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

[capster]

Maybe the Robotaxi is the van not the M2. You heard it here first.

Then I’m doubly glad I’ve got my Cybertruck already!

A CT in the garage is worth two in the bush.

 

[capster]

So DID Tesla scrap their cheap model? I get there’s a robotaxi reveal, but isn’t this 2 different things?

No, I wouldn’t think so. Even if Tesla wanted to devote all their next gen production to robotaxis in one market, there will be other markets where robotaxis aren’t yet legal. I’d think Tesla would want to sell the next gen vehicles into the latter markets on the assumption that some owners would place them in the Tesla Network when robotaxis became legal in that market.

edit: The mind does boggle at the possibilities afforded Tesla by FSD and robotaxis.

 

[skybluecgreen]

Does anyone know what the situation is with the Tesla and CATL partnership to make batteries in the US? This tweet by Troy is concerning. I know he gets a lot of criticism but he has been the best on the P&D #s and is generally credible I think:

https://twitter.com/x/status/1776663285250576661

 

[2daMoon]

There's nothing woke up the physics of what's happening to our planet. The data is there. He needs to go back to "first principles" thinking.

Yes.

But, Elon was commenting not on the concept of environmentalism, but, on the "movement" which is more and more based upon virtue signaling, petty influence, power, and plenty of things along those lines that actually get in the way of saving the planet.

The people he is talking about are completely unfamiliar with first principles thinking. Possibly even unfamiliar with basic principles.


Elon, on the other hand, will work toward a goal taking into account that it might take years, or even decades to accomplish. He will have in the equation that fossil fuel will be part of the transition and demonizing it could lead to catastrophe if it were outlawed today.
Things like that are what need to happen, and many of those most vocal in the "movement" are more about ego and instant gratification than they are about working the bigger picture.

 

[insaneoctane]

...Anyway, the story appears correct - Tesla is prioritizing RT.

Ummmm, you say prioritize, but the Reuters article literally says "Tesla has canceled the long-promised inexpensive car that investors have been counting on"

 

[WattsHappening]

I think this is ok to post, even though politics plays a big role in this episode (I promise to not get political). Autoline interviews Mike Murphy, who was previously a GOP operative/pollster, but now is a EV evangelist. He discusses the role politics plays in EVs and provides some recommendations on how to get past the 'red wall.' I found the discussion very enlightening.

I find the polling data pretty interesting although not surprising.

And there is a short segment and polling data on Elon. What strikes me is how aligned the polling data is with Elon's recent behavior. Murphy suggests that Republicans as a group are not favorable towards EVs (we already know this), but the way to make inroads is to (1) have them try EVs (as we know, butts in seats...), and (2) don't focus on climate as a reason to drive EVs. One could argue that Elon's recent perceived shift to the right politically as well as him downplaying climate change are both beneficial to selling Teslas to Republicans en masse. Add the Cybertruck, which also might make a dent into the pickup crowd (dominated by Republicans).

Again, I'm not suggesting he's right or wrong. Just fascinating to me. I would not be surprised in the least to learn in the future that this is one big 4D chess move by Elon.

Good watch.

 

[Usain]

There are two competing visions of a sustainable future.

The first is built on the idea that the only way to survive as a species is to limit growth, cut consumption, and live austerely.

The second is built on the idea that technological innovation can enable both sustainability and growth.

Tesla stands for the second one.

I don't see these two ideas as competing. We probably need some measure of both austerity and technological innovation.

As hard as technological innovation is, austerity is even harder.

Frankly, when it comes to tackling the climate crisis, Tesla is doing the easy part.

 

[MD70]

Does anyone know what the situation is with the Tesla and CATL partnership to make batteries in the US? This tweet by Troy is concerning. I know he gets a lot of criticism but he has been the best on the P&D #s and is generally credible I think:

https://twitter.com/x/status/1776663285250576661

Tesla was going to build a plant with CATL but it wouldn’t have received the battery subsidy so instead it’s bought “spare” equipment from CATL to make the batteries.
The number produced will not be enough for a model 2.

