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

[Krugerrand]

Maybe the process isn't mature yet, Tesla made it look pretty easy with a very hard metal (except for die wear). But you say it's more expensive to hot form? I would have thought cheaper due to floor space, foundation reinforcement, and tooling costs. Well, that blew my case without a deep dive on Tesla's process.

Trade offs. No one process is all better or all worse. The tooling isn’t necessarily cheaper. The dies are way more involved design wise, with more complex PLCs, coolants and such tubed through out, etc… Yes, less dies to produce a part, but cold stamped parts don’t then need to be control cooled, and they don’t proceed to laser trimming and cutting zones. When they come out the end, they’re complete and ready to go to GA.

Consider something like scrap. A piece of scrap from hot forming is much more money down the drain than a cold stamped piece of equal size/type. The blanks alone are way more money. Don’t be fooled into thinking that hot forming suddenly reduces scrap to nothing or below cold stamping figures.

 

[JoRoMo]

…
(yes, I know it is a Swedish city)

Do you, now…

 

[2daMoon]

Do you, now…

There's Norway I could be wrong about that, is there?

Apologies for my mistake go out to all the residents of Hell, as well as anyone planning to go there...

 

[philw1776]

Norway, Sweden, Denmark, same thing...

 

[Mengy]

Multiple people are saying this now (roughly 17% growth for 2024). This is a little surprising to me as we endured some shutdowns to improve both cost and volume this year on Model 3, and expect some more brief shutdowns for similar improvements at Fremont shortly, IIRC? Are these not enough to push volumes more than roughly 17%?

I have seen the predictions but I would like to hear the rationales behind them. Apologies if I somehow missed them.

For me, my belief 2024 will be a low growth year (where they set up for subsequent high growth years) comes from one simple question:

Where will the new growth for 2024 come from?

Fremont has plateaued around 550K production, Berlin seems to have stalled at around 250K per year, Shanghai is a bit under 1,000,000 per year, and Austin is around 250K production rate too. That equals a total production of about 2,050,000 per year. Now both Austin and Berlin were ramping during 2023 so we will only get around 1.8 million for this year, but in 2024 I would only expect to see some additional volume from the CT ramp in Austin, so if they can produce around 100K CT's in 2024 we'd have about 2,150,000 for the year of 2024. Semi production increase should be minimal for 2024 as the Giga Nevada expansion is still underway.

Berlin production likely won't ramp much more as they seem to be having labor issues preventing it, and Austin is unlikely to add any additional new lines while they are focusing on the CT ramp and $25K line design. I doubt we'll see Shanghai ramp much higher, at least not until the new compact goes into production.

Without any new factories, nor any new production lines starting to ramp, there just aren't many sources for increased auto production other than the current lines we have, and my gut feeling is Tesla won't push to increase those much while we still have high interest rates. Which will likely be at least half of 2024, if not longer.

My two cents on 2024 predictions!

 

[navguy12]

Can anyone (perhaps with marketing experience) comment on why Kia Canada is halting all deliveries to dealers until after the new year (other than doing so to get more marketing money for 2024)?

On the November video call, many employees wanted to know how to explain Kia's decision to keep cars on the compound to their customers.

"Can we just tell people there was a fire at the factory?" joked one employee.

Capicotto said it was up to dealers what they would tell customers, but he modelled some wording that didn't mention the internal strategy.

"Mr. Customer, we've just been communicated that there's been … delivery delays and logistics delays at Kia Canada," he suggested.

https://www.cbc.ca/news/canada/kia-canada-car-sales-1.7063216

 

[cliff harris]

It's not the rates.

It's basic econ--- that to find more buyers once you've exhausted all those able and willing to pay existing prices, you have to lower your prices. Which is what they've done.... and would have to continue to do if you grow production (of the same vehicles) another 20-40% next year. At over 60k on these cars they had 1.3M buyers in 2022. But at just over 50k they had 1.8M in 2023 (ignore S/X, they're steadily approaching rounding errors in volume). If they want to find 2M (or 2.4M as some of the VERY optimistic here think) they're gonna need to go lower to find that many people able and willing.

Elon has raised this exact point himself- it's not lack of demand, it's a question of demand from those ABLE to buy- and as the math shows the amount you need to move the price to add like 40% more buyers is a lot more than the difference interest rates make.

