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The last earning call it was clearly stated Tesla was between growth phases. They still add billion every quarter to cash reserves. People losing it when the delivery numbers (a snapshot of 3 months) are down QoQ is myopic imo. I was here during the Model 3 ramp when they losing billions every quarter, those days are gone forever. There will be another growth phase, then another in between phase and so on.
-do people expect the next growth phase to be driven by Model 2 (whatever it's going to be called)? If so, when do you expect that to meaningful contribute to the company? Because at last check, they have no planned space for where to build it. The process has not started in Mexico. It has taken Tesla 2-3 years from groundbreaking on a new factory to actually seeing vehicles come off the line that amount to more than a few hundred a week. So, if history repeats itself, it doesn't look like there will be volume production of a Model 2 until 2027 and that's if they hurry up and start building the factory in the next few months (Mexico, Austin expansion, etc.).
-You want Tesla to have a growth multiple as a growth company, you can't have them declining YoY (you said QoQ, but it's YoY that's the big story). Q124 is likely to be the 4th or 5th straight quarter of EPS decline. That doesn't exactly line up with a growth company from an investor perspective.
-If cash is doing so well, why no stock buy back? Why did they sell $3bn in bonds in the 2nd half of 2023? Kind of an odd juxtaposition, imo.
I am a sucker who bought into the FSD story from day one. Now I see others who haven’t paid a dime for FSD supervised get it before me on much cheaper cars. Tesla is just forgetting about, us who supported them when the times were rough. Still no FSD supervised for the legacy Model S and. Should have put the money in TSLA instead of FSD.
I’m in the same boat. If Tesla wants to figure out what’s going on with sales, they need look no farther than their “ not a sales” department and the “promises” they make.
Those who argue that there has been large inventory buildup in some areas are correct, but ignore the Q1 logistics issues that stemmed in large part from the Suez canal effects. I am not an expert on shipping matters, at least a couple of us seem to be. From what I know the primary effects of the Suez Canal were two: 1. increase in shipping times between China/South East Asia and Europe and 2. Increase in price, resulting from decrease in supply of available ships. Those two also reflected lessened availability of RoRo in particular so had disproportionate effect on automotive shipments.
Those two factors had collateral impact also, reducing supply of parts and slowing finished goods production and shipping in other areas. Those in turn helped cause seemingly finished goods that were waiting for critical components in some cases and impacting negatively other shipping even outside the directly affected areas.
When considering also the shifting patterns of consumer sentiment in some markets purchasing preferences changed, in some important cases, diminished, so high inventories of some tings rose and others dropped.
Unquestionably Tesla did have unusually high supplies of some Model Y cars, low in others. During the quarter, for instance, I bought a new Model Y. My preferred color, inside and out and equipment were unavailable within 60 days. I compromised, many probably did not.
As Tesla matures, inventory imbalances will inevitably rise. They are beginning to appear as a direct function of 'unwinding The Wave' and vastly increased popularity.
Despite the moaning about inventory buildup, the combination of all these factors means that the "Traditional Tesla Build to Order" simply does not apply when they are dealing in millions of vehicles. So, an inventory of 30 days is NOT, repeat NOT a negative effect. It results directly and inevitably from the unwinding process.
We and the world were told 2024 would be a year of transition...and so it is. Notwithstanding the excellent work several people have done in forecasting Tesla sales and production, the business model itself is changing as Tesla matures, so for the moment @Troy and others were off for the quarter. They'll adapt to the revised business model.
Lastly, as Tesla goes through this transition we'll see seeming discrepancies in Model Y and Model 3 because those are high volume, built to plan vehicles. Building to plan saves huge expense. It also results in higher inventory levels as variants increase. That will appear for Cybertruck too, eventually. This transition, though is preparing for, above all, the new smaller vehicle(s), the factory changes, additions and new factories.
As we look forward we'll certainly see tesla inventories reported at 30-45 days as these processes evolve. When that happens, as Douglas Arms warned "DON'T PANIC!". Just remember that Tesla has a direct sales model so store inventory, shipping times, production efficiencies will all yield gradual increases in inventory levels.
Remember that other OEM's report sales when transferred to dealer, not end sale. Remember that the balance sheet and P&L for Tesla include the entire supply chain.
