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

[SOULPEDL]

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)?

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

The answer was right in the article:

"The reason for this, he explained in the call, is to avoid appearing too successful in the eyes of headquarters in Korea."

I don't know how it's related to marketing (worst PR move ever), but wondering if they're fine tuning supply and demand against some week production volume (which could be in spurts if not enough demand exists). If they were to deliver them all, there might not be any at the dealerships to show or sell? I'm guessing here, but it's better than their answer, plus my experience is first hand - When you're low on drugs and can't get any more so you have to ration and hoard what's left.

 

[navguy12]

The answer was right in the article:

"The reason for this, he explained in the call, is to avoid appearing too successful in the eyes of headquarters in Korea."

I don't know how it's related to marketing (worst PR move ever), but wondering if they're fine tuning supply and demand against some week production volume (which could be in spurts if not enough demand exists). If they were to deliver them all, there might not be any at the dealerships to show or sell? I'm guessing here, but it's better than their answer, plus my experience is first hand - When you're low on drugs and can't get any more so you have to ration and hoard what's left.

Yes, but this is what I gleaned as the reason why to avoid appear too successful (from the article):

There's a high risk with over performance that Kia headquarters will not provide Kia Canada resources necessary in our budget for 2024 to have a successful year if we over perform for the balance of 2023 at too high a rate."

According to Capicotto, Kia Canada has hit its target of selling 84,000 vehicles for 2023. He said there was concern that if sales continued to go well, headquarters would decide Canada didn't need marketing support in the new year and would cut back on that.

In other words…less money for marketing in 2024. I can’t believe that is the actual reason, thus my query to a marketing expert if this could be for real.

 

[Artful Dodger]

Do we really know how far along the Gen 3 vehicle is right now?

Ron Baron already told us in Nov 2023: 12-18 mths so that's Q4'24 or Q1'25

Could Tesla be already testing out the assembly line in Austin?

On Nov 30, Elon told Sandy that he reviews production plans weekly. Which is different from what he said about the CT prod. line back in Summer (that he was spending time on the line optimizing cycle times). So we're most likely over 6 mths out, which agrees with Ron's statement of 12-18 mths.

If Tesla was planning to go into production in Q2 2024, how would we know? Is early Gen 3 a possibility?

There's never been a reveal-event-to-delivery-event faster than the Model Y. That was 364 days from the reveal event to start of deliveries. I don't expect an early reveal event either for the 1st Gen 3 platform car, so NET Q3 2024 and Nov seems to be a popular month. But Tesla has to be careful not to Osborne Model 3 sales, so don't count on this either.

 

[Words of HABIT]

Final electric-vehicle mandate to come Tuesday, sales must double by 2026

Canadian auto companies sold more electric vehicles this year than ever before, but would still need to nearly double that number within three years to meet a new national mandate.

www.ctvnews.ca

CTV News article, first published on Dec. 18/23 by The Canadian Press.

Canada's Environment Minister Steven Guilbeault is set to reveal the final rules under the Canadian Environmental Protection Act to establish Canada's first-ever nationally-regulated electric-vehicle mandate.

By 2026, 20% of passenger vehicles sold to be zero-emissions, by 2030, 60%, and by 2035, 100%.

The first nine months of '23 show that 10.3% of all passenger vehicles sold in Canada were zero-emissions, so need to double sales all else being equal to meet 2026 goal. Mandate applies to auto manufacturers (must show Canadian import statistics), not auto dealers. Government will assist sales of zero-emissions vehicles through use of ZEV credits which can be bought and sold between manufacturers. Unfortunately plug-in-hybrids (PHEVs)still get partial ZEV credit, so they are kicking that can down the road a few more years before being phased out.

Verbiage of this article jumps back and forth between "zero-emissions vehicles" and "EVs", so I can only assume that near all zero-emissions vehicles will be Battery Electric. Not a mention of hydrogen or other type.

There is great progress being made in the provinces of British Columbia and Quebec which as recently as the third quarter of 2023, both provinces exceeded the 20% target for EVs, and growing. It helps that BC and Quebec have additional $4k and $7k rebates respectively, in addition to the federal rebate of $5k for EVs. Not surprisingly the more sparsely populated Central provinces and Atlantic provinces with less fast charging sites were the laggards.

