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

[Electroman]

Headlines from last year in the Alternate Universe:

Ford takes $2.7 billion hit as it drops efforts to develop full self-driving cars | CNN Business (Oct 26, 2022)
GM’s Cruise Robotaxi business has lost $5 billion since 2018 (Jul 27, 2022)
Mobileye Stock Tanks After Earnings. Blame Tesla. (Apr 27, 2022)

The Mobileye story is from this year, little over a month ago

 

[lascavarian]

Looks interesting, but at only SEER 18, it would be a downgrade.

Seer 18 would be unremarkable but this is SEER2. A Seer2 rating of 18 is very high performance. YMMV

 

[Hiline]

Care to actually explain why you’re so sure Q2 is going to be such a disaster?

Cause all I see is data pointing to 440-450k deliveries, limited price cuts/discounts, mostly on the vehicles that don’t matter much to Tesla’s bottom line. The Y, which is by far the money maker is doing great this quarter. Increased IRA credits from Austin expansion. Increased IRA credits from Shanghai now supporting Canada which means all Fremont/Austin production goes to US deliveries. Gross margin tailwinds from both Berlin and Austin hitting volume production. There’s more too but I’m sure the point is clear.

Not saying Q2 earnings are going to be spectacular, but I see no reason to think they’re going to be a disaster. I do think they’ll blow away analyst expectations

I would be much more optimistic if the price cuts and discounts were that limited. On average, each car sold this quarter is about $4k cheaper than one sold last quarter - I estimated this from the US price cuts; if you have data from other markets that significantly deviates from this estimate, please do share. On 450k deliveries, this results in a $1.8B hit to gross profit, which is 40% of last quarter gross profit and 60% of income before taxes. This has not taken into account the $2k-$3k inventory discounts that Tesla is currently implementing on the Model 3 RWD in the US, but I supposed these are offset by the Berlin and Austin ramp that you brought up. The additional IRA credits amount to, what, $100M this quarter? Small amount relative to the hit from the price cuts.

The long-term implication of the margin reduction is the commoditization of the Model 3 and the Model Y, leading to a lower P/E. Lower earnings and lower P/E mean lower stock price. EPS last quarter was 85 cents, and I believe analyst consensus this quarter is around 80 cents? This is way too optimistic.

 

[Hiline]

I can’t understand how someone can invest in a company when they clearly think company management is completely incompetent. I get how people can be bearish about specific things, lots of things which are concerning, particularly around the Macro and delivery timelines. But the way you paint it seems to suggest you feel Tesla management is perfectly willing to blindly row that boat right into oblivion.

Why are you here? Why would you ever invest in a company when you clearly think management is incapable of seeing clear and eminent danger ahead? It’s not just this post, I see you repeating a lot of weak bear cases which require assuming Tesla management is filled with idiots.

View attachment 944435

Interesting that you read my posts that way. I invest in Tesla because I believe in the management's long-term vision, not their attention to short-term stock price movements. Not sure what I wrote makes you think that I imply that their management is filled with idiots - if you think a stock price crash represents incompetent management, well that's your bias which I'm not going to try to change.

I for sure am not the kind of investor that selectively reads only information and opinions that confirm my investment thesis.

 

[replicant]

"Could Tesla's charging system become the national standard in the U.S.?"

TLDW?

It's too long and I fear the answer.

 

[StarFoxisDown!]

I would be much more optimistic if the price cuts and discounts were that limited. On average, each car sold this quarter is about $4k cheaper than one sold last quarter - I estimated this from the US price cuts; if you have data from other markets that significantly deviates from this estimate, please do share. On 450k deliveries, this results in a $1.8B hit to gross profit, which is 40% of last quarter gross profit and 60% of income before taxes. This has not taken into account the $2k-$3k inventory discounts that Tesla is currently implementing on the Model 3 RWD in the US, but I supposed these are offset by the Berlin and Austin ramp that you brought up. The additional IRA credits amount to, what, $100M this quarter? Small amount relative to the hit from the price cuts.

The long-term implication of the margin reduction is the commoditization of the Model 3 and the Model Y, leading to a lower P/E. Lower earnings and lower P/E mean lower stock price. EPS last quarter was 85 cents, and I believe analyst consensus this quarter is around 80 cents? This is way too optimistic.

Ummm how about you show some proof for where in the world you’re getting $4k ASP decline for this quarter?

