly happy with my car for the price, but I'm on the same spectrum as Elon and think rationally about it. Most customers are NOT rational. It shouldn't make any sense to equate a minor cosmetic change with a huge perceived value, but it totally does. Its not a coincidence when apple make some phone colors cost a LOT more than others. This stuff works. Also why Tesla leave money on the table without adding some real pricey paint options to performance trims.

Tesla's engineering focus is awesome to see, but sometimes I wish they hired a few PR/Customer service people who appreciated the 'soft' skills of business a bit better.

 

[Artful Dodger]

The other guy said Tesla didn’t have supply chain issues. I just proved to him that it did.

No, you didn't. You quoted an article published on Jul 22, 2022. That's not at all relevant, and you're acting like you won.

Bood Gye.

 

[NicoV]

Looking at Electric Vehicle registrations in Europe: 14 countries, 90+% of BEV market we can already see that the wave keeps unwinding. I would say deliveries have started about a week earlier than previous quarter. It’s mostly Model Y, so we’re seeing the effect of Berlin production being delivered continuously in EU.

We’re seeing a lot of deliveries early on in the quarter. This quarter we’re reaching levels that were reached in Q1 2 weeks later. If it continues like this, there’s not a lot of wave left in Europe anymore. Which will be good for the cash flow.

 

[UkNorthampton]

We’re seeing a lot of deliveries early on in the quarter. This quarter we’re reaching levels that were reached in Q1 2 weeks later. If it continues like this, there’s not a lot of wave left in Europe anymore. Which will be good for the cash flow.

Or bigger wave? Depends on how many boats (all of Model 3, some Y) are due, vs increased Berlin production of Ys. Chinese car market seems to be bad, particularly for non-battery electric vehicles, I think Tesla could still be doing well in China, plus increasing deliveries in Australia (especially), New Zealand, Thailand.

 

[Nolimits]

This new price cut makes me want to get another Y

 

[Thekiwi]

Or bigger wave? Depends on how many boats (all of Model 3, some Y) are due, vs increased Berlin production of Ys. Chinese car market seems to be bad, particularly for non-battery electric vehicles, I think Tesla could still be doing well in China, plus increasing deliveries in Australia (especially), New Zealand, Thailand.

China seems to be doing alright currently:

Of course the entry level model Y & 3 are already priced far lower in China than the USA.

 

[15Peter20]

My December 2020 M3LR would cost £3k more if I bought it now (in the U.K).

 

[SO16]

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.

As a buyer, I want my NEXT vehicle to cost less and have more functionality. I don’t want to be paying 4k for a cell phone like the first ones did. (10k in 2021 USD.)

The savings overall to me will be more than simply keeping prices high to make me feel good about my last purchase.

 

[jerry33]

In other words, I’m mad at myself for poor timing and therefore it’s Tesla’s fault. Had it worked out the other way, I’d be a genius.

All of our cars have dropped in value. At least next time we can get a better car for less.

Agreed. But it takes a pretty dumb bunny to miss that a car that is mostly a computer will either reduce in price or increase in functionality or both as time goes on.

 

[willow_hiller]

Calling it now: the pessimism levels in here are too high to be fully rational. Things are almost guaranteed to be better than investors are guessing. Maybe not with the share price in the short term, but definitely with the company in the long term.

Also, a side-bar: typically anti-Tesla social media is going nuts over these price cuts. Which leads me to believe a large part of anti-Tesla sentiment is jealousy. They hated Tesla because it was unobtainable for them; increased affordability makes them change their tunes very quickly.

 

[winfield100]

......force people on his network of superchargers and have enough of a lead in the electric car game to have leverage of government and infrastructure.

um, having "used" other networks where chargers were few and far between IF they worked and some literally impossible to use IF working due to complexity of payments

Tesla Superchargers, navigate to, plug in charge 'n go, 6 trips of 2,500 - 3,500 miles in 10 months on east coast of US

there ain't no forcing, more a "thank Aphrodite it's so easy"

 

[InDaClub]

I'm so upset by these cost reductions...

Or take the Tesla Model S 75D which has a 75 kWh battery. In 2018 the battery costs around $13,600; in 1991 it would have been $564,000. More than half a million dollars for a car battery.