2024 is a frightening year in many ways. and is even more for those of us who were not paying attention when Tesla so clearly told us what was happening. The implications are inevitably delaying the high growth and high margins we have grown to regard as semi-divine principles. Key: watch Free Cash Flow. if Tesla manages positive cash flow in Q1 we'll know all is doing well. Inevitably Free Cash Flow will be lower because of supporting this business transition, but if it is still positive we know the total logistics planning and management is still functioning as designed.
The financials are the important part. The production and deliveries are just two metrics. Further, Tesla Energy shows the transition is happening there too, as both production changes new products and variants appear and new factories appear. Q1 did show TE with highest ever completions, but at a lower rate than last year. That too is transitional.
Tesla California sales in 2023 are a good metric for testing whether the CEO's political activism has caused mass left-wing aversion to the Tesla brand such that vehicle sales have been harmed.
Why this matters:
California's government provides some of the most comprehensive and detailed EV sales data of any regional market in the world
California is the most prominent left-leaning state in America
California is the leading EV market in America in terms of both total volume and EV market share, and since the very beginning it has been a leading indicator for EV growth trends elsewhere
California and SF Bay Area politics have been the specific target of much of Elon's political activism since 2020
Overall, Tesla has continued to maintain a dominant position in the California EV market in the last couple of years. Tesla's share of the general light-duty vehicle (LDV) market in California is now 13%. This all-time record for Tesla is an increase from 11.7% last year and it is second only to Toyota's 15.7%. Tesla accomplished this with a four-vehicle menu that leaves major gaps in the market unserved, such as pickup trucks, full-size SUVs, compact sedans and compact hatchbacks. In 2023, Tesla achieved 61% BEV market share by selling 230k out of 376k total BEVs with at least 200 miles of nominal range. Tesla outsold the next-best competitor, Chevrolet, by almost 12x. This is approximately the same ratio of Tesla to the 2nd-place BEV competitor that Tesla has enjoyed across the US as a whole for many years. Although 61% is down significantly from 73% from last year, Tesla still posted significant 8.2% growth statewide in 2022. Tesla's market share declined because everyone else grew faster.
California Energy Commission (2023). California Energy Commission Zero Emission Vehicle and Infrastructure Statistics. Data last updated [24 Jan 2024]. Retrieved [2 Apr 2024] from Zero Emission Vehicle and Infrastructure Statistics.
Tesla's decline in California market share may be disappointing but it is understandable. Both of the US factories, but especially Fremont, are close to maximum output for the S3XY models for the existing production lines. Also, the S3XY models are already so dominant in California that they may be close to their demand limits under current macroeconomic conditions. The Model Y and Model 3 were the #1 and #2 best-selling vehicles of any kind in California, by a wide margin. The Y sold slightly more than the RAV-4, CR-V, Rogue and Tucson combined. There still may be substantial room for this ceiling to grow over time, as awareness increases and the Supercharger network and service center network continue to expand.
Let's zoom out for context:
61% share is still double what it used to be before the Model 3 was introduced
Competitors emerged from the chip shortage in 2023 and thus were much less supply constrained than during the pandemic. The entire automotive industry had a glut of supply, prices dropped across the industry, and dealership inventories grew.
2017 saw a similarly large drop in CA BEV market share when S&X sales peaked and 3 was still in the beginning of Production Hell.
California is the leading state in the USA for selling compliance EVs at a loss, because California is a huge market with stringent regulatory requirements and it is the most lucrative automotive market in the nation. Tesla is selling into a tilted playing field because customers are subsidizing their losses with earnings from ICE and hybrid sales, but this situation won't last forever.
2023 was another weak year of growth for the overall automotive market in California. Overall LDV sales were 10% lower than in the peak years of 2015 through 2018.
California has a overall liberal and leftist population supermajority, but it's a big state with almost 40 million people living it it and it is politically, geographically, culturally, ethnically and economically diverse. The populous coastal counties that comprise the major urban areas are heavily left-leaning, whereas the rural counties are heavily right-leaning, and many other counties are somewhere in between.
In the leftist urban and coastal counties, Tesla did have a decline in their BEV market share from its peak in 2020. In 2023 alone, it declined from 74% to 61%. However, this decline was right in line with the overall trend for California in which Tesla's market share dropped from 73% to 61%. Also, Tesla still showed growth in these left-leaning counties. The only exception was San Mateo county just south of San Francisco and just north of Silicon Valley. San Mateo for some reason had sales collapse by 38% in 2023. I don't have any idea why this happened, but San Mateo is a fairly small market and it was heavily saturated with Teslas until 2022. Despite that lone outlier, overall in the most left-wing counties in California, Tesla actually grew their sales volume by 8.1%, which was almost exactly equal to the Tesla's statewide sales growth of 8.2%.