I have not heard any other news about tesla building or acquiring battery’s from companies which will meet the subsidy criteria quickly.

So for this reason I suspect the robotaxi/ model 2 is many years away from mass production.

Tesla to Open US Battery Plant With Equipment From China’s CATL

Tesla Inc. will expand battery production in Nevada, opening a small facility using idle equipment from China’s Contemporary Amperex Technology Co. Ltd., according to people familiar with the matter.

www.bloomberg.com

 

[Usain]

To summarize this far, we have these unknowns for RT:

1) door closing (probably an easy solve);
2) automated charging (more difficult);
3) liability and regulatory issues

I’m sure more items are out there, so my suspicion is that whatever we see on 8/8 will be quite a ways off from deployment.

If it’s a 2 seater that is going to limit its use case… ie, going to the airport with family and luggage.

None of those are hard to solve. Not hard at all.

And you don't need to solve any of them right away. Waymo seems to handle or ignore all three of those challenges and it is deployed today.

So none of that stuff means we are a ways off from deployment.

 

[insaneoctane]

If investors have invested "well over $10B" in capital expenditure for FSD, but FSD isn't priced into the current SP...what happens next?

https://twitter.com/x/status/1776457066863034752

 

[CHGolferJim]

I think this is ok to post, even though politics plays a big role in this episode (I promise to not get political). Autoline interviews Mike Murphy, who was previously a GOP operative/pollster, but now is a EV evangelist. He discusses the role politics plays in EVs and provides some recommendations on how to get past the 'red wall.' I found the discussion very enlightening.

I find the polling data pretty interesting although not surprising.

And there is a short segment and polling data on Elon. What strikes me is how aligned the polling data is with Elon's recent behavior. Murphy suggests that Republicans as a group are not favorable towards EVs (we already know this), but the way to make inroads is to (1) have them try EVs (as we know, butts in seats...), and (2) don't focus on climate as a reason to drive EVs. One could argue that Elon's recent perceived shift to the right politically as well as him downplaying climate change are both beneficial to selling Teslas to Republicans en masse. Add the Cybertruck, which also might make a dent into the pickup crowd (dominated by Republicans).

Again, I'm not suggesting he's right or wrong. Just fascinating to me. I would not be surprised in the least to learn in the future that this is one big 4D chess move by Elon.

Good watch.

Hacks on Tap podcast

 

[Usain]

Yes.

But, Elon was commenting not on the concept of environmentalism, but, on the "movement" which is more and more based upon virtue signaling, petty influence, power, and plenty of things along those lines that actually get in the way of saving the planet.

The people he is talking about are completely unfamiliar with first principles thinking. Possibly even unfamiliar with basic principles.


Elon, on the other hand, will work toward a goal taking into account that it might take years, or even decades to accomplish. He will have in the equation that fossil fuel will be part of the transition and demonizing it could lead to catastrophe if it were outlawed today.
Things like that are what need to happen, and many of those most vocal in the "movement" are more about ego and instant gratification than they are about working the bigger picture.

Sounds like a classic straw man argument to me.

 

[2daMoon]

Sounds like a classic straw man argument to me.

Well, I suppose that could be what Elon is referring to.

People carrying the "environment" flag and twisting the movement to achieve their own ends, which delays the achievement of the goal.

 

[Usain]

Well, I suppose that could be what Elon is referring to.

People carrying the "environment" flag and twisting the movement to achieve their own ends, which delays the achievement of the goal.

I question whether that is happening in any significant way.

I used to be very active in the environmental movement. I didn't see much selfishness. It was mostly quite the opposite. And I never met anyone who held human extinctionist views.

I get the impression that human extinctionists are extremely rare, which is what you would expect with such a radical viewpoint.

 

[AMN]

This is the first time we have an official confirmation that FSD is actually shadowing the driver. I am pretty confident it wasn't the case until very recently. Great stuff!

 

[Zaddy Daddy]

An interesting study based on ballpark guesstimations. This is sincere appreciation for the effort, not a dig.

