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

[Dikkie Dik]

This news sounds familiar but article is from yesterday. Chinese Tesla suppliers investing a billion dollars in production capacity in Mexico.

Production could very well be for Giga Texas of course.

Chinese Tesla Suppliers Invest | Businesblog

 

[Dutchie]

Did I hear correctly that the NVIDIA cluster comprising of 10,000 H100 chips is still not online?

There was not a word about DoJo in the deck or the call. Is that dead?

 

[Artful Dodger]

Did I hear correctly that the NVIDIA cluster comprising of 10,000 H100 chips is still not online?

Your hearing is incorrect: (from the Q3 transcript)

"We recently completed a 10,000 GPU cluster of H100s. We think probably bring it into operation faster than anyone’s ever brought that much compute per unit time into production"​

There was not a word about DoJo in the deck or the call. Is that dead?

Lol, did you look at all for news? This report is just 3 weeks old: (not everything fits into the shareholder letter, especially if it's already been in the news)

Tesla doubles Dojo D1 supercomputer chip order with TSMC: Report (Sep 25, 2023)

 

[DTG_]

The analysts should look up from their screens one in awhile. "My god, Tesla is down to the same profit level as traditional automakers!"

Traditional automakers aren't valued at 70+ P/E, for multiple reasons.

 

[Cobos]

Traditional automakers aren't valued at 70+ P/E, for multiple reasons.

Neither is Tesla down to same profit lvls. We are looking at EVs here. Is Tesla at same profit lvl as Lucid? How about Ford or VW. They are thinking about crossing the chasm of disruption, they are NOT over on the safe side.

 

[Buckminster]

Netflix are putting up prices following a great quarter. Is that too early in this economy? There will be a time when Tesla can push up prices again but will probably have further reductions ahead of that. Unless Cybertruck event really is a PR miracle…

 

[cliff harris]

Netflix are putting up prices following a great quarter. Is that too early in this economy? There will be a time when Tesla can push up prices again but will probably have further reductions ahead of that. Unless Cybertruck event really is a PR miracle…

Netflix are a different universe. Staying home and watching streaming TV is super cheap. In a bad economy, you eat out less, go to the movie less, and watch netflix more, because this saves you a bunch of cash.

Cutting edge technology electric cars with ridiculous 0-60 times like most Tesla's are at the other end of the scale. When we have a cheaper model 2, things will look different, but right now, Tesla will always struggle in a tough economy.

 

[cliff harris]

New CFO does not exactly inspire much confidence. Certainly not like Zach Kirkhorn did.

in what way? I bet if they have deepfaked his accent to be zachs, none of us would have been able to tell the difference. He seemed exactly the same to me, and it was good to hear him, and drew and tom on the call.

 

[Max Plaid]

History has shown that we should worry about the stock when Elon is overly optimistic and pumping the stock. He didn’t today, so we’re good.

BTW: Elons story about 20% credit card interest rates is a US fenomenon. In Europe we mostly use debit cards, and credit cards are payed off every month.

Yes, when Elon pumps the stock you know he's about to unload 10 billion shares on the open market, so we're good!

UK also has credit cards with crazy interest rates that only need a minimum payment every month, very easy to get into debt fast, ask me how I know...

Anyway, thanks everyone for the commentary, I stopped listening to the earnings calls many moons ago, they are indeed depressing

What I don't get is how come they can be so bad, and yet the shareholder meeting back in May was the opposite...?

 

[Max Plaid]

Overall, I fully agree with Tesla's plans to slow down GigaMexico, while moving the next-gen platform's initial production to GigaTexas. It makes sense in multiple ways, like the building already exists and has space available as well as that is where the engineers are. Plans change, and long-term this change is one that I think is for the best.

Agree, TBH I never understood why Mexico was the initial candidate for Gen 3 given the huge footprint at Austin

Get it perfected at GF5 first, then replicate at other factories that will come online a just the right moment

 

[lascavarian]

Canaccord (sp?) lowering price a bit to 257. Long term positive as a tech growth company so not overly concerned about Q3. This from CNBC interview.

 

[aubreymcfato]

You can make that argument. At the same time, Tesla needs some splash to get attention, especially considering that they don't spend (waste?) money on advertising. They didn't need to make Plaid-but how much media attention has that gotten as (one of) the quickest (0-60) car in the world? How many people remember the 4-door family sedan dusting half million dollar supercars at the dragstrip? How many magazine/social media articles have been written about it? And on the street-how many remember getting dusted by one? Regarding the X-most people would only remember it as a crossover EV without the "falcon-wing" doors. Those doors (and Plaid) both showed Tesla's engineering stones and willingness to "boldly go where no man has gone before". Granted I think they underestimated the actual problems posed by those doors but it made a spash and got some attention. How many still remember the "gull wing Mercedes" that otherwise wouldn't have a clue of it's existence?

IMO the Cybertruck will be the same way. You can see a Lightning on the road and not even notice, it's just a rebuilt F-150 as far as anyone is concerned. Same with Silverado EV (assuming they actually get them on the road)-it looks like any other pickup from the last 70 years. Not worth noticing. Cybertruck...will be noticed. Some will love it, some will hate it-but it will be noticed. IMO, if Tesla can deliver on the promises and performance, and especially approach price parity with an ICE P/U, I think it will be huge for the company.

This is a good hypothesis.
Elon has is own weirdly effective way to think about marketing and communication... Remember when he wanted to spend tens of millions of dollars to send a seed onto Mars, plant it and just make a photo? He wanted to spark new enthusiasm for space exploration, but in the end decided to do it himself.
As much as I think some of his ideas turned out better than others (some I think were a net negative), at least is MO is consistent.

