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

[Krugerrand]

I don't know about you. I'd much rather Ford and GM succeeded and gave us quality, affordable EVs than we had to buy our EVs from China.

Well let me tell you about me; I’d rather the human race cease to exist on this planet, so some people losing their jobs because they didn’t pay attention isn’t going to bother me. And yes, I’ve had to pivot jobs in my lifetime as has my spouse. Suck it up buttercup. Opportunity to grow.

Ford and GM don’t deserve to still be in business regardless of Chinese EV quality. But I take a moment to remind you that the Chinese are building Teslas and word on the street is that the quality is above that of the same vehicles coming out of California. Things that make you go hmmmmm.

People can buy Tesla EVs or Chinese made EVs. Or one from a couple of niche makers that survive. There doesn’t have to be 200 different kinds of daily driver EVs. No, there doesn’t. People are spoiled with all the choices they have. They can have fewer choices and razzle dazzle their cars with after market bedazzling to express their creativity and uniqueness.

 

[Krugerrand]

Do we really think the US Govt. will bail out Fiat? I think not. GM and Ford perhaps, but not the newest rendition of Chrysler. Quite a bit different than the 80's and the K Car...

I had a K car. Worked just fine. ‍

But no, I don’t think Stellantis gets a bailout and depending on how things develop; I’m not sure the other two will either.

 

[woodisgood]

I had a K car. Worked just fine. ‍

But no, I don’t think Stellantis gets a bailout and depending on how thing develop; I’m not sure the other two will either.

Perhaps I’ve grown too cynical but I can’t see how at least some of them don’t get bailed out.

 

[Krugerrand]

Perhaps I’ve grown too cynical but I can’t see how at least some of them don’t get bailed out.

Well, if emission standards continue to be raised, and if they keep laying people off and closing shops, and if they keep stopping their paltry EV production how much business is left to be saved and bailed out?

I expect there’s a point when it’s EVs or bust and the government realizes that and sees another American car company doing just hunky dory - it won’t make sense to bail the others out, who’ve got nothing to build an EV business on.

And I’m betting on the pragmatic nature of the Germans to be picky about whom they save.

We’ll see what happens. Shouldn’t be too much longer - within a decade.

 

[wipster]

Perhaps I’ve grown too cynical but I can’t see how at least some of them don’t get bailed out.

My bet's on Good Mary... still trying to wrap my head around them stopping production on their best selling and least expensive US BEV just because it doesn't use their Unobtainium batteries?!? Methinks something else is up. Be damn surprised if they can come anywhere close to their projections with the pickup and the SUV's...

 

[MartinAustin]

Cramer is in the middle of a dreadful mis-assessment of the Lithium industry rn

 

[wipster]

Cramer is in the middle of a dreadful mis-assessment of the Lithium industry rn

When is he not in a dreadful mis-assessment of something? Whatever he says, do the opposite.

 

[Knightshade]

My bet's on Good Mary... still trying to wrap my head around them stopping production on their best selling and least expensive US BEV just because it doesn't use their Unobtainium batteries?!? Methinks something else is up.

The something else was right in the stories about it-

Barra said it was in order to shift operations at its assembly plant in Orion Township, Mich., toward the production of two electric trucks: the GMC Sierra EV and the Chevy Silverado EV.

Same reason GM killed the otherwise quite successful B-body full sized sedan/wagon platform back in 1996... to repurpose the plant for more profitable full sized trucks.

 

[woodisgood]

Well, if emission standards continue to be raised, and if they keep laying people off and closing shops, and if they keep stopping their paltry EV production how much business is left to be saved and bailed out?

I expect there’s a point when it’s EVs or bust and the government realizes that and sees another American car company doing just hunky dory - it won’t make sense to bail the others out, who’ve got nothing to build an EV business on.

And I’m betting on the pragmatic nature of the Germans to be picky about whom they save.

We’ll see what happens. Shouldn’t be too much longer - within a decade.

That’s all fair, but it’s hard for me to see a US administration that won’t have ties to either Big Auto or UAW. The government is no stranger to using taxpayer dollars for its own special interests (it’s not like the populace gets to vote on these types of things, guffaw). It’s my belief the next decade will provide plenty of shocks to the system in the form of economic Cold War, possible real war who knows where, another global pandemic, etc. In the midst of that some of these legacy auto companies may seem awfully sympathetic, and we certainly wouldn’t want all those jobs lost, as was the focus with previous bailout. I do believe had Ford and GM been further along in their EV transition, the pandemic offered the perfect opportunity for a bailout (I.e., if it had hit in 2023 instead of 2020). Instead, it merely served as a wake up call to start planning to take advantage of the next shock.

