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

[Singuy]

What's odd to me is Q1 and Q2 total production was 30k vehicles higher than deliveries... but in Q3 with reduced production deliveries were only 5k higher than production.

I was expecting a larger inventory drawdown than that with the reduced production.

I am thinking there are probably 15-20k refresh M3 ready to be delivered but we're held for q4 perhaps for accounting purposes.

 

[M|S|M MYP]

Looks like Troy's streak of accurate delivery estimates continues. Not sure why some here get so hung up on the adjustments he makes throughout the quarter/s. Every good analyst does that.

As do the bad ones

 

[jamaatta]

So, are we closing green today?

 

[AndrewZ]

S/X production and sales absolutely terrible considering the price cuts. There is not "production - constrained" excuse here. Production levels are way below capacity already.

I'm estimating ~ $0.7 EPS for the quarter. Annualized this is $2.8 EPS, meaning Tesla is at a current PE ratio of 85 with low earnings growth. Sadly that is not sustainable and the stock will be going down in the short term.

Calls for $350 share price this year are laughable. 2024 earnings estimates are going to get revised down further until analysts can see some light at the end of the tunnel? When will that be? It isn't going to be this year with interest rates staying high and Musk turning off more potential customers with tone-def tweets.

I am still hoping for a rebound in share price to sustainably go above $300 mid 2024, but consumer weakness is really hurting earnings more than I thought. FSD isn't ready to push margins up significantly. Megapack is really the only thing left of hope.

Even the optimistic market has rates quite high out to the end of next year, only 0.50-0.75 below current levels. When rates do come down, unless something really breaks, the taper down will be slow and gradual and it won't be a cut down to 0% again - we were at 2.4% and creeping up before the pandemic hit.

In Canada we have mortgages that typically renew every five years. I have one renewing in 2026, and I would not be at all shocked to still see rates decently high when that comes.

 

[Usain]

So, are we closing green today?

Maybe. Market reaction is not too bad so far.

 

[jeewee3000]

So, are we closing green today?

 

[Todd Burch]

What we could be seeing in the markets is that everyone knew this was going to be a (relative to typical Tesla quarters) kitchen sink quarter. The big selloff happened earlier during the Q2 call when Tesla guided for lower numbers this quarter. Now that the bad news is out, people want back in as they know this quarter should be much better, Cybertruck deliveries should be starting, etc. In other words, I think we're probably at the low point for Tesla performance for many years to come.

At least I hope so!

 

[betstarship]

FYI -

2022 Deliveries:

1,313,851

2023 1st 3 Q's:

1,324,074

 

[Zero CO2]

FYI -

2022 Deliveries:

1,313,851

2023 1st 3 Q's:

1,324,074

perspective !

 

[Mengy]

Looks like Troy's streak of accurate delivery estimates continues. Not sure why some here get so hung up on the adjustments he makes throughout the quarter/s. Every good analyst does that.

Troy's grounded estimates often run counter to the super bullish outlook, and there are many super bulls here on the forums, thus Troy's (and Gary Black as well) "reasonable" numbers often get poo-poo'd.

Perfect execution of a business like making cars is extremely difficult, it's why I tend to err on the conservative side of expectations for Tesla. The stock will get there in time, just probably slower than most people here expect, as the stumbling blocks along the way are numerous and major.

 

[2daMoon]

So, are we closing green today?

llaW teertS is a strange and unusual place where backwards can be regarded as quite normal.

So, with a "disappointing" quarter (that they were told was coming) there is as good a chance we'll see a rise in the SP as there is the chance we'll see a fall.

 

[EQC_]

If interest rates don't come down next year, what will be required to move 2.3-2.4million vehicles? I genuinely don't know how people expect this to go.

One of the key requirements will be fewer sales by the other manufacturers .

 

[Krugerrand]

This is where Elon postulating about POSSIBLY hitting 2M in that earlier earnings call hurts....just sandbag a bit Elon. C'mon, YOU CAN DO IT! :>

A comment like this suggests a person can’t reflect and consider all that has happened since that time, nor understand how those events changed the outcome, nor that Elon can’t control everything.

Like all the things people said they would do and accomplish in the year 2020 and didn’t. If only they’d sandbagged their agendas.

