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

[Artful Dodger]

not sure why we think Model 3 Highland will be priced lower or equal to current M3 trims

Two very obvious reasons why Highland will be cheaper:

1. Model Y w. gigacasting is cheaper to build than Model 3 w/o; ergo Model 3 w. will also be cheaper (that's the major reason behind the Highland refresh), and
2. Model 3 Highland volumes will be much higher due to simplification of production processes at Shanghai + Fremont; a lower base price will match the total addressable market to the planned volume (ARK Invest did a chart of TAM vs. Price)

The broad strokes were also layed out in the original Secret Master Plan*.

Cheers!

*Just between you and me.

 

[ThisStockGood]

Just listened to a popular danish car podcast. The host announced next weeks episode would be ready on Saturday (and not Friday as usual). Reason is that a major car brand is revealing something… and that everything about it is extremely secretive…

I know nothing, but I smell a reveal of Highland in exactly one week

 

[GhostSkater]

Someone posted an interior shot of a V4 supercharger pedestal. It is crammed full of stuff. Remember that the cables are liquid cooled, so there’s equipment for that in the pedestal. You need essentially a compressor/chiller/radiator system within the pedestal to remove the cable heat when charging at 250 kW.

There is no compressor on Superchargers stalls, It's just fans and a air to water heat exchanger, by the pics we got it might be the same that goes on the cars on V4

You don't need a refrigeration system in it since the wires can get over 100°C without a problem (as per the NACS specs), this means that even at high ambient temperatures you have plenty of temperature delta to have effective heat exchange

In contrast, the cells peak at ~60°C, so if you have 30+°C ambient temperature, there is not enough difference for enough power to be dissipated, you would need a giant heat exchanger that wouldn't fit even behind the newest BMW grills. A refrigeration system increases the delta between the cells and the cold coolant side and a the delta between the ambient and hot coolant side, make the cold side colder and the hot side hotter

 

[Mengy]

I was surprised to find out that not only is Tesla's current operating margin lower than some other auto OEMs, but so are their gross margins.

Toyota has a gross margin just under 20%.

So it seems on the surface that Tesla is just like any other OEM in terms of cost to build.

However that is with EV costs while Toyota and others are primarily ICE / hybrids. I could imagine their costs and gross margins would be surpressed as they transition to more EVs, so it's not an apples to apples comparison. But I fear currently it doesn't make sense to proclaim Tesla has a superior cost structure.

Even after all the price cuts and flat earnings, if Tesla is able to keep current operating margins and grow revenues ~ 50% YoY in the future, this will allow for a high PE multiple like 50-80 even as earnings go higher.

So 2023 is a wash, EPS might be in mid threes, like $3.6. But what can 2024 look like? I can see $1 additional contribution from Energy growth. I would also assume that Model 3 revamp should improve ASP and reduce COGs. Could this, and Cybertrack ramped, contribute at least $0.5 in EPS in 2024? I would think that's a reasonable bet.

If so, TSLA should be able to get over $5 in EPS in 2024 with good growth trajectory. At a PE ratio of 70, I think we might be able to reach a stable price of $350 maybe in a year from now.

I know a lot of posters are going to crap on your for your post there, but in all honesty I agree with your outlook for TSLA in 2024. I don't think we'll get above $350 for most of next year, as I too feel margins will be held low compared to what we enjoyed last year. Mainly due to CT & Highland ramping plus the Giga Mexico buildout and other factory expansions, coupled with the low car prices we are at now. Berlin seems to be stagnating a bit for some reason, that isn't helping. In time I feel COGS being lowered will help us out tremendously, but I think that will take a year to happen.

At some point the Fed will likely begin lowering rates next year, and THAT's the point where I see TSLA finally going up noticeably again. Probably late next year IMHO.

It's not a popular nor rosy opinion, but it's how I think 2024 will play out for TSLA.

 

[Krugerrand]

Would you like an AWD Ioniq 5 for $46k?

Um - no.

5 years is a long time in vehicle development.

Yes. Long time. Do you hear that GM? Ford? Porsche, VW, Mercedes, Audi - It’s a long time. Remind me again the name of the number one selling EV.

