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

[Gigapress]

PTSD, a second war, uncertainty where interests will go etc…

He’s concerned and out of an abundance of caution, so he doesn’t lose Tesla, he’s pumping the brake a little bit.

Relax.

His comments on the call directly contradict what he and Zach said a year ago on the Q3 2022 call. That is not necessarily a problem per se, but there was no real explanation for the pivot in direction. That's why I found it perplexing. In just a year, they went from saying that aggressive growth will continue, with the 50% CAGR target even if there is a "brutal recession" to now being vastly more conservative and cautious.

Furthermore, it is also confusing because it directly contradicts the growth guidance contained in the Q3 Update slide deck, which has almost identical text as previous quarters:

We are planning to grow production as quickly as possible in alignment with the 50% CAGR target we began guiding to in early 2021. In some years we may grow faster and some we may grow slower, depending on a number of factors. For 2023, we expect to remain ahead of the long-term 50% CAGR with around 1.8 million vehicles for the year.

I think this mixed messaging is worth questioning instead of taking at face value.

Spoiler: Q3 2022 Comments

"we anticipate continuing to grow our vehicle production sales deliveries by -- on average 50% a year as far into the future as we can see"

Q: "...do you still expect 50% annualized growth for the foreseeable future...?" A: "Well, like I said, we want to sort of focus on a high level on what we think is possible here. We -- to the best of our knowledge, we believe that Tesla will continue to grow deliveries and revenue production at a 50% or greater compound annual growth rate. It might occasionally be a year that is a little less, and then some years would be maybe a little more or a lot more. In some of our out-year planning, we see potential annual growth rates that are in excess of 50%."

Q: "Can you talk about how Tesla could adjust if we were to enter a prolonged recession, including new product prioritization, investment flexibility, new factory versus factory expansion, service support infrastructure, productivity cost measures, and demand stimulation alternatives?" A: "Well, to be frank, we're very pedal to the metal come rain or shine. So, we are not reducing our production in any meaningful way, recession or not recession."

Zachary Kirkhorn -- Chief Financial Officer

I'm, sorry, just to add before you jump in, Martin. Just to echo Elon's point, I mean, I think where our cash balance is, what our forecasted cash generation is, where our margins are as a company, I mean, we can withstand quite a lot of downside before we would have to dig into our capital plans, Supercharger expansion, product lineup. So, the business has done quite well over the last handful of quarters. And this is a real opportunity, I think, for the company to press forward, I mean, most aggressively, as Elon has mentioned.

Elon Musk -- Chief Executive Officer and Product Architect

Yeah, we try to model out like, let's say, 2023 is a brutal recession year. Even then, we generate meaningful cash.

 

[Drumheller]

Interest rates may further increase in the USA. Not decreasing anytime in the near future.

 

[hobbes]

In other news, Tesla is building a supercharging in hell! You heard it here first

Spoiler

Supercharger Hell, Stjørdal kommune, Norway, that is

supercharge.info

Zoomable Tesla supercharger map with adjustable range indicator.

supercharge.info

 

[mongo]

IIRC from the discussion here wet commissioning means commisioning the line with electrolytes, dry without, so nothing to do with DBE technonlogy (but I could be wrong).

Wet electrode manufacturing uses a solvent. Electrolyte is added during cell manufacturing after the jellyroll is in the can.
I think the quote was referring to the processing of the raw feedstocks into cathode material which is later dry bonded to the aluminum foil.

 

[Max Plaid]

It's entirely possible that, if the Gen 3 pilot works out well in Austin, then the already-built but now-idle space inside Giga Berlin could re-allocated for Gen 3 production.

A Euro-sized sedan in 2025 would be a giant hit (easily selling 750K), and would sidestep any potential EU tariffs against Made in China EVs.

Something to thing about anyway, which Team Tesla does constantly.

No "sedans" please, we want hatch-backs, thank you!

 

[Krugerrand]

His comments on the call directly contradict what he and Zach said a year ago on the Q3 2022 call. That is not necessarily a problem per se, but there was no real explanation for the pivot in direction. That's why I found it perplexing. In just a year, they went from saying that aggressive growth will continue, with the 50% CAGR target even if there is a "brutal recession" to now being vastly more conservative and cautious.

