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

[hobbes]

China to get FSD subscription

https://twitter.com/x/status/1784037342690549892

The tweet says EAP which is something different than FSD..

 

[Ellec]

The tweet says EAP which is something different than FSD..

Is it Early Access Program for FSD or Enhanced Auto Pilot?

 

[hobbes]

Another price drop in New Zealand:

After removing 15% sales tax, price in New Zealand (no subsidies) is as follows in equivalent US dollars:

Model 3 RWD: ~$33.0k USD
Model Y RWD: ~$34.0k USD

(Delivery cost & “order fee” is an extra $900 USD)

If there is no sales tax that is a subsidy, no? Or is Tesla paying the sales tax for the customer ?

 

[nativewolf]

This is the sort of dangerous assumptions that got TSLA investors into trouble in 2021 - 2022 when share price assumed massive automotive margins would be maintained with volume expansion.

Demand is not infinite. If demand was infinite right now, Tesla would be able to sell megapacks from much, much higher prices than 25-30% gross margins.

Tesla has already cut prices on the megapack (though not much).

Right now, only the places with the highest energy costs or motivations to buy these systems (1st world countries with unstable grids like Australia, Hawaii...) are paying these prices. The economics don't work for most of the populations to pay these prices. That's fine.

Megapacks are a solid business. But please be practical. Tesla is producing 20 GWh annualized right now. When that goes up to 40, then 60-80...there will be price cuts.

Just like in automotive.

COGs will go down some, but not outpace the price cuts.

Just like in automotive.

Unlike in automotive, competitors will keep upping their production of Megapack competitors increasing market supply.

Demand pressure might allow Tesla to keep solid margins, but it is entirely impractical to expect them to go up with volume increases.

For 20 - 60 GWh annualized production over next 3 years we can probably assume 25-30% gross margins, but after that expect them to move down to 20%.


10% operating margin on 200 GWh annualized production (in 5 years maybe?) at $300 / kWh ASP (though probably will be lower) would yield 6 billion in operating profit, e.g. something like $1.8 in EPS. That's nice, but only worth like 100 billion in market cap.

The energy market is not all created equal and that's something that @Musskiah and others looking at energy need to realize. The buyers that can pay crazy money for storage are the ones that can first displace combined gas and other JIT emergency producers that offer grid stabilization services. Those spot hour prices are insane and can easily and quickly pay for expensive storage. It's actually, technically, the best solution for the market and would be preferable to all other sources.

The next group of buyers is far more price sensitive, just stoarge serving expensive gaps in dispatch. Think someone needing to dispatch to meet the 5-8pm energy needs on a hot phoenix September day when solar has kicked out by 5pm and there is no wind and AC needs are huge because of latent heat moving through walls keeping housing very hot in the early evening. A gas facility in that case will be more competitive and thus a solar facility+storage will have smaller margins to work with. IRA distorts this, really in a bad way IMO- it was happening and better to let the market just get there.

The next group of buyers is going to be more price sensitive yet, competing with fully depreciated massive power plants.

So the longer the transition moves along the more price sensitive buyers become while at the same time supply curves are flooding the market. In 2 years every utility in the USA will think nothing of putting storage at every bit of land they own, my own guess. @petit_bateau spreadsheets are still the best work you'll find in the wild. I believe you've probably nailed the margins and profits. Nice business but it will go low margin faster than some posters here would like.

 

[nativewolf]

I doubt the troll will post this, but I think this explains all, were would rather have invested your money? Hard one! I expect the next 5 years to look similar if not much better (for Tesla only).

View attachment 1042280

-- Why not add Nvidia? 1,817%

 

[Ellec]

-- Why not add Nvidia? 1,817%

I didn't add them the web page picked the other stocks, I guess based on auto industry. But yes Nvidia would have been a great investment as well.

 

[elasalle]

“We did 1K/ week in April “ .. Moravy

( assuming pedal issue has been resolved)
… now time to “ pedal to the metal “ or “ balls to Wall Street ”

https://twitter.com/x/status/1784069016954286507

 

[alexxs88]

I doubt the troll will post this, but I think this explains all, were would rather have invested your money? Hard one! I expect the next 5 years to look similar if not much better (for Tesla only).

