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

[wtlloyd]

Days like today, I ponder words of wisdom from our old friend, Yosemite Sam -

"Ow! Ow! Ow! My biscuits are burnin'!"

Holding.

 

[StarFoxisDown!]

I'm having difficulty with comparing the $15K up front versus $99 or $129 per month. At $99 per month, that is 150 months or 12.5 years of payments before it equates to the $15K up front price. Add in time value of money, and one could argue it's the equivalent of 15 years or more of payments before they are equal.

As Elon has repeatedly stated that the value of FSD is going to keep increasing and we should expect the price to keep rising, I just don't see $99 or $129 per month as an appropriate subscription cost that we should expect. Given the choice, who in their right mind would choose to pay $15K over $99/$129 per month. Maybe $199 or $249 per month is a better comparison.

Even at $199 per month, to me that would be an easy choice over $15K up front. Especially if Tesla sticks to their guns about FSD not being transferrable. I just can't see subscription cost being less than that.

Just to clarify what I'm saying, drop the monthly subscription price to $99 or $129 now, especially since high interest rates reduce disposable income for consumers and get them accustomed to the behavior of paying a monthly subscription. Again to auto consumers, monthly subscription are a foreign idea. You bring them in at a lower initial price and then as FSD improves, gradually increase the monthly subscription price from $99 to $159 to the next to $199 year after and $249 the year after that....and so on.

And to anyone saying there is no need for easing consumers into a monthly subscription model, even the tech community was resistant to switching from buying software outright to a monthly subscription model. There was lots of pushback. It took a couple years, no quarters, for software consumers to come around.

 

[hobbes]

On the call yesterday Tesla said about 50% of them are open to non-Teslas. I wouldn't call that "practically all."

Or are half of the Superchargers V2 and they aren't open to others? (Are any V2s open to all?)

Just looked at the map, there are big regional differences: Belgium/Netherlands/Germany is "practically all" (I´d guess 90%), Britain for exampl much fewer (maybe 20%) - so I guess it averages out to 50%. Maybe Elon´s remark was also with regard to superchargers worldwide?

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[Knightshade]

I'm seeing headlines of net income dropping over 20% from last year. What's the FUD twist and explanation behind this statement? Asking for a trolling friend.

I think the explanation is right in Teslas Q1 financial summary-- the bit in red is YoY change.

if you're asking WHY it's down over 20% YoY that's a more complex question. Lower ASP, still higher commodity costs, higher capex, higher warranty cost and deferred revenue, were all some of the reasons Zach cited on the call though.

 

[NicoV]

I think the explanation is right in Teslas Q1 financial summary-- the bit in red is YoY change.
View attachment 930330


if you're asking WHY it's down over 20% YoY that's a more complex question. Lower ASP, still higher commodity costs, higher capex, higher warranty cost and deferred revenue, were all some of the reasons Zach cited on the call though.

This quarter we’re competing with q2 2022 when Shanghai was in covid lockdown iirc. I doubt we’ll do worse than that.
“Every cloud has a silver lining” — Stuart Little.

 

[Buckminster]

https://twitter.com/x/status/1649138631007764481

https://twitter.com/x/status/1649145930933760000

https://twitter.com/x/status/1649142166390730756

 

[MP3Mike]

so I guess it averages out to 50%. Maybe Elon´s remark was also with regard to superchargers worldwide?

No. It wasn't worldwide, and it wasn't Elon.

DREW: Yeah, so as you may have seen, we opened our first V4 post in Europe and our Magic Dock post in North America in Q1. And that is indicative of the direction we’re heading with universal compatibility for all vehicles no matter where the charge board is, et cetera, in all major markets. And we’re going to continue to roll out those sort of improved offerings as we build new stations. We’re always balancing our ability to serve our own customers with our ability to serve new customers when doing that. I think we’ve been able to balance it rather well, for example, in Europe, 50% of all of our supercharging stations are open to all EVs, and we’ve been able to do that without any increase in wait times at all, for anybody. So, we’re going to continue to take a similar approach as we do this in North America and China over the coming quarters.

 

[MC3OZ]

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?

The compact Gen3 car should cost roughtly half as much to build.

Elon is an optimist who tends to be pessimistic about financials and can exagerate the negatives.

FSD isn't the only path to future success, FSD is simply the most likely step-change.

Considering the macros and the Berlin and Austin ramps, Q1 results are good.

Austin and Berlin are still a drag on margins, which gives you an idea of the mountain other car makers need to climb.

IMO it is vey likely a Gen3 ramp is less of a drag on margins, partially becuase the initial price of Gen3 cars can be higher.

 

[CorneliusXX]

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?

I've been thinking about pricing today and something that probably should have been obvious to me in the past (but wasn't really while the market was going gangbusters) was the fact that Tesla prices according to the value of the least interested buyer so they can clear their production. By providing a flat public rate and increasing volume they have to drop prices for all their sales down to a clearing price that gets all the vehicles sold.

Compare that to the conniving dealerships who can judge the interest of each buyer and rip them off according to how much they think the buyer wants the vehicle. Only the few that can't be sold are eventually sold at the price of the least interested buyer.