I’d agree absent a shock it would be difficult to force a bailout.

 

[Krugerrand]

That’s all fair, but it’s hard for me to see a US administration that won’t have ties to either Big Auto or UAW. The government is no stranger to using taxpayer dollars for its own special interests (it’s not like the populace gets to vote on these types of things, guffaw). It’s my belief the next decade will provide plenty of shocks to the system in the form of economic Cold War, possible real war who knows where, another global pandemic, etc. In the midst of that some of these legacy auto companies may seem awfully sympathetic, and we certainly wouldn’t want all those jobs lost, as was the focus with previous bailout. I do believe had Ford and GM been further along in their EV transition, the pandemic offered the perfect opportunity for a bailout (I.e., if it had hit in 2023 instead of 2020). Instead, it merely served as a wake up call to start planning to take advantage of the next shock.

I’d agree absent a shock it would be difficult to force a bailout.

All logical. I just don’t think it’s going down like that. I think Tesla being in the picture is what makes the outcome different than before.

 

[Ogre]

There doesn’t have to be 200 different kinds of daily driver EVs. No, there doesn’t. People are spoiled with all the choices they have.

Pretty near inevitable that choices consolidate during a big transition.

Look at the smart phone market. There were literally hundreds of goofy shapes of phones and within a few short years we were down to a handful of models from each player in the market. Apple had just the one size iPhone, Samsung has 2-3 models, most other companies had 1-2 smartphones.

Since then the number of different models has crept back up. Same thing happening to cars.

GM is stupid trying to force dozens of new models at once. These guys just need to focus on doing one thing well. Something Rivian sort-of did right.

 

[Ogre]

That’s all fair, but it’s hard for me to see a US administration that won’t have ties to either Big Auto or UAW. The government is no stranger to using taxpayer dollars for its own special interests (it’s not like the populace gets to vote on these types of things, guffaw). It’s my belief the next decade will provide plenty of shocks to the system in the form of economic Cold War, possible real war who knows where, another global pandemic, etc. In the midst of that some of these legacy auto companies may seem awfully sympathetic, and we certainly wouldn’t want all those jobs lost, as was the focus with previous bailout. I do believe had Ford and GM been further along in their EV transition, the pandemic offered the perfect opportunity for a bailout (I.e., if it had hit in 2023 instead of 2020). Instead, it merely served as a wake up call to start planning to take advantage of the next shock.

I’d agree absent a shock it would be difficult to force a bailout.

Struggling to see what a bailout looks like.

How do you bail out a company that is selling a product nobody wants?

Edit: though perhaps we know. The original version of the IRA with it s giant union clause was very much structured to bail out GM/ Ford.

 

[wipster]

The something else was right in the stories about it-



Same reason GM killed the otherwise quite successful B-body full sized sedan/wagon platform back in 1996... to repurpose the plant for more profitable full sized trucks.

Yeah right... I hear her knockin' but she can't come in. I don't doubt they will "repurpose" the plant(s), but I think they're going to have a difficult time in producing anywhere near what they project. And even if they do make 100K or so, I suspect they will be riddled with problems and recalls (even surpassing the leader Tesla... LOL). Tesla had some time to grow and experience issues in the first few years with the S and X, then applied them to builds with the 3 and Y, all the while fixing most of any problems with OTA SW updates and upgrades... what's better than a "recall" that's done in your garage when you're sleeping!

No, I think GM and to a lesser extent Ford are going to experience years worth of growing pains for the next several years because no matter how good something sounded/sounds to POTUS, you can't just flip a switch and convert from ICE to BEV, regardless of how big your engineering dept. is. Because all of the larger OEM's really have to reinvent the entire organization, not just build new BEV's. Tesla's versatility will win in the medium and long term.

 

[scaesare]

Unless you expand the sentence to say "Without qualifying for the tax credit, demand would be lower... so they cut the price to qualify for the tax credit which would...increase demand...because it effectively doubles the size of the price cut for the consumer- and makes the value proposition even more compelling versus other vehicles that got either no, or half, credit"

In which case your refutation does not hold up. Considering "qualifying for the credit" in a vacuum isn't a "reason" really.

Unfortunately, unless you modify your sentence to say ""Without qualifying for the tax credit, demand would be lower than production... " than it doesn't matter... and you don't know that it would have been.

Precisely.

Mmmm hmmm.

 

[Phobi]

I expect there’s a point when it’s EVs or bust and the government realizes that and sees another American car company doing just hunky dory - it won’t make sense to bail the others out, who’ve got nothing to build an EV business on.

And I’m betting on the pragmatic nature of the Germans to be picky about whom they save.

