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

[Musskiah]

Production was only 410,831--- versus 479,700 in Q2 of 2023.

Demand did not rise to meet supply, supply was cut to meet demand. (and loan rates were bought down and other promos as well to make that happen).

That's a smart business move, but does not, at all, change the fact Tesla is down on deliveries 2 quarters in a row now after years of 50% CAGR... so yes, demand is soft compared to the last decade Year- and Tesla cut production to account for it.

Demand was not nearly as soft in Q1 as some insinuated. That's the point. Those sales were realized in Q2. Secondly, auto sales are only 4.3% softer than Q2 2023.

Tesla set it up for a Q2 suprise, coinciding with Energy. Of course Lathrop will sustain higher numbers now. The factory is ramping to full capacity which, at equilibrium, amounts to 10GWh per Q (40Gwh per year full capacity). Sure it could be somewhat lumpy, but simple division shows 10Gwh should be average per Q.

 

[M|S|M MYP]

Anyone check on this lately?

 

[ClimateOptimst]

This prediction from last December is aging well. I think Tesla energy is massively undervalued by wall st

Finally! should be the next big growth driver that contributes meaningfully to the bottom line. With china megapactory coming online ~6 months from now hopefully we'll see at least two years of 100% growth coupled with high and increasing margins such that wall street analysts are forced to include TE in their valuation models & expand the TAM for tsla

 

[GhostSkater]

While we all want you to accumulate more shares, you have been given ample opportunities/time while wall st suppressed $TSLA

Put as much as I could during that period, but now hopefully I will be able to put much more

 

[Doggydogworld]

It is useful to note that EU/UK general practice uses non-Tesla related lessors for company cars. That avoids lease accounting issues for Tesla.

That's generally true now, but it depends on the terms negotiated with these third party leasing companies. Especially "residual value guarantees". Tesla used to devote many paragraphs to this in the 10-K (especially back in the day when they also offered RVGs to retail customers and got slapped for improper accounting). Musk dislikes lease accounting -- he wants to recognize the revenue rightnow, not over 3-5 years. So over time Tesla stopped doing RVGs so often. Then about 5 years ago they started accounting for many RVG deals as "sale with right of return" instead of leases. A bit aggressive, but not really material unless RVGs return to being a large percentage of sales.

The EOQ surge in Europe does have a "discounted fleet sale" feel to it. Have you heard anything specific?

 

[GatorMeat]

Won't argue that - but you can ask Gemini follow-ups on the summary as well - in the end, if it's valuable enough, I'll watch it - but tbh, most videos in here I just let Gemini summarize (Gemini itself is also not "watching" the videos, it's using the captions of the video afaik to summarize, which in itself misses all non-spoken stuff already.)

YouTuber's like this just rehash what is already known. They are not experts nor do they have inside info. They are in it to be 'famous' and make $.
How is Warren Red and Eva doing since they sold at the lows?! Listening to these attention wh@res is dangerous to your wealth. It seeps into your brain

 

[GatorMeat]

CNBS right on top of things with their negative spin.

Earlier today banner reporting TSLA among the biggest pre-market movers when stock was down.
Yesterday pre-market when it was UP by an even larger percentage ? Crickets.
View attachment 1061521

No CNBC clip on FireTV News app yet. Everytime they put up a TSLA chart on these big up days, they show the Red YTD chart- very misleading and fear mongering

 

[Knightshade]

Demand was not nearly as soft in Q1 as some insinuated. That's the point.

No, that's moving goalposts. Your original claim was

There was all this talk about soft demand. What say ye now that the tables have turned? Is demand now suddenly outpacing supply?

Again- what's happening here is not that demand is suddenly surging to outpace supply it's that Tesla cut supply significantly to account for softer demand.

Those sales were realized in Q2

Only because they slashed production in Q2

They produced nearly 70,000 fewer vehicles YoY in Q2 2024.... while deliveries were also over 20,000 vehicles lower than Q2 2023.

479,700 was Q2 2023 production
410,831 was Q2 2024 production.

if production had remained flat YoY we'd have seen another large increase in inventory this quarter, not a drawdown.

So no, the narrative that Q1 overproduction was just "cars in transit with plenty of buyers" was not true... Inventory drew down in large part because they cut production a ton- not because of some huge demand surge.

Secondly, auto sales are only 4.3% softer than Q2 2023.

Which tells you demand was soft compared to last year in the same quarter.

The exact thing you claimed in your previous post these P&D numbers debunk- but factually do not.

