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

[hobbes]

https://twitter.com/x/status/1714976789083140588

 

[Artful Dodger]

Whatever happened to the Next Gen platform China was supposedly going to develop? Was that just a rumor or did the idea get scrapped?

Do mean the one that was supposed to debut at the Shanghai Auto Show two years ago? That one existed only in the feverous minds at REUTERS Osborning Dept.

If you mean the Tesla China R&D Facility, Elon said last year they're just not ready. They are doing software development right now for the local market in China.

 

[mongo]

View attachment 983481

Q3, 2022 Elon - "We anticipate continuing to grow our vehicle production sales deliveries...on average 50% a year as far into the future as we can see."

Q3, 2023 Elon - "It's not possible to have a compound growth rate of 50% forever."

What's your point? They can't see out forever... it's obvious...

2023:
"Yeah. I mean, the risk of stating the obvious, it's not possible to have a compound growth rate of 50% forever or you will exceed the mass of the known universe. But I think we will grow very rapidly, much faster than any other car company on Earth, by far."

 

[Artful Dodger]

How else will you know when it's time to sell the house to be able to buy more shares.

When the SP gets to within $0.27 of triggering the Uptick Rule, but bounces instead? /S

 

[unk45]

This is a good topic to ponder! In the slide deck Tesla listed current factory capacities:

Fremont: 650K
Shanghai: 950K
Berlin: 375K
Austin: 375K
TOTAL: 2,350,000

Now, regarding Austin, 125K of that capacity is the 125K CT production, which Elon himself said will take about 18 months to ramp up to. So for 2024 we can expect the CT line to NOT hit that 125K number, we are more likely to only see about 60K CT's in 2024.

This means for next year, 2024, we are looking at a probable production number of 2,285,000. This would only be about 27% above 2023 expected production of 1.8 million.

Now for 2025, we really don't have any new capacity coming online that we know of. Mexico's buildout is delayed and Berlin seems stalled in it's ramp, so for 2025 we're likely only going to see a bit more production than 2024 due to the CT ramp being mature. We might see some more line improvements to existing factories which might equal slightly higher run rates, but nothing extraordinary. Maybe Berlin will gain some production as well?

I'm expecting 2025 production to be barely above 2024 production. Maybe 2,500,000 or so? 10% above 2024 production numbers. I just don't see many possible paths to gain lots of production in that timeframe given the current production capacities and buildouts.

So yeah, I'm expecting the growth rate to slow for a year or two, until Gen3 production comes online in either late 2025 or 2026, and especially until Giga Mexico is built and producing.

Assuming your prognosis were to be correct, there si a gigantic side effect. Despite some price reductions that might happen, in this scenario Tesla Energy could continue to ramp, production efficiency for all models could stabilize at near full capacity and gross margins would rise, capex would drop, and free cash flow would grow like a SpaceX Falcon 9 launch.

When we consider that Tesla has had very positive cash flow with high growth, just imagine what happens if the growth slows and factories have been optimized! Bad news on growth means good news on profitability, even in recession.

 

[Mengy]

Assuming your prognosis were to be correct, there si a gigantic side effect. Despite some price reductions that might happen, in this scenario Tesla Energy could continue to ramp, production efficiency for all models could stabilize at near full capacity and gross margins would rise, capex would drop, and free cash flow would grow like a SpaceX Falcon 9 launch.

When we consider that Tesla has had very positive cash flow with high growth, just imagine what happens if the growth slows and factories have been optimized! Bad news on growth means good news on profitability, even in recession.

This is indeed very possible.

 

[Cosmacelf]

Priority means what?

A $25k vehicle, selling in huge numbers, requires a huge amount of batteries. And a cost structure to support a sales price of $25k. This all doesn't just miraculously happen instantaneously because a $25k car will be the most important car to fuel the transition to EVs.

Elon is pulling back expansion plans because he is worried about a recession. Which means, the battery supply is there, but will be underutilized. If Tesla had a broader vehicle lineup, it would be able to sell more cars, even in a recession. The real problem is that Tesla is still a small company with only 4 vehicles, soon to be five. If they had a $25K car (which you’ll remember he didn’t even want to make, he wanted to make it into a robotaxi whenever FSD is 100% reliable), they would sell lots of them, regardless of a recession. People don’t stop buying cars in a recession.

 

[FreqFlyer]

Do you think that media article proved your point?

When did Elon say not ‘very special’? He said ‘cool’ and ‘sleek’ and ‘utilitarian’.

Take a chill pill, was just posting an article on the subject you were discussing with the other poster.

 

[Artful Dodger]

Afterall, if Elon's FSD moonshot does work out, it needs robotaxis to be monetized. S3XY Models won't be enough, and new Factories take years.

On this topic, I'm surprised we didn't hear a question about licensing FSD. This is the only plausible scenario I can conjure for rapid mass-deployment of Robotaxi's. But nobody else is making EVs in high volume (except BYD...).

Nawh!

