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

[EVNow]

I think true FSD is closer than most think. Tesla didn't use neural networks to make driving decisions until January. It's been only 3 months, and according to user reviews this new system is already leaps and bounds ahead of the old system.

Sorry - have to call you out on this. All this is pure BS.

 

[Sancho]

Elon could not have been clearer on the call that they have been lowering prices to match demand with supply. The only reason stated in the call for why they had to lower prices more than they anticipated (based on the miss on their own margin guidance) is the economy. But other factors could be at play, including increased supply by both Tesla and others.

Bigger picture, it’s indisputable that there is a very limited market for 40k cars, and if Tesla isn’t already rubbing against that limitation, it certainly will as it rapidly grows production.

So we know Tesla needs to have a car priced around $25k to sell its long term supply. The trillion dollar question remains, can Tesla sell at that price point with a healthy margin, or does Tesla really need FSD to succeed to be a trillion cap company?

 

[betstarship]

2024 Tesla Cybertruck Prices, Reviews, and Pictures | Edmunds

Tesla's Cybertruck is finally a reality, and it's packing some impressive specs. Here is everything we know about the Cybertruck. Read more at Edmunds.com.

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Estimated Price: $40,000-$78,000

2023 Rivian R1S Prices, Reviews, and Pictures | Edmunds

Research the 2023 Rivian R1S with our expert reviews and ratings. Edmunds also has Rivian R1S pricing, MPG, specs, pictures, safety features, consumer reviews and more. Our comprehensive coverage delivers all you need to know to make an informed car buying decision.

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Estimated Price: Starting around $78,000

With Tesla opening up their supercharger network now, is it less likely or more likely for Tesla to eat in to Rivian's deliveries starting in Q3/Q4?

 

[Knightshade]

Great Visual of the earnings. The Energy bucket will/can surpass Auto in how many years?

If you believe Elon- never.

He clarified on the call when he said energy might be bigger than auto he meant in terms of deployed gwh, NOT in terms of financially.

 

[Hiline]

Sorry - have to call you out on this. All this is pure BS.

Oh I don't mind being called out when I'm wrong - no need to be sorry. If you can provide your justification, that'd be nice. I don't like it when people downvote me without providing any reason, so I don't know if I'm wrong or if there's a miscommunication or difference in opinions.

 

[Krugerrand]

Sure, along with a number of substantial price cuts that have negatively impacted margins. I don't think they would have chosen to hit margins that hard if they didn't feel the need.

So, what? It’s irrelevant. As long as they make a profit on each car, keep cutting costs, keep improving efficiencies and keep increasing production and sales quarter over quarter and year over year they can continue to expand and move toward the end goal of sustainability.

Were you under some illusion that Tesla would be able to sell millions of cars per year for an ASP of 50k+ and margins in excess of 20%+ for infinity regardless of macroeconomics and everything else? No, you couldn’t possibly be.

It doesn’t matter how they get there, it only matters that they get there. Otherwise we die.

 

[Wingfoiler]

As a long term investor, the questions I am continually asking are:

1. Is Tesla on a track where their cash flow supports their growth objectives?
2. Are their products (current and future) good enough to sustain demand while increasing volume?
3. Is Tesla effectively managing costs relative to competitors, to support long term profitability?

The earnings call communicated more directly what has been previously signaled: Tesla is focused on the long term, and won’t take their foot off the accelerator pedal unless their ability to fund growth is at risk.

In a challenging macro environment this means compressed margins as they maximize growth over profitability, but I have not yet seen the answers to the above questions turning negative. If Tesla both grows and reduces costs through these cloudy conditions, consider how well positioned they will be when the macro is sunny again. Even without FSD.

Tesla’s management team has continually signaled that they are building the business for the long term. Investors are most likely to have their expectations met if they align their time horizon with this.

 

[InTheMiddle]

<...>
Tesla will survive until FSD comes to fruition. They literally told you that. But you need to get it out of your head that they’re not depending on FSD. Again, you’ve been point blank told by the CEO that FSD is crucial and they are banking on it.

Invest accordingly. Simple. If you can’t afford to lose your investment in TSLA, then get out. If you don’t like the direction the company is going in, get out. If you don’t think they can achieve their goal, get out. If you’re against the mission, get out. If the risk is more than you want to deal with, get out. If you don’t want to deal with the WS shenanigans, get out.
<...>

There is another option: Vote with your shares at the annual meeting, in favor of the path that you believe the company should be going in. Be a part of the solution to whatever problem one perceives to exist. Things do not need to be "My way or the highway" (no matter who is saying it).