 

[jeewee3000]

New CFO does not exactly inspire much confidence. Certainly not like Zach Kirkhorn did.

The only thing on TSLA conference calls that doesn't inspire much confidence is the sound quality. It's worse than a phone call. Please use some SpaceX production values/magic to fix this!

 

[lascavarian]

Gene Munster saying message to investors is that there is a year to wait until margins return. On CNBC now.

 

[jeewee3000]

Gene Munster saying message to investors is that there is a year to wait until margins return. On CNBC now.

Kind of in line with what Elon has been predicting for a long time: H2 of 2024 is the earliest he sees improvement in the economy. Grain of salt, but seems plausible if the interest rates were to stay flat for the next couple of months and inflation cools.

 

[jeewee3000]

Given that earnings call, I do think any chance of hitting 20 million production by 2030 is now very unlikely. CT ramping slowly to a potential rate of only 250K by end of 2025, delaying Giga Mexico construction, slowing MY and M3 production growth to focus on cost cutting instead, 4680 production ramping slower than expected, etc. Elon said they are taking their foot off the accelerator until interest rates start going down.

I don't see a realistic path to growing production to 20 million within seven years now, there just aren't enough factories in the pipeline to accomplish this anymore IMHO, not in such a short timeframe.

Polite disagree.

I agree that there might be an effect in the next few years (i.e. we don't ramp 50% volume every year) but since they are making progress on the design of the manufacturing line of the Gen3 vehicle (in Austin), the lessons will be learned in Austin as opposed to in the newly built factory.

Shanghai proved that copying a ramp which you have solved is doable. Tesla will just design the line in Austin, where the designers/engineers are currently, and try to incorporate those (cheaper) lessons in the design of Giga Mexico. This is actually a good thing since v1.0 of any new line/factory is not optimal. (Again, see Shanghai vs Fremont)

Not that I'm happy with the delay or saying "this is all 4D Chess by Elon", but I just want to point out that not as much time is lost as some think there will.

In other words: Tesla is assessing the situation/circumstances on a day to day basis and being flexible in its decision making. This is a good thing and one of the reasons why I have so much faith in the company. If they blindly started to build Mexico because the Powerpoint presentation from three quarters ago said so then this would be a recipe for disaster.

They are making the best out of a bad situation.

 

[traxila]

The only thing on TSLA conference calls that doesn't inspire much confidence is the sound quality. It's worse than a phone call. Please use some SpaceX production values/magic to fix this!

This exactly.

When the CFO was speaking could not understand a word, and it was not because of his accent.

Hope EM feels better today. He probably needs a girlfriend.

World is more depressing than usual nowadays if you listen to the ‘news’.

 

[Mengy]

Polite disagree.

I agree that there might be an effect in the next few years (i.e. we don't ramp 50% volume every year) but since they are making progress on the design of the manufacturing line of the Gen3 vehicle (in Austin), the lessons will be learned in Austin as opposed to in the newly built factory.

Shanghai proved that copying a ramp which you have solved is doable. Tesla will just design the line in Austin, where the designers/engineers are currently, and try to incorporate those (cheaper) lessons in the design of Giga Mexico. This is actually a good thing since v1.0 of any new line/factory is not optimal. (Again, see Shanghai vs Fremont)

Not that I'm happy with the delay or saying "this is all 4D Chess by Elon", but I just want to point out that not as much time is lost as some think there will.

In other words: Tesla is assessing the situation/circumstances on a day to day basis and being flexible in its decision making. This is a good thing and one of the reasons why I have so much faith in the company. If they blindly started to build Mexico because the Powerpoint presentation from three quarters ago said so then this would be a recipe for disaster.

They are making the best out of a bad situation.

It sounds like you are actually agreeing with me!

I agree once the Gen3 line is built in Austin and ironed out, they can then "copy & paste" the line design in Mexico and any other future factories. However, that takes time to implement, and with these delays now I do not think there is enough time between now and 2030 to ramp total production to 20 million by then. I think something more like 13-15 million production by 2030 is far more likely, with 20 million happening a few years afterwards.

 

[JSML]

Here's a question - Why is Tesla building the CT if it's extremely difficult to build at an affordable price instead of building and ramping ASAP the cheaper platform version? IF Elon is worried about monthly payments/economy, then you would want to produce the cheapest product so that people can buy it...

Elon’s a perfectionist. It’s not just the gen 3 platform. Elon wants to evolve the machine that makes the machine. It has absolutely need to be the lowest cost possible.

Tesla cars are iconic. This new one will be too. The model once made will not change for a decade or more. Takes time.

 

[SarahsDad]

I wonder if Elon is pushing the lower >125K cap on Cybertruck production because it will never be profitable. Because maybe when he says it’s really hard to build he means it’s really expensive to build? And he’s not willing to raise the prices substantially because he's pledged to make ‘affordable’ vehicles. He has to make it a loss leader.

The result is scarcity marketing with demand>>supply. This may end up being Elon’s best form of advertising. Like Ferrari’s “We will always deliver one less car than market demand”.

If so, there may be a huge resale market for Cybertruck (not great for investors). Buying a car for $69K and turning around and selling it for $99K or more. I think we’ll see this.

And expect more crowds around the shiny Cybertruck at the local supercharger. And more walk-ins at Tesla showrooms (“Well, the wait for the Cybertruck is 6-12 months, but you can buy a Model Y today!”). This would be good for investors.