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

[Musskiah]

Why? The very fact that you want to put off an examination of the profitability of something makes me ...want to question that in great detail.

Uh-huh....so? Are you going to argue Tesla isn't profitable now too?

 

[CHGolferJim]

In other words, the Delaware judge is not interested in how shareholders vote, even after being made aware of the personal connections that she objected to in the first place. She is bound and determined to "protect" the shareholders from themselves, no matter how they vote and what they think. Ridiculously large sums of money are to be given to the attorneys, even if they don't save their "clients" a dime. Lovely.

I refuse to believe this little court is unaccountable to the appeals process, an essential element of the rule of law. Can anyone explain Tesla’s future recourse whatever the output from the DE court?

 

[Mengy]

That's incorrect. Tesla's operating margin is at 5% right now. GM is at 6.9% (that's certainly a mass production car company, isn't it?), VW is at 6.1%, Toyota is at 9%. Unfortunately the data on which you're basing the assumptions is a couple of years old.

I also don't see how dropping the manufacturing volumes will help with margins, as the COGs/unit will just get higher.

Not necessarily. Volumes will likely increase slowly per Elon and Tesla as the affordable EV will sell in good volumes due to lower pricing. Also battery costs are still declining over time, and with the new affordable EV's being built on the 3&Y lines the capital expenditures for those lower cost models will be lower than usual, thereby decreasing COGS per volume.

 

[unk45]

I believe some of that attitude is sour grapes. Many young people still live with their parents because they can't find a good job. I suspect many of those who have a good job purchase cars.

Without question there are huge variations. The trends, as graphically shown in a previous US-only post, are indisputable. While ‘empty nests’ grew until roughly 2000 or so, the trend changes are only in part due to economics. A large part is driven by the same forces showing declining birth rates in nearly all major countries, exacerbated in part by children remaining in residence with parents. Perhaps counter-intuitively those trends are inversely connected with household wealth and income.
For our purposes, the most direct reference is to driver license data, linked earlier for US.

If we have serious question about all this, the statistics are available mostly from Statista. I will do more research if there is enough interest. Personally, I think it is so obvious that the primary effort should be towards sizing RT acceptance rates rather than pure TAM in major metropolitan areas.

What do other people think about this?

 

[nativewolf]

I believe there is good data showing that Japanese youth are abandoning car ownership. This however is in a nation of terrible highway infrastructure and great mass transport so I don't know if it is indicative of a trend + or - for TaaS. Certainly the mass transport is more sustainable and car use in Japan was very very low and yet sales were moderate. Guaranteed profits for the Japanese auto industry and thus more important for those conglomerates than the worlds OEMs at large.

 

[alexxs88]

You don't understand what's actually happening then. Tesla is not dropping volumes. What did they tell us in the call? That they are utilizing existing capacity at their existing factories to increase volume through new vehicles, thus decreasing COGS, and likely propelling margins higher.

I genuinely don't want/need any more conflict on this board . I think Tesla will be dropping volumes YoY for at least 3 more quarters. The implication of what they said in the call is that the lines will become less specialized (less cost efficient?) in order to be able to accommodate multiple types of vehicles to grow volume. That's obviously very good for their volumes, but we're at least 9-12 months away from any new body vehicle rolling off the assembly line. If we even get that, as I have my doubts.

What Tesla had in 2023 and even moreso in 2022 is not likely to happen again anytime soon. That's incredibly high volume on a very specialized production line with insane demand that didn't need any price incentive to move those volumes. The perfect combination resulted in crazy margins.

 

[alexxs88]

Not necessarily. Volumes will likely increase slowly per Elon and Tesla as the affordable EV will sell in good volumes due to lower pricing. Also battery costs are still declining over time, and with the new affordable EV's being built on the 3&Y lines the capital expenditures for those lower cost models will be lower than usual, thereby decreasing COGS per volume.

I don't think they'll increase slowly. I think they'll decrease for the next 3 quarters at least (absent new models, higher competition, no rate cuts, what's the growth driver?) then, depending on what the new models actually are, volumes will of course increase. But making them on the same lines as the Y and the 3 will also make those lines less efficient, so that might affect margins on those models.