 

[Singuy]

I know a lot of posters are going to crap on your for your post there, but in all honesty I agree with your outlook for TSLA in 2024. I don't think we'll get above $350 for most of next year, as I too feel margins will be held low compared to what we enjoyed last year. Mainly due to CT & Highland ramping plus the Giga Mexico buildout and other factory expansions, coupled with the low car prices we are at now. Berlin seems to be stagnating a bit for some reason, that isn't helping. In time I feel COGS being lowered will help us out tremendously, but I think that will take a year to happen.

At some point the Fed will likely begin lowering rates next year, and THAT's the point where I see TSLA finally going up noticeably again. Probably late next year IMHO.

It's not a popular nor rosy opinion, but it's how I think 2024 will play out for TSLA.

I feel like every giga factory during the ramp phase had a few quarter of stagnation. Fremont during the 3 was q1/2 of 2019. Shanghai had stagnation too but of course covid screwed up a bunch of things. It seems like Tesla tries to hit 5k/week..then stalls, then goes higher. I think it's part of their margin optimization process. My hunch is that the initial high volume pilot line capacity is 5k/week. Once they hit that and run out the kinks, they install additional lines which may take a quarter for the next phase of ramp.

 

[Singuy]

I was surprised to find out that not only is Tesla's current operating margin lower than some other auto OEMs, but so are their gross margins.

Toyota has a gross margin just under 20%.

So it seems on the surface that Tesla is just like any other OEM in terms of cost to build.

However that is with EV costs while Toyota and others are primarily ICE / hybrids. I could imagine their costs and gross margins would be surpressed as they transition to more EVs, so it's not an apples to apples comparison. But I fear currently it doesn't make sense to proclaim Tesla has a superior cost structure.

Even after all the price cuts and flat earnings, if Tesla is able to keep current operating margins and grow revenues ~ 50% YoY in the future, this will allow for a high PE multiple like 50-80 even as earnings go higher.

So 2023 is a wash, EPS might be in mid threes, like $3.6. But what can 2024 look like? I can see $1 additional contribution from Energy growth. I would also assume that Model 3 revamp should improve ASP and reduce COGs. Could this, and Cybertrack ramped, contribute at least $0.5 in EPS in 2024? I would think that's a reasonable bet.

If so, TSLA should be able to get over $5 in EPS in 2024 with good growth trajectory. At a PE ratio of 70, I think we might be able to reach a stable price of $350 maybe in a year from now.

You should look at Toyota gross margin and operating margin during the growth phase, not after a few decades of margin optimization. Tesla has multiple Gigafactories at 50% utilization while expanding..Toyota doesn't have any factories at half the utilization.

 

[⚡️ELECTROMAN⚡️]

I know a lot of posters are going to crap on your for your post there, but in all honesty I agree with your outlook for TSLA in 2024. I don't think we'll get above $350 for most of next year, as I too feel margins will be held low compared to what we enjoyed last year. Mainly due to CT & Highland ramping plus the Giga Mexico buildout and other factory expansions, coupled with the low car prices we are at now. Berlin seems to be stagnating a bit for some reason, that isn't helping. In time I feel COGS being lowered will help us out tremendously, but I think that will take a year to happen.

At some point the Fed will likely begin lowering rates next year, and THAT's the point where I see TSLA finally going up noticeably again. Probably late next year IMHO.

It's not a popular nor rosy opinion, but it's how I think 2024 will play out for TSLA.

You guys have no idea what the price will be a year from now. Quit thinking you're Nostradamus or something.

 

[stealthyc]

You guys have no idea what the price will be a year from now. Quit thinking you're Nostradamus or something.

Jeez, let people express their opinions. No one said that they are absolutely right, they said this is what they think it will be like.

 

[AudubonB]

Make the overture? Not Ross Gerberini

 

[Krugerrand]

Jeez, let people express their opinions. No one said that they are absolutely right, they said this is what they think it will be like.

Technically, he expressed his opinion.

 

[Cosmacelf]

You guys have no idea what the price will be a year from now. Quit thinking you're Nostradamus or something.

