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

[heltok]

So when can we expect FSD v12 prowess to show up on the income statements?

I think Q1 will be all about ironing out bugs. Then Q2 will be about getting the masses exposed to FSD. Maybe around May after AI day they will give 1 month of free trial to everyone eligible. Then in June we can expect monthly subscriptions will increase. So Q3 should be the first time we can see effects, maybe around that time China and maybe Norway will have been added.

So around mid Q4 when Q3 ER report comes out I think the next golden age of Tesla will begin.

 

[Todd Burch]

Not sure what that non-sequitur reply has to do with the “boy who cried wolf” situation we have with the overly bullish FSD YouTubers.

Years of unquestioning flattery and hours of YouTube videos praising every single beta point release as giant leaps in Tesla’s goal of achieving FSD (when usually the changes are minor or sometimes even setbacks), means when we actually do see big leaps forward (like what may be currently happening), no one on Wall Street or in mainstream media takes anything these guys say seriously.

Totally agree, the people who claim FSD is ready for Robotaxi or driving perfectly are full of it.

Don't recall exactly what I was responding to the other day--but it was something along the lines of not expecting the pace of improvement to be similar to what we've seen in the past. Now that everything has switched to a neural net, improvement will accelerate.

 

[Knightshade]

So when can we expect FSD v12 prowess to show up on the income statements?

I think Q1 will be all about ironing out bugs. Then Q2 will be about getting the masses exposed to FSD. Maybe around May after AI day they will give 1 month of free trial to everyone eligible. Then in June we can expect monthly subscriptions will increase. So Q3 should be the first time we can see effects, maybe around that time China and maybe Norway will have been added.

So around mid Q4 when Q3 ER report comes out I think the next golden age of Tesla will begin.

I think Q4 is the earliest it'd have a material difference- and only if the gears of paperwork move fast enough for it to be legal in the EU by then which seems an iffy proposition.

That's not to say there might not be an uptick in NA subscriptions later in the year following a free trial thing, but I think it's hard to find reasonable #s for that where it's a major bump to EPS.

 

[SOULPEDL]

Totally agree, the people who claim FSD is ready for Robotaxi or driving perfectly are full of it.

Agree, it's not quite Robo-ready, but soon.
"Perfectly" would be nice, but it isn't the goal - it's about saving lives and higher utilization.
So far, I've had a couple of perfect drives already (and I'm not full of it). It's as real as it gets for the most part.
Then there's Waymo... they have reverse!

 

[Thekiwi]

Well , now I’m confused. According to the dude, raising prices April 1 for NA is because demand for Q1 is so bad and they’re trying to goose Q1 sales. Then along comes a rise in prices in Europe but for March 22nd. Now I’ve been hearing from the dude how bad things are in Europe with sales. So am I now to understand Tesla needs to only goose Europe sales until March 21 and not until March 30?

Please Baby Jesus, just give me one more vehicle delivery YoY.

Where in Europe would people need to order before March 22nd to ensure Tesla could deliver it to them by end of March? That might be the answer as to why those dates are different. Whereas in USA there is plenty of inventory nationwide for Tesla to continue selling up until quarter end and delivering on Mar 31st.

If Tesla truly was increasing prices due to high demand, then they probably would do it instantly rather than announcing when they would increase it right? Absent some sort of external impact like an ending of a subsidy, the only reason to pre-announce a price increase is to juice sales before that date it would seem.

 

[Musskiah]

So when can we expect FSD v12 prowess to show up on the income statements?

I think Q1 will be all about ironing out bugs. Then Q2 will be about getting the masses exposed to FSD. Maybe around May after AI day they will give 1 month of free trial to everyone eligible. Then in June we can expect monthly subscriptions will increase. So Q3 should be the first time we can . see effects, maybe around that time China and maybe Norway will have been added.

So around mid Q4 when Q3 ER report comes out I think the next golden age of Tesla will begin.

Actually Smart Summon is the key moment. The only input the human has had with Smart Summon in the past is essentially an electronic Deadman Switch with "go" or "forward /reverse" commands in the app. So as long as this remains consistent, it's the best driverless proof-of-concept Tesla has. I think Wall Street will turn onto FSD sooner than anyone thinks now. It sounds like we are talking months finally, certainly NOT yearzuh (plural).