Agreed in general... but there are other factors here. If we assume perfectly rational, perfectly informed car buyers, then we could indeed conclude that Tesla have exhausted the market at the $60k price point, and thus need to go lower. But the real world is more messy, and is disproportionately messy for Tesla.

We are still in the early days of the BEV transition. In other words, a LOT of people didnt buy a model Y for 60k, not because they couldn't afford it, but because they are not yet persuaded to switch to an EV. They probably bought an ICE or Hybrid costing 60k. Some of that is a lack of education, some of it may be legit concerns about charging availability where they live. Some of them just might want to 'wait and see' and wait until a neighbor makes the swicth.

And thats assuming a fair playing field. In a field where FUD specifically about Tesla is rampant, even that is lowballing the potential $60k sales. How many people have swallowed FUD about reliability, or safety? And how many people still think all Teslas are $100k+.

I definitely know people who can trivially afford $50k model Ys but buy a BMW or an Audi or similar. If they were considering an EV, they would likely at least look into a Tesla.

TL;DR: The $60k model Y segment is not exhausted until ICE sales at that price point collapse.

 

[cliff harris]

Without any new factories, nor any new production lines starting to ramp, there just aren't many sources for increased auto production other than the current lines we have

Surely one of the main reasons for Highland, was to make the model 3 easier to make. I presume that also translates into FASTER to make. There could be more growth from existing lines than we would expect.

 

[CorneliusXX]

So last year, for example, June 2022 it was $62,990 for a Model 3 Performance (peak price that was around for most of 22 until mid-Jan 23)- and 60 mo loan rates history is here:

Finance Rate on Consumer Installment Loans at Commercial Banks, New Autos 60 Month Loan

Graph and download economic data for Finance Rate on Consumer Installment Loans at Commercial Banks, New Autos 60 Month Loan (RIFLPBCIANM60NM) from Aug 2006 to Nov 2023 about installment, financing, consumer credit, vehicles, new, loans, consumer, interest rate, banks, interest, depository...

fred.stlouisfed.org

You're looking at 4.85% here- so your monthly on 62,990 (ignoring fees/tax/etc since those vary by state) is $1,184.38

Most recent loan rate on the Fed chart for 60 mo is 7.88%, but the car price is down to $50.990. Your monthly is $1,030.97

It's over $150 a month cheaper NOW with high rates than it was with low rates and a more expensive car.... or over $8000 cheaper over life of loan today than mid last year.

$58,490 is all they needed to cut the price to if they were just wanting to keep the monthly payment the same now as June 2022.... Instead they cut it MUCH further.

This "it's much cheaper now" would get even bigger using the Y, their best selling model, since the drops there were even larger...a Performance Y for example, using same dates and rates, goes from $1315.99 a month June of 22 to $1061.30 a month.... almost a $300 per month cheaper payment today.



It's not the rates.

It's basic econ--- that to find more buyers once you've exhausted all those able and willing to pay existing prices, you have to lower your prices. Which is what they've done.... and would have to continue to do if you grow production (of the same vehicles) another 20-40% next year. At over 60k on these cars they had 1.3M buyers in 2022. But at just over 50k they had 1.8M in 2023 (ignore S/X, they're steadily approaching rounding errors in volume). If they want to find 2M (or 2.4M as some of the VERY optimistic here think) they're gonna need to go lower to find that many people able and willing.

Elon has raised this exact point himself- it's not lack of demand, it's a question of demand from those ABLE to buy- and as the math shows the amount you need to move the price to add like 40% more buyers is a lot more than the difference interest rates make.

I think we also need to compare the customer's total budget based on increased interest rates / inflation. Rent and mortgage payments and other bills have gone up significantly - reducing disposable income and shrinking the number of people who are able to buy, even with the reduction in monthly car payments.

 

[jamaatta]

Have we already seen CT Giga Mexico production confirmed? At least governor said so...

Tesla Giga Mexico is a 3-phase project, will produce Cybertruck: Governor

As noted by the governor of Nuevo León, Samuel García Sepúlveda, in recent comments, Giga Mexico would be a three-phase project.

www.teslarati.com

 

[Mengy]

Surely one of the main reasons for Highland, was to make the model 3 easier to make. I presume that also translates into FASTER to make. There could be more growth from existing lines than we would expect.

Sure, a little bit, but it doesn't seem like anything drastic was changed structurally on the Highland. It's still a Model 3 just with more bells and whistles and a face lift. That's why they were able to ramp production of the Highland so fast, it was basically just restarting the M3 line with minor changes. That's my hunch at least.

