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

[Rarity]

The only way all this really makes sense is to view the totality and absolutely ignore obsession to quarterly sales and even production of vehicles. When many of our own promote short term earnings and vehicle production/delivery we often cannot resist the temptations to pay attention. if we cannot there is one quarterly metric we can watch in confidence that it is relevant: Free Cash Flow.

In the meantime keep a close watch for continuing innovation in materials, logistics and manufacturing. While those three continue combined with healthy Free Cash Flow we will know all is well with our investments. All the rest is just noise!

I am watching FCF like a hawk, because it is the best hard information available. But for me, it is becoming an increasingly unsatisfying metric.

Musk indicated last year that he is managing more or less toward FCF break-even. Why would he do this? It seems to be because Tesla is pivoting toward being a startup again. Or a company of multiple startups. It is enough to be "default alive" when a startup in the current macro environment. It wouldn't make sense to become alarmed if FCF flatlines. Indeed, it could be a good indication that management has its eyes on the prize.

The cash is going somewhere and my hunch is that while some of it is going toward reducing auto prices, securing the battery supply chain, and making opportunistic investments in the energy space, a lot of it is going to AI spending. The composition of Musk's headspace changed quite a bit last year. ChatGPT was introduced, which lit a fire under him, as it did with so many others.

This leads to more of interest in a "sum of startups" analysis. There are so many moving parts that it might be futile to track it all. Honestly, I don't know how Musk keeps it all in his head. And even when startups are simple, they are often very tough to value.

 

[Zero CO2]

OT for Holiday was at Paramus NJ Service Center on Saturday finally saw CT and Bot in person ...freaking stunning .... my wife thought CT was too big to drive ... i told it was typical pickup truck size ... she did not believe me there is something about it that makes CT look giant in person ...

Delivery Center was packed with a lot of happy new Tesla owners ... surprisingly i was the only one there interested in the CT ... associates had zero info and are not even allowed to touch CT no fingerprints i guess ... i would really have liked to sit inside ... oh well

 

[Maarten]

The New Roaster just needs a large enough bty pack so it can still hit top speed near the end of a lap at the Nurburgring.

Appropriate name for all the cars trying to keep up.

 

[Todd Burch]

I'm telling you, I really do believe we'll see revenues from Optimus before we see revenues from Robotaxis!

I don't think there's any doubt that Optimus will be out before Robotaxis. Having a robot performing a function in a factory is far easier than getting a car to drive by itself safely in a nearly infinitely complex environment with no safety driver. With Optimus, there is low risk to human life. With Robotaxi, high.

 

[Musskiah]

A prescient light show perhaps?...

More than 200 Indian American Tesla car owners on Saturday held a unique musical show in a Maryland suburb of Washington DC to commemorate Ram Mandir Pran Pratishtha ceremony, which will be held in Ayodhya on January 22.

https://twitter.com/x/status/1746585216196411688

How VHP plans to celebrate Ram temple inauguration globally

www.deccanherald.com

 

[madodel]

Tesla drivers stranded? It's been a long time since I've seen something like this. If the story is accurate, let's hope Tesla does something to make sure it doesn't happen again.

extreme things happen. How many people ran out of gas because the gas stations had no electricity? How can any company guarantee a storm, wildfire, tornado, earthquake or volcanic eruption won't affect the use of a vehicle?

 

[Artful Dodger]

Musk indicated last year that he is managing more or less toward FCF break-even. Why would he do this?

Do you mean Elon's Q1 comment that he would let margins go to zero before cutting back on production plans? This was in the time when Robotaxi was first in his priorities, so those would be deferred, not 'lost' revenues. Then in June, they delayed Giga Mexico construction, so plans change... (old military addage: no plan survices contact with the enemy).

I think you overestimate the amount of planning, and underestimate the amount of responding to circumstances. And I offically revise my statement from last Spring: Elon has now successfully predicted 5 6 of the last 3 recessions...

 

[DaBooster]

And that is a good thing. Robotaxis will lose a lot of money for a long time.

Would you care to elaborate?

 

[2daMoon]

extreme things happen. How many people ran out of gas because the gas stations had no electricity? How can any company guarantee a storm, wildfire, tornado, earthquake or volcanic eruption won't affect the use of a vehicle?

This is a valid point.

However, of the plethora of gas and electric energy providers Tesla is more likely to be the one to implement an elegant solution to such a problem, aren't they?

 

[Cosmacelf]

Since this is the stock thread, my perspective on the stock price.

We know the growth catalysts: $25K car, robotaxi, Optimus, Semi, Cybertruck, India, Megapacks, etc. The problem with the stock is twofold. First, Tesla already sports a pretty high valuation at around 90 P/E. Second, the timing and true impact of those growth catalysts is unknown.

Robotaxi and Optimus could be busts. Tesla hasn’t announced anything concrete on the $25K car. They anti-sold Cybertruck as a stock boost during the last earnings report (slow ramp, etc). The Semi is missing in action, no factory is even being built for it. India is just rumor still. The only thing known to be ramping are Megapacks.

