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

[scaesare]

https://twitter.com/x/status/1262530589506273280

Per usual, reading comprehension seems to be an issue. Didn't want to include the part where I said, "Or the CEO misunderstood the economics of his own product." Hmmm, wonder why?

Once again, your take is that the only possible explanation is CEO incompetence. Not... you know, that another approach might make better sense in light of circumstances four years later.

Oh that's right... successful leaders NEVER change their approach/tactics as time marches on and the landscape changes... much better to dig your heels in and carry on regardless...

 

[scaesare]

The used car salesman tactic of raising prices didn't work. They must not have moved many units this month so far.

Anyway, RIP margins.

And the news item you doubled down on your incorrect understanding of (before hand-waving your wrong stance away), where we havce an example of Tesla reducing it's COGS in manufacturing the 3? And who knows how many other engineering/production/manufacturing improvements we don't know abuout.

So... given that margin is affected by COGS as well as price, what is your basis for claiming margins are dead?

 

[wtlloyd]

According to this, Tesla is already stockpiling cells from LG. I think they are 2170s?

Tesla stockpiled batteries from LG Energy Solution in Q1: report

Tesla reportedly bought such a large volume of cells from LG Energy Solution that the supplier's sales increased 30% quarter-over-quarter.

www.teslarati.com

I think there might be two reasons for the delays in building out the Semi factory:
1. Elon is trying to save cash in the short term.
2. Tesla doesn't yet have enough cells to keep the Semi factory from becoming a cash furnace. But that problem will be solved soon.

Both good but I believe the real reason is that they are entering the marketplace of durable heavy transport for the first time. The Semi is using a drive train based on existing systems, but with a load and durability demand that is multiples of what those technologies have been called on. Google says that typical Class 8 use is 45,000 miles per year, and that 750,000 miles is the average lifespan (I assume that means major component replacement if it's desired to continue service).
I think they are slow-walking production for multiple reasons, and that proving durability can't be rushed.

 

[scaesare]

This was a reply to this post.

https://twitter.com/x/status/1781393490938560658

Well looky there.. what's being used as evidence of a disaster in the making by The Usual Suspects is actually indication of Tesla reducing their COGS and improving the product.

Imagine that....

 

[jerry33]

What is Tesla's Mars business plan?

1. Get minimum 1 M people there. (30 years)
2. Have a sustainable economy. (50 years)
3. Bring water from Titan. (100 years)
4. Terraforming. (300 years)

 

[GhostSkater]

On point

https://twitter.com/x/status/1782436262881661053

 

[insaneoctane]

In my case, FSD drove a little TOO carefully. I got rear ended this weekend, while waiting for FSD 12.3.4 to decide (in its hesitating, on again off again way) to make a right turn into traffic. The car behind me probably saw my car pull partially into traffic (which it did), then slow/stop (which it did) because of cars in the next lane (not the lane I was entering). My best guess is, the other driver likely looked left for incoming cars as they accelerated right into my back bumper, on the assumption that I was still in motion. Ouch. Will need a new liftgate and new plastic bumper - it's broken and I can see the big square looking metal pipe thing underneath that presumably actually absorbs the bigger shocks. (Low speed: no injuries at all thankfully).
FSD is really safe, but the over-abundance of caution is unnatural (to all but Driving School students) and can cause problems.
And before naysayers chime in: Yes, I am responsible for the behavior of the car during FSD, and I was paying attention and very on edge about its indecisive behavior. I had already goosed the accelerator once earlier on that drive, due to impatience in entering a clear lane that had partial view obstruction. And yes, the person behind me, by accelerating without looking, is responsible for rear-ending me. So in terms of actual responsibility, it lies with the humans. I want to also make the point, made to me very clearly this weekend, that indecision shown by FSD at times can also be unsafe.
I am not sure if the hit itself disengaged FSD, or if my likely reaction of hitting the brake disengaged it, but I can at least hope my chagrin (my beautiful Y is now no longer pristine) and hassle gave Tesla at least one useful data point.
Yes, still a fan of FSD, but I will choose much more carefully when I engage it. It had given me a great 10 mile drive on Friday, and I was feeling confident in it from that, but my Saturday was ... not so joyous. I'm hoping my beloved blue dragon will be healed soon.

Sorry this happened to you. I hope Tesla analyzes the data to see FSDs contribution to this accident. It would be too easy to look at the "accident while on FSD" and say, "rear ended...that's not our fault". Clearly there is something to be learned here if they are interested.

 

[jerry33]

Well that could be your problem. You aren't going to find Tesla's R&D expense in a Toyota report.

At least, not the public one.

 

[FreqFlyer]

Both good but I believe the real reason is that they are entering the marketplace of durable heavy transport for the first time. The Semi is using a drive train based on existing systems, but with a load and durability demand that is multiples of what those technologies have been called on. Google says that typical Class 8 use is 45,000 miles per year, and that 750,000 miles is the average lifespan (I assume that means major component replacement if it's desired to continue service).
I think they are slow-walking production for multiple reasons, and that proving durability can't be rushed.

Why 2170s and not 4680s?

