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

[Carl Raymond]

I’ve just watched all the earnings call hot takes on YouTube.
Two things I think they have missed, one good, one bad.

Megapacks deployed is a noisy chart. Lathrop is ramping continuously. Deployments are big projects with phased payments. If deployments fall, it means the chart is “owed” a bigger bump next quarter. With margin now up at car levels, and more of these relatively simple factories in the works, I’m excited for megapacks.

FSD licencing right now is like selling Mac OS in a world where outside Apple there are only PCs. Cars don’t magically become FSD ready. There’s the cams, the computer that most people think of. But then there’s the actuators and all the things that make the car “software defined”. When legacy are ready for FSD, they’ll also be masters of OTA updates. Given it takes them 18 months to be NACS ready, I’m thinking years. It’ll be a different world by then, with Tesla annual run rates above 5 million. IMO.

 

[SmokyPeat]

All that was missing from that earnings call was Elon doing his best Howard Dean howl.

 

[Artful Dodger]

So If I own this vehicle, get tired of being the sole user, couldn't I just lend it out to the Robotaxi network and let it work for me like a prior house I made into a rental?

You did read Master Plan, Part Deux, right? (Elon Musk, July 20, 2016)

"You will also be able to add your car to the Tesla shared fleet just by tapping a button on the Tesla phone app and have it generate income for you while you're at work or on vacation, significantly offsetting and at times potentially exceeding the monthly loan or lease cost."​

 

[wipster]

View attachment 958151
Elon said nothing about AI...no wonder stock went down...Bad Elon!!

Perhaps... it was xAI pretending to be Elon...

 

[Chunky Jr.]

Wall St : Evaluating Tesla :: Homer Simpson : Designing cars

 

[Dutchie]

You're misunderstanding the clause.

it's saying you can transfer it (at which point the old car does not have it- so you aren't "somehow selling FSD" to someone else when you dispose of it...) but then in the future you ALSO can't sell it on the car it's transferred TO per these new terms. You'll get to sell it 0 total times.

Which means you end up with a "worse" version of FSD than you started with....because the one you started with you can sell 1 time.


I'm gonna pass and wait until Tesla is forced to admit they can't actually deliver the FSD I was promised on HW3 and they have to make me a better offer than this junk one.

Wow, thanks. So, if I understand correctly; Soon robotaxi is a thing. Because of this my current car with FSD is an appreciating asset. Say I can sell it then for $200K (or whatever the number for discounted cash flow of tobotaxi revenue is). However, if I upgrade it now I cannot sell my car with FSD and loose on this appreciating asset...
I will pass...

 

[2daMoon]

Wow, thanks. So, if I understand correctly; Soon robotaxi is a thing. Because of this my current car with FSD is an appreciating asset. Say I can sell it then for $200K (or whatever the number for discounted cash flow of tobotaxi revenue is). However, if I upgrade it now I cannot sell my car with FSD and loose on this appreciating asset...
I will pass...

The car would not lose the hardware, firmware, or software for FSD, only the license to utilize it. So it should still hold its value for being FSD capable.

Any Robotaxi capable car you could sell for $200K will sell for that regardless of whether or not FSD software has been enabled on it.

Anyone paying to play will have done the math and will cough up whatever is needed to turn on (license) the software and start making money.

 

[EQC_]

I don't like, or get, Elon saying that without FSD the company is worthless or whatever it was he said.

I think the quote is: "The overwhelming focus is on solving full self-driving. That’s essential. It’s really the difference between Tesla being worth a lot of money or worth basically zero."

My interpretation of this is sortof the engineer/mathematician/scientist way of making approximations.

For example, compared to 10, a 1 is "basically zero" and can be ignored for rough estimates. So, perhaps once FSD is truly solved and delivered en-masse, the company is worth 10x more than without FSD at all.

Or, alternatively, as time goes on (toward infinity), any linear growth becomes negligible compared to exponential growth. At the limit, the linear growth is "basically zero" and can be ignored next to an exponential term. So perhaps, in the long run, FSD and other AI stuff helps Tesla grow exponentially...while eventually things like regular vehicle revenue and profit eventually become linear or flat.

This isn't necessarily a statement of the stock value...that would depend on what fraction of FSD current and future capabilities are already in the stock price.

