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

[Skipdd]

My thoughts:

It was pretty boring, but maybe that’s good. Tesla will focus on scaling for a while. Delivering, not just talking about ideas. We customers might be hungry for a new CT, a new Roadster etc, but what’s best for the stock and the world is probably to just pump out Ys until they have solved batteries and semiconductors. Which unfortuneately will take until next year as this year will be another year of lack of supply. We will see how Omicron(BA.2) and China’s zero covid plays out in the next year and if this effects supply chains all over the world.

One thing I like was that Elon said that ideas don’t matter, what matter is actually shipping in scale. But then I found that he deflected a few questions by going crazy with ideas about FSD making less parking space needed, buses becoming less popular etc. I agree with him, but until we are there focus should have been on shipping.

Some of us might have misunderstood non-4680 LFP or Dojo as something else than just a cost saving etc. We need to process this new information, but it’s not really any disappointments here. Dojo maybe becoming a cost saving first in 2023 and maybe not at all as GPU and other offers from competition is evolving alongside Dojo over time was to be expected but still some of us were dreaming of seeing 10x this year, which clearly is not happening.

Tesla bot aka Optimus Prime seems to be a much bigger deal than I thought. Tesla are starting to work on production this year, while $25k car is not getting any development. Clearly Elon thinks that the bot is gonna be huge and be ready pretty soon and to be willing to take resources from the rest of the development already. The bot is probably more important to understanding the value of TSLA than the $25k car and the $25k has been pretty central to the 2030 bull case.

Not even sure if there will be a $25k car for many years. If Robotaxi is gonna be huge and come soon, making a car optimized for robotaxi seems more important. A car that can run many miles before interior, engine, wheels etc needs to be replaced, that is easy to get in&out of, with comfortable seating and with long range. Which probably will cost more like $50-100k than $25k. Think like an ugly squared minivan with king sized chairs and sliding doors on one side. And IF Robotaxi actually comes then OMG we are in for some pretty fun times with the stock price. Elon might have not been exaggerating with his greatest appreciating in history and I think we should start to consider what effect this would have on real estate prices and what new businesses will be enabled by this. And if he is not exaggerating with the Optimus Prime, we will soon have a world that looks like this:

And I am not sure how I feel about that…

Agree Optimus Prime extrapolations are potentially scary, but underscore your point about its priority. I took copious notes until 1st Analyst question, when my connection dropped. Time to change out cable this year to fiber. Elon said, “Priority of product - most important is Optimus humanoid robot.” He also said that “…will do a lot of engineering for CT, Semi, Roadster, and Optimus to create them and be ready to bring them to production next year.”

In the interest of not repeating what I saw in the 10+ pages of other things discussed, I will only add a couple I didn’t see:

• In response to a question about insurance roll-out, statement made “…internal goal is to cover 80% of Tesla customers within the US, [so they can] choose to use Tesla if they wanted to [this year, subject to individual state approvals]. And then move to Europe.”
• When asked about source of margins, Zach answered, “4 factors - (1) mix of MY increasing - carries higher profit (2) localizationin Shanghai - logistics, duties, factory has more efficient line design (3) new version of MS, MX as that has ramped (4) various price increases in markets...further out, software portion of the business is where to focus. Huge profitability and lower cost. Robo Taxi very large upside”

I would also observe that Elon said, wrt FSD, “being safer than a human is a low standard.”
I may have missed this somewhere, but how is this being measured, as it seems to be a key benchmark for determining when they will deem FSD ready; not that they will just clear this bar, but exceed it by orders of magnitude. Happy to be pointed to another thread for the answer. Only calling this out as a point of interest.

 

[Webeevdrivers]

Didn't answer major question regarding Model Y and 4680's. How will Austin and Fremont differ? Produce two entirely different cars? Shift Fremont to M3/S? How do you know where your car is coming from if you order? Nobody wants the older battery technology when ordering today. Would be like ordering an iPhone 13 and they send you the 12.

I don’t know. I know the existing Y’s are proven out. Working well. We have a y coming in the next 8 weeks. I’m fine either with either battery type. In 3 years we’ll probably upgrade. Maybe a Cybertruck next time. Who knows. Either way, wether I get an Austin Y or Freemont Y, it’s all good. That’s just me.

