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

[Artful Dodger]

You know which other words didn't appear in the Investors Letter or Earnings Call? -- "drag on margins" from Berlin or Texas. Going forward, both those 2 Model Y lines should be considered mature, and their gross margin contributions should approximate the levels we saw for the company as a whole before the production ramps started at Berlin and Austin 2 years ago.

Any body recall what auto gross margins were in Q1 '22 vs. Q2? That's the natural difference in g.m. I expect going forward, IMO. Sure the absolute number will be lower now due to pricing, interest, yada but the step-change is what I'm after -- what was the decrease in g.m. strictly due to the ramp, and what should we expect it to increase by now that the ramp is mostly done? Note that some of this may be baked into the Q4'23 g.m. increase already.

Of course, I expect both Berlin and Austin to produce at their nominal capacity in 2024: 750K Model Y Berlin+Austin, 560K Fremont, 1.1M Shanghai, CT's a variable (my previous est was 80<CT<120K). Est'd 2024 Tesla production is therefore: 2,510K +/- 20K #predict

So in summary: higher margins, full production, increased profit. Imma call it right now: record year for Tesla in 2024.

Cheers!

 

[Eugene Ash]

Sure.... they don't have 1000's of thermistors... but if they are having to double the number of cells per brick, I had suggested, that I "suspect that means 2X temp sensors" in each brick... but just conjecture.

There are multiple ways to measure temperature, and I assure you there is no constraint on thermistors. NTC thingies are super cheap, and there is no chip involved. They'd probably go with addressable digital thermistors on a single bus, but again, we're talking a dollar max per brick. 800v/4.2 ~200$ per pack, as opposed to previous 100, in worst case. Not worth obsessing about...

 

[texas_star_TM3]

It's hardly 100% utilitation. The 560K from Fremont is the ACTUAL from 2023, and the 1.1M from Shanghai is their current run rate based on Dec 2023. Are you going to argue the their production will DECREASE? Hah!

Again, Texas only has to be brought up to Berlin and that over 2.5M capacity. As per demand, I'm not even going to dignify that tired old trope with a microeconomics lesson.

Tesla isn't going to sell 2.5 million Model 3 and Model Y at 6-7% car loan rates and the Cybertruck will be as niche as the S or X to the volume for the near future. Sure... if they drop price and margin even more...

 

[texas_star_TM3]

You know which other words didn't appear in the Investors Letter or Earnings Call? -- "drag on margins" from Berlin or Texas. Going forward, both those 2 Model Y lines should be considered mature, and their gross margin contributions should approximate the levels we saw for the company as a whole before the production ramps started at Berlin and Austin 2 years ago.

Any body recall what auto gross margins were in Q1 '22 vs. Q2? That's the natural difference in g.m. I expect going forward, IMO. Sure the absolute number will be lower now due to pricing, interest, yada but the step-change is what I'm after -- what was the decrease in g.m. strictly due to the ramp, and what should we expect it to increase by now that the ramp is mostly done? Note that some of this may be baked into the Q4'23 g.m. increase already.

Of course, I expect both Berlin and Austin to produce at their nominal capacity in 2024: 750K Model Y Berlin+Austin, 560K Fremont, 1.1M Shanghai, CT's a variable (my previous est was 80<CT<120K). Est'd 2024 Tesla production is therefore: 2,510K +/- 20K #predict

So in summary: higher margins, full production, increased profit. Imma call it right now: record year for Tesla in 2024.

Cheers!

meanwhile TSLA is (0.17%) today... didn't you call it yesterday that TSLA will massively bounce back today and be a top performer for the day?

 

[Drax7]

“I don’t even believe my own predictions “ Howard Marks

 

[Eugene Ash]

This is a topic I think this forum should spend some time on and would be of value to all of us.

My gut tells me that this will become the next "competition is coming" scare. I don't think it will so easy for China to make a huge impact outside of Asia soon. They will get there but it will take much longer than people think, imo. I had some exposure/experience in China during my career but it would be great to hear from others on this topic.

Here is why I think the Chinese EV expansion outside of Asia will be slower than expected:
1. To reach huge volumes, manufacturing facilities will need to be established in Europe and North America
2. There are currently not many Chinese huge end to end manufacturing facilities outside of Asia (some in North Africa . . Investments starting in Mexico).
3. Mexico will be key to entering the US market and in Mexico the 3rd Party Supply chain is not comparable to China's supply chain. The auto supply chain is there in Mexico but the Chinese companies will need to establish their supply chain and may find that efficiencies are not like China. China's supply chain network is the best in the world.
4. There will be cultural issues. Often Chinese companies will insert Chinese ex-pats in most of the senior management roles whom are not tuned to the local cultural differences and can create mistrust, frustration and poor performance. A friend of mine that works at a Chinese bank in South America tells me that in management meetings, the conversation at times can move to Mandarin. The ex-pats will speak in Mandarin for 10 min then summarize for the locals with 2 sentences.

