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

[unk45]

…

New vehicle dealer inventory at the end of 2023 was 72 days compared to 60 days in 2022. Higher but not unheard of. The industry panics around 90 days.

A common misconception is that the sales figures reported by other car companies are deliveries to dealers and not retail. That is not true. They report the combination of fleet sales and dealer sales to end users.

When dealer inventory builds up to high levels, the car companies offer incentives or even slow down production. There is no evidence to suggest incentives were unusually high last year. Up for sure but only by a few thousand dollars.

…

]

Average transactions price at GM and Ford do not support the assertion that prices have dropped anywhere near as much as Tesla. Neither do their auto gross margins.

..

.

All the data we have suggest that Tesla is alone in reducing prices to the extent it did. The flip side is that no one else was trying to grow sales by double digits percentages.

…

Automotive News every week has incentives listed on the back pages. There is regular evidence, one need not rely on aggregators like Cox.
You’re incorrect on sales recognition by US OEMs other than Tesla. Check the 10K’s. They all recognize sales upon shipping to dealers, exact wording varies slightly.
Dealer inventory and OEM inventory are different. Dealers, depending on season and other factors can routinely carry >90 days at times. High demand models can be <30 days. Tesla is the only one that recognizes sale only on title transfer and that only with payment and documents fully executed.

Very few people seem to understand how conservative is Tesla sales recognition.

 

[SOULPEDL]

0.00% chance of this.

Anti-small-geofence has been the entire point of Teslas approach to self driving.

Agree but never say never. IMO, it's a safer path to take initially. It's a strong belief I've had for years and posted several times. Again I reiterate that early release features may be added over time. Examples are zero-occupant drives at first, geo-fencing, only on freeways (which is also a type of geo-fencing) and so on with some creativity. This could happen quite soon, however, that nasty take-over hand warnings have to go away. That's the unknown part for me - how does it get unstuck? It's gotta come all the way to me when I call for it. Chandler Az might be easier than city centers or places far from fresh training data.

When you let young kids roam the streets, it's local, daytime at first, back home before dark. Same thing with FSD for me, and the safest. There is a youtuber that counts disengagements and pins them on a map. There are patterns established pretty quick. So Tesla knows the trouble spots. Just draw some lines in a safe zone and try it out I say.

In fact, my use case (imagined back in 2016) was to have it drive me to work then return home for covered parking. If I could have 10 successful consecutive trips, why not lock that trip in as is?

 

[MP3Mike]

Tesla insurance isn't run by Tesla... they outsource it to insurance providers and just label it Tesla insurance but Tesla isn't the underwriter.

That was true for the first few states, but Tesla started underwriting the insurance themselves in some states.

First Tesla Insurance Underwriting Slated in Expansion to Oregon and Virginia - TeslaNorth.com

Tesla Insurance is currently available in Arizona, California, Illinois, Ohio and Texas. But according to state insurance filings seen by Forbes, expansion is slated for Oregon and Virginia next. Forbes says Tesla will be underwriting by itself or the first time in Oregon and Virginia, instead...

teslanorth.com

 

[kbM3]

My ONLY negative takeaway from yesterday was the removal of the 50% average annual growth guidance.

Edit: just saw this brilliant tweet, giving a great argument for removing detailed guidance, among other things. It’s from unplugged performance.

https://x.com/unpluggedtesla/status/1750654817478005044?s=46&t=sTYHCL8Y--FZk1aKgsfDCA

 

[The Accountant]

My ONLY negative takeaway from yesterday was the removal of the 50% average annual growth guidance.

The 50% growth rate was not removed. They only reiterated that in some years it won't be 50%.
Over time their target is still 50% cumulative annual growth rate.
The question was specifically about 2024 and 2025.

 

[ggies07]

So do high gross margins matter anymore? Tesla has $29B in cash now. Should we be looking at this from a different angle now, just like with other Tesla items? Sure, let's not go negative on the margins, but does it always have to be an ATH?

IF $29B is plenty to expand on the things for the future, then lower the margins and flood the market with more EVs.

 

[Hiline]

Playing around with the 50% CAGR starting in 2020 with 510k vehicles. In order to meet this goal, Tesla is going to have to produce this many vehicles each year:

2021: 765k
2022: 1.15M
2023: 1.72M
2024: 2.58M
2025: 3.87M
2026: 5.81M
2027: 8.71M
2028: 13.07M
2029: 19.61M

Now I see the basis for 20M units per year by 2030.

The 50% growth rate was not removed. They only reiterated that in some years it won't be 50%.
Over time their target is still 50% cumulative annual growth rate.
The question was specifically about 2024 and 2025.
View attachment 1012320

You could argue that Tesla is still on track for 50% CAGR if they manage to deliver 2.58M units this year. They have exceeded 50% CAGR so far. The cumulative rate will likely be lower by the end of 2024, but may rebound by 2026 if the market improves by then.