 

[ByeByeJohnny]

Expecting Texas to start getting beat up here to. Still no production permit despite supposedly no bureaucracy and fake environmentalists to blame. What's their excuse?

 

[MC3OZ]

That worried me as well, since it seems that the production processes, materials and design should all be much more efficient in creating value.

My takeaway from this, even though it was stated about CT being a 1/4M per year vehicle, is that CT is meant to be more of a primary robotaxi vehicle, driving 24/7, 4 million+ miles lifetime...rock solid.

Nothing like that has ever been built, but fits within the stated design paradigms. That is a total guess though...

When the Cybertruck was revealed, Tesla had never built a vehicle for that type before, so the cost estimates may have been approximate.

As they are getting closer to production they have more of an idea on costs and perhaps some options work out more expensive than expected, so they need to spend time working on alternatives, or they need to be very sure before ordering equipment.

Sandy Munro thinks that method of construction should be cheaper, and on the surface it seems a lot of body shop robots and processes are not needed, paint also isn't needed.

Also the most expensive 4680 cells from Austin will be during the initial ramp, perhaps Model Y has more margin to absorb those costs.

Overall the prices for Cybertruck stated in the reveal are not easy targets to hit, I think Tesla will be happy to just hit them with reasonable margins.

A cheaper higher volume vehicle like Model 2 also has to hit the margin targets, in fact it is more important.

I'm not overly worried, they will make CT, and even if it is made a slightly lower margins than other models, this is not a big deal.

 

[82bert]

Our Fremont Y from Q4 is the best vehicle we’ve ever owned. Far superior to our 3 yo 3.

4680, from my rudimentary understanding, is more about efficiencies for Tesla and far less about actual improvements or advantages to the vehicle.

 

[Discoducky]

Yeah, except for all those lower middle class families with 2+ kids that do sports every weekend and go out. No way they will use this every.single.time in 2-5 years. This will take at least 10 years for society to get used to it ONCE it is normalized. So until then, we have all these families still driving their gas powered cars, polluting the environment, because A) Tesla won't make a cheaper car B) we sure as hell know none of the other automakers will be making as many cars as Tesla in the next 10 years. Hell, even GM's trajectory is for 1 million by 2025.

It's the wrong strategy for their mission (because the earth is warming too quickly), but it's the right strategy for the next transportation system.

I think the math works out for a family to buy a Model Y, X or a CT and loan it out for robotaxi, but I get this won't be for everyone. But the math does work out, the car eventually pays for itself well before it comes near its useful life, but you have to do some extra work along the way in terms of cleaning and charging most likely. I think companies will fill this service need however (feel free to start a company that does this!)

 

[fiveten]

My expectations are ridiculously high. Every earnings call disappoints me since I’ve been a stock holder. I want instant gratification on the stock price, but it’s gonna take a few weeks best case scenario to get back to the 1150 mark or so.

 

[ggies07]

I think the math works out for a family to buy a Model Y, X or a CT and loan it out for robotaxi, but I get this won't be for everyone. But the math does work out, the car eventually pays for itself well before it comes near its useful life, but you have to do some extra work along the way in terms of cleaning and charging most likely. I think companies will fill this service need however (feel free to start a company that does this!)

Look, there is no way a family of 4 doing sports is going to shove their crap in an autonomous EV every single time. That in itself takes too much time. Do you guys have families here? Stop thinking like this will be a fast, smooth transition. What we NEED are less polluting cars on the road, not scheming math problems for the wealthy.

 

[Blue horseshoe]

I'm in the boat of FSD? neat! Pick me up in Missouri. Even today it might make sense for people to uber somewhere but they dont. I personally don't see FSD having this great impact unless the unit cost to use one are really low. Really low.

Secondly on the FSD thing...many peoples cars are full of stuff, my wife golfs so her car has extra boxs of golf balls, a spare wedge, maybe a collapsable cart, hats etc. She and her friends all have cars that look like this, all golfers. Others are into other things but I don't know many people who have cars without personal belongings.
Based on my admittedly personal experiences I don't see the average jack and jill letting out their car as a robotaxi. I could see Tesla having a fleet of them of course. No personal belongings, centralized charging, cleanup crews.