A small hatchback on the Highland 3 platform and a refreshed Model Y would go great in Europe and probably won't cost an arm and a leg for them to do it. The main question is why didn't we have this conversation 2 years ago. It genuinely feels like the previous 2 years have been missed.

 

[cliff harris]

We really should all just ignore the obvious troll here. In the meantime, here, courtesy of AJ is an excellent chart that puts Q1 in perspective:

https://twitter.com/x/status/1785974051086782499

 

[alexxs88]

View attachment 1043681

Anyone that compares QoQ instead of YoY has never dealt with car sales. Or virtually any kind of sales that are seasonal in nature. Not to mention that the companies around Tesla don't have PE ratios priced for high double digit growth.

Trying to argue that the car sales business of Tesla is not aggressively falling behind the stock price's targets is nothing short of crazy.

PS: Just looked at some other posts of that guy. He shouldn't be writing about cars. Comparing the Taycan with the M3P on curated specs instead of those that matter for performance car buyers.

 

[Musskiah]

I genuinely don't want/need any more conflict ocommensurate.

I'm just trying to use numbers and facts to keep the record straight. I'm not in conflict with you, to be clear. You opinions just frequently conflict with reality. The facts simply reject the notion that Tesla isn't one of the most profitable Auto manufacturers.

I think Tesla will be dropping volumes YoY for at least 3 more quarters.

Agree to disagree. Did you happen to hear April 28 insurance registrations in china were 14.8k?

The implication of what they said in the call is that the lines will become less specialized (less cost efficient?) in order to be able to accommodate multiple types of vehicles to grow volume. That's obviously very good for their volumes, but we're at least 9-12 months away from any new body vehicle rolling off the assembly line. If we even get that, as I have my doubts.

I think the implication is that capex And cogs will be lower for a new low cost vehicle.

What Tesla had in 2023 and even moreso in 2022 is not likely to happen again anytime soon. That's incredibly high volume on a very specialized production line with insane demand that didn't need any price incentive to move those volumes. The perfect combination resulted in crazy margins.

Tesla dropped prices substantially in 2023, so Tesla's profit margin per car in 2023 was $8,279, compared to $9580 in 2022, which means they maintained profitability despite huge price cuts. This is because they reduced COGS commensurately.

 

[unk45]

Uh-huh....so? Are you going to argue Tesla isn't profitable now too?

Now you're missing a handful of important points. In Q1 2024 TSLA was heavily negative for Free Cash Flow. It was also negative for GAAP and non-GAAP profits.

Each competitive metric should be assessed at the same time in the same fashion, adjusted fro accounting policy differences. Nearly all such adjustments do accrue to TSLA favor including inventory and COGS. They are not perfect apples and oranges.

Almost all comparisons do show quite unpleasant results. The major bright spot anywhere is Tesla Energy.

Unlike most of the rest, Elon Musk has responded with alacrity. That is a good thing, even if it has been too slow. He certainly has attacked less than perfect areas including Supercharger strategy, Lithium processing and, it seems, a heavy Capex commitment to open new Megafactories prior to optimizing existing ones.

All things considered TSLA is outperforming most automotive competitors and, maybe even most major BESS providers. Maybe, because none have that singular component easily extractable from other activities, including TSLA.

This post is reflecting a positive tone because relative to others, this is probably positive. That does not mean improvement will perforce justify any given valuation.

Our dilemma is really not directional. It is valuation. I offer no perspective on that. Elon did: he 'jumped in with both feet' showing he's worried. Now, is it too soon to assume successful regeneration of the TSLA growth story? Is Elon's 2024 all completed already in May?

 

[Musskiah]

Anyone that compares QoQ instead of YoY has never dealt with car sales. Or virtually any kind of sales that are seasonal in nature. Not to mention that the companies around Tesla don't have PE ratios priced for high double digit growth.

Trying to argue that the car sales business of Tesla is not aggressively falling behind the stock price's targets is nothing short of crazy.

PS: Just looked at some other posts of that guy. He shouldn't be writing about cars. Comparing the Taycan with the M3P on curated specs instead of those that matter for performance car buyers.

I think I found Gordon's new burner on TMC

 

[alexxs88]

I'm just trying to use numbers and facts to keep the record straight. I'm not in conflict with you, to be clear. You opinions just frequently conflict with reality. The facts simply reject the notion that Tesla isn't one of the most profitable Auto manufacturers.

