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

[EQC_]

Another Q - I remember a note to Alexandra Merz, from Moody's, in the last 2 years saying that TSLA's investment grade wouldn't go higher until they show Cybertruck at volume production. What constitutes volume production?

If TSLA goes to a higher grade, then there's a lot of money that'll need to flow into the stock just for being at a higher investment grade, right?

Short answer to what Moody's *might* define as Volume Production for Tesla: 500,000 vehicles per year of one model.

I don't agree with that, and it's definitely a metric that would be unfair to Tesla relative to other automakers' production figures for single models. But: based on my memory of Moody's statement, I think it will take a big number like that to "prove" that Tesla isn't wholly reliant on the Model 3 and Y. The Cybertruck at "Volume Production" enough to satisfy Moody's might just mean production numbers that are a sizeable fraction of 3 & Y production numbers.

Spoiler: More rambling explanation.

If I remember correctly, part of that "volume production" argument was that Tesla is basically reliant on two similar products -- the Models 3 and Y. Moody's noted that the 3 and Y are the vast majority of Tesla's revenue and profit, and the other products (energy, S, X, etc.) are small in comparison.

There are many flaws with this analysis. The first to come to my mind are:

• Tesla's per-product scale is different and MORE efficient than others. It shouldn't be "bad" that Tesla produces a million Model Y's per year, split among relatively few trims. That is MUCH more efficient than, for example, producing 100,000 each of 10 different models, and each of those split among many different trims.
• The 3 is produced at two different factories, and the Y is produced at 4 different factories...and there are frequent small upgrades to the vehicles at each, as well as regional differences in the method of production as well as the final vehicles sold. So it's not like Tesla's "reliance" on 2 products has created other limitations or vulnerabilities. Production is still global and diverse.
• And, of course, with an assortment of work/research/products that are not typical of automotive manufacturers, Tesla is still, in fact, a diversified business even if they only produce huge numbers of 2 car models.

Anyway...given that Moody's sees Tesla's production of 1.5+ million 3's and Y's per year as a "weakness" that needs to be addressed by another vehicle produced at volume, I can very much see Moody's wanting to see Tesla producing Cybertrucks at a sizeable fraction of that figure...so 500,000 seems about right.

 

[JimS]

OT:

We are now a two Tesla household. Here is my wife's 2024 LR AWD Model Y:

For the fascinating long and boring story of how this came to be visit my thread Western Road Trip in a Model 3, then go to the 2024 UPDATE page. Or just go straight to 2024 UPDATE page and skip all the pages about our 2021 road trip!

 

[Unpilot]

Yes, it does get tiresome.

I find these types of post very valuable; versus the posts where subjective opinion is often injected into the post and written as fact.

Trust me, every person outside the Tesla bubble understands this common sense.

He probably didn't expect to rely on valuation Tesla's AI to product potential for stock appreciation previously, which now everyone has pivoted to.

All EV demand is getting wrecked,

 

[Jim Holder]

If the stated goal is supervised driving then it will be just that supervised driving with no need to pivot to ETE Neural Nets ... that is why the aspiration is FSD ... Tesla engineers will make the words true in the long run
similar to the space X Mars goal .. if the goal is not Mars then none of the "stuff " required to reach mars will be achieved

So maybe FSD can be really renamed Full Supervised Driving until then after all

 

[Musskiah]

That is the average value per vehicle I am estimating, as many people won't subscribe at all, while others will pay $100 / month. Few will spend $200 / month and very few will spend $500 / month. You can't assume all the owners will spend the max number of money for the product.

Most people don't have $200 / month lying around. Their monthly payments are already $500-$700.

Valuing an item or service doesn't mean the person can afford it. Many office workers in the USA work on salary. They are not paid for overtime. Spending $200 / month to get more work done while traveling means they still spend the same amount of time in the office , work extra during your commute, and recieve the same pay.

Also, if you stretched your budget to afford a Tesla, you may just not have the budget for FSD, regardless of its value.