 

[Ellec]

On point

https://twitter.com/x/status/1782436262881661053

Tesla should take part of the billions they get free from the ICE companies via credits and hire a top director and make world class adverts and just post them on X. Free advertising

 

[Buckminster]

I don't think anyone is denying the connections, nor the unstated plans for potentially converging the technologies of all Musk enterprises towards that goal. It is only that there are already other threads to discuss these things so as to avoid talking about them here.

Que @Buckminster in 3... 2... 1

SpaceX Mars Mission and Funding Discussion

 

[Zaddy Daddy]

If you feel so emotionally charged from my post

Nope. That’s projection.

 

[wtlloyd]

Why 2170s and not 4680s?

Random question?
I'd guess because they have a higher energy density and are already in production with additional lines forthcoming, right there in Sparks?

 

[EVWatcher]

1. Get minimum 1 M people there. (30 years)
2. Have a sustainable economy. (50 years)
3. Bring water from Titan. (100 years)
4. Terraforming. (300 years)

It’s important to recognize that none of those things are a business plan.

Somewhere in there mars will hopefully provide economic value that can be returned to earth.

That will likely come in the form of research in the early days.

But more importantly as this is an investor forum knowing what a business plan is - and what isn’t one - is pretty important to understanding a business.

 

[GhostSkater]

https://twitter.com/x/status/1782444120838963257

 

[Nathan]

Elon can tweet and it reaches hundreds of millions of eyes, via direct followers, retweets, then the press reporting on it, which would cost tens of million in marketing/advertising to achieve. X is Tesla's marketing arm now.

Yeah, but it's a double edged sword because Elon making news on X doesn't necessarily lead to more people understanding the advantages of electric vehicles. And sometimes as I have reported, he turns off the people who are most interested in electric cars with his political postings. There is obviously a need for education as so many are ignorant about even the basics . What the best methods are for promoting that education I am not certain.

 

[unk45]

Hi, Knightshade --

Note that I am not accusing Tesla of accounting fraud or any wrongdoing at all and resent the implication that I am. I'm surprised to hear this from you, because I think you have high standards for accuracy. I may have unintentionally accused Tesla of fraud; if so, could you provide a quote so that I can properly amend and apologize?

Some auto companies have a separate line item for R&D; some, including Tesla, do not. I don't think either approach is fraudulent. GAAP has rules but still requires significant management judgement. Tesla is perhaps unique among auto manufacturers in conducting (almost?) all of the warranty work in house. I've never inquired as to how exactly Tesla accounts for this because I don't think it all that important, but a quick look at the 10-K shows:

"Services and other revenue consists of sales of used vehicles, non-warranty after-sales vehicle services, body shop and parts, paid Supercharging, vehicle insurance revenue and retail merchandise. "

"Costs of services and other revenue includes cost of used vehicles including refurbishment costs, costs associated with providing non-warranty after-sales services, costs associated with our body shops and part sales, costs of paid Supercharging, costs to provide vehicle insurance and costs for retail merchandise."

I didn't see much more detail, but didn't look too hard because I don't care that much, I'm more than willing to be corrected by those more diligent than I am. My guess is that what this all means is that warranty work is charged to reserves at cost.

In general, though, P&S is a 30%-40% gross margin business. You'll note the wide range there! I'm going from memory and welcome correction. If you're a any other OEM, your warranty expense is going to include that dealership/independent mechanic GM. That doesn't seem to be the case for Tesla. There are two implications:

1: There are analytical difficulties in comparing T's warranty expense, and thus auto gross margins, with other OEMs, and
2: Providing warranty work at cost helps to explain the crap margins in the services and other segment, which is kind of where I came in.

Please let me know if I've misunderstood anything.

Yours,
RP

Only a slight few additional points. Poring over the fine print notes to financials for publicly held auto dealership groups will reveal, lo and behold!, warranty repair work is a major profit center. Look again and note that service income, where directly declared, is a high profit center too. That service income, BTW, when investigated closely turns out to be predominately service of in-warranty vehicles. Out fo warranty does have parts sales, but not so much service since most out of warranty service is normally done by independent dealers. Some such work is, BTW, done by independents for Tesla products too. Of course with electric vehicles it's nearly all repair rates than service, with the notable and lucrative exception of tires.

As usual I'm not giving sources for that. I've read many of these financial reports, but quoting them one by one is beyond my willingness.

 

[unk45]

Elon can tweet and it reaches hundreds of millions of eyes, via direct followers, retweets, then the press reporting on it, which would cost tens of million in marketing/advertising to achieve. X is Tesla's marketing arm now.

OTOH, they've just eliminated the referral program if reports are correct. What will replace it? Such are among the directly quantifiable promotional benefits, lacking one an evaluation of how many incremental sales that program has made.

 

[geometro]

Not sure why he posted this except it may be a preview of tmw… (it’s a recap of Autonomy Day, 2019; 30mins long):

https://twitter.com/x/status/1782418703759315220

 

[DarkandStormy]

And the news item you doubled down on your incorrect understanding of (before hand-waving your wrong stance away), where we havce an example of Tesla reducing it's COGS in manufacturing the 3? And who knows how many other engineering/production/manufacturing improvements we don't know abuout.

So... given that margin is affected by COGS as well as price, what is your basis for claiming margins are dead?

The last time he publicly spoke, the CFO said they were reaching the natural limit of reducing the COGS/unit.

Guess we will get more info tomorrow.