 

[TN Mtn Man]

So, are we closing green today?

Well, considering that every time TSLA sets a P&D record the stock drops 5%, I suppose it should go up on a miss.

 

[Olle]

It's an open question as to how aggressive Tesla will be in pursuing its L2 charging network. If Tesla is going to build a super-affordable Gen 3 vehicle then that means a lot more apartment dwellers will need charging. Only Tesla could build out the L2 network fast enough to keep up with demand. Of course, that assumes the Gen 3 vehicle is sold to the public.

So let's assume that Tesla believes its L2 charging network is important for the mission. The number of EVs on the road will grow exponentially as expected. Tesla will need become very aggressive in rolling out its L2 network.

Then the next open question is how aggressive Tesla will be in pursuing profit from its L2 charging network. At first I think Tesla will try to just break even and go for market share. But break-even will still require a significant cut of the revenue as Tesla will need to quickly ramp production of chargers and hire a lot of people to manage the network.

After the L2 network is established and the ramp phase is over, revenue will start to massively dwarf expenses.

To give you all an idea of the revenue opportunity, just look at ChargePoint. They mostly concentrate on the L2 network. Their revenue comes from hardware sales, network subscriptions, and maintenance contracts. They don't take a cut of the electricity delivered. Their annual revenue is already $600 million and they are tiny compared to where this market is going.

Tesla is going to be standing in front of a huge flood of money.

That's exactly right. The bigger story is that Elon has now reluctantly accepted the "$25k car" as largely customer owned. According to Isacson's book, it happened as recently as in the beginning of 2023! Until then, Elon was adamant about Robotaxi and S3XY, with nothing in-between. There was supposedly a lot of consternation about this among Tesla's top executives.

S3XY, because of their relatively large sizes, are often driven by suburbanites with home charging, while Robotaxi would use its own auto plug in system, which meant that traditional L2 wasn't going to be a super high priority (except for destinations).

With the $25k car coming to private people, L2 for apartment dwelling customers is high on the list, which is why we are seeing Tesla's effort to make L2 frictionless in all aspects of deployment, billing and customer experience.

 

[unk45]

It's an open question as to how aggressive Tesla will be in pursuing its L2 charging network. If Tesla is going to build a super-affordable Gen 3 vehicle then that means a lot more apartment dwellers will need charging. Only Tesla could build out the L2 network fast enough to keep up with demand. Of course, that assumes the Gen 3 vehicle is sold to the public.

So let's assume that Tesla believes its L2 charging network is important for the mission. The number of EVs on the road will grow exponentially as expected. Tesla will need become very aggressive in rolling out its L2 network.

Then the next open question is how aggressive Tesla will be in pursuing profit from its L2 charging network. At first I think Tesla will try to just break even and go for market share. But break-even will still require a significant cut of the revenue as Tesla will need to quickly ramp production of chargers and hire a lot of people to manage the network.

After the L2 network is established and the ramp phase is over, revenue will start to massively dwarf expenses.

To give you all an idea of the revenue opportunity, just look at ChargePoint. They mostly concentrate on the L2 network. Their revenue comes from hardware sales, network subscriptions, and maintenance contracts. They don't take a cut of the electricity delivered. Their annual revenue is already $600 million and they are tiny compared to where this market is going.

Tesla is going to be standing in front of a huge flood of money.

Given that L2 will grow more than will Fast Charging, with Supercharger still dominating Fast Charging in North America, to a lesser extent in Europe/Uk and most of Asia. Nobody here is likely to argue with that.

The question is whether Tesla will dominate L2 and generate significant revenue from that, much less profits. Some, including you, persist in imagining Tesla will dominate L2. There are several reasons why they will NOT dominate anywhere, including NA, while still playing a profitable role in L2 from TE:
First, the TE opportunity:
-Electrify America chose Tesla Energy in 2021:

Electrify America has now deployed Tesla Powerpacks at over 140 charging stations

Electrify America announced that it has now deployed over 30 MW of battery capacity using Tesla Powerpacks at over 140...