Uh, now you’re just being grumpy. Get a coffee, or lay off the coffee, sit in a corner, and think about what you posted

 

[SOULPEDL]

Lol how I get slammed for making predictions here that may actually come true.

Quoting ARK, "Elon Musk noted that Tesla is developing a vehicle that will sell at roughly half the price of the Model 3 and Model Y."

I said $27.5K after tax write-off which seemed to ruffle some cat hairs around here. Perhaps it's even lower.
Then I said "in 2 weeks", half jokingly, and now it's possibly in a week... one week later.

Just sayin. Thanks to the @Artful Dodger for the reference - data and quotes help.

 

[NicoV]

I know a lot of posters are going to crap on your for your post there, but in all honesty I agree with your outlook for TSLA in 2024. I don't think we'll get above $350 for most of next year, as I too feel margins will be held low compared to what we enjoyed last year. Mainly due to CT & Highland ramping plus the Giga Mexico buildout and other factory expansions, coupled with the low car prices we are at now. Berlin seems to be stagnating a bit for some reason, that isn't helping. In time I feel COGS being lowered will help us out tremendously, but I think that will take a year to happen.

At some point the Fed will likely begin lowering rates next year, and THAT's the point where I see TSLA finally going up noticeably again. Probably late next year IMHO.

It's not a popular nor rosy opinion, but it's how I think 2024 will play out for TSLA.

A quick reminder that Zack said we would only see the impact of lower materials cost in H2.
That will cause higher margins, and thus a higher EPS.
Just as an example: it was recently on our local news that building materials cost is now going down. Not long before we see deflation.

 

[Tachyon]

And just who would make that Overture

Will,I am
If insist you .

 

[Christine69420]

It seems like Giga Mexico has a drone pilot. Look for AdreanCG over at Youtube:

 

[Nocturnal]

I know a lot of posters are going to crap on your for your post there, but in all honesty I agree with your outlook for TSLA in 2024. I don't think we'll get above $350 for most of next year, as I too feel margins will be held low compared to what we enjoyed last year. Mainly due to CT & Highland ramping plus the Giga Mexico buildout and other factory expansions, coupled with the low car prices we are at now. Berlin seems to be stagnating a bit for some reason, that isn't helping. In time I feel COGS being lowered will help us out tremendously, but I think that will take a year to happen.

At some point the Fed will likely begin lowering rates next year, and THAT's the point where I see TSLA finally going up noticeably again. Probably late next year IMHO.

It's not a popular nor rosy opinion, but it's how I think 2024 will play out for TSLA.

I'm in the camp that expects a decent macro correction once rates start being cut. TSLA though could be back at ATHs anytime though, or it could be stuck in this 200ish range. This stock shouldn't surprise us by now.

It also didn't have any significant competition

They still don't. If the other brands want to sell EVs at a loss then of course the cars might look comparable on paper. Nobody else can make EVs at a profit. (maybe BYD but I still believe they would separate out their BEV numbers if they were solid)

 

[SOULPEDL]

Useful chart, thx.
Where does that put Ford on the new flat black E-version?

 

[Drumheller]

The Model 3 Highland could see a significant price reduction IF Tesla is planning to not sell the Model 2 in the USA for years / ever. That would make sense, sell the lowest cost model in other countries where the Model 3 is too expensive for most people. If the Model 2 starts production in late 2025, takes a few years to ramp, perhaps it wouldn't even be considered for USA until at least 2028 or 2029. That would give a long window for a lower priced Model 3 to sell well.


For 2024, I will take note from Jonas and predict a share price between $1 and $999. If I'm wrong, let's hope I was too conservative.


Also, could a certain pilot air drop some Temptations on a specific mountain side? Kthx

 

[Usain]

I don't think it helps/hurts FSD either way. If it's great, haters will say it's faked or pre-mapped like the 2016 video, even if it's clearly not and people who love FSD will be happy. If it does terrible things, haters will hate, others will defend it as an edge case. The O'Dowd videos didn't change the perception of FSD, even with running stop signs. It takes a lot more than a video to change opinions.

The thing is, it's hard to fake a live stream in real traffic conditions. Anything can happen. And something really bad could happen.

Elon is taking a risk. So he must really think V12 is solid.