We’ll see what happens. Shouldn’t be too much longer - within a decade.

This. Very much this. With the recent 3500~ packages (with maybe a handful coming over to Canada) there are red flags all over with the upcoming labour negotiations as well. Stellantis will be going into major cost control measures once these high-ticket offerings (upper trim Charger/Challengers fade away this year). I give them credit for milking the platform this long (and finding people willing to fork out for “special editions”, but realistically they should have started work on a new “well” (this hybrid garbage doesn’t count ) before the tap started to run dry and eventually turn off with eventual emission standards/regulations.

Plan? I honestly have more faith in Toyota surviving right now, abandon ship.

 

[woodisgood]

All logical. I just don’t think it’s going down like that. I think Tesla being in the picture is what makes the outcome different than before.

So that would require the government embracing Tesla as a/the success, whereas currently they‘re still trying to pretend it doesn’t exist. I agree that it’s inevitable, in which case it’s only a question of timing and whether something like that can be snuck in before Tesla is so obviously the dominant champion (and embraced by govt) that everyone‘s willing to forget about F and GM.

The other thing I’d say is while Tesla’s policy team is making significant strides in Washington, they are, like all of Tesla, very much mission-guided. They’ll never play politics like the other autos can. So you’re counting on government’s embrace to almost completely be merit-based. That’s a hopeful view for this cynic but I’ll be thrilled to be wrong.

 

[Fred42]

I didn't see it mentioned here that Tesla dropped the US price of the 7-seat option on the Y back to $3,000.

 

[scaesare]

I don't know about you. I'd much rather Ford and GM succeeded and gave us quality, affordable EVs than we had to buy our EVs from China.



What you said is perfectly compatible with what I said specifically about corporations. Why don't you name me one corporation that exists without profits or without the promise of profits somewhere in the future?

Regarding maximizing shareholder value as the sole purpose of a corporation is a view propagated by Harvard Business School back in the 90s and drove short-term profit maximization at the cost of jobs and the environment. What I think the correct approach is is to generate profit while taking into account other stakeholders: employees, community, etc. A corporation doesn't need to, and should not, maximize profit at the expense of everything else. Shareholders are not the only stakeholders of a corporation. But at the end of the day corporations exist to make profits. You have non-profit organizations to provide services without making money.

Interesting documentary on this: The Corporation

 

[UrsS]

Does demand (or lack thereof) determine the price of a Tesla?
The way I understand Elon (as far as Tesla is concerned,) his goal is to replace as many ICEs with EVs as fast as possible, i.e. replace fossil fuel burning with sustainable non lethal energy. Since Elon emigrated to the United States (not to China) he uses the tools of capitalism to achieve that goal. He needs the capital to build more factories to build more EVs to replace more ICEs. Had he emigrated to China he wold be bribing the 'right' people and kissing the 'right' behinds to achieve the same goals.
Profit enters the picture only as a means to achieve the goal. I bet Elon would give away every car for free if he could see a way of doing this sustainably.
According to Elon the price of the cars he sells is too high because most people who want a car can not afford his cars. But there are plenty of people who would like to buy his cars (or any EV) at a price they can afford - there is no lack of demand, there is a lack of adequately priced supply. Hence Elon lowers prices wherever he can without sacrificing the ability to expand production to where it needs (according to Elon) to be. And he rises prices when the real demand becomes ridiculously out of touch with production.
There is no demand problem. But there is a adequate supply problem - and that is determined by cost of production. That is why Elon is harping on cost reduction all the time. The $25,000 Tesla will be coming as soon as there is a way to produce it. So is the $15,000 Tesla. The demand is most certainly there.

 

[MC3OZ]

I bet Elon would give away every car for free if he could see a way of doing this sustainably.

I think Elon's statement about being able to sell cars for zero margin was intended to imply confidence in FSD, rather than a serious intention to sell cars for zero margin,

Achieving the mission is not incompatible with making money, it is necessary to make money to achieve the mission, and fund the construction of new factories.

Elon is well aware that retail shareholders have backed the company in the past, and that all employees are shareholders.

If we are realistic about margins, there will be periods when margins are 30%, or higher in future, but in the long run that will not be sustainable.

Margins are influenced by the pricing policies of the competition, and the relationship between total demand and total supply.

IMO the period where me might see high margins again is something like 2025-2028, simply because global demand for EVs may be in excess of total supply.

As soon as 2030, I expect a better supply/demand balance, and lower margins

Tesla earnings after 2030 are not totally dependent on automotive margins, it is very likely energy storage, FSD and AI/robots will increasingly become a factor. Higher delivery volumes and operating leverage also a factor, also insurance, service, supercharging, etc.