Fact: the average household income of a Tesla owner in 2024 is $150k per year. If they knew the real productivity value alone, they could afford it. Tesla Demographics 2024 by Age, Income, Gender, Home Value

@Drumheller Even if what you assert is true, the additional productivity of the worker with FSD will allow that person to outperform their peers. Most places incentivise those who perform, whether it be raises, bonuses, promotions, or other means. Let's not argue there is no value in increased productivity, ok?

 

[Jim Holder]

Troys current delivery estimate last I heard was under 410k.. and he tends to be very accurate this near to EOQ... so if production is >450k that'd be a massively large glaring gap between the two (largest gap ever)

Which can also mean Troy may be off this quarter by an equivalent glaring gap…and that’s okay too.

 

[elasalle]

Which can also mean Troy may be off this quarter by an equivalent glaring gap…and that’s okay too.

Troy’s tweet in reply to Tesla’s 6M says he might need to revise his estimates

Link? If you want it don’t be lazy- go search for it on titter

Cheers!!

 

[Jim Holder]

Troy’s tweet in reply to Tesla’s 6M says he might need to revise his estimates

Link? If you want it don’t be lazy- go search for it on titter

Cheers!!

He already addressed it on the previous page:

“If we subtract that from 6 million, we get 424,673 production so far in Q1.”

 

[Musskiah]

Has Tesla ever said that they will offer full autonomy outside of a company owned or company operated fleet ? I think what you are describing - privately owned vehicles in full autonomous mode in private operation - is decades away. Sure an individual can choose to sleep while on FSD but I don’t think Tesla is going to market their product as such or accept liability for such operation anytime soon. FSD in private hands will require supervision for a very long time.
Full autonomy will happen only in the context of Tesla robotaxis or private vehicles that are temporarily part of the robotaxi fleet. I see zero chance of Tesla marketing a fully autonomous solution to Tesla buyers in the 2026-2027 timeframe even if they have already started rolling out robotaxis.

However that said, a supervised solution with rare interventions is still easily worth $100 - $200 a month for a lot of people. It will drive a lot of buying decisions.

If they let me watch a movie or do work without the wheel or eye-tracking nag now on the highway, I would take the responsibility on tomorrow. Disengagements have been so rare on the highway for so long, the reason FSD is dangerous is because of the nags. Otherwise, it's safe on the highway to do these tasks. I never said "take a nap" on purpose. I agree that might be next decade.

 

[Ellec]

https://twitter.com/x/status/1773816974138647012

Maybe it's Tesla related? Whatever it is should be interesting.

 

[EQC_]

This is completely wrong. Do you REALLY think every single car company on the planet is wasting their time? That despite spending billion over decades on advertising, nobody thought to look into its effectiveness?

Not exactly wasting...but it's okay to question the efficiency of the typical, decades-old advertising we've all seen.

In a way, though, I think the traditional auto manufacturers sortof dug themselves into a hole that now requires advertising. It seems like they were all so focused on competing with each other on variety, producing a wide array of very similar models and trims to try to appeal to every niche of customer, that they sortof broke the basic goals of economies of scale.

So, they are now stuck producing a whole bunch of tweaks on very similar products, and the only way to be profitiable is to somehow use advertising to convince a few extra buyers that the Toyota RAV4 TRD Off-Road package is what they want, and not the similarly adventure-ish trim of the Honda CR-V or Subaru Forester or Ford Escape. And, at the same time, that RAV4 customer needs to know that they probably don't want the other Toyota SUV/Crossover choices...because Toyota also offers the Corolla Cross, Venza, Highlander, Grand Highlander, Land Cruiser, and Sequoia (along with many trims of each of those) to appeal to *other* niche customers.

I suspect that this inefficient production of a huge array of choices now requires constant advertising just to attempt to explain all of those choices.

It's a pretty stark contrast to Tesla producing huge numbers of a few models, and only a few options available on each, to keep manufacturing simple.

Spoiler: Example of niche/inefficient production on GM pickup trucks.

Think about, for example: General Motors full-sized 1/2 ton trucks.