 

[Usain]

Where will the new growth for 2024 come from?

Do we really know how far along the Gen 3 vehicle is right now?
Could Tesla be already testing out the assembly line in Austin?
If Tesla was planning to go into production in Q2 2024, how would we know?

Is early Gen 3 a possibility?

 

[2daMoon]

For me, my belief 2024 will be a low growth year (where they set up for subsequent high growth years) comes from one simple question:

Where will the new growth for 2024 come from?

Fremont has plateaued around 550K production, Berlin seems to have stalled at around 250K per year, Shanghai is a bit under 1,000,000 per year, and Austin is around 250K production rate too. That equals a total production of about 2,050,000 per year. Now both Austin and Berlin were ramping during 2023 so we will only get around 1.8 million for this year, but in 2024 I would only expect to see some additional volume from the CT ramp in Austin, so if they can produce around 100K CT's in 2024 we'd have about 2,150,000 for the year of 2024. Semi production increase should be minimal for 2024 as the Giga Nevada expansion is still underway.

Berlin production likely won't ramp much more as they seem to be having labor issues preventing it, and Austin is unlikely to add any additional new lines while they are focusing on the CT ramp and $25K line design. I doubt we'll see Shanghai ramp much higher, at least not until the new compact goes into production.

Without any new factories, nor any new production lines starting to ramp, there just aren't many sources for increased auto production other than the current lines we have, and my gut feeling is Tesla won't push to increase those much while we still have high interest rates. Which will likely be at least half of 2024, if not longer.

My two cents on 2024 predictions!

Battery supply could be a factor for increased production at Berlin. Once Texas has the line polished and ready for duplication, Berlin is poised for a fast installation of the equipment to produce batteries.

Whether this could happen in 2024 is anyone's guess.

But Tesla/Grohman being close by could shorten the beaucoup battery bastion build-out in Brandenburg by quite a bit.

 

[Chunky Jr.]

Do we really know how far along the Gen 3 vehicle is right now?
Could Tesla be already testing out the assembly line in Austin?
If Tesla was planning to go into production in Q2 2024, how would we know?

Is early Gen 3 a possibility?

If history is any guide, there would be sightings by drones or people seeing them driven around town at least 6 months before production

 

[DarthPierce]

If history is any guide, there would be sightings by drones or people seeing them driven around town at least 6 months before production

I would guess that it wouldn't be so easily spotted as a Cybertruck. Especially if they are mostly testing the internals- it could be in a model 3 or y looking car.

 

[Tim S]

"Berlin production likely won't ramp much more as they seem to be having labor issues preventing it, and Austin is unlikely to add any additional new lines while they are focusing on the CT ramp and $25K line design."

I disagree with this. I don't believe Tesla is done ramping Model Y production in Berlin or Texas. "Labor issues" will not stop growth in Berlin for an entire year. CT ramp and small car design will not stop Model Y growth in Texas.

 

[TesLeif]

Sure, a little bit, but it doesn't seem like anything drastic was changed structurally on the Highland. It's still a Model 3 just with more bells and whistles and a face lift. That's why they were able to ramp production of the Highland so fast, it was basically just restarting the M3 line with minor changes. That's my hunch at least.

50% new parts...

 

[UncaNed]

50% new parts...

If really 50% new parts, then this is HUGE because it must represent huge gains in faster manufacture, lower cost, better product, lower weight... exactly what I want as an investor, even if we'll have to wait a while longer.

These things can eventually be introduce into new production lines for models 3, Y, S, & X... we've a very bright, competitive future to look forwards to.

 

[Artful Dodger]

50,000*100,000 is still a big number: 5,000,000,000.

Each 4680 bty cell line added at Giga Nevada will support ~25K Semi/yr nameplate capacity. But I don't expect Tesla to start building battery lines at Sparks, NV before the planned 8 are built at Austin. So I'm calling it 2025 for the Semi production ramp. That should also give them time to complete the factory, and they'll need at least one Megacharger route ie: (SFO 2 TX/MX)

 

[Artful Dodger]

Have we already seen CT Giga Mexico production confirmed? At least governor said so...

This guy is a slow learner. If he keeps shooting his mouth off, he'll get more of the 'Spanish' treatment. Elon doesn't tolerate leakers.