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

[uscbucsfan]

The rise of interest rates excluded a meaningful amount of potential Tesla buyers due to the fact that most car buyers, buy on time. As interest rates come down, incremental raises to the sales prices can be made, every dollar of which will go directly to the (pre-tax) bottom line.

Also, in the potential 2024 positive surprises category, I think it is possible that we will see sales of 4680, along with FSD licenses to OEMs.

I don't think we are close to seeing FSD OEMs as Elon stated and how we've detailed here, but it bears repeating that the car prices reducing has actually reduced car payments with higher interest rates. There's also the fact that interest rates aren't high in a historical sense, probably even still considered low and unless the economy tanks, we won't be going back to the all-time lows we were at.

 

[Eugene Ash]

@anthonyj, @TrendTrader007 : is it time to buy calls yet : )?

P.S. Couch > a few chairs this morning...

 

[NicoV]

Dan IVes is not happy with the call.

https://twitter.com/x/status/1750492031795831245

I found it a good conference call. Boring is good. No drama is good. I’m not in the business of predicting next quarter’s numbers, so I’m fine with no guidance.

 

[Mengy]

I found it a good conference call. Boring is good. No drama is good. I’m not in the business of predicting next quarter’s numbers, so I’m fine with no guidance.

I agree it was a good call, but the lack of guidance numbers will hurt TSLA a lot IMHO. Wall Street won't take that pleasantly.

We are at $189 in pre market, hold on everyone because today could be a very rough day for many shareholders emotionally!

 

[M|S|M MYP]

Last time i checked it was still January, so that means we have 11 more months to go in year 2024. A lot of things can happen in the next 11 months, we have been through this before and will come out fine like we always have. Does it sting a little? Seeing your portfolio go down in the high 6 digits will do that to you. However, the future is bright and there are several couches that need shaking!!

 

[Knightshade]

When rates went up they had to lower prices. When they go back down they should be able to increase prices.

This has been addressed, with real math, multiple times in this very thread- they did not cut prices in line with rate increases.

Tesla cut prices FAR more than rates increased-- the monthly on a loan is much lower today than it was when prices were high. Plus there's additional, quite significant, inventory discounts on TOP of those.

So the price cuts aren't to offset interest rates (or at least, not MOSTLY to do so)-- they are to increase demand to match production.

That's pure speculation, for all we know Tesla has been cranking out cars as fast as they can, inventory has decreased QoQ

Untrue--- Troy has written on this a fair bit- but the most obvious is Berlin running not just fewer shifts than they could, but also not even hitting the known max output of the 2 shifts they DO run.

Tesla adjusts production based on demand- they COULD make more cars but they wouldn't have buyers for them- and they don't want to start running huge inventories like legacy does.... they're ALREADY giving historically high inventory discounts on inventory cars, that'd only get worse with more inventory.

 

[AndrewZ]

US economy still growing at a crazy rate, GDP in at 3.3% for the fourth quarter

 

[FEERSUMENDJIN]

I was thinking there would need to be a significant divergence given a legacy car platform's with different camera locations, drivetrains, braking, steering would require their own unique data and training.

It will just be like Optimus holding out his hands in front of the cameras for calibration ! But its is the thin end of the wedge: Tesla Steer by wire, brake by wire, 48V. Eventually : Ford, we can put some blue oval badges on these models for you ! Already doing this with VW and the Explorer. Look at the new Honda ENY1 FFS.

 

[FEERSUMENDJIN]

This has been addressed, with real math, multiple times in this very thread- they did not cut prices in line with rate increases.

Tesla cut prices FAR more than rates increased-- the monthly on a loan is much lower today than it was when prices were high. Plus there's additional, quite significant, inventory discounts on TOP of those.

So the price cuts aren't to offset interest rates (or at least, not MOSTLY to do so)-- they are to increase demand to match production.