So, with most all original auto manufacturers playing hooky regarding EVs, Tesla will be the beneficiary of selling ZEV credits to them for the foreseeable future.

No mention of auto manufacturers in this article, although a nice shout-out in the form of a photo of a Tesla EV charging. All in all informative and positive article of where the future is heading. Heading towards EVs.

 

[AZRI11]

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.

If Tesla had more stores in high traffic areas, like near other dealerships, they would sell more vehicles in the United States. It does hurt sales when state reps don't allow Tesla to obtain a license to open locations. It probably hurts even more because electric vehicles have become politicized in the United States.

 

[Webeevdrivers]

Final electric-vehicle mandate to come Tuesday, sales must double by 2026

Canadian auto companies sold more electric vehicles this year than ever before, but would still need to nearly double that number within three years to meet a new national mandate.

www.ctvnews.ca

CTV News article, first published on Dec. 18/23 by The Canadian Press.

Canada's Environment Minister Steven Guilbeault is set to reveal the final rules under the Canadian Environmental Protection Act to establish Canada's first-ever nationally-regulated electric-vehicle mandate.

By 2026, 20% of passenger vehicles sold to be zero-emissions, by 2030, 60%, and by 2035, 100%.

The first nine months of '23 show that 10.3% of all passenger vehicles sold in Canada were zero-emissions, so need to double sales all else being equal to meet 2026 goal. Mandate applies to auto manufacturers (must show Canadian import statistics), not auto dealers. Government will assist sales of zero-emissions vehicles through use of ZEV credits which can be bought and sold between manufacturers. Unfortunately plug-in-hybrids (PHEVs)still get partial ZEV credit, so they are kicking that can down the road a few more years before being phased out.

Verbiage of this article jumps back and forth between "zero-emissions vehicles" and "EVs", so I can only assume that near all zero-emissions vehicles will be Battery Electric. Not a mention of hydrogen or other type.

There is great progress being made in the provinces of British Columbia and Quebec which as recently as the third quarter of 2023, both provinces exceeded the 20% target for EVs, and growing. It helps that BC and Quebec have additional $4k and $7k rebates respectively, in addition to the federal rebate of $5k for EVs. Not surprisingly the more sparsely populated Central provinces and Atlantic provinces with less fast charging sites were the laggards.

So, with most all original auto manufacturers playing hooky regarding EVs, Tesla will be the beneficiary of selling ZEV credits to them for the foreseeable future.

No mention of auto manufacturers in this article, although a nice shout-out in the form of a photo of a Tesla EV charging. All in all informative and positive article of where the future is heading. Heading towards EVs.

All good info. But I still wonder how informed the powers to be in Ottawa are in regards to charging infrastructure across the country. It is a huge challenge in some areas for a non tesla to actually traverse the country. Both the northern and southern route have no reliable charging infrastructure. (Petrocan charging stations don’t count as they are mostly offline or broken down). I wonder if any of these folks have ever tried a cross country trip in a non tesla. (Super easy in a tesla, even pulling a trailer).

Jmho.

 

[Musskiah]

I am reposting this originally from Oct 13, 2023...Along with the added information that has come to light from Bradford Ferguson that the Lathrop "Megapacktory" (as Bradford coined it
which I love) could now be slated to produce 2x what was originally estimated for a total of 80KWh or roughly 20,000 Megapack equivalent. So you can, perhaps, 2x these figures. SOURCE RANDY AND BRADFORD (mentions 80KWh around 9:30 time)

ALTERNATE INSIGHTS FROM BRIAN WANG:

Three Tesla Megapack Factories Could Provide Most of Tesla Profits in 2025 | NextBigFuture.com

CATL is the world's largest battery maker and CATL battery factories are operating at 70% of capacity to produce about 200 GWH/year of batteries. Tesla needs

www.nextbigfuture.com

Tesla Megapack Factory Production Limit Solved and Capacity Will be Doubled to 80 GWh | NextBigFuture.com

Bradford Ferguson reports that the Tesla Megapack factory will expand to 80 GWH per year of capacity. The original megapack factory capacity was 40 GWH.

www.nextbigfuture.com

In the name of being conservative in estimates, I'll stick to the OG figures in my original post...
----------
Re all this talk about growth in 2024:

Lathrop @ 10k megapacks annually should generate well over $20B in revenue simply from the sale of megapacks alone (and then recurring revenue stacks up each year for annual operational revenue). At just 20% margins, this is another $4B+ in annual profits, or $1B per Q - from a single Megafactory. $1B in profit is equivalent to roughly 200k M3/MY PER Q; or stated another way, equivalent to two factories! So there are the "two gigafactories built this year" we are looking for (this is where 2024 growth will suprise the WS "smart $$"). Now recall Tesla has at least one Megafactory breaking ground in China in Shanghai (Lingang to be specific)... Tesla to begin construction of Shanghai "Megapactory" in near future, says EV maker's China chief
If this comes online by Q3 2024 (as it is slated to and we know the pace Tesla China operates at) lookout above!

Whether or not Berlin and Austin expand at all, or Model2 Compact comes in late 2024 to Ausin (or Berlin or Shanghai), it is apparent that EARNINGS growth (its all about EBITA versus enterprise value and PEG ratio IMHO) is going to grow 30% from Energy alone in 2024. The beast is awakening.

I open my comments up for criticism...

 

[Captkerosene]

A YouTube video by Dumb Money Live:

Over an hour long, it delves into the potential value of Bot. (10T by 2030.)

Probably not much new to the well informed Tesla investor ... and not my favorite presenters - although I think they understand it pretty well. More importantly, it highlights the gradual change in narrative we've seen for investing in TSLA: Auto/FSD/energy -> AI and robotics.
------------------------
Also, I was glad to see Elon's OptiMouse comment. IMO, there will be dozens if not hundreds of different embodiments for Tesla automation and training. Maybe a hint from Elon that he's working towards that?

 

[Musskiah]

Aside: If you do not currently subscribe to Randy Kirk on YouTube, I want to put in a plug for the man; he is doing a yeoman's task of bringing important information to light, IMHO better than anyone else in the YouTube Tesla game - yet he has very few subs. I would also highly recommend Brian Wang from www.nextbigfuture.com and, of course, Bradford Ferguson seems to really be on the ball doing some of his own Tesla research. I am sure many of us die-hards or fanbois (or whatever we call those of us who obsessively consume all things Tesla) are already aware of these characters, so please excuse if I am telling you something you already know.

 

[Drumheller]

Yes, but this is what I gleaned as the reason why to avoid appear too successful (from the article):



In other words…less money for marketing in 2024. I can’t believe that is the actual reason, thus my query to a marketing expert if this could be for real.

I don't know if it is true in this specific situation but, yes, these stupid games are played regularly with budgets in the corporate world. I've seen it in the companies and budgets I've worked with. It's tough to set goals for companies and projects as people will almost always game the system for their own personal gain.

 

[wipster]

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?

I doubt we'll see production as soon as Q2, but I do think that it will rapidly follow introduction, hopefully as soon as Q3, as an extremely affordable Tesla BEV, which we all know will be a great looking technologically advancing vehicle, could osborne a significant part of the fleet, M3SR especially. So I see production starting in Q4 2024. I don't think they need to take as long as prior vehicles since a lot of Gen 3 is already under way.

 

[wipster]

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

Just look for a little car with a big bra (or two).

 

[Chunky Jr.]

Foundation series Cybertruck orders are open again...

Tesla has reopened Cybertruck 'Foundation Series' configurator for some

Tesla seems to have reopened its order configurator for the Cybertruck "Foundation Series" for some users this week, after many lost the...

www.teslarati.com

 

[bpjod]

All good info. But I still wonder how informed the powers to be in Ottawa are in regards to charging infrastructure across the country. It is a huge challenge in some areas for a non tesla to actually traverse the country. Both the northern and southern route have no reliable charging infrastructure. (Petrocan charging stations don’t count as they are mostly offline or broken down). I wonder if any of these folks have ever tried a cross country trip in a non tesla. (Super easy in a tesla, even pulling a trailer).

Jmho.

Firstly, pretty much any BEV sold from this point on will eventually (<2 years) be compatible with NACS. That help considerably with this issue.