 

[Stretch2727]

Crazy impressed with this FSD video from Rob Mauer. Dense Chicago traffic with the St Patty's celebrations.

https://twitter.com/x/status/1769500530739421414

 

[Thekiwi]

Agree, it's not quite Robo-ready, but soon.
"Perfectly" would be nice, but it isn't the goal - it's about saving lives and higher utilization.
So far, I've had a couple of perfect drives already (and I'm not full of it). It's as real as it gets for the most part.
Then there's Waymo... they have reverse!

Waymo is operating a driverless robotaxi network in San Francisco, and as of a few days ago started operating its driverless service in Los Angeles county as well.

They seem to be mocked by many in the Tesla community, but I think it should be followed seriously and closely to see the teething problems associated with operating a driverless network. Not so much from a technical perspective (where the two companies diverge significantly) but from a regulatory, legal perspective, and also to see what level of help (if any) municipalities provide in terms of adjusting problematic locations (road markings, signage, visibility issues, etc) that can trip up any driverless solutions.

 

[Musskiah]

Updated to 2023.44.30.25 (v12.3) on my 2020 LR Y with hw 3.0 and ultrasonic sensors early yesterday morning in Sedona, AZ. It's amazing, you all will be pleased, a 10-steps-forward-haven't-observed-any-steps-back kind of update. Feel free to skip this post if you don't want the details.

Gone are the annoying unnecessary lane changes and suddenly veering off-route into turn lanes. Much less jerky and spastic, really not at all. Smoother all around, even takes round-a-bouts smoother (even though I've never had much problems with round-a-bouts, unlike others). Yesterday morning I took off around 5am in the dark. My initial chief complaint was the sudden acceleration from stop, over-shooting the speed limit by 5 mph, then suddenly slowing down 3-4 mph (have all my settings set to "chill"). BUT yesterday afternoon and this morning (5am again in the dark) all that went away (don't know what could account for this--a total recalibration of the FSD system? Just guessing...).

ONE HUGE BENEFIT is that the driver can now TURN OFF autowipers when FSD is activated. It was raining on and off yesterday afternoon on my test drive, and although autowipers still suck, at least now the driver can turn them on and off at will. Each time FSD is engaged, autowipers are also engaged, but it is simple to turn them on/off during any given session. Perhaps Tesla is using driver usage of wipers to train FSD? Just a thought...

My big question: is the FSD system already "learning?" I ask because yesterday morning, while turning left up my crooked, narrow, un-lane-marked street in the dark for the first time with v12, the vehicle would have absolutely T-ed into a curb had I not intervened. This surprised me as this has never happened before with any other FSD versions (have had this house since 2020, been in FSD beta since 2019). But the second time, later yesterday afternoon, the car did not come close to hitting the curb, and proceeded much more cautiously, too cautiously, in fact, up the road to my home at only 7mph, like it was scared. Now this morning, again in the dark, it took the corner much more smoothly and confidently with no danger of hitting the curb and went about 10mph up the street (it's a very narrow street, more like a driveway, with trees lining both sides and no visibility, so 10mph is acceptable in this instance). Am extremely impressed. Again, I can't help but wonder if there is some kind of major recalibration of car's system, and a new "mapping" of sorts of the terrain. Anyway, all conjecture, but that's what happened.

This morning the drive was practically flawless. My only point against it was entering a round-a-bout too quickly, but that's a somewhat subjective statement. It wasn't dangerous as there were no pedestrians or cars around, but I could see a cop ticketing me for going 20+mph through a round-a-bout at 530am. Uber riders, or the elderly, would also not be pleased with that kind of speed in that situation.

Some TMCers have argued for lower FSD prices to entice customers to try it and increase take-rate. I’ve disagreed all this time because I felt it was too crappy and people would be too turned off. I've got a buddy who just got his first EV, a Tesla Y, 5 weeks ago, had FSD for a free trial period upon purchase, said it sucked and was too dangerous and wouldn't use it again. That is why I never felt Tesla should lower prices on FSD--it just wasn't there yet, and I didn't want it to reflect badly on Tesla.