Worldwide inventory discounts have not been anywhere near $4k. Big US price cuts? What are you talking about? There’s been some inventory discounts on Model 3’s which are HW 3 but Model Y has not seen big price cuts and has seen it's inventory levels stay low even as Austin has ramped up production considerably this quarter. I guess you're going to list any and all inventory discounts and ignore the fact that Model Y has seen multiple small price increase throughout this quarter?

To try and say ASP is going to decline $4k, a similar drop from Q4 to Q1, is beyond silly. I don't really follow your previous posts but the silliness in that comment makes me think you're just a carebear here on the forums.

 

[MartinAustin]

TLDW?

It's too long and I fear the answer.

LOL I know about the law of headlines... but... honestly I cannot discount this outcome, simply because Tesla is producing way too many cars and deploying way too many NACS sites for the rest of the industry - who are still too much in love with ICE in America - to catch up. Tesla are running away with the ball, so to speak.

 

[MD70]

OT but I think a good anecdote.

https://twitter.com/x/status/1666113086707712000

 

[Mengy]

Yeah I'm still holding cash and waiting on the sideline. Q2 earnings are going to be a disaster. Without ads coming online soon, Q3 earnings are not going to look much better. A crash right back down to $150 is not out of the question.

I don't think Q2 will be a disaster for Tesla, but I do expect it to be mundane and middling. Not bad, but no surprises either.

 

[Blue horseshoe]

Stop feeding the trolls

 

[Todd Burch]

https://twitter.com/x/status/1666106232409661442

?

Only removed from the next few years so that GM has more of a chance to take advantage of them...lol.

 

[GOVA]

I would be much more optimistic if the price cuts and discounts were that limited. On average, each car sold this quarter is about $4k cheaper than one sold last quarter - I estimated this from the US price cuts; if you have data from other markets that significantly deviates from this estimate, please do share. On 450k deliveries, this results in a $1.8B hit to gross profit, which is 40% of last quarter gross profit and 60% of income before taxes. This has not taken into account the $2k-$3k inventory discounts that Tesla is currently implementing on the Model 3 RWD in the US, but I supposed these are offset by the Berlin and Austin ramp that you brought up. The additional IRA credits amount to, what, $100M this quarter? Small amount relative to the hit from the price cuts.

The long-term implication of the margin reduction is the commoditization of the Model 3 and the Model Y, leading to a lower P/E. Lower earnings and lower P/E mean lower stock price. EPS last quarter was 85 cents, and I believe analyst consensus this quarter is around 80 cents? This is way too optimistic.

I see.

So, the fact that avg. car is 6K cheaper to produce and they will have made more cars by EOQ goes where into your equations?
Even if your 'calculations' were correct, why is this Q a disaster exactly?

If I were farma, I'd research a drug for myopic ASAP.

 

[Hiline]

Ummm how about you show some proof for where in the world you’re getting $4k ASP decline for this quarter?

Worldwide inventory discounts have not been anywhere near $4k. Big US price cuts? What are you talking about? There’s been some inventory discounts on Model 3’s which are HW 3 but Model Y has not seen big price cuts and has seen it's inventory levels stay low even as Austin has ramped up production considerably this quarter. I guess you're going to list any and all inventory discounts and ignore the fact that Model Y has seen multiple small price increase throughout this quarter?

To try and say ASP is going to decline $4k, a similar drop from Q4 to Q1, is beyond silly. I don't really follow your previous posts but the silliness in that comment makes me think you're just a carebear here on the forums.

The price cuts are not exactly a secret: Tesla Car Price History

The price cuts in this document are for the US market, but I assume the worldwide price cuts are similar. Again, if you have data to the contrary, please do share.

I don't think Q2 will be a disaster for Tesla, but I do expect it to be mundane and middling. Not bad, but no surprises either.

I never attempted to define what a disaster would look like, but I think analyst expectations are too high, and this is why the earnings are going to disappoint.

I see.

So, the fact that avg. car is 6K cheaper to produce and they will have made more cars by EOQ goes where into your equations?
Even if your 'calculations' were correct, why is this Q a disaster exactly?

If I were farma, I'd research a drug for myopic ASAP.

If you share where the 6k lower cost of production between this quarter and last quarter comes from, I'll be happy to revise my calculations.