And they needed to buy-down interest rates and offer significant promos to only be down 4.3%. Which, again, is still down.

You could certainly change your claim, as you now appear to be doing, to "less soft than some thought" though!


Again you seem so focused on a narrative more optimistic than the actual data supports, rather than focusing on the genuinely, fact-based, positives here... for example:

Teslas buydown of rates appears to be helping mitigate the soft demand-- moreso than previous inventory discounts were. That's good!

Tesla is being super flexible on battery config in the Y and 3 now to enable more 3s to qualify for the IRA credit by matching battery type to lease vs purchase buyers dynamically- That's good! (and should only need to run until Panasonics US 2170 plant comes online next year too)

Tesla is finally willing to cut production significantly when demand is soft rather than their previously stated intent of continuing to grow production no matter what. That's good!


Maybe focus on the good, and actually true, things?

 

[Musskiah]

Maybe focus on the good, and actually true, things?

China registrations scoreboard

 

[EQC_]

...Green on Twitter have been saying they have been using the second inference chip since 2021 as they ran out of compute from one of the chip. If you extrapolate FSD performance of 2021 back then, anyone would say Tesla couldn't reach any significant intervention free drive on hw3 ever.

If I remember and interpretted correctly (and I have approximately ZERO background in this stuff, so I may be incorrect):

I believe the switch to FSD Version 12 gave them back some overhead on the chips.

I can't seem to find the reference, but I have a memory that Elon(?) said with FSD 12, the system was processing all 8 camera inputs and producing vehicle control outputs at the equivalent of 51 frames per second. To me, that sounds like, if they wanted to, they could process at ~25 frames per second on just one of the two inference chips in HW3....and 25fps seems like it ought to be fast enough to handle the driving task.

My interpretation (again, plausibly very wrong) was that Tesla always intended to be end-to-end neural networks...so that is what the hardware is designed and optimized for. It took lots of development and new techniques to get there...but now that they have cut out the 300,000 lines of C++ code, the hardware is now able to be used more efficiently and make the best use of its capabilities.

 

[JimS]

As I’ve been monitoring my CNBC app more than usual this morning, I noticed a new article headlined:

Tesla shares rise on better-than-expected Q2 deliveries report​

When I read it I realized it was basically the same article I had read earlier by Lora Kolodny but I think the headline had previously featured the huge YOY drop in deliveries. The article no longer showed the poor lonely Tesla sitting on the lot anxiously awaiting a buyer, but a picture of a bustling scene of numerous Teslas loaded on trucks and awaiting delivery.

I hope Lora doesn’t get too upset about some editor changing her story. It would be such a loss for CNBC if she quit.

 

[EQC_]

Putting scale in context:
9.4GWh = 9.4MkWh
9.4MkWh/81kWh = 116,049.38

I like that...viewing battery capacity as 81kWh "car equivalents" is great.

One way or another, Tesla deployed enough cells to deliver their 444,000 vehicles plus 116,000 vehicle-equivalents in grid storage form. In that sense, for comparing to previous years, it could be said that Tesla delivered 560,000 vehicle-equivalents of batteries this past quarter. Record quarter!

 

[EQC_]

I have always said Energy was the sleeping giant waiting in the background for its turn to take the limelight. This is coming to fruition nicely! Not bad for jus a car company

If I remember correctly, Lathrop's nameplate capacity is ~40 GWh per year. So, 10 GWh per quarter....and they're building another one in Shanghai.

I'd also assume some of this quarter's 9.4 GWh deployment is packs that were built in previous quarters but just not fully deployed until this quarter...so Lathrop might still have some ramping left to do also.

 

[Doggydogworld]

The TSLAQ Trojan horse of Troy not going to like it

Was Troy also TSLAQ when his delivery estimate was almost 6% too high in Q1?

Love this. They got paid to deliver roughly 32,000 3/Ys 'for free' from inventory, meaning they'd been built and costed last quarter, delivered and paid for this quarter. Should really help (quarterly) margins, no?

No. Production costs are recognized when the car is sold. There are a lot of complicating details, e.g. LIFO, FIFO and my favorite GIGO, but at a high level I think of it as each VIN getting COGS assigned to it on the date of production. Then Tesla recognizes both revenue and COGS for that VIN on the day of sale.

Demand was not nearly as soft in Q1 as some insinuated. That's the point. Those sales were realized in Q2. Secondly, auto sales are only 4.3% softer than Q2 2023.