So until Tesla actually throws us a bone with announcements, stock will lag. Hopefully we will get some announcements during the Q4 call.

 

[Usain]

extreme things happen. How many people ran out of gas because the gas stations had no electricity? How can any company guarantee a storm, wildfire, tornado, earthquake or volcanic eruption won't affect the use of a vehicle?

According to the news report, the routing software continued to send cars to the Supercharger location while it was inoperable. I don't know if that's true or not though. They didn't interview anyone.

 

[scaesare]

Wouldn't that make it awkward when loading plywood in the back?

On my Cyber-Roadster?

More like golf clubs or some hottie's beach bag....

Besides, the wing opens with the trunklid... duh...:

 

[scaesare]

In the decade between gen2 Roadster reveal and production, it's safe to assume that there will be significant improvements made in both battery gravimetric energy density and C rates.

But by the same token there were no doubt advances between the CT reveal and beginning of production, yet the final specs fell short of the announced ones...

Now, not as much time may have passed, but I think the issues is that the initial announcements are forward-looking estimates as to what will be possible in the future when production starts, and the advancements may not always mesh up...

 

[Rotte]

https://x.com/elonmusk/status/1746964887949934958?s=46&t=wxPKcvy02m9A9W5LZ_m9cg

Optimus looking impressive!

 

[NicoV]

Super vague ‘start production as early as this year’ when it’s just the fifteenth of January but okay.

Panasonic announces new and improved 2170 chemistry:

https://twitter.com/x/status/1746937833959342323

My free articles are gone, maybe someone else can get some more information out of it:

Panasonic to Make Upgraded EV Battery as Early as 2024

Panasonic Holdings Corp. plans to roll out the newest iteration of its electric-vehicle battery cells with improved capacity as early as this year, the chief technology officer of its energy business said.

www.bloomberg.com

According to Digitimes: Panasonic to make upgraded EV battery as early as 2024

”Panasonic Holdings Corp.
plans to roll out the newest iteration of its
electric vehicle
battery cells with improved capacity as early as this calendar year, the chief technology officer for EV batteries said.

A revamped version of its 2170 cells will begin production at its manufacturing plant in Nevada sometime during 2024 or 2025, CTO Shoichiro Watanabe said in an interview.”


That sounds more like december 2024 than januari 2024.

 

[Cosmacelf]

https://x.com/elonmusk/status/1746964887949934958?s=46&t=wxPKcvy02m9A9W5LZ_m9cg

Optimus looking impressive!

Holy *sugar*! Also, that engineering space looks all kinds of awesome.

 

[unk45]

I am watching FCF like a hawk, because it is the best hard information available. But for me, it is becoming an increasingly unsatisfying metric.

Musk indicated last year that he is managing more or less toward FCF break-even...

I have never heard such a thing from Elon. Never! He DID say:

Elon Musk willing to bet Tesla's profits on driverless dream

Musk said on a conference call last week that Tesla has the wherewithal to sell cars at "zero profit" and then earn immense sums later off driverless software.

economictimes.indiatimes.com

Of course I chose to use the India Times quotation, just for the sake of Gujarati support!
He definitely said 'zero profit' if necessary but NOT zero FCF. Tesla did not even sell original Roadsters at zero positive cash flow impact.
Go all the way to even Zip2 and Elon has been obsessed about cash flow. He is acutely aware that accounting profitability has no inherent survival value. Free Cash Flow does have survival value. Bankruptcy comes to those who have no cash. Profits, on the other hand, are relevant, but only when those profits enhance cash flow. Regularly companies with accounting profits and negative cash flow can and do fail. Companies with negative cash flow rarely can long survive, even with government ownership. Lest anyone does not understand that, most of those have some sort of fraud and/or accounting failures. Free cash Flow is harder to mistake, partly due to traditionally tighter accounting treatment of cash.

Elon NEVER understates the importance of cash flow. He's faced crises of cash flow with both SpaceX and Tesla and has, if anything, overstated cash flow risks.

 

[SmokyPeat]

But by the same token there were no doubt advances between the CT reveal and beginning of production, yet the final specs fell short of the announced ones...

Now, not as much time may have passed, but I think the issues is that the initial announcements are forward-looking estimates as to what will be possible in the future when production starts, and the advancements may not always mesh up...

The Roadster and Cybertruck reveal was a slick bit of advertising. Perhaps premature, but it got people excited. Do I expect the gen2 Roadster to live up to all of the hype, cost figure, cold gas thrusters etc. ? Not really.

 

[Usain]

Awesome. This one deserves a post that is watchable from the forum.

https://twitter.com/x/status/1746964887949934958

 

[cliff harris]

Holy cow:

https://twitter.com/x/status/1746964887949934958

Do we have any robotics experts? I was under the impression that cloth manipulation was SERIOUSLY hard. Especially all-black...