Overall I think Tesla's pricing strategy is the best and I personally value the fact that I could buy my Model Y online for a fixed price. But in a market disruption scenario where no-one wants to spend up on big money items Tesla might find they need to discount their prices more than those sold via dealerships.

This recession is the first chance we've had to see how Tesla's pricing strategy will work in a downturn.

 

[CorneliusXX]

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.

No, I just thought it would do that until I could retire. Now I have to keep working

 

[NicoV]

I’ve been reading a bit in the Benelux FB Model Y forums to get a feel of the sentiment about the price drops.
The main sentiment is: “OMG, I can now get a performance instead of an LR”.
Many of the EU Tesla buyers are company car drivers that have a certain budget. None of those will go for a cheaper car. They will use up all of their lease budget.
Others will suddenly discover that their lease budget will allow a Tesla.
In the private market I expect most customers would prefer a lower price instead of a faster car. But that‘s a minority here.

 

[Right_Said_Fred]

A discussion on FSD subscription and FSD impact on Tesla’s financials is fine after Elon’s remarks yesterday. But not the 10th exchange of personal anecdotes and insights on whether it’s safe or not. A bunch of post have found their way to FSD discussion

 

[zecar]

I think the explanation is right in Teslas Q1 financial summary-- the bit in red is YoY change.
View attachment 930330


if you're asking WHY it's down over 20% YoY that's a more complex question. Lower ASP, still higher commodity costs, higher capex, higher warranty cost and deferred revenue, were all some of the reasons Zach cited on the call though.

I don't think the primary concern is about the income statement. It is probably about Musk's comments of high demand just a month ago. The Tesla story has always been "we could sell more if we could make more". Now the question is perhaps how does Tesla's growth projections match up with the growth of overall demand for EV.

If Musk assumes Tesla is production constrained for the next few years then it doesn't matter much what Tesla makes. If Musk is wrong and Tesla should have been more careful with covering the main EV market segments then Tesla is wrong footed.

Having a new body ready for the Y skateboard would perhaps be a good backup plan. But I doubt anyone would be willing to push Musk in that direction. Plus the gigacastings make change more difficult.

Monthly Y sales will say a lot about Tesla and total EV market size trends.

 

[vikings123]

Just to clarify what I'm saying, drop the monthly subscription price to $99 or $129 now, especially since high interest rates reduce disposable income for consumers and get them accustomed to the behavior of paying a monthly subscription. Again to auto consumers, monthly subscription are a foreign idea. You bring them in at a lower initial price and then as FSD improves, gradually increase the monthly subscription price from $99 to $159 to the next to $199 year after and $249 the year after that....and so on.

And to anyone saying there is no need for easing consumers into a monthly subscription model, even the tech community was resistant to switching from buying software outright to a monthly subscription model. There was lots of pushback. It took a couple years, no quarters, for software consumers to come around.

Tesla knows this. The problem is FSD is not ready yet. You don’t want to lose customers with an unfinished product.

 

[Gigapress]

Fact: Elon is all in FSD, therefore Tesla is all in FSD.

That’s major overstatement. “All in” would mean that if FSD fails then Tesla loses everything and is out of the game. That is obviously not true, because several of their other businesses are still very profitable and growing rapidly, and would continue to do so even if FSD were cancelled right now and everyone got a full refund.

Why is the cat being so mean and hissy recently? You realize it’s 4/20, right? At least for today, mellow out and have some respect for the holiday.

 

[Singuy]

https://twitter.com/x/status/1649138631007764481

https://twitter.com/x/status/1649145930933760000

https://twitter.com/x/status/1649142166390730756

First post by Gary is ingenuine. Everyone knows the price went up for like a few days and then got massively cut. The price cut started way before Jan, but in December of 2022 after Tesla worked through back logs date back till Jan of 2022. Ever wonder why ASP was like 10k below the listed price?

 

[Buckminster]

The compact Gen3 car should cost roughtly half as much to build.

Elon is an optimist who tends to be pessimistic about financials and can exagerate the negatives.

FSD isn't the only path to future success, FSD is simply the most likely step-change.

Considering the macros and the Berlin and Austin ramps, Q1 results are good.

Austin and Berlin are still a drag on margins, which gives you an idea of the mountain other car makers need to climb.

IMO it is vey likely a Gen3 ramp is less of a drag on margins, partially becuase the initial price of Gen3 cars can be higher.

Elon advised that gen 3 is referred to internally as the robotaxi. I think non FSD believers might need to brace themselves that this vehicle may never have a steering wheel. The cheaper compact car for China etc. was supposed to be designed in China which hasn't happened so far. I don't want you all to worry about it though cause I am usually wrong about this stuff.

Another crazy thought, could the main offering in fact be the Cybervan; minibus version? Might be more suitable for:

and:

 

[DarthPierce]

Not even cybertruck can handle that pot hole

 

[JRP3]

I think non FSD believers might need to brace themselves that this vehicle may never have a steering wheel.

No chance.

 

[DarkandStormy]

Isn't this just accounting? It's not like Tesla converted foreign currency into USD.

The USD depreciated against the Euro and the yuan in Q1. So citing FX headwinds is a bit weird. They should have been tailwinds in Q1. Perhaps we'll find out more when the Q comes out.