View attachment 1042280

So you expect Tesla to get to 4.5T in market cap?

 

[phoggy123]

The energy market is not all created equal and that's something that @Musskiah and others looking at energy need to realize. The buyers that can pay crazy money for storage are the ones that can first displace combined gas and other JIT emergency producers that offer grid stabilization services. Those spot hour prices are insane and can easily and quickly pay for expensive storage. It's actually, technically, the best solution for the market and would be preferable to all other sources.

The next group of buyers is far more price sensitive, just stoarge serving expensive gaps in dispatch. Think someone needing to dispatch to meet the 5-8pm energy needs on a hot phoenix September day when solar has kicked out by 5pm and there is no wind and AC needs are huge because of latent heat moving through walls keeping housing very hot in the early evening. A gas facility in that case will be more competitive and thus a solar facility+storage will have smaller margins to work with. IRA distorts this, really in a bad way IMO- it was happening and better to let the market just get there.

The next group of buyers is going to be more price sensitive yet, competing with fully depreciated massive power plants.

So the longer the transition moves along the more price sensitive buyers become while at the same time supply curves are flooding the market. In 2 years every utility in the USA will think nothing of putting storage at every bit of land they own, my own guess. @petit_bateau spreadsheets are still the best work you'll find in the wild. I believe you've probably nailed the margins and profits. Nice business but it will go low margin faster than some posters here would like.

I see where you are coming from wit this post and if it the grid was at static to declining growth as we've seen the past 20 years....I'd agree with you. But in this case the demand for electricity is going to skyrocket with the primary drivers being re-industrialization, data centers/AI, and EV's. The number of communities that will fast-track large scale traditional power plants will be limited. But Solar + storage is going to become the primary solution IMO. It's low cost, low impact, and can go most places where the demand is rising. So while the low hanging fruit to your point is grid stabilization for profit, the longer term will be defined by combined baseload. The US has so much land available and the price for panels and batteries are plummeting, the levelized cost of electricity could render fully depreciated assets unviable in this decade. But we are going to need every bit of capacity new and old to keep up with the needs of the new economy.

 

[Musskiah]

The energy market is not all created equal and that's something that @Musskiah and others looking at energy need to realize. The buyers that can pay crazy money for storage are the ones that can first displace combined gas and other JIT emergency producers that offer grid stabilization services. Those spot hour prices are insane and can easily and quickly pay for expensive storage. It's actually, technically, the best solution for the market and would be preferable to all other sources.

The next group of buyers is far more price sensitive, just stoarge serving expensive gaps in dispatch. Think someone needing to dispatch to meet the 5-8pm energy needs on a hot phoenix September day when solar has kicked out by 5pm and there is no wind and AC needs are huge because of latent heat moving through walls keeping housing very hot in the early evening. A gas facility in that case will be more competitive and thus a solar facility+storage will have smaller margins to work with. IRA distorts this, really in a bad way IMO- it was happening and better to let the market just get there.

The next group of buyers is going to be more price sensitive yet, competing with fully depreciated massive power plants.

So the longer the transition moves along the more price sensitive buyers become while at the same time supply curves are flooding the market. In 2 years every utility in the USA will think nothing of putting storage at every bit of land they own, my own guess. @petit_bateau spreadsheets are still the best work you'll find in the wild. I believe you've probably nailed the margins and profits. Nice business but it will go low margin faster than some posters here would like.

These are all excellent points. I understand some use cases for stationary storage are going to be more price sensitive than others. I very much appreciate @petit_bateau for his experience and insights. I don't fail to understand how prices will eventually have to shift to open up addressable market (this is what you mean by "not created equal"). That won't happen in 2026, as you suggest, that's all.