 

[Big Time]

My bad everyone I forgot to feed my cat and plug in the spanking machine. Whoops

 

[EQC_]

Elon isn't Moses, and Texas isn't the Promised Land. Enough, already.

I will kindly thank you to stop discrediting my chosen religion.

(Should be obvious, but this is a joke and not meant render judgement of any religion, whether actually practiced by humans or not.)

 

[betstarship]

"Office use in 10 major US cities is at about half of its pre-pandemic rate on average, according to badge-swipe data from Kastle Systems Inc. More than 20% of US office space was vacant as of June 30, brokerage Jones Lang LaSalle Inc. reported."

The scourge of remote work sends U.S. office distress up to $24.8 billion—that's even worse than malls and hotels

Second quarter data showed the most distress in the office sector, MSCI Real Assets reported, the first time since 2018 that it wasn't retail or hotels.

fortune.com

Edit: Stuff like this make it really difficult to tell how productive organizations are right now and since 2020.

 

[SOULPEDL]

Impressive! You waited all of 2 whole minutes from then time you asked your question on this board until you told us here that u already bought.

I once had a girl-friend who showed a similar style of reasoning: she'd say "Why shouldn't I?" then pout for 2 seconds during which time nothing came into her **** head, then immediately do whatever she damn well wanted in the first place. Emotions only.

I don't really miss her, but I do enjoy the occasional giggle at her "thought process".

Apparently we both knew you weren't going to answer with anything relevant to our "process."

 

[Optimeer]

Why are you talking about Elon? Drew Baglino told us this on the conf. call:

"Yes. First, I’ll just start with a little bit of a production update. So, in Texas, 4680 cell production increased 80% Q2 over Q1, and the team surpassed 10 million production cells produced here in Texas. So, congrats to the team for that. Their focus on yield reduced our scrap bill by 40% quarter-over-quarter, and that resulted in a 25% reduction in cell COGS.​

​

Here in Texas, we’re preparing to launch our Cybertruck cell, which is 10% higher energy density than current production. That was accomplished through process and mechanical design optimization. As we scale Cyber cell production through the end of the year and early next, we should be in a comfortable place on cost per cell.​

​

"Against our battery energy density targets, the Cyber cell is at our expectations on a like-for-like electrochemistry basis. We’re yet to integrate silicon or in-house cathode production, both reviewed on Battery Day, which do bring significant further energy density and cost improvements, but that is a topic for another day.​

​

"Lastly, it is important to remember that most of what we focused on at Battery Day was the Tesla-engineered 4680 production system and the improvements we strove to achieve on equipment, factory density, capital cost and utility cost reduction, all of which we are realizing in our Texas scale up to date."​

There is no 'delay' in the 4680, it's proceeding according to plan explained publicly over a year ago. The Cathode Plant must be producing cathode at sufficient scale before they can economically produce cells enough cells to start mass production of Cybertruck, with it's massive battery pack.

Why do people keep insisting that Tesla make bricks without straw? (ie: cells w/o cathode). Elon isn't Moses, and Texas isn't the Promised Land. Enough, already. CT and 4680s will arrive at scale in 2024Q1, just as they told us, here on Earth, made by Humans.

What I asked myself was how high is the scrap rate when the scrap bill is reduced by 40 % and the COGS decreased by 25 %.

Spoiler: Calculation

I assumed that the recycling of the scrap cells is quite complex unless there is an optimized process in place, therefore I assumed no cost savings in the recycling of cells for my back of napkin calculation.

	Q1	Q2	Decrease
Usable Cells	100%​	100%​
Non Usable Cells	233%​	167%​	40.0%​
Total Cells	333%​	267%​	25.0%​
Yield Rate	30%​	38%​

I came to the conclusion that the yield rate was approx. 30 % in Q1 and was 38 % in Q2. If my calculation was wrong, please explain how this mathematical problem is actually solved. So I assumed that the yield is still quite poor and my assumption was that it will take time until acceptable yields of lets say 90 % are achieved. This is inline with Drew's quote: "As we scale Cyber cell production through the end of the year and early next, we should be in a comfortable place on cost per cell."

If we assume that the yield is poor, then a scale-up of the production might be still possible but would produce mountains of scrap cells which only can be recycled when there is an established recycling process in place. So this is an argument to actually take the time focusing on refining the process and reducing the scrap rate and this is what I think what Tesla is doing. In the end this speaks for a late Cybertruck start, for example in Q4 2023. This is not what I was hoping for and therefore I described it as "late".