Furthermore, it is also confusing because it directly contradicts the growth guidance contained in the Q3 Update slide deck, which has almost identical text as previous quarters:


I think this mixed messaging is worth questioning instead of taking at face value.

Question away, but clearly you’ll not get an answer because nobody here has it.

But I’ll tell you this; it’s all business as usual at Tesla. They can and will change direction faster than you can type a post.

 

[Singuy]

His comments on the call directly contradict what he and Zach said a year ago on the Q3 2022 call. That is not necessarily a problem per se, but there was no real explanation for the pivot in direction. That's why I found it perplexing. In just a year, they went from saying that aggressive growth will continue, with the 50% CAGR target even if there is a "brutal recession" to now being vastly more conservative and cautious.

Furthermore, it is also confusing because it directly contradicts the growth guidance contained in the Q3 Update slide deck, which has almost identical text as previous quarters:


I think this mixed messaging is worth questioning instead of taking at face value.

Maybe when a brutal recession happens, rates would drop to 0 again which is what is needed to sell cars lol.

 

[EVWatcher]

might explain some Elons grumpiness ... putting up with Toyota ... adopting NACS ...
Elon " you have no EV volume...why should you be allowed to participate "

I have suspicions but I have no idea how contract like this work. Is it possible that these agrees bring more into it that simply supercharger access? I’ve kinda harbored a belief that this results in tesla engineering working directly with these companies engineering teams at in a way that would increase the likelihood they will end up picking up FSD contracts and battery pack contracts from Tesla too.

Am I delusional or is there some basis for this assumption?

 

[SmokyPeat]

Wow, I guess Kevin isn't expecting an invite to Elon's next roundtable, lol:

Musk turned into 'a little baby' on Tesla call: Investor

Tesla (TSLA) reported third quarter results that missed analyst estimates on both the top and bottom lines. Kevin Paffrath, the YouTuber behind "Meet Kevin," a financial analyst, and Tesla investor, had harsh words for the EV maker's CEO Elon Musk. Paffrath called the company's earnings call...

finance.yahoo.com

 

[Mike Smith]

I understand Wall Street's reaction. Normally when a CEO talks about a bad economy it's because they're messing up internally. It's inexplicable to them that this CEO could be simply speaking honestly because it just never happens.

It's hard to adjust to Tesla's honest earnings calls when every other company always paints the rosiest picture possible.

 

[EQC_]

Model Y sales are much bigger than Model 3, despite it being a lot more expensive and less efficient. Huge clue to what people want.

To go really big they need it to be a hatch, and the huge majority of buyers of a cheaper hatch aren't going to even take a glance at a more expensive sedan.

Possibly worth noting that Model Y sales are also bigger because Tesla chose to produce more of them. Granted, Tesla has the best insight into the demand for each model, and that undoubtedly drives their factory decisions...but Tesla only produces the Model 3 in Fremont and Shanghai...while the Y is produced at Fremont, Shanghai, Austin, and Berlin. So, even if Model 3 demand suddenly became higher, the Model Y would sill out-sell it (one way or another) simply because Tesla has the equipment in place to build more Y's. But, Elon did always focus on the Model Y having the higher demand, predicting that it (not the Model 3) would eventually be the highest selling auto in the world.

Of course...this is a Chicken/Egg type question. Is the Model Y selling more because more people want that design, or because Tesla thought more people would want that design and so pushed harder to make more...

 

[Tony73]

I understand Wall Street's reaction. Normally when a CEO talks about a bad economy it's because they're messing up internally. It's inexplicable to them that this CEO could be simply speaking honestly because it just never happens.

It's hard to adjust to Tesla's honest earnings calls when every other company always paints the rosiest picture possible.

Musk was very inarticulate. He could have made the same points in a much better way. He belabored the negative news and turned them into talking points for the media while not expressing Tesla’s strong points enough. Honesty has nothing to do with it.

 

[GhostSkater]

Musk was very inarticulate. He could have made the same points in a much better way. He belabored the negative news and turned them into talking points for the media while not expressing Tesla’s strong points enough. Honesty has nothing to do with it.