I would suggest that there is a disconnect between what the company is actually delivering on vs what is being aspirationally pursued. Since re-entering TSLA end of December, I have advocated for The Mission being the focus. While there may be tangental benefits to The Mission from autonomy (due to higher daily % utilization, et al), pushing volume at the expense of margin should be the primary focus (as I've advocated months ago). This will likely continue (potentially even deepen) over the next couple of quarters in order to hit the ~40% YoY (2023-o-2022) P&D growth Tesla is now projecting. This isn't doom-and-gloom, this is simply delivering on The Mission and "...enabl(ing) affordability at scale" (EM 4/15/23). It may not lead to the 'irrationally exuberant' P&D volume growth or FCF / EPS growth some here expect...but it will lead to delivering on The Mission in the greatest possible way (without going too far and putting Tesla's existence at risk by running negative GM or FCF, of course). This is the company going in the direction that I want the company to be going in. L5 Robotaxi would be great, and it should be considered as an amazing aspirational goal and potential for the future, but it is absolutely not something the company is crucially dependent on, vs what they are actually delivering as their official mission of "Accelerating the World's Transition to Sustainable Energy".

TLDR: The talk track may be on aspirational FSD goals for the future, but the importance of Tesla is that they're successfully delivering on The Mission today. Perhaps the talk track should pivot to being more about that - it may be less profitable than some potential future capability, but it's far, far more important to humanity.

 

[StarFoxisDown!]

I think true FSD is closer than most think. Tesla didn't use neural networks to make driving decisions until January. It's been only 3 months, and according to user reviews this new system is already leaps and bounds ahead of the old system. If a 3-month old system is already this powerful, with additional training data it can leapfrog over any other autonomous driving system by the end of the year. I think the reason Tesla was confident enough about FSD to raise the purchase price from $12k to $15k late last year was due to the anticipated functionality of neural network-based decision making. The confirmation yesterday that FSD was going to run fine on HW3 hinted that Tesla knows that they're close. I am one who never takes Elon Musk's statements at face value, but I think there is a legitimate possibility of at least something close to a true FSD system, in the next 8 months.

If I'm wrong, TSLA will be stuck in the $150-$200 range through the end of the year because the economy is not going to turn around by then. If I'm right, the 420 party will be right around the corner.

I think you're obviously going to be alone in this thought process that FSD close to full autonomy in 8 months.

I do however think FSD will improve enough in the next 8-12 months for FSD adoption rate to improve materially. My frustration continues to be how treat FSD prices and subscription price. The current prices, especially in a tough macro environment, are just unaffordable. Tesla could be padding margin compression significantly by lowering FSD prices.

Part of the reason I just wish Tesla would drop the ability to buy FSD outright is that with a subscription model, if Tesla decides to adjust the pricing, people aren't going to complain about being screwed over. If you're paying $200/month and they drop it to $99/month, well then great for you. But if you buy FSD outright at $15k and they drop it to $10k, yeah you're going to be pissed and then Tesla has to go through the stupid act of making them "whole".

Just do away with it Tesla and fully switch to the subscription model.

I know some disagree but I think FSD at a monthly subscription rate of $99/ month or $129/ month would significantly increase subscription rates and offer some margin support to the business while ASP is being pressured.

 

[EVNow]

Oh I don't mind being called out when I'm wrong - no need to be sorry. If you can provide your justification, that'd be nice. I don't like it when people downvote me without providing any reason, so I don't know if I'm wrong or if there's a miscommunication or difference in opinions.

May be do some reading first .... esp. the Autopilot forums here ?

I think it's even less believable now than a few years back - since 400k people have FSDb and many of us have been very closely following the development for over a year.

Analysts who have a Tesla or can easily see one in action are in the same boat.

Read the last few dozen pages of this thread.

FSD Beta v11.x

The next big milestone for FSD is 11. It is a significant upgrade and fundamental changes to several parts of the FSD stack including totally new way to train the perception NN. From AI day and Lex Fridman interview we have a good sense of what might be included. - Object permanence both...

teslamotorsclub.com

 

[betstarship]

Why aren't we talking about Tesla Bus?

 

[Mengy]

Why aren't we talking about Tesla Bus?

Because there isn't one?

 

[betstarship]

Because there isn't one?

From Master Plan Part 3 (last slide):

Seems like an obvious fit with the Semi platform.

 

[Coolio2000]

I think you're obviously going to be alone in this thought process that FSD close to full autonomy in FSD in 8 months.

I do however think FSD will improve enough in the next 8-12 months for FSD adoption rate to improve materially. My frustration continues to be how treat FSD prices and subscription price. The current prices, especially in a tough macro environment, are just unaffordable. Tesla could be padding margin compression significantly by lowering prices.