My point that demand is "quasi infinite" was in specific reference to your comment "I am not sure energy margins stay high into 2026." Tesla, TSLA & the Investment World: the Perpetual Investors' Roundtable

I strongly disagee. Tesla stopped taking orders for Megapack now, in 2024, because there is so much demand AT THESE PRICES (maybe quasi infinite is an exaggeration but this is the point), which means "the buyers that pay crazy prices," as you say, are very much in the market. Tesla Energy is booked well into 2025 and COGS (battery costs) are going to do down significantly next year, which means they can again drop Megapack prices by several $10k and margins wouldn't be effected. The order book will stay long well into the forseeable future (2027). Most importantly, the unrecognized revenue (nearly pure profit) will continue to bolster margins as it becomes recognized at an accelerating rate. Revenue recognition will lag 12-24 months behind the full ramp of Lathrop because that is the nature of unrecognized revenue. So if Lathrop is fully ramped by early 2025, at the earliest, unrecognized revenue really hits the books in 2027. Hence, margins stay bolstered until 2027, at least. In my mind, this is the logic supporting the fact that high Tesla Energy margins in 2026 aren't even a question.

Over the long term (beyond 2027) it's tougher to forecast, and I believe @petit_bateau can certianly provide more insight than I. One thing is certain, as Elon says...

"There's essentially quasi-infinite demand for energy storage, if the energy density and the price are good enough."

AI and tech will be so hungry for Energy this next decade, humans literally won't be able to build enough energy storage. Battery energy density and prices will have to improve, sure...and they will. The market is far greater than a couple of Megafactories can satiate.

 

[Musskiah]

This is the sort of dangerous assumptions that got TSLA investors into trouble in 2021 - 2022 when share price assumed massive automotive margins would be maintained with volume expansion.

Demand is not infinite. If demand was infinite right now, Tesla would be able to sell megapacks from much, much higher prices than 25-30% gross margins.

Tesla has already cut prices on the megapack (though not much).

Right now, only the places with the highest energy costs or motivations to buy these systems (1st world countries with unstable grids like Australia, Hawaii...) are paying these prices. The economics don't work for most of the populations to pay these prices. That's fine.

Megapacks are a solid business. But please be practical. Tesla is producing 20 GWh annualized right now. When that goes up to 40, then 60-80...there will be price cuts.

Just like in automotive.

COGs will go down some, but not outpace the price cuts.

Just like in automotive.

Unlike in automotive, competitors will keep upping their production of Megapack competitors increasing market supply.

Demand pressure might allow Tesla to keep solid margins, but it is entirely impractical to expect them to go up with volume increases.

For 20 - 60 GWh annualized production over next 3 years we can probably assume 25-30% gross margins, but after that expect them to move down to 20%.


10% operating margin on 200 GWh annualized production (in 5 years maybe?) at $300 / kWh ASP (though probably will be lower) would yield 6 billion in operating profit, e.g. something like $1.8 in EPS. That's nice, but only worth like 100 billion in market cap.

Automotive margins were temporarily elevated due to an unprecedented increase in money supply - completely dissimilar to the reasons that Megapack margins are high. There are an enormous number of well established OEMs in the Automotive market; in stationary storage, at mass scale, there will be few to truly compete. Without responding to you point by point, I'll just say it's a mistake to try to compare Automotive margin behavior to Energy Margin behavior.

 

[AndrewZ]

It doesn’t matter. It’s the media that distorts and reports such things as if they’re a big deal.

The stock market cares about earnings and really about revenue vs COGS, it doesn’t care about news articles that have no material impact on earnings.

Even massive recalls don’t really impact the stock market. News dropped on April 17th about Ford recalling 456,000 vehicles, the stock is up 6% since then.

People can of course choose to draw whatever connections they want between things they perceive should or shouldn’t impact the stock market and when they do or don’t, but that’s just speculation especially when the thing has no quantifiable impact on earnings.


Why TSLA is up since earnings is up for debate, is it because FSD/autonomy (not sure who is quantifying that) or is it because Elon is guiding that 2024 volumes will be higher than 2023?

 

[2daMoon]

These are all excellent points. I understand some use cases for stationary storage are going to be more price sensitive than others. I very much appreciate @petit_bateau for his experience and insights. I don't fail to understand how prices will eventually have to shift to open up addressable market (this is what you mean by "not created equal"). That won't happen in 2026, as you suggest, that's all.