As there have been numbers published by Tesla for accident frequency across the spectrum from Human-only through to FSD-Beta, it wouldn't be all that difficult to work through the same scenario based on those known factors. We'll likely see new data on FSD-SuperV accident rates later this year or early next.

The software for Tesla cars using Autopilot, Advanced Autopilot, and while using FSD offers data that could paint a picture which might provide greater accuracy for calculating an outcome for Robotaxi, adding in some fudge-factor for there being no potential for human intervention.

Likewise, there may be similar data found with a careful search that offers more accurate cost info.

It would be nice to see this study further refined.

Thanks for the useful thought experiment.

3 things:
(1) Autopilot (not FSD) with human supervision had nearly a 10x lower rate [1 accident every 3-4 million miles depending on the Q] of accident than a human alone [1 accident every just over 400k miles if memory serves], for the last 5 years running.
(2) Disengagement does not equal accident
(3) The average annual revenue generated by each robotaxi exceeds $100k according to many models, so 10k robotaxis will generate $1B+ in revenue. Your presumption is that 100k robotaxis earn $1B a year, you are off by a factor of 10.

If you run the numbers again, you will find the "breakeven" is in the single digit thousands of miles. This is precisely why once we get over 1000 miles without critical disengagements, we are getting very close. My suspicion is that the alpha testers who are months ahead of us have seen evidence that 12.x.x has proven capable of this, and so they are ready to go all in on Robotaxi. My suspicion is also that they have models much like the one you have shared, and those models reveal that they can handle the costs associated with the claims.

Supervised accident rate has no strong correlation on unsupervised accident rate. Critical disengagement rate is a better proxy.

As I stated the absolute figures don't matter in my model as all parameters scale with miles driven. It's about cost / revenue ratios. There is no "breakeven" in the thousands of miles per critical disengagement rate, that's simply way too low as the costs of an accident are simply too high.

Hi, Zaddy Daddy --

Interesting work! I recognize this is all very back of the envelope, but had a couple of quick questions:

1: Operating costs of $0.2 per mile.

I assume "operating costs" doesn't include "capital costs"? If so, shouldn't that be at least $0.1/mile? ($50k car driven for 500k miles, for instance.)

2: I think the RT runs into real political problems is the accident rate > human, and even if it's > non-impaired human. My research here is limited to a single Google search, which pops up with this quote:

" For every 1000 miles you drive, your chances of getting into a car accident are 1 in 366. "

. which suggests 366k miles/accident, which sounds vaguely plausible, say one every ten years or so.

Basically, I think you need to assume accident levels are so low that they don't really impact your financial modelling.

Yours,
RP

I think you cost estimates for accidents are way low. A minor curbing on my S cost me and the insurance company over $3,500. Here in Florida the lawyers are having a field day with injuries often costing close to a million dollars. Then we have hurricanes running rates even higher. The trail lawyers are probably drooling at the thought of robotaxi.
Also, I saw someone posting operating costs at .02 per mile. The best I’ve seen for efficiency is 4 miles per Kw .
There aren’t many places with electricity at .08 per Kw. How about other expenses?

I don't know about your state, but California is particularly litigious....

View attachment 1036183

$5K seems low.....

Costs could definitely be too low. I WAGed based on California, where electricity costs alone will end up being like $0.1 per mile. Then you have to amortize car purchase, among other expenses. Other states will be cheaper in some sense. I don't think the change in operating costs will affect the analysis too much.

Accident costs could be much higher, that's why I looked at the higher ($10,000 per accident) as well.

Tesla would never launch a service that had an accident every 10,000 miles. That’s way worse than the average driver.

The TLDR is yes, cost won't be the impeding factor, but what you said likely will. It will still have to get near 100k / critical disengagment for public to accept it.

 

[Quesder]

Here is a hypothetical question: Could Model 3 rear-wheel drive price drop to the $25000-ish, and no need to create new "$25000" car?
I bought Model Y in Dec 2023, at $49990, and I even drove 82 miles to Stockton to pick up. And I had to file tax carefully to get $7500 credit.