Part of the reason I just wish Tesla would drop the ability to buy FSD outright is that with a subscription model, if Tesla decides to adjust the pricing, people aren't going to complain about being screwed over. If you're paying $200/month and they drop it to $99/month, well then great for you. But if you buy FSD outright at $15k and they drop it to $10k, yeah you're going to be pissed and then Tesla has to go through the stupid act of whole them "whole".

Just do away with it Tesla and fully switch to the subscription model.

I know some disagree but I think FSD at a monthly subscription rate of $99/ month or $129/ month would significantly increase subscription rates and offer some margin support to the business while ASP is being pressured.

I would sign up for FSD in a heartbeat if it was $129 per month! No way I'm spending $15k.

 

[2daMoon]

With Tesla opening up their supercharger network now, is it less likely or more likely for Tesla to eat in to Rivian's deliveries starting in Q3/Q4?

Not likely at all, once it is realized how any new orders for a CT won't be delivered for years.

There may be a wee bit of a CT backlog to address before Rivian's deliveries will be impacted.

 

[Krugerrand]

Elon has been known to use hyperbole.

Ok. Well good luck to all who are picking and choosing what to ignore. It’s worked well for Mark, and whatshisface from Alpha, for the competition, and a whole bunch of others.

Also worked well for those of us who took him at his word and didn’t nitpick every little thing he didn’t get exactly right.

Hyperbole away, Elon. I know how to recalibrate your timelines.

 

[RHJP]

I would sign up for FSD in a heartbeat if it was $129 per month! No way I'm spending $15k.

I really dislike subscriptions but in the future, once FSD is solved, I would happily pay $129 per month.

Let's see... $129 x 1,000,000 users is $129,000,000 per month.

I'm really starting to like the subscription's now.

 

[Joe F]

Here is my main issue with the "FSD is more important than anything else" line of thinking:

Yes I do believe FSD will be revolutionary, eventually, BUT I also think it will take a long, LONG time to play out even after the point where FSD reaches Level 5. Once FSD is solved I do not think we are going to see an immediate massive inflow of revenues to Tesla.

Currently FSD costs $15,000 to buy, it will likely cost more once it is Level 5. How many normal everyday people will be willing to pay that price for software when it only does something they can do themselves and already do every day (driving)? I know the argument is "people will pay it happily" but my hunch is they won't because it's just too expensive for a luxury they don't need. I know I have no intention of paying $15K+ for it, I'm completely happy with standard Autopilot on my Model Y. Sure some people will buy it, but Elon's constant statement that "FSD will be the largest value increase in history" feels overly optimistic to me.

[snip]

I disagree with your line of thinking. Have you ever lost a loved one to an accident that FSD could have avoided?
Ever dozed off behind the wheel, if even for a fraction of a second? Many have. Ever have a little too much to drink and know you really shouldn't drive, but do anyhow? Sadly, many, many do.

Cheap insurance, yes, even at $15K IMHO. That's why I bought in in 2016 for my S, that's why I ordered in with my Cybertruck, that's why it will be purchased for my wife's MY when we're ready to order it.

Crashes due to medical emergency conditions are scary. Happens every day.

When Tesla solves FSD, once people understand the problems it solves, take rate will improve. Not at first, but it should ramp.

I'll leave you with this from NHTSA, report from 2009 but data still relevant IMHO:

• Eighty-four percent of the drivers in crashes precipitated by medical emergencies experienced seizures, blackouts or diabetic reactions prior to the crashes. Drivers or surrogate responses to questions about general health, use of medications and feelings on the day of the crash suggest that most of the drivers were aware of the medical conditions associated with the crash. Drivers in crashes precipitated by medical emergencies were more likely than other drivers to be more severely injured or...

crashstats.nhtsa.dot.gov/Api/Public/ViewPublication/811219

 

[EVNow]

Slide deck calls out $800 million hit to revenue, that would have boosted revenue
margin = 1-(costs/revenue).
However, it may have also impacted the other inputs to the equation.

View attachment 930174

I did a bit of searching. TL&DR : Can't assume FX impacted margin or profitability. Tesla didn't call out FX as affecting profitability this quarter (last quarter they did). They only called out ASP. Last quarter revenue impact of FX was $1.4B, more than this quarter's $0.8B.


Here is what @The Accountant wrote last quarter, in the estimates. As you see FX impacts both Revenue & Cost, and cost affect cost more than revenue.

And what Tesla said last quarter

and this quarter.

 

[betstarship]

Not likely at all, once it is realized how any new orders for a CT won't be delivered for years.

There may be a wee bit of a CT backlog to address before Rivian's deliveries will be impacted.

Is that accurate? I was thinking that the production scale would be quicker for Cybertruck because its designed to be built for manufacturing. I'm guessing the the cost to manufacture will be lower too (thus increasing margins until Tesla price cuts go into effect for that model too...).