But that's changed now. I think Tesla should lower FSD prices to entice people to try it. It is that good now. It is not robotaxi ready yet, shouldn't sleep while driving yet, but it's good enough now that I would feel comfortable with my 75 year old mother experimenting with it. It’s really that good, a major major leap in the right direction. I'll continue to post more if I feel something is worth mentioning.

Did your mom try it yet? I'm dying to know how that goes.

 

[Musskiah]

Crazy impressed with this FSD video from Rob Mauer. Dense Chicago traffic with the St Patty's celebrations.

https://twitter.com/x/status/1769500530739421414

This is the one. Once Burnt Hair comes back in stock on The Boring Company site - that's the telegraph!

 

[MC3OZ]

0 Model 3s qualify for IRA credits for buyers right now.... compared to last year when they all did.

The current model is the Highland refresh which is a better car in many ways compared to previous versions...

Qualifying Model Y for IRA credits was obviously a higher priority..

Yes, they would like to have the cells to qualify Model 3, they are probably working on that.

The video above highlights to attention to detail in build quality and overall presentation for Cybertruck.

No doubt some customers who might have bought a new Model S/X are getting a Cybertruck instead...

Model S/X still are not available in RHD countries - I also suspect that is something they intend to eventually fix.

 

[skybluecgreen]

Lots of positive chatter on FSD V 12.3, hopefully it is as good as they say.

I have been skeptical of the very positive reports until I saw this live drive in LA this afternoon

https://twitter.com/x/status/1769485088931393589

I never believe anything from Whole Mars but once others started to show their videos like edgecase https://twitter.com/edgecase411 my interest was perked. I have now been monitoring the FSD forum FSD V12 (end to end AI) and although reports are mostly positive, some say it is worse than v11. But this live stream was overwhelmingly positive.

Youtubers can edit to highlight the good so that is why a live stream like this was convincing for me. I watched the second hour live and there was only one safety disengagement. I have been in the Neroden camp on FSD since he used to post but for the first time I am excited about it. Not saying robotaxis are close but once my car, a 2018 Model 3 lemur, can get FSD 12 I will try a subscription. It may not be material to earnings but I think others are going to as well.

 

[Knightshade]

The current model is the Highland refresh which is a better car in many ways compared to previous versions...

And also a 15-20% more expensive one due to no IRA credits. But Troys data shows the ramp in the US has been quite slow out of Fremont so that's not going to help the delivery #s any more than the higher price does.

Qualifying Model Y for IRA credits was obviously a higher priority..

Ys all use US made cells, so they've been qualified as long as the IRA has been around- nothing changed there.

There's no additional supply for US cells for Model 3, and as of Jan 1 some of the sourcing requirements for foreign stuff got tighter, so they can no longer accounting-gimmick their way into qualifying Chinese cells like they could in 2023.

That's also why expectations of any major Y ramp in Austin doesn't make sense-- there's no extra 2170s to go into those vehicles, and 4680s are in queue for Cybertruck ramp. This may get better by late in the year (or more likely next year) but it's certainly a limitation right now.

Yes, they would like to have the cells to qualify Model 3, they are probably working on that.

I don't see how though unless you know of some non-Chinese supplier for these? Otherwise they'll be waiting on plants still under construction for the most part to fix that so again not a 2024 solution.

Model S/X still are not available in RHD countries - I also suspect that is something they intend to eventually fix.

Do they?

I thought they outright cancelled those orders and told those who had them that car simply will not be made?

Tesla cancels all right-hand drive Model S, Model X orders

Customers can choose one from inventory or buy a left-hand drive version.

arstechnica.com

 

[Zaddy Daddy]

@Zaddy Daddy

Using a graph of past prices does not convey a thing about future prices. MY prices will be on the rise in both Europe and US in weeks. This is a sign we are at a local bottom and near/at stabilization. I didn't mean to imply price cuts were only because of interest rates, so I agree with you the depth of the ruthless price cuts Tesla exacted on the competition was not commensurate with interest rates - it was in fact more of a a coup de grâce!