Agree to disagree. Let's talk in a year Your entire argument rests on profits / vehicle which isn't a very useful metric. Would you be happy if profit / vehicle increases by 50%, but volume drops by 55%?

Agree to disagree. Did you happen to hear April 28 insurance registrations in china were 14.8k?

I did. That's some demand unlocked through their offers. You genuinely can't read anything into one week of data. Same as I didn't post when they were down to incredibly low numbers. There's a lot of noise in the data.

https://carnewschina.com/wp-content/uploads/2024/04/teslaW17-800x478.png

I think the implication is that capex And cogs will be lower for a new low cost vehicle.

Tesla dropped prices substantially in 2023, so Tesla's profit margin per car in 2023 was $8,279, compared to $9580 in 2022, which means they maintained profitability despite huge price cuts. This is because they reduced COGS commensurately.

Profitability / car is not a very useful metric . That's why it's mostly a sidenote and people tend to focus on overall margins.

 

[Musskiah]

Agree to disagree. Let's talk in a year Your entire argument rests on profits / vehicle which isn't a very useful metric. Would you be happy if profit / vehicle increases by 50%, but volume drops by 55%?

It is incredibly useful to look at profit/vehicle because it puts profitability truly in perspective. Volume won't drop by 55%, so you are just flapping your yapper.

I did. That's some demand unlocked through their offers. You genuinely can't read anything into one week of data. Same as I didn't post when they were down to incredibly low numbers. There's a lot of noise in the data.

Then why did we "read into" the prior weeks of China registrations? Then why are you trying to cherry pick one Q of operating margins rather than use TTM?

https://carnewschina.com/wp-content/uploads/2024/04/teslaW17-800x478.png

Profitability / car is not a very useful metric . That's why it's mostly a sidenote and people tend to focus on overall margins

I am having trouble taking you seriously. Real real.

 

[Musskiah]

Now you're missing a handful of important points. In Q1 2024 TSLA was heavily negative for Free Cash Flow. It was also negative for GAAP and non-GAAP profits.

Negative FCF was the exception, it's not the rule.
-$2.5B due to inventory in transit (which will be sold in early Q2)
-1B to AI

 

[2daMoon]

There are conflicting reads because Elon was particular ambiguous on the call what that actually means. It's all real speculation since he didn't answer repeated analysts questions on this exact topic for clarify. They did state cost savings won't be as much so it probably won't be a totally new platform/model.

Before the earnings call I had written how I hoped they would be ambiguous. They were. This is as it should be.

Analysts, for the most part, ask dumb questions. (there are exceptions) I enjoy it when they simply refuse to answer the useless questions and move on.

If it was going to be a new model, I don't think it's hard to say it's a new model, but maybe Elon is unsure himself or wants to surprise everyone. My guess (as well) is less features at a lower cost on the 3/Y platform. A new platform/car/infrastructure probably would've been leaked if it was that or supplies or what not would have some info.

The quoted message included a quote taken from the earnings call in the post you replied to. The Earnings Call quote began with,

"We have updated our future vehicle line-up to accelerate the launch of new models"​

How much more clear would you need the message to be in order for you to think they said there will be new models?

Beyond this, there is no need to feed your and other's curiosity until the model is ready. They have learned their lesson regarding all the FUD that is generated when they tell too much too soon. Tesla folks won't be revealing further information in advance. It is beneficial for them to tease, then provide more info as those models are nearer to production.

 

[Stretch2727]

It was also negative for GAAP and non-GAAP profits.

I am confused. Negative for GAAP and non-GAAP?

 

[DarkandStormy]

This quote form Elon on X is interesting:-


Inference is the cars and if we assume 3 Million cars and $1,000 per FSD computer , we get $3B which is probably on the high side.

So at least $7B on additional AI training compute.

I am assuming the amount citied is just hardware.

It's not very much in comparison to actual AI companies.

 

[⚡️ELECTROMAN⚡️]

90% of the posts I'm seeing are responses to ignored members. Haven't we fed them long enough?

 

[Musskiah]

It's not very much in comparison to actual AI companies.

If you look at the trend, Tesla is growing AI spending faster than the Big 4 AI. If they spend $10B in 2024 on AI as projected, that will be more than a doubling over 2 years. None of the Big 4 AI players can beat that.