China can start with exports but I believe to be a huge threat to Tesla they will need to build manufacturing capacity abroad and this will take time and come with some hiccups.

Please others with thoughts . . . chime in.

1) Differences in business model and importance of image. What works in CN, might not work in the rest of the world. I wonder if the Nio houses are profitable anywhere beyond CN. As an investor I love how lean TSLA is on the store side and delivery, service.
1a. I wonder how are the battery swap stations doing in Scandinavia. Again it was at zenith of SPAC mania.
2) AI - They all rely on mobileye, or at best on Nvidia. TSLA has a huge edge and progress is palpable.
3) Software issues and "smart assistant" functionality. I'm pretty sure they'd have a hard time sticking to GDPR. That is just not in CN culture to respect anything like that.
4) Re-using ICE body shells - fastest bang for the buck, but terrible engineering-wise.
5) Local incentives/subsidies juice numbers. Remember Bloomberg reports on fields of new rotting EVs? It certainly juiced their statistics
6) Safety standards. They'll have to fight with perception, created by their ICE vehicles, one of poor safety.

A lot of these are foundational, not easy to overcome.

 

[Dikkie Dik]

https://twitter.com/x/status/1750961586699927964

Unboxed for gen3 more or less confirmed by Viecha

 

[Artful Dodger]

Elon doesn't need to wait until 2028 to exercise all of his grants. He can do it gradually over time and planned so as not to tank the stock price.

Elon has 304M stock options which expire on January 20, 2028. Given a 53% tax rate, Elon would need to sell about 161M of those shares just to pay the income taxes.

There are precisely 1,453 trading days between Monday and Expiry day. He'd need to sell an average of over 110K shares EVERY TRADING DAY for the next 4 years just to execute his stock options (he'd still need $7.1B in cash for the $23.33/share execution price).

You think that wouldn't tank the SP? No, there needs to be a better plan... and the Board should get on this.

 

[MD70]

Elon has 304M stock options whic expire on January 20, 2028. Given a 53% tax rate, Elon would need to sell about 161M of those shares just to pay the income taxes.

There are exactly 1,453 trading days between Monday and expiry day. He'd need to sell an average of over 110K shares EVERY TRADING DAY for the next 4 years just to execute (and he'd have to come up with $7.1B extra in cash to pay the $23.33/share excution price).

You think that wouldn't tank the SP? No, there needs to be a better plan... and the Board should get on this.

Can the board do a direct share buyback from Elon ?

 

[Richard007]

TSLA on sale! Added 103 chairs.

2024 will be a fun year!

 

[jabloomf1230]

TSLA on sale! Added 103 chairs.

2024 will be a fun year!

All I could afford was another 65 chairs.

 

[SamS]

$150 before $200. I love the long term story but according to Musk himself, they are in a growth slump until the gen 3 vehicle comes out and that’s 2 YEARS from now.

 

[MD70]

$150 before $200. I love the long term story but according to Musk himself, they are in a growth slump until the gen 3 vehicle comes out and that’s 2 YEARS from now.

Most likely delays will occur so we’re talking at least 3 years.
At least he was self aware to say his optimistic prediction is in 2 years.

 

[EVNow]

$150 before $200. I love the long term story but according to Musk himself, they are in a growth slump until the gen 3 vehicle comes out and that’s 2 YEARS from now.

When I'm talking about how impact of CT has changed in the last few years - this is what I'm talking about. CT is no longer the growth story ... its the next gen. If they could make a million CTs, that would be the growth story now ....

 

[Zero CO2]

I have a limit order for more TSLA chairs sitting at $175 ... getting itchy trigger finger $7 per share delta wont mean much when we are at $500 ...I can all but guarantee we hit $175 next week if i pull the trigger today

this decision should be so easy since i bought shares a couple weeks ago at $213 .... i have been accumulating TSLA shares since 2017 and I still try to time my incremental buys wasting a lot of cycles for nothing .... i would hate to count how many hours

it just shows how powerful the FUD can be even when looking at the facts in the earnings and forward guidance

and lately this thread has a lot of FUD ... it used to be my anti-FUD source ... now i am not so sure ... WTF is going on here

i wont name names but there are a few posters that have relentless negative bias ... repeating the same negative narratives over and over with no new insights ... you know who you are ...