By stating "Tesla may be approaching a 'natural limit' " (this is their words from most recent earnings) I was aknowledging that Tesla expects less cost declines - I agree with you. As @unk45 has shared, cost declines are still expected to come from batteries, and I would add other commodities. This will not be insignificant.

You forgot to add Deferred Tesla Energy Revenue to your forecast. Tesla has already stated $1.05B of this Revenue will be realized in the next 12 months (2024). In 2025, this will be well over $2B and perhaps as much as $4B by my estimation - I don't really want to get into the math here, but it's plain to see this if you examine the difference in this Deferred Energy Revenue between 2022 and 2023. This Revenue alone will contribute nearly $1EPS (or more) ON TOP of the 2 Megapacktories. Your margins are low for Energy in 2025- I would put them at between 25-30%. Otherwise, I generally agree with your numbers. I stand by my CONSERVATIVE $2 FY2025 EPS forecast from Energy (Deferred and 2 Megapacktories combined). Larry Goldburg, though we may take his forecast with a grain of salt, makes a fairly compelling case for 2035 35% Energy Margins with $10B profit (FWIW 2024 Energy forecast is 25% margins with $4B profit). For those who missed it, here is the link again: Start at 9:30

I like your FSD assessment, that is reasonable, and probably rightly conservative. Of course, it is entirely possible we could be in for a monster suprise here!

Tesla targets 50k ramp in semis by EOY 2025. I think 20k in 2025 is reasonable with 15k coming in the second half. I think your margins are low as they will preferentially sell the $250k version along with, perhaps, premium upgrades as they always do. I can live with $0.40 EPS

I am glad we agree on Cybertruck, this means we have tested our theories with rigor from different perspectives and arrived at, perhaps, the most accurate conclusion of all.

Google Finance - Stock Market Prices, Real-time Quotes & Business News
Tesla Inc (TSLA) - Services and Other Revenue is at a current level of 8.319B, up from 6.091B one year ago. This is a change of 36.58% from one year ago. The growth is Supercharger revenue, in particular, comes from Tesla's growing fleet. Even if they ONLY add another 2M cars in 2024, that's another 2M paying customers to the network.

I really like your conclusion, IF you were to add in the Deferred Energy Revenue of $1 EPS, and then modify the arithmetic accordingly. One thing is certain, you and I both agree Tesla is currently undervalued: You think 56%, I think something closer to 100%.

On a personal note: @Zaddy Daddy I genuinely have always appreciated your analysis. You have helped me realize that, perhaps, it is not that you are a contrarian as much as I am an eternal optimist. Thank you for continuing to help me temper my assumptions.

I am accounting for deferred revenue, as the deferred revenue will keep turning over but net accruing as production grows.

Assume it takes, on average, 1 year from production until revenue recognition (starting with this assumption because Tesla still hasn't recognized 5 GWh in a quarter even though production as been around that since early last year, though maybe 9 months is better).

So while there will be 2024 production recognized in 2025, basically a lot of 2025 production will be recognized in 2026. So you are relying on the production rate in late 2024 and early 2025 (plus deferred) to determine how much will be recognized in 2025.

Lathrop is at 20 GWh still (according to sources like Bradford Ferguson), we can hope it reaches 40 GWh by the end of the year, but that's not guaranteed. Shanghai should *start* production toward the end of this year, but I don't think we can even assume it will produce at a 20 GWh rate for an entire quarter (5 GWh). It's possible - it's even possible it produces higher - but also possible it produces less. So 5 GWH in the Q4 from Shanghai...maybe? But not much in Q3 and nothing in Q1/Q2.

Meaning, on average, even after adding in a few GWh from deferrals, you are looking at 45-50 GWh + say 5 GWh in deferrals. Likely a bit under 60 GWh in honestly.

It's only going above 60 GWh if Lathrop gets to 40 GWh rate by summer this year and Shanghai ramps at last to 20GWh rate by end of Q3.