Thanks as well to @MC3OZ in providing more details about past and future improvements in your post.

 

[KBF]

You did read Master Plan, Part Deux, right? (Elon Musk, July 20, 2016)

"You will also be able to add your car to the Tesla shared fleet just by tapping a button on the Tesla phone app and have it generate income for you while you're at work or on vacation, significantly offsetting and at times potentially exceeding the monthly loan or lease cost."​

I get why this makes sense from a pure financial point of view, but I don't trust the general public enough to want strangers in my personal car. Lots of people stink, literally and figuratively... So for my own sake, I don't care, I won't use it, because I can afford not to.

However, it increases the possibility of people who can't afford a Tesla (aka if one HAS to take out a monthly loan...) to actually own one. Fair enough, from a shareholder's POV it seems more ethical than just trying to convince people to buy things they can't afford - it is an impressive solution that won't leave customers in worse financial shape.

It sure is different seeing how a company whose #1 goal is global sustainability rather than short term profits actually ends up making more profits... They think of things like this.

 

[Artful Dodger]

What I asked myself was how high is the scrap rate when the scrap bill is reduced by 40 % and the COGS decreased by 25 %.

I assumed that the recycling of the scrap cells is quite complex unless there is an optimized process in place, therefore I assumed no cost savings in the recycling of cells for my back of napkin calculation.

Q1	Q2	Decrease
Usable Cells	100%​	100%​
Non Usable Cells	233%​	167%​	40.0%​
Total Cells	333%​	267%​	25.0%​
Yield Rate	30%​	38%​

I came to the conclusion that the yield rate was approx. 30 % in Q1 and was 38 % in Q2.

You're asking the wrong person to check your maths. Paging @mongo for an opinion.

Cheers!

 

[MC3OZ]

If we assume that the yield is poor, then a scale-up of the production might be still possible but would produce mountains of scrap cells which only can be recycled when there is an established recycling process in place. So this is an argument to actually take the time focusing on refining the process and reducing the scrap rate and this is what I think what Tesla is doing.

I think this general point is correct, and not that unusual for a battery cell production ramp

I am unaware of the status of recycling, they do have recycling at GF Nevada and might simply ship cells there.

Recycling can recover up to 90% of the raw materials, there is a cost to recycling, but it still cheaper than buying new

The maths of trying to calculate the yield from the cogs and scrap rate reductions is tricky.

For example, when a cell is faulty it needs to be manufactured twice, but if the raw materials are recycled in theory they they cost less second time around.

But in particular we don't know why poor yields happen, perhaps production machinery drifts out of tolerance, there are bad batches of raw materials, or staff need more training, etc.

Some of the problems causing poor yields might cause production shutdowns while the problem is diagnosed and corrected. In that case the hit to cogs blows out because machinery/workers are idle or not producing at the peak rate.

Stopping and correcting yield issues ASAP is actually the faster path in the long run.

IMO the yields might not be as bad as you suggest, simply because they are stopping more frequently.

Spoiler: Attempt at alternative maths.

Assume a pack needs 1,000 cells we make 1,000 per production run with a 50% yield there are 500 good cells and 500 bad cells.
A second production run of 1,000 makes 500 good cells, the cost is 2X production.

If we improve yield 20% to 60% we initially make 600 good, 400 bad.
Then on the second run we make 600 good and 400 bad by we only need 400, cost is 1.66X - Cogs improvement is 16.5%.

If we improve yield an additional 20% (40% overall) to 70%, we initially make 700 good cells and 300 bad.
We need 300 good cells out of the second run of 700 good cells - 1.42X- Cogs improvement is 29%

We need someone with better maths skills to settle the debate.

 

[Buckminster]

 

[Buckminster]

TSLA Nasdaq rebalancing is 1.1%:

https://twitter.com/x/status/1682191559842775046

 

[ByeByeJohnny]

Wow, thanks. So, if I understand correctly; Soon robotaxi is a thing.

No, you don't understand it correctly.

 

[hobbes]

1. I looked at the take rate of an estimated 9%, shouldn't they lower the price and reap the $ now?.

Not if they believe that they can sell it at a higher price later (when it becomes obvious that it can actually do what has been promised all all along).