There's the GMC Sierra and the Chevy SIlverado. They are nearly-identical twins produced at the same factory. But, both have to be advertised separately...and sometimes during the same commercial break! So, they compete against each other, and against Ford and Dodge and any other truck on the road.

Then, the GMC and Chevy trucks can be had in standard cab, double cab, or crew cab configurations. And the bed can be short or long. There's 2WD and 4WD. There's even different options on how many functions you want on your multi-function tailgate.

And within all that, there are multiple trims, defined by a whole bunch of changed parts -- functional parts like different engines and transmissions and suspension -- completely cosmetic parts like different grills, chrome accents, and bumpers -- and different interior parts like different seats, interior surfaces, infotainment screen sizes on different dashboards, etc.

And of course, the exterior of the truck needs stickers and badges so people know you got the one with the big engine or the off-road package or whatever. So, the factory will be putting that "5.0L V8 32Valve DOHC" badge on both sides and maybe the tailgate too.

If one "product" -- a half-ton GM truck -- has so many options, it really does seem like constant and frequent advertising might be needed, not just to say why you should choose this truck over a Ford or a Dodge, but to try to tell each and every customer which of the many many configurations should be ideal for their lifestyle/image/budget/etc.

 

[Gigapress]

The summary of this is simple: A long term bull is now realizing Tesla's brand value advantage isn't given it the extra margin cushion it once did, which has long-term implications to its automotive valuation.

He probably didn't expect to rely on valuation Tesla's AI to product potential for stock appreciation previously, which now everyone has pivoted to.

You can exclude me from "everyone". I think automotive and grid batteries alone justify at least $1T market cap. I also would divest most of my TSLA holdings if I thought everything depended on major AI success, because it's less certain in my opinion.

On the automotive side I think Tesla's design, manufacturing, distribution and service advantages are still undervalued. Institutional analysts by and large still haven't demonstrated that they understand how big Tesla's lead is. It's 2024 and Tesla has demonstrated they can scale up while still no one else even has definitively shown they can make competitive EVs with positive gross margin. $5k profit (net present value including supercharging and services) on 20 million cars would be $100B per year profit. If that comes to fruition then $600B market cap is unlikely to persist.

Energy is less proven, but is looking quite bright and the TAM is enormous.

I will say, I think now isn't the best time to evaluate where Tesla is compared to other automakers. All EV demand is getting wrecked, it isn't Tesla specific. The fact is Tesla still has better margins on EVs than anyone else. Them having to using advertising to move cars in this market doesn't mean they aren't superior as an EV brand.
...

I agree with this part

 

[WattsHappening]

No new info in Tom Nash's latest video that we here don't already know. But it reiterates the long term HODL thesis perfectly. He is very excited to be buying TSLA right now, as he sees the current negative sentiment as a great indicator of it being a great time to be buying right now.

Dan Ives is calling for a 3x in SP over the next couple of years. Tom is calling for 8x to $1,420 in 3-4 years. Add in Cathie Wood, Brad Gerstner, Ron Baron, etc., and it's clear to me that it's just a matter of being patient. I just wish I had more available funds to deploy right now.

 

[Thekiwi]

https://twitter.com/x/status/1773816974138647012

Maybe it's Tesla related? Whatever it is should be interesting.

He did say last week that he was currently driving his own trimotor cyberbeast and review would be in coming weeks.

 

[Thekiwi]

Breaking news: Microsoft & OpenAI plan to build a $100 Billion Supercomputer for AI.

I’m hoping it’s required for supporting cloud based inference for hundreds of millions of users and not required for just training, as that would be out of the reach of all but a few companies to compete against.

Edit: yes it is!

Review just dropped:

 

[unk45]

This is completely wrong. Do you REALLY think every single car company on the planet is wasting their time? That despite spending billion over decades on advertising, nobody thought to look into its effectiveness?

I even pointed out two which distinctly have not, Ferrari and Porsche. There are a number fo the examples that are not distributed in North America.
Since the famous John Wanamaker said: "I know I waste at least half the money I spend on Advertising. The problem is that I don't know which half", people have regular asked questions about effectiveness.