 

[The Accountant]

Interesting and solid advice from someone working at Tesla.
Not sure how this somewhat long post will display here on TMC so let me point out some interesting lines:

Do you know what one of the most common words used by business media and equities analysts happens to be? Surprise.
Surprise beat. Surprise miss. Surprise Surprise Surprise.
By no means is this a jab, but typically I am not eager to align my economic interests with a forecaster (another word for guessing, by the way) who is surprised all the time.
If you view equity as truly ownership in a business, which would make you in the 1% of people who operate like this, you should not concerned about daily price action.
If you do not want to own a company for 10+ years, do not own it for 10 minutes.
Think of your % ownership just as if you owned a coffee shop. You will have peaks and valleys but over time (do not get lost in short term noise) if you are a customer centric business that provides a great desirable product, the chance of success long-term is on your side

https://twitter.com/x/status/1750914983808909679

 

[2daMoon]

When I'm talking about how impact of CT has changed in the last few years - this is what I'm talking about. CT is no longer the growth story ... its the next gen. If they could make a million CTs, that would be the growth story now ....

When has the CT ever been perceived as part of a growth story?

The CT was presented as an innovative, disruptive, next gen technology story. Every step of the way they have spoken of how everything about the truck will be different from design, to the materials, to the assembly line. This doesn't paint a rosy picture for growth.

It is more an example of a Tesla Blade Runner Pickup, for a 21st Century Bubba.

The reveal never left any impression Tesla had intentions of it being on par with M3 or MY (growth story) production levels. Though I can say I've always expected it to have higher production numbers than S and X.

Though, thanks to its immense popularity, I agree how it may now become a growth story.

 

[joh01652]

Look at point #1

https://twitter.com/x/status/1750918316695093377

Gary Black also has a $10B buyback in a pinned tweet on his home page--I just dismissed it when I saw it, but maybe there's some truth/talk of it with Tesla execs??

https://twitter.com/x/status/1750540958511362071

 

[Stretch2727]

I get this newsletter from Tu Le. He has been on Autoline and has spent a lot of time in China and knows the auto industry quite well. This weeks newsletter is a long read including a bit on the Detroit Lions!

Anyway hard to summarize but I will post a few excerpts here. He is basically stating the future is all about Tesla and the Chinese EV manufactures as they are tech companies versus auto companies.

Let’s say Tesla’s engineers are made up of 80% SW dev engineers and 20% traditional engineers. It still took Tesla 20 years to get to where they are and that was WITH the horses they needed to develop a software dominated passenger vehicle. Now, lets flip this – Let’s say currently Legacy OEM has 20% SW engineers (not likely) and 80% traditional automotive engineers.

Do we really believe that in one product lifecycle, the Legacy Automakers can build vehicles in the same way that Tesla and China EV Inc does? Remember, also that there is an entire division consisting of engineers at these Legacy Automakers that’s only function is to design, engineer, test and then manufacture powertrains.

I’ve said this before and I will say it again. Leadership needs to change. Not all leadership and not even at the CEO level at many of these companies. But more tech / service / DTC leadership needs to be added and new blood that have the desire to get the company moving much, much faster while also embracing more risk. Poaching one man / woman from Apple or Amazon is NOT going to get it done. If they aren't able to push for significant change and aren't given the autonomy to make the tough decisions that current management have deferred till now, they will also fail.

SAI Weekly 04 - 24: My Tesla Rant, BYD Democratizes Autonomous Driving with DJI's help.

Pictures of the Cybertruck are starting to make their rounds on Chinese social media since landing this week for its China tour. For those wondering if it’ll be sold in China, that’s not really up to Tesla. It could be, but current regs in most major cities limit the streets vehicles like the...

www.sinoautoinsights.com

 

[Artful Dodger]

according to Musk himself, they are in a growth slump until the gen 3 vehicle comes out

Haha, now we know where the beans went... in your ears. What Elon said was:

"There's a lot to look forward to in 2024. Tesla is currently between two major growth waves. We're focused on making sure that our next growth wave driven by next-gen vehicle, energy storage, full self-driving, and other projects is executed as well as possible."​

The first wave was the Model 3 ramp when we say over 100% yoy growth. If we get 38% growth this year, that's NOT A SLUMP, that's 2.M vehicles. "Our next growth wave" simply means there will be a period of time when growth is again above the 50% long-term target.

You dreamed you heard the word slump, or you heard in on CNBC and believed them. That's on you. Certain press weasels are already squeeling about a decrease in production this year, 'cuz who's to stop us, amirite?

Advise: take your 10-year-old hacked account and go phishing instead.