You can't have it both ways. If Q1 demand "was not as soft" then Q2 was softer than -4.3%. That said, -4.3% is certainly better than expected. With Q3 being an easy comp (433k) and Q4 boosted by seasonal strength and CT growth 2024 deliveries might end up being higher than 2023 after all.

 

[Musskiah]

I like that...viewing battery capacity as 81kWh "car equivalents" is great.

One way or another, Tesla deployed enough cells to deliver their 444,000 vehicles plus 116,000 vehicle-equivalents in grid storage form. In that sense, for comparing to previous years, it could be said that Tesla delivered 560,000 vehicle-equivalents of batteries this past quarter. Record quarter!

This is exactly the way to look at it. On caveat: with deferred Energy Revenue, these Megapacks will become ~2 TIMES more profitable as cars in the short term (through at least 2025). So, essentially we are looking at the profitability of over 650k (maybe nearly 700k) vehicle-equivalents. Wall Street has a lot of catching up to do over the next several Qs, starting right now, not even considering Optimus and Robotaxis.

 

[Knightshade]

China registrations scoreboard

That also seems more a "less bad than feared" story though as it's still down YoY, rather than a good one that'd have growth in it.

Not to mention overall China is down significantly at wholesale-

Tesla China sells 71,007 vehicles wholesale in June 2024

Data from the China Passenger Car Association (CPCA) has revealed that Tesla China was able to sell 71,007 vehicles wholesale in June 2024.

www.teslarati.com

Tesla China’s June 2024 results represent a 24.20% year-over-year drop compared to the 93,680 vehicles that were sold wholesale in the same month last year. It also represents a 2.16% month-over-month drop compared to May 2024’s 72,573 units.

For all of Q2 Tesla China is down 16.77% YoY and down 6.85% QoQ.

And that's, again, only down that much thanks to very aggressive financing from (and at a cost to) Tesla.


Most of the good on the car side, as I suggested earlier, is from Tesla finally making more dynamic moves in response to soft demand-- the financing deals, finally cutting production significantly, finding ways to flex-match batteries to IRA buyers, etc.

Over in energy is where you'll find the good news that requires no asterisks.

 

[GatorMeat]

As many said last Q, the inventory accumulated would be unloaded this Q. There was all this talk about soft demand. What say ye now that the tables have turned? Is demand now suddenly outpacing supply? Or perhaps many vehicles were just staged in Shanghai South Port, for example.

They drastically cut production to match demand, which was out of necessity along with all the job cuts. They still have a historically large # in inventory, although still low compared to traditional auto.
Also, selling inventory vehicles doesn't mean the revenue goes 100% to profit. Inventory is held on the balance sheet, the costs don't hit COGS on the P&L until it sells.

 

[unk45]

I have always said Energy was the sleeping giant waiting in the background for its turn to take the limelight. This is coming to fruition nicely! Not bad for jus a car company

This is quite wonderful for those of us who've bleated energy, energy, energy while not too much definitive evidence emerged. Now we also are seeing that cell production suddenly has accelerated enough to deliver mass quantities of Megapacks among others.

 

[GatorMeat]

Love this. They got paid to deliver roughly 32,000 3/Ys 'for free' from inventory, meaning they'd been built and costed last quarter, delivered and paid for this quarter. Should really help (quarterly) margins, no?

No.
They are not 'free' from inventory. They go to inventory as an 'asset' on the Balance Sheet. They get 'costed' by going to COGS in the quarter they are sold. Inventory will help cash flow though in the Q sold.

 

[EQC_]

As many said last Q, the inventory accumulated would be unloaded this Q. There was all this talk about soft demand. What say ye now that the tables have turned? Is demand now suddenly outpacing supply? Or perhaps many vehicles were just staged in Shanghai South Port, for example.

You're doing it all wrong.

Last quarter was bad because inventory built up, proving that demand was dead.

This quarter is also bad because that inventory disappeared, which means it will be harder to buy a Tesla same-day like customers do at those wonderful dealerships we all enjoy so much.

It's also good to write headlines like "Tesla's sales continue to drop!" even though Tesla's vehicle deliveries are up roughly 60,000 vehicles from last quarter. The actual meanings of words don't matter, and you can spend the article referencing the year-ago numbers to justify yourself. Most readers don't get past the headline anyway, and definitely won't look up last quarter's numbers to compare them to this quarter's.

It's also important to ignore all the nasty little facts like last quarter's Red Sea/Shipment delays, the Berlin factory being hobbled by the power pole attack, lumpy accumulation and shipping from ports, etc.

If you can follow these simple suggestions, you too can win clicks and a lucrative career as a journalist.

/s, obviously.