Secondly, If the government can stick to this commitment (why do I feel certain they'll be kicking this down the road at some point), the beauty of a free-market economy is if anyone can figure out how to profit from providing charging infrastructure, they'll build it. Having some certainty that by 2035 100% of new vehicles sold in Canada will be electric (along with measurable intermediate goals) does give some certainty to an enterprise that there will be some demand for their charging network, assuming it's competitive, i.e. convenient, reliable and affordable. Without that commitment from government, it becomes a much more risky investment.

If we sit and complain about how bad the charging is in some areas but no clear direction is given, the problem will never be resolved as no-one will build the vehicles as there's a lack of charging infrastructure and no-one will build out the charging infrastructure as there will be no demand for charging services if there are no EVs to charge. This is a necessary step. By the government setting these targets it gives manufacturers a reason to hit these targets along with defined penalties for not doing so. It also gives charging networks some certainty that there will be some demand for their services. It also sends a clear message to consumers about the direction the transportation industry is headed. Now everyone can go about solving these problems.

 

[Artful Dodger]

Day 06: Six geese a-laying | Megapack To Excel​

Part of 12 Days of Christmas - Tesla Edition a series (c) by the Artful Dodger, Dec 2023

Over this Yuletide season, I will post a daily installment focusing on Tesla products, past, present, and future (please note that I will express major themes as short-hand bullet points, or I will run out of Yule before the tide peaks). Here's the series so far:

Day 01: A Partridge in a Pear Tree | Roadster Proof of Concept
Day 02: 2 Turtle Doves | S/X Fraternal Twins go Mainstream
Day 03: 3 French Hens | Model 3 Bets the Company
Day 04: 4 Calling Birds | Model Y Built at Four Factories
Day 05: Five Golden Rings | Semi Breaks Physiks

Intro to Part 6: Megapack To Excel​

Megapack is the answer to the question everybody was afraid to ask: if renewables are cheaper, why doesn't everybody do it? (hint: based on it's supply'n'demand economics).

1. Getting those Ducks in a Row​

• Folks love to say the problem with renewables is that the sun doesn't always shine, and the wind doesn't always blow. This is incorrect
• it's about the timing of peak power availability vs peak demand, since on the traditional grid electricity must be consumed within moments of its generation (or the grid becomes unstable)
• Renewables and the 'Duck curve'
  • the real achilles heel of solar energy is that peak demand occurs in the evening when people get home from work, often after the Sun has set, or its after peak insolation
  • the solution is to pair solar power with battery storage, thus flattening the 'duck curve', and creating arbitrage opportunities (c.f. Tesla Autobidder +Virtual Powerplants)
  • Wind is less variable on a hourly basis, and tends to be deployed in commercial wind farms, where geographic distribution (site planning) and added storage make it work
  • Read about the first large deployment of Telsa Megapacks near Adelaide Australia, called the Horndale Power Reserve. This $90M project (which was done in 90 days in 2017 on a dare from Aussie Billionaire Mike Cannon-Brooke) paid for itself within 2 years, and single-handedly saved the South Australian grid several times. Key to future success is the number of even larger such 'big battery' projects now planned or already deployed in Australia - Elon once said 'a continent is just a big island.'
• Whoops, sat on a Duck
  • futher big-battery projects came rapidly after the Aussie success story became widely known, notably the islands of Hawaii and Puerto Rico (huricane-damaged grid)
  • Perhaps the most famous example is the Moss Landing project near San Francisco, which was Tesla's 1st ever 1GWh storage deployment, one so large its capable of running the entire City of San Francisco for 4 hrs - this makes daytime solar extremely valuable (charge), and overnight wind extremely useful (recharge)
  • the economics of arbitrage were now clear: Megapacks let you buy low and sell high
  • even more important you don't need to repair natural gas 'peaker plans' which are now quickly being replaced by grid-scale energy storage projects

Lesson 1: Build the missing piece of the puzzle - Storage infrastructure

2. The Right Stuff: Megapack 2 XL​

• Tesla Megapacks were mostly on the back-burner during the Model 3/Y ramp, the pandemic, and the supply shortage due to lack of battery cells (Giga Nevada used a nickel-based Li-Ion chemistry, and made 10x more cells for the auto business than the energy business)
• Finally, Tesla arrived at the optimal design for their new energy storage product, based on the size and weight of the ubiquitous shipping container: the Megapack 2 XL (4 MWh/pack)
• this form-factor speeds logistics, making it readily adaptable to existing transport infrastructure
• Megapack 2 XL also saw the switch to much cheaper LFP bty cells based on $/KWh*lifecycle (LFP is also longer lasting, more supply available)
• Of course, this new flagship TE product would be built at a new dedicated Tesla factory in Lathrop, CA (about 30 miles N. of the Fremont factory) which is also the lead factory in an upcoming fleet of 'Megafactories'.