As for margins, I believe those videos are talking about gross margins, not operating margins. I think 20% operating margins I give is already a pretty optimistic target. This implies probably around 30% gross margins. Tesla didn't even reach 20% operating in a quarter during the Covid demand boom. Megapacks have already seen some price cuts, it's not like demand is infinite at those high margins. When they double capacity, yes operating leverage will improve margins but the ASP will have to be cut.

So 20% operating margin on 55 GWh of batteries at $350 / kWh = $1.1 in EPS. I don't see any way there will be sustained operating margins above that for Energy. IMO that is very risky to assume.

 

[Zaddy Daddy]

I appreciate your regular grounded projections of near-term earnings implications. However, I think the calculation of X subscribers at $Y/mo subscription fee is missing perhaps two of the bigger implications of a 'ChatGPT' moment on both Tesla's business and TSLA:

1. Once it becomes obvious that compelling autonomy is inevitable and that Tesla has both a hardware and data advantage, Tesla vehicles may demand a sales price premium as people won't want to buy into a 'dumb' car, increasing vehicle margins.

2. This ChatGPT moment may drive a much higher TSLA P/E multiple, as people start believing the future earnings potential for the autonomy part of the business, and some folks may rush into it as an "AI play" that has been underappreciated in the last year of AI mania.

I'm not that focused on either of these things as I believe the real 'winnings' are farther over the horizon and prefer to keep accumulating at these share prices. But I think it's potentially risky to think that EPS and TSLA upside is constrained by the # of FSD subscribers at the current subscription price.

When you watch youtube videos for a few weeks and there are 0 critical interventions in any of them, then you can buy calls.

 

[SOULPEDL]

Waymo is operating a driverless robotaxi network in San Francisco, and as of a few days ago started operating its driverless service in Los Angeles county as well.

They seem to be mocked by many in the Tesla community, but I think it should be followed seriously and closely to see the teething problems associated with operating a driverless network. Not so much from a technical perspective (where the two companies diverge significantly) but from a regulatory, legal perspective, and also to see what level of help (if any) municipalities provide in terms of adjusting problematic locations (road markings, signage, visibility issues, etc) that can trip up any driverless solutions.

You make it sound complicated for Tesla to achieve because Waymo has to work with lawyers and the city to navigate road markings? These are automatic with Tesla, no need to coordinate road markings. They're digging up our streets now and V12 is doing very well so far, as is. And quickly too.

Spoiler: Truth be Told...

I've been sour on Waymo for hiding things from public view since the very start. I signed up but then declined the offer when I learned that I had to sign their NDA. That left a really bad culture after-taste; I did not sign it. Then the LIDAR thing... I've owned two precision 3D scanners and modeled plenty of 3D. I can say from experience that if they coated the town in baby powder it would absolutely improve the scans, thanks but no thanks.

And how many times were they rated highest on a scale of 1-10 that didn't include Tesla, ever. They took the quick path to something operational ASAP, threw costs and efficiencies out the window (ICE)... I mean, is the business model profitable yet? Then expanding to other cities - why? Because Cruise did? Are they trying to sell the company again?

IMO, it's worthless starting tomorrow morning. Discounted experimental van sale, coming soon.

 

[insaneoctane]

Since we know Tesla is, in fact, trying various advertising approaches....what do you think about a campaign to educate against FUD? They could pick a commonly misrepresented concept and advertise/educate against the FUD for awhile and then move on to the next. Perfect FUD narratives include :

• Charging times / Supercharger network / Home charging
• Low prices / leases
• Range anxiety / Actual ranges / local vs road tripping
• Cold weather performance
• Total carbon footprint vs ICEV
• Rare earth elements / sourcing
• Recalls / OTA
• Maintenance / TCO
• Safety, world's best

Many more topics available, but anything that FUD manipulates that impacts sales...

 

[Musskiah]

I am accounting for deferred revenue, as the deferred revenue will keep turning over but net accruing as production grows.

Assume it takes, on average, 1 year from production until revenue recognition (starting with this assumption because Tesla still hasn't recognized 5 GWh in a quarter even though production as been around that since early last year, though maybe 9 months is better).