electrek.co

others can and will choose various storage providers and Tesla will have a share.
-Virtual Power Plants (VPP)and L2 networking: That is vestigial today with charging networks mostly because few networks actually install storage buffers, one more reason for their unreliability. Since Tesla already holds the licenses in multiple countries and NA regions those activities are entirely compatible with load-balancing.
- In many countries L2 charging stations are deployed in Shopping Centers, Supermarkets, hotels, and other locations at a rapidly increasing rate. Many are networked, many are not. Many have EV connectors of some type, many have none. Around the world many are free and many have payment required.
-I have personally done charging in countries from Southeast Asia, the Middle East, Southern and Central and Western Europe, North America and South America.
That does not make me an expert, but it does help me form the opinion that L2 provisioning is very diverse, everywhere, and that will not change. Why? Simply because L2 is not a specialized load, it is different from most loads only in that it is continuous rather than intermittent, so electrical infrastructure, rated for intermittent loads, must be derated fro continuous ones. That's it, nothing else.
-Around the world travelers must use adapters whenever they move from place to place, often within the same country. So it is for BEVs.
-The fundamental question is whether Tesla somehow has competitive advantage to dominate Level 2 at it does with fast charging. It will not precisely because the barrier to entry is so very, very low. That is why there are so many diverse solutions everywhere. Just as with my Florida condominium association, everyone else has a plethora of choices. Tesla is one. We did not choose Tesla because it was slower to install, cost more and was more rigid than others. Some will choose Tesla whose situations are different.
-Tesla certainly will get business from some, after all the Tesla charges are clear and simple, and their payment processing, at least in the US, is competitive with typical larger volume payment processors. However, any commercial entity that already has POS card processing can and does offer site-based touches processing at very cheap rates, based on ad valorem rather than KW, but Tesla does that too where kW pricing is illegal or not wanted. For those places adding a payment processor for their L2 chargers is an inconvenience when they can simply add each charger to their existing network. That issue will apply most strongly in the most advanced payment systems markets, i.e. almost everywhere in Europe, much of Asia, South America. Further most NA markets are rapidly advancing.
-To be blunt, Tesla has zero advantage in payment processing EXCEPT when linking Tesla Energy Virtual Power Plant to the system so the operating cost of the installation can be reduced. Once that component is added Tesla can integrate the entire operating cycle. When Tesla adds the VPP to to overall client side whether shopping center, multi-family housing, commercial building or medical facility, the optimization that results from VPP integrates all electrical usage plus adds the Uninterruptible power to the process. That integration is the Tesla speciality. That is clear and unmistakable value. There are competitors, to be sure, but Tesla will often be more elegant.
-The last Tesla advantage that could happen is that provided by heat pumps. Those are already in widespread use and growing worldwide but the Tesla potential advantage, as discussed several times by Elon, builds from Octovalve experience. Were those technologies to mature they could be easily integrated in the entire Tesla Energy value proposition.

All of those factors make it unlikely that Tesla would achieve any gigantic profits from L2 charging as such. Were they to integrate other Tesla Energy services that value proposition could change. Lastly, the role fo payments processing in any aspect of these opportunities would itself depend on resuscitating the Elon visions of decades ago with X.com pre PayPal. Anything like that, while interesting, is highly speculative. Without such integration the opportunity can only be substantial with the Tesla VPP combined with L2 and storage (eg Megapack)

Many of us seem to imagine high continuing profitability based on the competitive landscape today. The opportunities are, however, tomorrow and the component parts are evolving rapidly. In short TANSTAAFL

 

[jkirkwood001]

...I am still hoping for a rebound in share price to sustainably go above $300 mid 2024, but consumer weakness is really hurting earnings more than I thought. FSD isn't ready to push margins up significantly. Megapack is really the only thing left of hope.

Or advertising.

(Ooh! oh! ouch! HEY stop it!)

 

[ThisStockGood]

so… beat equals TSLA down… miss equals TSLA up

;-)

 

[Usain]

so… beat equals TSLA down… miss equals TSLA up

View attachment 978958

;-)

And we're green. How about that?

 

[Drumheller]

so… beat equals TSLA down… miss equals TSLA up

View attachment 978958

;-)

Where are the call and put walls this morning for this week? It seems to me that almost nothing else matters to TSLA anymore other than options manipulation