Untrue--- Troy has written on this a fair bit- but the most obvious is Berlin running not just fewer shifts than they could, but also not even hitting the known max output of the 2 shifts they DO run.

Tesla adjusts production based on demand- they COULD make more cars but they wouldn't have buyers for them- and they don't want to start running huge inventories like legacy does.... they're ALREADY giving historically high inventory discounts on inventory cars, that'd only get worse with more inventory.

I think Berlin running the third (night) shift would take the margins to new depths

 

[Mengy]

Untrue--- Troy has written on this a fair bit- but the most obvious is Berlin running not just fewer shifts than they could, but also not even hitting the known max output of the 2 shifts they DO run.

Tesla adjusts production based on demand- they COULD make more cars but they wouldn't have buyers for them- and they don't want to start running huge inventories like legacy does.... they're ALREADY giving historically high inventory discounts on inventory cars, that'd only get worse with more inventory.

I agree that Tesla is holding back production increases due to demand issues, but those demand issues are likely due to high interest rates. As the Fed lowers rates (later this year hopefully) then demand should increase concurrently, and at that point Tesla would likely begin ramping Berlin and Austin again.

 

[Knightshade]

I agree that Tesla is holding back production increases due to demand issues, but those demand issues are likely due to high interest rates.

Again, the monthly payment on a new Tesla today is much lower than it was in 2022.

Run the math yourself on the payment for a 60k car at 3% versus a 40k car at 7%.


The "interest rate" thing is as much a red herring as the "regulators are in the way of FSD" thing is.

There's some specific narrow situations it's relevant- but it's provably not the primary factor at all.

If interest rates hadn't moved at all the price cuts would still have had to happen because there weren't 500,000 more buyers at 2022s high prices irrespective of interest rates.

And the fact they're holding back production at 2023 prices tells us there's probably not another 300k (or 500-700k for those still optimistic enough to insist on 2.3-2.5M sales in '24) at 2023 prices either.... see again the inventory discounts have gotten larger as time as gone on as well on top of the list price cuts.

 

[AndrewZ]

Interest rates surely aren’t helping but compared to China and Europe, the US is doing extremely well.

What about the $7500 point of sale? Rates come down a bit later this year, but starting in 2025 batteries will lose the IRA credit if they contain critical minerals from China / Russia / Iran / North Korea on top of the battery component restriction that came into effect this year, and the % sourcing from free trade countries will ratchet up.

So you have rates coming down to some extent, probably not as much as the market hopes, but likely some loss of incentives as well in the US — I’m not sure of the incentive statuses elsewhere.

 

[larmor]

So everyone talks about conference calls and especially mentions future growth and guidance. Tesla introduces several new products lines including Tesla bot – – Amazon, are you listening? Do you still want to pay workers to load and move packages?, $25,000 mass market car to start in 1 1/2 to 2 years! Like actual production, and on the cusp of self driving release.

I am pretty sure those words above, and the words in the conference call indicate new product, lines and guidance for massive growth, but who knows I’m still looking for my iPod and someone to service my McIntosh from 1985…

 

[Artful Dodger]

Alternate Uptick Rule kicked in at -10% from yesterday's Close: $207.83*0.9 = $187.04

Short sales are still allowed (that's the alternate part of the SEC rule), they just can't be done below the 'National Best Price' but they can still buy Put options for lower strikes, and then their Options Market Maker reflexively short sells stock at below the price, so don't look for support from the 'Uptick rule', rather look at Put Options volume (reported intraday roughly hourly)

EDIT to add: The 'Alternate Uptick Rule' will remain in effect until tomorrow at 4:00 PM Eastern time, the Close (normal short selling rules apply again in the After-hrs session on Fri, Jan 26, 2024)

Cheers!

 

[Knightshade]

Interest rates surely aren’t helping but compared to China and Europe, the US is doing extremely well.