Since you are positive I am wrong then you might explain why so many companies and people are still using coal to generate power and heat. Just because something si demonstrably factually incorrect does not mean that many people manage to be convinced that is is really a good thing. Just think of all the people with vested interests to promote coal, oil etc.

General Advertising is the same. Once it was the only way, before the internet, before direct marketing. Back then there was newspaper, then radio the Television. Television generated the advertising business as it still exists. General Advertising is the ICE equivalent. "Everyone"
knows it's what to do because 'everyone does it'. That is your argument.

To all of you who are denying these posts, I suggest you consider how much communication and daily discourse have changed since, 1993 when ICANN was formed and the internet began to take shape. in the 21 years since then all of Marketing and Advertising have totally changed. Anybody doing, in 2024, what they did in 1992 is doomed to mediocrity or failure.
Those who stick to ICE are very similar to those who stick to General Advertising. Some still seem robust but their direction is negative.

I'm genuinely sorry for those of us who fail to understand this. By not understanding you also cannot understand Google (not Alphabet), Amazon, Tesla or Apple. Use of advertising by all of those is highly selective and focussed on very specific goals. The famous Apple Super Bowl ad is actually an example of highly selective very specifc goals.

Just think about 1993 vs 2024 and you'll all, hopefully, begin to understand just how huge the changes have been. Frankly I was incredibly lucky to have been in the midst when 1193 happened so was lucky enough to be helping to find new tools. Had I not had that incredible luck I would not have found AAPL, TSLA and I'd probably never have been in the middle of the Great Migration from General Advertising to Targeting and Direct Response.

Just like ICE more people accept the past of Advertsing than see the future and even the present. That is sad.

Now I'm finished on this subject. It feels rather like trying to teach a new language to people who thing their single tongue should be the only one for the world. Since i live in a multilingual world I don't have the luxury to be ignoring new realities.

 

[Chunky Jr.]

Impressive ramp, but it looks like it has mostly plateaued...

https://twitter.com/x/status/1773848700038586420

 

[heltok]

 

[MC3OZ]

I get different results for the 6 millionth car calculation if I subtract all cars produced in all past quarters instead of starting with the 5 millionth car they reported.

There is a public spreadsheet here that shows Tesla's production history in the past:

Tesla Production & Delivery History, created by @TroyTeslike, last updated on 19 Apr 2024

Deliveries 1 Canada,Canada,Canada,China,China,China,Europe,Europe,Europe,ROW Deliveries,Canada,China,Europe,ROW,USA,Total,Deliveries,Model 3,Model S/X,Model Y,Model 3,Model S/X,Model Y,Model 3,Model S/X,Model Y,Model 3 Year,Canada,China,Europe,ROW,USA,Total,Year,Canada,Model 3,Canada,Model S/X,C...

docs.google.com

It shows 5,572,978 units produced until the end of 2023 plus 2,349 Roadster Original equals 5,575,327 entering Q1 2024. If we subtract that from 6 million, we get 424,673 production so far in Q1.

It was recently reported that Giga Shanghai now works 5 days a week instead of 6.5 days. See the news article here. I think Giga Berlin is also 5 days. Giga Texas Model Y production is probably 5 days too.

Austin Model Y production is 5 days per week and has been at least since the start of Cybertruck production.

What apparently happened was experienced staff from Model Y production were allocated to Cybertruck production, and one Model Y shift may have been dropped.

For a long time there has been a trend of cars piling up towards the end of the week and logistics catching up over the weekend.

What we can safely say is at the end of Q1 2024 combined Model Y and Cybertruck production seems higher than any previous level of Austin production.

The key to still higher levels of production seems to be the completion of the multilevel staff carpark and the hiring of more staff. They may also need more car carriers, and the westside outbound logistics is a work in progress.

It is hard to account for any shutdowns and production ramps, partially because we were not explicitly tracking them. Your method seems like the best we can do.,

 

[DarkandStormy]

Impressive ramp, but it looks like it has mostly plateaued...

https://twitter.com/x/status/1773848700038586420

Plateaued with Berlin and Austin nowhere near capacity.