Even with wide variation in regional demographics, culture and politics, Tesla overall increased sales volume in California pretty evenly throughout the state. Tesla grew the same in woke, socialist metropolises, in liberal suburbs, and in MAGA Trumpland (which does exist in California). Tesla even grew sales by 5% in San Francisco county, which is the bluest county in the state, is the epicenter of the Twitter/X and OpenAI controversy, and has been directly accused by Elon of propagating a radical "woke mind virus" that will destroy civilization as we know it.
Unfortunately, Tesla grew sales in California with the help of large price reductions. However, Tesla also reduced prices by the same amount all across the US and similar amounts in all major EV markets around the world. Also, competitors cut prices on their EVs shortly after Tesla did, and inventory has been piling up at their dealerships. It's important to note that Tesla's online ordering and transparent pricing means that we know they were selling vehicles at the same prices throughout California.
All of this evidence casts major doubt on the belief that Elon's political activism has been the primary cause of growth slowdown and price reductions. It is questionable whether it even is a net factor at all. There has been no observed correlation between the political bias of a local market and Tesla's BEV market share. It appears that the broader tough market conditions have affected the whole EV market in the state and worldwide, with BYD the only other player looking decent in 2023. That being said, a lack of correlation doesn't necessarily mean there was no effect. The urban and coastal areas in California have many differences from the rural areas, so maybe Elon's antics were hurting demand in the metro areas but some other factors were tailwinds in these same areas. Still, the simpler and more likely explanation is that the politics did not have a majorly negative effect. Either way, end result is the same and the data shows no cause for alarm.
An important aspect of this post is how, for years, people have speculated upon the horrible effects Elon's antics have had on the stock price, the brand, the metrics defining the company, etc.,
and,
not a single one of those people ever put forth any effort to prove their theory by sorting through the facts and presenting support for their argument. Other than the most ambiguous attempts at correlation which failed to encompass a wide range of variables.
Thanks again @Gigapress for taking the time to show how there may be more to consider before jumping to a conclusion just because it would confirm one's bias, were it true.
Not that they will read it, or, should they read it, that it will change their feelings.
For those folks, please remember, facts don't care about your feelings.
I completely disagree. On the contrary, Uber’s financials are the best indicator that robotaxis would be wildly profitable. At their current scale they are running approximately at break even profitability. Tesla Network should be able to provide a superior customer experience while also reducing costs by about 2 to 4x relative to the combined costs for Uber and the drivers.
Key numbers from Uber’s 10-K for 2023:
$138B gross booking revenue (not including driver tips)
of which $37B went to Uber
and $101B to the Drivers (again, not including tips)
9.4B trips
$1B operating profit
$4.4B spent on sales and marketing (mostly promo discounts and incentives)
$3.2B spent on R&D (almost as much as Tesla’s $4.0B!)
I could not find any disclosure from Uber on their total payload miles, so I can only estimate average trip distance and average booking price per mile. However other sources estimate about $2-3/mile average. I think that’s pretty accurate. Right now in my local market (a suburb of Seattle) the app tells me a typical 7-mile trip is either $3/mile or $4/mile depending on whether I’m willing to wait longer for a car. This is normal for here but the Seattle area is probably pricier than the global average and it’s rush hour right now.
Estimates for net earnings for labor for drivers vary widely but $10/hr is on the low end of the range. This is after subtraction of all the expenses the driver pays for their vehicle. With approximately 40 mph average speed, this is around $0.25/mile for wages. Therefore, driver labor alone is probably at least 10% of the cost structure for Uber’s economic model, and more likely is closer to 20%. If Uber could keep that as revenue then, all else being equal, they’d have earned roughly $15-30B of profit last year. And they are still growing revenue fast.