Lesson 2: Go big, then go wide (and deep)

3. Megafactories: "The Business model"

• Also coined the 'Megapacktory', this consists of two 20 GWh/yr modules that are designed to be cloned quickly to increase production as required
• Tesla Energy large-scale storage solutions have been called 'recession proof' because their main customers are large utility operators, who's capital budgets are set years in advance and are largely unaffected by interest rates (thanks, Public Utilities Boards, who set the tariffs to ensure minimun profitability of large utility companies regardless of the wider economy).
• Quasi-infinte demand:
  • Electrical grid and generation companies have on the order of 1,200 existing gas and coal fired generators is the USA alone. Each one of these sites typically includes 'peaker plants' which are about twice as expensive to start and operate for the few hrs per day needed
  • when faced with replacing an end-of-life peaker plant (4 years / $200M), engineers and MBA's look favorably at a 1 year / $100M Megapack solution. So do CEO's.
• Flattening the TSLAQs
  • Megapack has a unique business model within Tesla
  • Upfront payments from Customers at the time of order largely cover the initial costs to build their megapacks (typically 20% paid upfront), plus a further stream of payments based on achieving milestones throughout deployment, test, and commissioning phases
  • Each Megapack deployment also earns an annual maintenance fee (which is often conducted remotely via computer) and contributes continuing revenue over the lifetime of the project
  • Due this back-loaded income, Tesla rides a tsunami of steadily-building revenue from its Energy division as the size of the fleet increases year after year (at 12.5 GWh now per Tesla)
    • Giga Shanghai right now is in the proces of building it's first 40GWh/yr Megapack factory, conveniently located just 3 km from the newly-commissioned 80 GWh/yr CATL LFP battery factory)
    • because the Megafactories are modular, I look for the Next Gen to also be in China: a factory to build build more Megafactories
    • for Tesla to make good on their intention to create 1TWh/yr of capacity for Megapack, that's 1,000/40 = 25 Factories the size of Lathrop needed (which is also 4/yr for 6 years <- they definately need a factory to build those factories)

Lesson 3: If you build it, they will buy it

Conclusion:​

Megapack embodies the low-hanging fruit in the transition to renewable energy, bolstering the electrical grid while achieving outstanding ROI. Tesla made the obvious move by creating a new product line focused on the grid. So obvious, that no other manufacturer (esp. Automakers) have been able to follow their lead. Why? Simply because others don't have the Right Stuff, the Secret Sauce, and the chutzpah to create a new sub-industry. Tesla has this right stuff.

Tesla leveraged their experience and expertise in power electronics, manufacturing, and their supply chain to build a recession-proof business line that is already changing the world, and stands to become even larger than Tesla's auto business. Megapack is the Goose that layed the Golden Egg (and just keeps on laying).

Next: Cybertruck: 7 new technologies debut in a world-beating new flagship truck - to da Moon!

Tomorrow's Topic:

Day 07: Seven swans a-swimming | Cybertourdeforce

 

[UkNorthampton]

Another one bites the dust - VW => Nacs

VW
Audi
Porsche
Scout

https://twitter.com/x/status/1737211700334547013

 

[alhounos]

That's everyone then. Mazda and Stellantis are still holding out but they don't make any EVs.

 

[2daMoon]

Subpar volume today and only a mere 2% gain. Meh.

Maybe tomorrow will do better!

That last minute move above 257 was a thing of beauty to watch tick by in the seconds before the close.
5.5 M shares traded in the closing cross is nothing to sneeze at either.

 

[Musskiah]

The last time TSLA rode the upper Bollinger like this on the daily chart was the June move of hollow candles.

 

[H Mak]

The last time TSLA rode the upper Bollinger like this on the daily chart was the June move of hollow candles.

You took the words out of my mouth