Fair commentary and outlook.
I think one huge event you are missing is the potential for a Model 2 (call it what you want) reveal in 2024. If we see this, it won't matter what eps is for Q3 or Q4, analysts may adjust their valuation models bringing price target upgrades.
I don't know if we will see the reveal in 2024 but I feel pretty certain that the the time from reveal to delivery will be short. I think the model Y had 10 months between reveal date and delivery date. I would not be surprised to see a 6 month time frame for the model 2.
If you look at all the other production starts of new Tesla models, really the one that aligned with a big boom in the stock was the Model Y. That was synergistic with Tesla beginning to produce consistent profits and operating leverage. I do believe Model 2 could do the same only if aligned with improving Tesla financials around the same time. At the end of 2024, I agree this could boost institutional targets and share price more than I estimated.
Nice post.
I do think that the point of sale tax credit on Model Y will more than make up for the loss of the credit on Model 3. Austin has a lot of extra capacity for producing Model Y. I expect a huge increase in US sales of Model Y.
Robotaxi probably won't get deployed at scale in 2024. But I expect that it is very possible that the technology will be proven well enough to justify a $500 SP in 2024. I expect that this will be the year when the market finally figures out that robotaxi is around the corner.
I think the question is more of supply chain, especially batteries. Model Y gets the rebate because they are using 2170 from Nevada, whereas Model 3 2170 are imported. If less people want a Model 3 and more want a Model Y, they need to boost the proper cell supply. They can't just take the imported 2170s over to the Model Y, at some point those still won't qualify for the tax rebate.
Model Y supply can go up from 4680 cell supply ramp. But if Model 3 is still using imported cells and no rebate, its sales will go down and total volume might be a wash. I agree the rebate is an improvement over the tax credit, but how much? People with lower incomes will now be able to use it, but not sure that is the target demographic for these higher priced cars. People with high incomes (like in California) aren't affected either way. Removing cost upfront and on loans is a benefit for sure, but I feel it's like $2.5k worth of new benefit if I had to guess.
Really the way to solve this is to redirect the imported 2170s to Berlin or Shanghai and hope 4680 can come in with huge supply and support Model 3 / Y. If there is enough Nevada 2170s and Austin 4680s, you can probably get Long Range Model 3 to qualify.
I appreciate this well thought out analysis regarding the stock in 2024.
However, I think it is a bit pessimistic, because it extrapolates merely from what is known. This is very sensible for most companies, and certainly most auto companies, but I think it misses the mark when it comes to Tesla.
Tesla has 4 wildcards that could MASSIVELY shift the stock higher:
1) FSD is actually achieved, or looks imminent, at some point in 2024
2) Optimus accelerates and starts to reduce factory headcount
3) Model 2 is announced
4) Something Special.
You are noting that 3) is likely, but there is no weighting for 4). Over the 7.5 years I've held the stock, there have been relatively slow periods and then sudden shocks. Cybertruck was a MASSIVE shock. Optimus is also a shock. Do we know what will happen in 2024? certainly not, but if there is any company prone to suddenly announcing random shocks, its Tesla.
I don't think 2024 will bring us FSD, human-capable (limited domain) bots, model 2 and another big shock. But I *do* think that one of the 4 is likely. Tesla has put phenomenal effort into bot, fsd and nextgen manufacturing. The chances of NONE of this impacting the stock in 2024 seems extremely low to me.
FWIW my bet used to be on FSD, but has shifted to bot. That last video shocked me. There has obviously been progress since then. The next 6 months will be extremely interesting. Tesla is a stock that can be both boring and terrifying to HOLD. I Hold specifically because I know that one day, some totally un-foreseen tweet from elon is going to shock every one of us. I don't want to be buying in a frenzy the day AFTER this happens, and I will happily wait another year to see what unfolds.
Robotaxi level FSD is not happening in 2024. Even with impressive improvements, it is still multiple orders of magnitude away from the reliability needed. I've read a bunch on the AI threads from machine learning experts like
@DrChaos and
@ZeApelido and listened to X Spaces with some experts too to get some insight.
However if FSD does become really impressive in 2024, it is totally possible the market temporarily prices much of that into the stock.
I actually agree with some experts that the Bot might end up bearing more fruit before robotaxis - and yes the market hasn't priced that in yet.
Basically I believe a big boost to the share price that you are hoping for can happen, but really only when there is a confluence of improving financial fundamentals and long term projects showing signficant progress. I do believe this could happen later in 2024, but hard for me to see the financials showing clear improvements on 2023 Q4 or 2024 Q1 earnings.