What about the $7500 point of sale? Rates come down a bit later this year, but starting in 2025 batteries will lose to the IRA credit if they contain critical minerals from China / Russia / Iran / North Korea on top of the battery component restriction that came into effect this year, and the % sourcing from free trade countries will ratchet up.

So you have rates coming down to some extent, probably not as much as the market hopes, but likely some loss of incentives as well in the US — I’m not sure of the incentive statuses elsewhere.

EU and China both also had some reductions in EV incentives by end of 2023- which led to further price cuts and are also not helpful to growing sales further with current product line.

In the US Tesla lost the $7500 entirely on the RWD and LR AWD model 3 on Jan 1 2024.... in theory it still exists for the Model 3 Performance, but that doesn't actually exist in refresh form yet and was only ever a small fraction of 3 sales.

 

[hobbes]

they should be rolling the Model NG out right now... rather than wasting resources/ manufacturing capacities on the niche Cybertruck...

My guess is they are somewhat sandbagging their ability to start the 20,000$ car to minimize affecting Y/3 sales. End of 2025 (info from call) might become mid 2024 (info to suppliers). Once interest goes down and demand picks up, they will be quick to announce and build the car. Unless the new unboxed production thing will slow them down..

 

[uscbucsfan]

EU and China both also had some reductions in EV incentives by end of 2023- which led to further price cuts and are also not helpful to growing sales further with current product line.

In the US Tesla lost the $7500 entirely on the RWD and LR AWD model 3 on Jan 1 2024.... in theory it still exists for the Model 3 Performance, but that doesn't actually exist in refresh form yet and was only ever a small fraction of 3 sales.

I asked this last night, but the CFO said that they only had point of sale tax credit on the MY. Is that accurate?

 

[Cult Member]

They have pencilled the Gen3 in at 50kw/h in Investor Day presentation. Seem about right to me. Should be smaller, lighter and cheaper than the current SR packs.

I agree, 50 kWh will be perfect for Robotaxis.
An affordable car for the masses around the world, where regulatory didn't approve autonomous driving in a foreseeable future? Must be as cheap as possible. I haven't heard from Tesla that they don't want to address this market in recent past. The economic impact of producing cars in huge numbers and to replace any old ICE on this planet with a low cost EV is overwhelming attractive.
The new production system in combination with the bot will make this possible. Can't wait until the horse (ICE) is replaced again, asap.

 

[AndrewZ]

EU and China both also had some reductions in EV incentives by end of 2023- which led to further price cuts and are also not helpful to growing sales further with current product line.

In the US Tesla lost the $7500 entirely on the RWD and LR AWD model 3 on Jan 1 2024.... in theory it still exists for the Model 3 Performance, but that doesn't actually exist in refresh form yet and was only ever a small fraction of 3 sales.

Exactly, those Model 3 trims likely lost the incentive due to the 2024> restriction on batteries containing any components from foreign entities of concern. Next year that same restriction comes into effect for critical minerals from foreign entities of concern, and that will likely be a much bigger hurdle — China and North Korea together have a near monopoly on some of these things, battery-grade graphite for one.

Uncertainty around incentives and the negative impact from that was only briefly mentioned on the call, but it will likely be a big deal next year. I won’t be surprised if almost zero or zero EVs qualify for $7500 next year.

 

[Krugerrand]

Dan IVes is not happy with the call.

https://twitter.com/x/status/1750492031795831245

Where have you been all these years x 4 for Tesla ERs, Danny boy? When has Tesla ever catered to WS? You know why Tesla doesn’t play your game, Dan? Because the whole lot of you are shortsighted, selfish, manipulative thieves. Missed estimates? Maybe you suck at estimating. Maybe get together with Troy. Go ahead, don’t be happy. It’s not hurting Tesla. Tesla is absolutely killing it as a company and THAT is actually your job to know when a company is solid financially and when it’s not. The whole narrative about bulls and bears is a bs narrative to keep the likes of this crook in a job. The real narrative is supposed to be the company. Should be THIS company on its way to being invaluable.