First time? It's no secret that Elon is not a good public speaker, and this is what like, he won't sugar coat, prepare ahead the best way to deliver the message so someone can't take it the wrong way or whatever, we have so far

"It's a giant money furnace" which on quarter latter was profitable, now "Dug our own grave" which one quarter or two latter will be nothing and will have many more of those lol

 

[skybluecgreen]

Gen 3 is continuing, but first production is in Austin (which should speed up development) .

Optimize, then copy:
"Berlin and Austin factory, the current priority is actually maximize the output from our existing lines by laser-focusing on efficiency improvements. As always, maintaining a high quality and reducing per unit cost will be as critical as growing the production volume. For Mexico, we are working on infrastructure and factory design in parallel with the engineering development of the new production that we'll be manufacturing there. That's all I can share for that."

I believe Gen 3 is the most important thing on Tesla's horizon and I am excited that the first production of it will be in Austin but I haven't seen where Tesla has confirmed this and I don't read that in your quote. Did I miss Tesla saying this or is it mainly educated, high probability speculation?

 

[Duffer]

A whole year worth of events.

As someone building a mountain fortress, I can say unequivocally I ain’t see no reduction in material or fuel costs. Not a bloody cent. My contractor continues to have issues ordering materials, never knowing if it’ll take a day, week or month to arrive. Just the other day, he opined how the window company he’s ordered from for over 20 years still hasn’t recovered from the COVID debacle, and we’re still waiting for two standard windows for a building that should be a stock item but for some reason are not and already two weeks late from the original ‘you’ll have them in two weeks.’

So, I don’t know where you live but nobody here is seeing any kind of cost reductions in food, fuel or otherwise. There’s still labor shortages, businesses going belly up right and left, people unable to afford housing, car loans etc…, and COVID making people sick.

Though hardly a mountain fortress (there is a several hundred foot "fall" to a very turbulent ocean ) we're having similar issues with materials, labor and increased costs across the board.

Despite the moaning and gnashing of teeth that has been prevalent here following the earnings call, it appears that Elon/Tesla is doing the prudent and responsible thing by reducing unnecessary expenditures. Honestly, that's what I would expect the majority of us here are doing as a result of the current geopolitical and financial instability in the world.

 

[geometro]

It seems to me, in the current environment, Tesla is not confident they have the demand to sell every car if they keep ramping as quickly as possible. (Buy a share tomorrow morning, @Krugerrand ). We can argue forever and get nowhere trying to guess all the factors impacting that situation. I'm of the opinion, that I think agrees with Elon, that the economy is the largest factor at this time. This also indicates to me that Elon / Tesla are anticipating the economy worsening or, at least, not improving in the short term.


His purchase of the bird was driven by a specific concern and goal at that time, regardless of the price. I think he is succeeding with that goal, and I'd guess he considers it money well spent from that point of view.


Go talk to median income families. Ask them how they're doing. Ask them if they believe the govt stats.

My point was that he offered a premium to the current price and then later realized the economy was shifting and wanted a discounted price. His offer was too high because he wasn’t able to forecast the macro (not his fault…. nobody can!)

 

[Krugerrand]

I understand Wall Street's reaction. Normally when a CEO talks about a bad economy it's because they're messing up internally. It's inexplicable to them that this CEO could be simply speaking honestly because it just never happens.

It's hard to adjust to Tesla's honest earnings calls when every other company always paints the rosiest picture possible.

Right!? It’s only been like this at Tesla for the entire existence of Elon’s reign.

Sometimes it takes a couple of decades for people to get the gist of how a company is being run when it’s this complicated.

 

[juanmedina]

Good discussion

https://twitter.com/x/status/1715129567633908195

 

[chiller]

Toyota/ Lexus join NACS, for whatever that means in this case....

https://twitter.com/x/status/1715095472933876212

I'm sure the top Toyota engineers are working hard on figuring out how to transfer hydrogen over the NACS connector.

 

[mongo]

I believe Gen 3 is the most important thing on Tesla's horizon and I am excited that the first production of it will be in Austin but I haven't seen where Tesla has confirmed this and I don't read that in your quote. Did I miss Tesla saying this or is it mainly educated, high probability speculation?

Gen 3 in Austin is from the Issacson's book. I don't know that I've seen any confirmation from Tesla/Elon.