 

[Blue horseshoe]

Ark purchased another ~$35M of tsla as I figured they would

 

[Tony73]

Scale is small. There is no profitability.

Human drivers are pretty cheap, Uber keeps most of what they charge the riders with drivers receiving a small cut + maintaining their cars.

If that were true, robotaxis would not make economic sense

 

[Mengy]

You could argue that Tesla is still on track for 50% CAGR if they manage to deliver 2.58M units this year. They have exceeded 50% CAGR so far. The cumulative rate will likely be lower by the end of 2024, but may rebound by 2026 if the market improves by then.

There is no possibility of Tesla delivering 2.58M units this year, the capacity simply isn't anywhere close to there. 2.1M to 2.2M is much more probable for 2024, with a tad higher in 2025 (maybe 2.3M to 2.4M) due to CT and maybe some Gen3. Then in 2026 we should see the Gen 3 ramping proper out of Austin, which should likely push us closer to 3M. If Gen3 production in other factories starts in 2027 then that would be the year unit growth blasts off again.

My feeling is 20M by 2030 is off the table now, I don't see how it can happen anymore. New factory construction is happening too slowly, and the delay on 4680 ramping has pushed back both CT and Gen3. I think more like 12M - 15M is much more likely by 2030.

All IMHO of course

 

[Tony73]

Automotive News every week has incentives listed on the back pages. There is regular evidence, one need not rely on aggregators like Cox.
You’re incorrect on sales recognition by US OEMs other than Tesla. Check the 10K’s. They all recognize sales upon shipping to dealers, exact wording varies slightly.
Dealer inventory and OEM inventory are different. Dealers, depending on season and other factors can routinely carry >90 days at times. High demand models can be <30 days. Tesla is the only one that recognizes sale only on title transfer and that only with payment and documents fully executed.

Very few people seem to understand how conservative is Tesla sales recognition.

They recognize revenue when they ship to dealers. The quarterly Sales reports which is similar to Tesla’s P&D reports sales to end users. In the 10-k, they report both sales to end users (called Total Sales) and to dealers (wholesale)

From GM’s 2022 10k:

We present both wholesale and total vehicle sales data to assist in the analysis of our revenue and our market share. Wholesale vehicle sales data consists of sales to GM's dealers and distributors, as well as sales to the U.S. Government, and excludes vehicles sold by our joint ventures. Wholesale vehicle sales data correlates to our revenue recognized from the sale of vehicles, which is the largest component of Automotive net sales and revenue. In the year ended December 31, 2022, 30.5% of our wholesale vehicle sales volume was generated outside the U.S. The following table summarizes wholesale vehicle sales by automotive segment (vehicles in thousands):

	Years Ended December 31,
	2022		2021		2020
GMNA	2,926			81.8	%		2,308			80.7	%		2,707			80.3	%
GMI	653			18.2	%		551			19.3	%		663			19.7	%
Total	3,579			100.0	%		2,859			100.0	%		3,370			100.0	%

Total vehicle sales data represents: (1) retail sales (i.e., sales to consumers who purchase new vehicles from dealers or distributors); (2) fleet sales (i.e., sales to large and small businesses, governments and daily rental car companies); and (3) vehicles used by dealers in their businesses. Total vehicle sales data for periods presented prior to 2022 reflect courtesy transportation vehicles used by U.S. dealers in their business. Beginning in 2022, we stopped including such dealership courtesy transportation vehicles in total vehicle sales until such time as those vehicles were sold to the end customer. Total vehicle sales data includes all sales by joint ventures on a total vehicle basis, not based on our percentage ownership interest in the joint venture. Certain joint venture agreements in China allow for the contractual right to report vehicle sales of non-GM trademarked vehicles by those joint ventures, which are included in the total vehicle sales we report for China. While total vehicle sales data does not correlate directly to the revenue we recognize during a particular period, we believe it is indicative of the underlying demand for our vehicles. Total vehicle sales data represents management's good faith estimate based on sales reported by GM's dealers, distributors, and joint ventures, commercially available data sources such as registration and insurance data, and internal estimates and forecasts when other data is not available.

 

[Paul_SF]

So do high gross margins matter anymore? Tesla has $29B in cash now. Should we be looking at this from a different angle now, just like with other Tesla items? Sure, let's not go negative on the margins, but does it always have to be an ATH?

IF $29B is plenty to expand on the things for the future, then lower the margins and flood the market with more EVs.

Oh, it's coming. Don't think the SP will stop Elon from killing the ICE. How many times he needs to say he doesn't care about the SP?