 

[wipster]

GM recalls the GMC Hummer EV and Cadillac Lyriq for potential power issues

General Motors is recalling the GMC Hummer EV and Cadillac Lyriq due to potential power issues from bad battery connections.

driveteslacanada.ca

Couldn't write this script any better...

 

[MP3Mike]

On average, each car sold this quarter is about $4k cheaper than one sold last quarter - I estimated this from the US price cuts

The price cuts are not exactly a secret: Tesla Car Price History

The price cuts in this document are for the US market, but I assume the worldwide price cuts are similar. Again, if you have data to the contrary, please do share.

Let's look at your data:

• Model S: $89,990 to $88,490: down $1,500
• Model S Plaid: $109,990 to $108,490: down $1,500
• Model X: $99,990 to 98,490: down to $1.500
• Model X Plaid: $109.990 to $108,490: down $1.500
• Model 3 RWD: $42,990 to $40,240: down $2,750
• Model 3 Performance: $53,990 to $53,240: down $750
• Model Y AWD: $51,990 to $47,490: down $4,500
• Model Y LR: $54,990 to $50,490: down $4,000
• Model Y Performance: $58,990 to $54,490: down $4,000

I'm not sure how all of those price cuts average to $4k per vehicle... So even your data says you are making false proclamations...

 

[Hiline]

Let's look at your data:

• Model S: $89,990 to $88,490: down $1,500
• Model S Plaid: $109,990 to $108,490: down $1,500
• Model X: $99,990 to 98,490: down to $1.500
• Model X Plaid: $109.990 to $108,490: down $1.500
• Model 3 RWD: $42,990 to $40,240: down $2,750
• Model 3 Performance: $53,990 to $53,240: down $750
• Model Y AWD: $51,990 to $47,490: down $4,500
• Model Y LR: $54,990 to $50,490: down $4,000
• Model Y Performance: $58,990 to $54,490: down $4,000

I'm not sure how all of those price cuts average to $4k per vehicle... So even your data says you are making false proclomations...

I honestly was just looking at the Model 3 RWD and the Model Y because they make up like 90% of all vehicles sold. If you take all into account, the average cuts may amount to $3.5k instead of $4k.

 

[M|S|M MYP]

GM recalls the GMC Hummer EV and Cadillac Lyriq for potential power issues

General Motors is recalling the GMC Hummer EV and Cadillac Lyriq due to potential power issues from bad battery connections.

driveteslacanada.ca

Couldn't write this script any better...

So 5 total vehicles recalled?

GM can't even produce 5 total vehicles without issuing a recall already?

 

[Motor Mouth]

I honestly was just looking at the Model 3 RWD and the Model Y because they make up like 90% of all vehicles sold. If you take all into account, the average cuts may amount to $3.5k instead of $4k.

That doesn't really check out though does it? Unless you eliminate M3 completely too. Moreover, and here's my main issue, the price cuts you refer to date from late January, ie during Q1. So, your data is tainted across numerous factors. Now, I get the "back of the envelope" generalizations and rounding-off efforts, but your estimate is way off here. Try to be a bit more precise if you're going to connect your "model" based on these inaccuracies to a "disaster" in Q2. That is, unless you don't want to be taken seriously.

 

[Hiline]

Moreover, and here's my main issue, the price cuts you refer to date from late January, ie during Q1.

I am confused. Can you please tell me what you think the price cuts I refer to are that date from late January?

 

[Ogre]

Let's look at your data:

• Model S: $89,990 to $88,490: down $1,500
• Model S Plaid: $109,990 to $108,490: down $1,500
• Model X: $99,990 to 98,490: down to $1.500
• Model X Plaid: $109.990 to $108,490: down $1.500
• Model 3 RWD: $42,990 to $40,240: down $2,750
• Model 3 Performance: $53,990 to $53,240: down $750
• Model Y AWD: $51,990 to $47,490: down $4,500
• Model Y LR: $54,990 to $50,490: down $4,000
• Model Y Performance: $58,990 to $54,490: down $4,000

I'm not sure how all of those price cuts average to $4k per vehicle... So even your data says you are making false proclomations...

The vast majority of Teslas sold in the 1st quarter enjoyed the pricing set in mid-January. There was a huge spike in sales and orders backed up a bit. A handful of sales during the end of the quarter were based on those peak prices. You can safely lower the average price for the quarter by $1,000 - $2,000.

Also, these numbers only reflect what’s going on in the US.