 

[bkp_duke]

I find it ridiculous that priority is not been given to the next generation vehicle. Irrespective of the state of the economy a ~$25K vehicle will sell in huge numbers outside the USA alone.
Initially it can be made in Berlin, Shanghai and Texas and then later the Mexico factory so no need to worry about the costs of getting a new factory.

One word - batteries.

Battery supply chain is not remotely scaled enough for the 25k car. No point in pushing it forward when you can't build it. Putting the pieces in place to hit that battery supply is going to take a few more years.

 

[FreqFlyer]

I find it ridiculous that priority is not been given to the next generation vehicle. Irrespective of the state of the economy a ~$25K vehicle will sell in huge numbers outside the USA alone.
Initially it can be made in Berlin, Shanghai and Texas and then later the Mexico factory so no need to worry about the costs of getting a new factory.

How do we know it does not have priority? The factory that is going to build it is already standing. You want Elon to discuss the $25K car and Highland M3 hasn't even start selling the US yet.

 

[Krugerrand]

See, the problem with this is that I thought Tesla was willing to sell cars at $0 profit in order to scale production quickly and bring prices down. This strategy was going to make Tesla cars price-competitive soon against gasoline cars. What Elon Musk said yesterday is a change of tune from what he had claimed on the call 3 months ago. Slowing down production scaling is going to allow competitors to catch up.

Context, pls and thanks, which you have none.

He didn’t say 0% margins ‘today’ or 0% margins at the risk of destroying the company. He talked about it in relationship to AI. But you know that.

So what exactly is your reason for purposely removing all the context of that ER call on the topic?

 

[Krugerrand]

I find it ridiculous that priority is not been given to the next generation vehicle. Irrespective of the state of the economy a ~$25K vehicle will sell in huge numbers outside the USA alone.
Initially it can be made in Berlin, Shanghai and Texas and then later the Mexico factory so no need to worry about the costs of getting a new factory.

Who said priority isn’t being given to it?

As a little reminder; batteries.

 

[Hiline]

Context, pls and thanks, which you have none.

He didn’t say 0% margins ‘today’ or 0% margins at the risk of destroying the company. He talked about it in relationship to AI. But you know that.

So what exactly is your reason for purposely removing all the context of that ER call on the topic?

I think we're on the same page here. Elon Musk said they were willing to sell the cars at zero profit to make money on AI. To be consistent with this, they should be scaling production as quickly as possible in order to sell AI on more vehicles in the future, shouldn't they?

 

[FreqFlyer]

See, the problem with this is that I thought Tesla was willing to sell cars at $0 profit in order to scale production quickly and bring prices down. This strategy was going to make Tesla cars price-competitive soon against gasoline cars. What Elon Musk said yesterday is a change of tune from what he had claimed on the call 3 months ago. Slowing down production scaling is going to allow competitors to catch up.

If Austin and Berlin were ramped up to Shanghai, at what price is Tesla moving an extra................what.........an extra 500K Model Ys in todays market?

It may have to go below $0 per unit to move them.

 

[Krugerrand]

Take a chill pill, was just posting an article on the subject you were discussing with the other poster.

Well, just add some context like; here’s an article that quotes Elon and no where did he say ‘not very special’.

 

[Featsbeyond50]

Feel free to post the quote where Tesla said they decided not to pursue that market. I’ll wait.

And also feel free not to make stuff up about a different truck model.

He said 250k per year. That leaves a lot of TAM.
I'm not free to make up my own wishes?

 

[Krugerrand]

He said 250k per year. That leaves a lot of TAM.
I'm not free to make up my own wishes?

How is that not pursuing the market? That’s Tesla’s current ‘external’ goal given the information they have in the moment. As what always happens, Tesla will change the goal if they acquire new information. You’ve no idea what their internal goal or ‘wishes’ might be, but they’ve got to start somewhere and plan for a goal they feel is reachable and financially good for the company.

You absolutely are free to make up your own wishes, just preface it with: This is my wish -

 

[GOVA]

I find it ridiculous that priority is not been given to the next generation vehicle. Irrespective of the state of the economy a ~$25K vehicle will sell in huge numbers outside the USA alone.
Initially it can be made in Berlin, Shanghai and Texas and then later the Mexico factory so no need to worry about the costs of getting a new factory.

Which part of the call did you not understand?

Irrespective of the state of the economy

This is not GM that says what people want to hear because bailouts. Tesla does watch their wallet.

 

[AndrewZ]

I think we're on the same page here. Elon Musk said they were willing to sell the cars at zero profit to make money on AI. To be consistent with this, they should be scaling production as quickly as possible in order to sell AI on more vehicles in the future, shouldn't they?

Characterizing this as Tesla intentionally bringing down prices to make money AI is I think not entirely accurate.

Selling cars at cost is the standard business model for the big automakers, autonomy is what Elon thinks a new EV company absolutely needs to succeed because of EV vs ICE dynamics. For the legacy companies, they sell at cost but make money over the long term by selling high-margin parts and servicing to their massive existing ICE fleets and this has historically been the single biggest barrier to entry for new car companies. And EVs specifically are so much lower maintenance than ICEs, so that revenue stream will likely not be as relevant.

Elon has talked about this many times.