So while there will be 2024 production recognized in 2025, basically a lot of 2025 production will be recognized in 2026. So you are relying on the production rate in late 2024 and early 2025 (plus deferred) to determine how much will be recognized in 2025.

Lathrop is at 20 GWh still (according to sources like Bradford Ferguson), we can hope it reaches 40 GWh by the end of the year, but that's not guaranteed. Shanghai should *start* production toward the end of this year, but I don't think we can even assume it will produce at a 20 GWh rate for an entire quarter (5 GWh). It's possible - it's even possible it produces higher - but also possible it produces less. So 5 GWH in the Q4 from Shanghai...maybe? But not much in Q3 and nothing in Q1/Q2.

Meaning, on average, even after adding in a few GWh from deferrals, you are looking at 45-50 GWh + say 5 GWh in deferrals. Likely a bit under 60 GWh in honestly.

It's only going above 60 GWh if Lathrop gets to 40 GWh rate by summer this year and Shanghai ramps at last to 20GWh rate by end of Q3.

As for margins, I believe those videos are talking about gross margins, not operating margins. I think 20% operating margins I give is already a pretty optimistic target. This implies probably around 30% gross margins. Tesla didn't even reach 20% operating in a quarter during the Covid demand boom. Megapacks have already seen some price cuts, it's not like demand is infinite at those high margins. When they double capacity, yes operating leverage will improve margins but the ASP will have to be cut.

So 20% operating margin on 55 GWh of batteries at $350 / kWh = $1.1 in EPS. I don't see any way there will be sustained operating margins above that for Energy. IMO that is very risky to assume.

I see, that's fair logic.

I'll try this another way...

SOURCE FOR BELOW:

https://twitter.com/x/status/1751963928542781758

Teslas TOTAL REVENUE, which Cern calls INDICATIVE REVENUE(TR=IR=Reported Revenue + change in Deferred Revenue & Unsatisfied Performance Obligations) was nearly $10B in 2023 (with Lathrop ramped at half mast [20GWh] for only a few months of the year) and the difference in unreported revenue is nearly $4B!

So in 2024 IR should likely approach $20B as Lathrop will be fully ramped to 40GWh for about half of 2024 (as you say), so we should end up something like double the 2023 IR.

In 2025 Lathrop could do over $20B of IR and Lingang(Shanghai) should do about $10B of IR (like Lathrop did this year).
Let's assume this $30B of 2025 IR between MPactories only REALIZE $20B @ your 20% margin. That's only $4B or $1.3EPS. Maybe you are correct sir. OR maybe at 30% margins that's $6B INCOME or $2 EPS. So Tesla comes in at $1.3-$2 EPS in 2025.

Now if margins crush expectations at 35% and REALIZED revenue is $25B instead of $20B, energy alone does $3 EPS In 2025. This is entirely possible if efficiencies of scale come into play and COGS reducation occurs, say from 30% battery declines as has been predicted.

I still stand by my CONSERVATIVE $2EPS TE FY2025

 

[SmokyPeat]

I have been skeptical of the very positive reports until I saw this live drive in LA this afternoon

https://twitter.com/x/status/1769485088931393589

I never believe anything from Whole Mars but once others started to show their videos like edgecase https://twitter.com/edgecase411 my interest was perked. I have now been monitoring the FSD forum FSD V12 (end to end AI) and although reports are mostly positive, some say it is worse than v11. But this live stream was overwhelmingly positive.

Youtubers can edit to highlight the good so that is why a live stream like this was convincing for me. I watched the second hour live and there was only one safety disengagement. I have been in the Neroden camp on FSD since he used to post but for the first time I am excited about it. Not saying robotaxis are close but once my car, a 2018 Model 3 lemur, can get FSD 12 I will try a subscription. It may not be material to earnings but I think others are going to as well.

I feel much the same way about FSD. This is the first FSD revision that has interested me in a long time. Hang on to that lemur edition Model 3- they are very rare and sought after. I always felt like the felines got way too much press in the automotive world. It's about time primates got their due!

 

[Buckminster]

https://twitter.com/x/status/1769596226243326228