But it doesn’t stop there. Many Uber drivers are bad at estimating their actual expenses, especially depreciation. Tesla vehicles have some of the lowest total cost of ownership on the market, and that gets better as the annual usage increases. Tesla’s robotaxi vehicle design in particular is designed to deliver the lowest cost of climate-controlled motor vehicle transport ever. The usage pattern will be more efficient than it is for private Tesla owners as well. Robotaxis will be driven gently, and the fleet average range per vehicle will likely be less than it is for current Teslas, because most of the vehicles will stay local and can drive themselves to charging spots during off-peak times. Gentle driving and reduced battery weight means the tires will last much longer. Also, frequent usage throughout the day means the energy cost of battery temperature conditioning and cabin air conditioning is less in proportion to total energy consumption. Additionally, safe driving and drastically lower collision rates should greatly improve insurance costs. The high usage rate also means the capital cost for the vehicle is less, because the interest / opportunity cost on the money sunk into the vehicle is amortized over greater amount of usage per unit of time. Overall, I think Tesla can reduce lifetime average per-mile vehicle expenses by about 50-70% compared to the average vehicle in the Uber fleet.
Tesla obviously is spending R&D vastly more effectively than Uber is. Uber burned 9% of their revenue on R&D with almost nothing to show for it.
Vertical integration would give Tesla further cost efficiency. They can use their own vehicles and their own servicing and charging infrastructure at cost. No profit margin going to someone else and almost zero transactions costs.
Tesla also should have superior economies of scale. With the ability to offer a better experience at lower prices, they can have greater fleet density. This means an higher ratio of payload miles to empty miles, less idle time, and more. Also the service and maintenance will be much more efficient at centralized, specialized facilities than it is for individual Uber drivers who are managing service and maintenance for a single vehicle.
If Tesla Network had provided those same 9.4 billion trips with robotaxis, they’d probably have earned at least $30 billion instead of $1B. 9.4B trips is a tiny portion of overall road transportation demand. This is why, if Tesla becomes the leading autonomous TaaS provider, they could scale to earning hundreds of billions of dollars per year.
This pending India Giga announcement, which seems to be moving at a glacial pace, is the only one that I think will move the stock in a meaningful way outside of FSD hitting 1000+ miles to critical DE.
Meanwhile, I am making up excuses to drive in shat weather on FSD 12.3.3 and my feeble mind gets blown constantly. With this state of FSD people still don't get it. In a month, I'll forget and will not wanna drive by myself.
It will get super-human with time now. Neuralink helps too. Just watch its first implant recipient talk about it. We live the scifi future now thanks to Elon.
Your choice - be a part of the old world or a part of the new one.
I am a sucker who bought into the FSD story from day one. Now I see others who haven’t paid a dime for FSD supervised get it before me on much cheaper cars. Tesla is just forgetting about, us who supported them when the times were rough. Still no FSD supervised for the legacy Model S and. Should have put the money in TSLA instead of FSD.
But seriously, did you really have your eyes wide shut back then? I mean, you had to know for starters that the company was likely to go boobies up when you bought that S. Never mind FSD, which btw you paid a whole lot less for it than later purchasers.
Most people who bought an early Tesla were intellectually aware that they’d likely just kissed all the purchase money away. And while hindsight can certainly make you regret a lit of things, most people also were intellectually aware their investment in TSLA likely was throwing money in a fire. And for years it was.
I get it. But so far nobody has ‘FSD’. Everyone has some incomplete version of it. Since I paid about half of current pricing, perhaps I’m only entitled to half functionality of the final product at current pricing? Or maybe I’m only entitled to the first version of it, or did I buy when they started the second version of FSD? I know I paid way before this 3rd or is it the 4th remake Tesla is on?
Point being. Let it go. Be happy with the years you’ve had driving emissions free. And fun driving it has been, no? Be content in the knowledge your money helped keep the company afloat and that they didn’t waste it but put it to good use. Be proud of that and don’t let hindsight and regret rule your head. They are ugly bedfellows that want to destroy happiness.
But Tesla at current valuation is doing fantastically for a car company. Tesla as of today’s close is worth 10 Fords, 10 General Motors, or five of each. Tesla today is worth more then Toyota, Ford, General Morors, Rivian, Lucid, and 313 Fiskers all combined.
But Tesla at current valuation is doing fantastically for a car company. Tesla as of today’s close is worth 10 Fords, 10 General Motors, or five of each. Tesla today is worth more then Toyota, Ford, General Morors, Rivian, Lucid, and 313 Fiskers all combined.
This pending India Giga announcement, which seems to be moving at a glacial pace, is the only one that I think will move the stock in a meaningful way outside of FSD hitting 1000+ miles to critical DE.
Excuse me while I change clothes now covered in coffee spit.