 

[Tony73]

There is no possibility of Tesla delivering 2.58M units this year, the capacity simply isn't anywhere close to there. 2.1M to 2.2M is much more probable for 2024, with a tad higher in 2025 (maybe 2.3M to 2.4M) due to CT and maybe some Gen3. Then in 2026 we should see the Gen 3 ramping proper out of Austin, which should likely push us closer to 3M. If Gen3 production in other factories starts in 2027 then that would be the year unit growth blasts off again.

My feeling is 20M by 2030 is off the table now, I don't see how it can happen anymore. New factory construction is happening too slowly, and the delay on 4680 ramping has pushed back both CT and Gen3. I think more like 12M - 15M is much more likely by 2030.

All IMHO of course

The market cares more about margin than sales at this point. 2.58 million at the same or lower gross margin than q4 will not move the needle stock wise. 2 million at 25% will get us comfortably back above 200

 

[SOULPEDL]

For fun, I was wondering how much of Tesla's cash reserves are my share.

Given that Tesla has $29 Billion in cash and 3.176 Billion shares outstanding, the cash per share is $9.13.

So your shares x $9.13 = $$$ (It might surprise you)

 

[M|S|M MYP]

For fun, I was wondering how much of Tesla's cash reserves are my share.

Given that Tesla has $29 Billion in cash and 3.176 Billion shares outstanding, the cash per share is $9.13.

So your shares x $9.13 = $$$ (It might surprise you)

Should i include all my phantom shares as well?

 

[Singuy]

So do high gross margins matter anymore? Tesla has $29B in cash now. Should we be looking at this from a different angle now, just like with other Tesla items? Sure, let's not go negative on the margins, but does it always have to be an ATH?

IF $29B is plenty to expand on the things for the future, then lower the margins and flood the market with more EVs.

Gross margin and operating margin mattered as a showcase of Tesla is doing under the hood. We see it with high volatility as other automakers doesn't see such movements.

Tesla as a business needing to hit all of these high reward/high risk projects like FSD/Optimus/Dojo truly just require time. If you believe they are more than an auto company, then their auto business' sole purpose is to keep the lights on and give their high reward/risk projects time to completion.

 

[GhostSkater]

While I could see standardizing on a single architecture for simplicity's sake, I could also see keeping 400v for smaller vehicles.

I sincerely doubt they'd introduce a third architecture, however. And there's still benefit I^2*R still holds for a smaller vehicle, allowing smaller gauge wire. And not sure you'd need less BMS chips... The needed power dictates the number of cells, not the voltage. For a given KWh pack you need fewer bricks of cells in series, but you need double the cells in parallel (i.e. more current capacity) in each brick. I suspect that means 2X temp sensors to monitor...

Keep in mind for the volume they are planning to make with next gen, introducing new architecture is a no brainer, hell, they are creating equipment to make it from scratch because it doesn't exist. True on the losses, but it might have considerably less power than even SR vehicles today, so wire gauge will still go down

On cell temperature, they don't monitor every cell, not even close, this info is old and might be wrong, but if I'm not mistaken Model 3 long ago had 7 temperature sensors per module, 28 in total for over 4000 cells

 

[hitchhiker]

Robotaxi will happen about 4-5 years after FSD can be trusted without a driver, becuase it'll take that long to get through the regulatory environment.

Optimus in the factory can happen as soon as it can safely do one task.

Even though its the same software, robots will happen first because they can control the environment, the risk, and the liability.

 

[DarkandStormy]

The 50% growth rate was not removed. They only reiterated that in some years it won't be 50%.
Over time their target is still 50% cumulative annual growth rate.
The question was specifically about 2024 and 2025.
View attachment 1012320

Q3 vs Q4

It literally was removed from the deck. If they thought they'd continue to hit 50% CAGR over a multi year horizon, they would have said that. Instead we got the vague "in between growth phases" and "growth volume next year will be lower."


Anyway, not much talk of 20m vehicles in 2030 anymore.

 

[ggies07]

Gross margin and operating margin mattered as a showcase of Tesla is doing under the hood. We see it with high volatility as other automakers doesn't see such movements.

Tesla as a business needing to hit all of these high reward/high risk projects like FSD/Optimus/Dojo truly just require time. If you believe they are more than an auto company, then their auto business' sole purpose is to keep the lights on and give their high reward/risk projects time to completion.

Not sure if you are agreeing with me or not. Yes, GM was a way to showcase how Tesla was doing, but they are a stable beast now.

Right, Tesla can still maintain a nice GM, but not feel the need to focus on that anymore...which is what I'm saying - why does this metric need to part of the SP now? Time to turn the head and look at this situation in a different way.