My point that demand is "quasi infinite" was in specific reference to your comment "I am not sure energy margins stay high into 2026." Tesla, TSLA & the Investment World: the Perpetual Investors' Roundtable

I strongly disagee. Tesla stopped taking orders for Megapack now, in 2024, because there is so much demand AT THESE PRICES (maybe quasi infinite is an exaggeration but this is the point).l, which means "the buyers that pay crazy prices," as you say, are very much in the market. Tesla Energy is booked well into 2025 and COGS (battery costs) are going to do down significantly next year which means they can again drop Megapack prices by several $10k and margins wouldn't be effected. The order book will stay long well into the forseeable future (2027). Most importantly, the unrecognized revenue (nearly pure profit) will continue to bolster margins as it becomes recognized at an accelerating rate. This will lag 12-24 month behind the full ramp of Lathrop because that is the nature of unrecognized revenue. So if Lathrop if fully ramped by early 2025, at the earliest, unrecognized revenue really hits the books in 2027. Hence, margins stay bolstered til 2027, at least.

Over the long term (beyond 2027) it's tougher to forecast, and I believe @petit_bateau can certianly provide more insight than I. One thing is certain as Elon says...

"There's essentially quasi-infinite demand for energy storage, if the energy density and the price are good enough."

AI will be so hungry for Energy this next couple decades, humans literally won't be able to build enough energy storage. Battery energy density and prices will have to improve, sure...and they will. The market is far greater than a couple of Megafactories can satiate.

Add to this how Megapack and other Tesla Energy products, combined with solar and wind production, have a staggering advantage over all existing power production and distribution methods, much as BEVs do in the automotive space.

In the Energy sphere nothing that came before can compete in price, speed of deployment, reliability, management, operation costs, etc. Tesla Energy's advantage in this market is greater than it is in automobiles, because the market is larger by orders of magnitude.

Every current source of electricity, with possibly the exception of hydro, will benefit the operators of those systems by being replaced with solar/wind and battery installations. So, quasi-infinite is not an exaggeration.

Unless some newer tech surpasses this form of energy production and storage over the coming decades these battery storage solutions will be in constant demand until all the existing fossil fuel based production facilities are retired and replaced. Nuclear will likely be displaced as well, due to construction and operational costs being so high.

The energy needs of Earth will continue to grow, and the demand for more of these systems will grow as this transition of the entire planet progresses, simply because it costs less and works better than what it replaces.

All Tesla needs is a portion of that TAM to reach those orbital market caps that seem to stagger the imagination of people still rolling their eyes at the idea of multi-Trillions. Tesla, being the best at manufacturing places to manufacture things, should have a good chance of holding their own in that market.

 

[unk45]

Automotive margins were temporarily elevated due to an unprecedented increase in money supply - completely dissimilar to the reasons that Megapack margins are high. There are an enormous number of well established OEMs in the Automotive market; in stationary storage, at mass scale, there will be few to truly compete. Without responding to you point by point, I'll just say it's a mistake to try to compare Automotive margin behavior to Energy Margin behavior.

Please understand that the stationary storage market is global. There are numerous major competitors in large scale stationary storage, well documented both here and elsewhere. From CATL, Huawei, BYD , and Siemens and so on, noting a lost that includes some you've never imagined:

7 Battery Energy Storage Companies and Startups - GreyB

This report will discuss some major companies and startups innovating in the Battery Energy Storage System domain.

www.greyb.com

What many of us fail to recognize is that although Tesla invented the Autobidder and established the Hpornsdale Power Reserve, the rest of the world has been rapidly developing and now is far more wides[read than has been Tesla.

Indeed Tesla Energy has a bright future, which would have been much brighter had TE ramps been far faster and the sales and service functions and been staffed to support finicky public utility and commercial customers. Yes, growth, but much of that growth has been taken by those dozens of competitors.

 

[Buckminster]

https://twitter.com/x/status/1784247662121816424

Troy created this rumour and now Jordan has jumped on it…

 

[Tony73]

Demand pressure might allow Tesla to keep solid margins, but it is entirely impractical to expect them to go up with volume increases.

For 20 - 60 GWh annualized production over next 3 years we can probably assume 25-30% gross margins, but after that expect them to move down to 20%.