Now since Q1 production is much higher than delivery, TESLA has to drop 3/Y price by $4000 to $5000 to clear inventory.
All-wheel Y is now $44990, real-wheel Y $39470. Rear-wheel 3 $36000.
If you deduct the Federal tax credit $7500, then Y is $31970 and 3 is $28500 (although 3 may not qualify).

Now the gap to $25000 seems worth of a stretch, especially since you can imagine how much performance and features could be cut-off in a $25000 car.

Moreover, if Gen 3 production process is really that good, production cost could be down and I believe another $4000 price drop is very possible.
In that case, why bother with the capital expense to develop and build a $25000 car production line? The only advantage for some buyers are now
just the smaller size of the car, if that is what they want.

That said, I am still worrying about TESLA delivery number for Q2. They must figure out a way to bring the number back to 450,000 level.

 

[2daMoon]

I question whether that is happening in any significant way.

I used to be very active in the environmental movement. I didn't see much selfishness. It was mostly quite the opposite. And I never met anyone who held human extinctionist views.

I get the impression that human extincionists are extremely rare, which is what you would expect with such a radical viewpoint.

Well, I took the "extinctionist" comment as sarcasm, to emphasize his point. Though he may actually see where people might die unnecessarily due to some path someone has charted.

With this possibility in mind, he may be frustrated with people taking action who haven't worked out how the many challenges have to come together, carefully, over time, to culminate in reaching the goal with the least amount of negative impact to humanity.

Such negative impact might come from making rash decisions/legislation/etc. or, by getting gung-ho on accomplishing some part before another key thing has been achieved which that part's success depends upon.

Maybe, from his point of view he can see how things need to be strategically orchestrated. Like, we can't just turn off the fossil fuel tap while we still need it.

This statement may be him wanting to employ saving the planet tactics so as to avoid taking two steps forward only to have to take one step backward before continuing.

 

[skybluecgreen]

Tesla was going to build a plant with CATL but it wouldn’t have received the battery subsidy so instead it’s bought “spare” equipment from CATL to make the batteries.
The number produced will not be enough for a model 2.

I have not heard any other news about tesla building or acquiring battery’s from companies which will meet the subsidy criteria quickly.

So for this reason I suspect the robotaxi/ model 2 is many years away from mass production.

Tesla to Open US Battery Plant With Equipment From China’s CATL

Tesla Inc. will expand battery production in Nevada, opening a small facility using idle equipment from China’s Contemporary Amperex Technology Co. Ltd., according to people familiar with the matter.

www.bloomberg.com

Thanks for the info. I hope they can find enough batteries for the 'model 2' from somewhere to keep the timeline intact for volume production in 2026 (or 2027.) I feel that Tesla will profit from the 25k car sooner than from robotaxis. I hope the plan is to make both simultaneously.

 

[cliff harris]

I dont understand why there are concerns that there are insufficient batteries for a model 2? Its not like cheaper EVs than the model 3 have not been built by other companies. The MG4 exists, The Nissan Leaf Exists, there is a cheap peugeot EV. How are these other companies getting hold of batteries to make cheap compact EVs but Tesla cannot?
Also AFAIK Tesla are way ahead of any other car company when it comes to having control over their own battery supply chain, including giga Nevada, but also the 4680 line.
I know, I know... everyone is disappointed at the run-rate of 4680s right now, but we were all unhappy about FSD progress until recently. These things change fast!

As an investor, I'd like Tesla to announce and start making compact model 2s as soon as they can, EVEN if they are battery constrained to only make 100k a year. The fact that an affordable, small Tesla compact car exists will mean a lot of people make plans to get one as soon as the supply is available. Obviously from a mission POV, all EV sales are good, but as an investor I'd rather people put a reservation in for a M2 than an MG4 or Leaf .

Also, a small compact car is a new segment for Tesla. Not a bad idea to get a vehicle out there in customers hands, even in (relatively) small numbers so it can be perfected before it gets made in the millions?

I would not be surprised to see robotaxi AND model 2 announced and demonstrated on the 8th.