10% operating margin on 200 GWh annualized production (in 5 years maybe?) at $300 / kWh ASP (though probably will be lower) would yield 6 billion in operating profit, e.g. something like $1.8 in EPS. That's nice, but only worth like 100 billion in market cap.

The stationary storage business inherently has better operating leverage than the auto business. Operating margin at 200 Gwh scale should not be much less than gross margin. There’s also the recurring stream of service/maintenance and SW revenue that will become very meaningful as the deployed base approaches the Twh scale. It will be a great business even at 15% to 20% gross margins.

 

[2daMoon]

Indeed Tesla Energy has a bright future, which would have been much brighter had TE ramps been far faster and the sales and service functions and been staffed to support finicky public utility and commercial customers. Yes, growth, but much of that growth has been taken by those dozens of competitors.

It has been disappointing that there aren't already ten or so Megapacktories cranking out product. It has always seemed like another in the Central states (at GigaTexas?) and one on the East coast could have been built by now. Two or three in China as well, while we are waiting for the first there to begin production.

Fortunately, Tesla has the know-how and the bankroll to make strides. It would be nice to have a few more folks with key Elonesque qualities to spread the management load across in order to get 'er done.

 

[unk45]

Add to this how Megapack and other Tesla Energy products, combined with solar and wind production, have a staggering advantage over all existing power production and distribution methods, much as BEVs do in the automotive space.

In the Energy sphere nothing that came before can compete in price, speed of deployment, reliability, management, operation costs, etc. Tesla Energy's advantage in this market is greater than it is in automobiles, because the market is larger by orders of magnitude.
...

I disagreed because there definitely is not a "staggering advantage" anymore. Ask anyone familiar with global storage projects who are the leaders today. Surprisingly Tesla is not on the list. In all those listed capabilities the established large commercial suppliers and large battery manufacturers are today capably of every feature Tesla has. Autobidder once was a big advantage, now there are several others with equal and superior technology partly because of integration with established technologies. In that arena companies such as Huawei and Siemens do have advantages, as do the major wind and solar equipment providers.

Just think about how CATL and BYD cooperate with China Energy Investment Group and National Grid, just to name two. Then thing of Samsung, supplier to many public utilities and corporations and a major battery manufacturer. LG is there too. This is a tiny, Asia-centric view. The Europeans are absolutely NOT asleep. GE, especially with wind, should be in this list too, but they are rather preoccupied with other issues so are just holding their own.

Tesla is a narrow specialist in this world, and they'll still thrive, but they are losing ground quickly because they have not grown with market maturity. Bluntly, the US is rapidly losing ground in many of these issues,
protectionism simply is not a suitable success factor when the rest f the world is evolving with lightning speed.
Next in the global target: AI it is quite impossible for the US to slow the global progress including China. protectionism never has worked and still does not.

 

[Krugerrand]

The stock market cares about earnings and really about revenue vs COGS, it doesn’t care about news articles that have no material impact on earnings.

Even massive recalls don’t really impact the stock market. News dropped on April 17th about Ford recalling 456,000 vehicles, the stock is up 6% since then.

People can of course choose to draw whatever connections they want between things they perceive should or shouldn’t impact the stock market and when they do or don’t, but that’s just speculation especially when the thing has no quantifiable impact on earnings.


Why TSLA is up since earnings is up for debate, is it because FSD/autonomy (not sure who is quantifying that) or is it because Elon is guiding that 2024 volumes will be higher than 2023?

One word: options

That’s the why of it all.

 

[Doggydogworld]

Why TSLA is up since earnings is up for debate, is it because FSD/autonomy (not sure who is quantifying that) or is it because Elon is guiding that 2024 volumes will be higher than 2023?

I agree it's all guesswork. My guesses:
1. TSLA was 171 before Reuters 4/5 Model 2 story, relief rallied back after Tesla's vague "new vehicles including more affordable models" statement
2. Robotaxi also helped, even traders who don't drink the KoolAid believe Elon will put on a killer demo in August and goose the stock
3. Elon was fully engaged in the earnings call, boosting confidence among long time bulls
4. Elon's "I think we will have higher sales this year" was much too weak to help TSLA. Absent 1-3 the story would be analysts reducing below 1.8m