The way I figure it is once robotaxi is enabled it's simple math.

1,000,000 lifetime miles
$0.20 revenue per mile
$200,000 total revenue
-$57,000 cost of vehicle
$143,000 profit / 10 years
~25% annual return on investment

If the numbers line up to something like this I'll be buying as many as I can to go make me money.

 

[Radish11]

Even though financials and guidance are amazing, I'm thinking we won't see a nice bump in stock price. Would be happy to be wrong but nothing we do is ever really good enough for Wall Street.

What was the guidance for 2022? I can’t find their earnings estimate for 2022

 

[vwman111]

Actual headline - "Rivian stock jumps after report saying factory is ramping production." They shut down to try to ramp to 200/week, which would be a whooping 10,000 vehicles/year if they could ramp instantly. They are up 2%. Tesla ramping to over 1.5M vehicles this year with the best margins in the industry and massive profits - down in AH.... You can't make this stuff up.

And with those excellent Q4 results we should have been hoping for $1400 tomorrow....Instead we are hoping we end the week above $850ish, where we were at this time last year.

 

[loquitur]

One interpretation is that Tesla is working on vehicle(s) optimised for robo-taxi, just not one that would cost as little as $25K.

Elon learnt his lesson with the $35K Model 3. Between announcement and being ready to sell the cheapest version inflation had increased that $35K to about $38K, but they had to sell it for $35K (as a special order). He will make sure he does not commit to a price many years before production starts, especially if inflation is higher now.

I thought the "$35K" referred to what was on the price sticker of my 2018 two-motor Tesla Model 3.
The sticker read something like ($35K [base price], $9K [long-range battery], $5K ["premium" interior],
$4K [all-wheel drive], $1K non-black paint). Total $54K. In car-dealer speak, that's a $35K car
with extra options!

It's just that they never came out with a totally-stripped stripped version (no radio, cloth-seat interior etc.)
but did approximate it with the "SR+". Perhaps the $35K base price was some contractual obligation
to help folks like me get the $10K+ in state and federal tax credits offered at the time.

 

[Knightshade]

Expecting Texas to start getting beat up here to. Still no production permit despite supposedly no bureaucracy and fake environmentalists to blame. What's their excuse?

To be fair, they confirmed they plan to deliver Model ys with 4680 from Texas this quarter

Given Austin began construction months later than Berlin, that means even if Berlin were to get approval tomorrow (and that seems unlikely) Austin would still have reached production faster from factory start.

Every added day before Berlin approval pads Austins lead.

Perhaps the $35K base price was some contractual obligation
to help folks like me get the $10K+ in state and federal tax credits offered at the time.

No, at Model 3 intro they said $35,000 for the car, before the tax credit.

They DID eventually make and sell a very few at that price (the SR, no plus) then quickly got rid of it.

 

[Discoducky]

Look, there is no way a family of 4 doing sports is going to shove their crap in an autonomous EV every single time. That in itself will takes too much time. Do you guys have families here? Stop thinking like this will be a fast, smooth transition. What we NEED are less polluting cars on the road, not scheming math problems for the wealthy.

Yep, not for everyone, but my kids pack all their soccer and gymastics stuff in one bag each and it goes in and out of the car all the time (if we don't then stuff doesn't get cleaned and it smells horribly). I have a trailer for the X and my wifes 3 stays perfect and pristine and we don't talk about every getting into that car dirty..EVER!

The X is the utility vehicle and we go camping in it, tow stuff, haul stuff, move stuff and it goes to all the kids events and my cycling events as well.

Anywho, not for everyone, but if I can get my car paid for by putting it on the robotaxi service for some amount of time, I'll weigh that appropriately for my needs when the time comes. And that time will come.

 

[Krugerrand]

For a bunch of smart people, some of you are kinda dumb. It’s as plain as the nose on your faces what the future looks like, yet you’re too busy being angry and upset for one reason or another. Pity.

So, the cat is now accepting handwritten double spaced essays of no more than five pages in length as to why it should leave you its fortune in its will.

 

[ggies07]

Yep, not for everyone, but my kids pack all their soccer and gymastics stuff in one bag each and it goes in and out of the car all the time (if we don't then stuff doesn't get cleaned and it smells horribly). I have a trailer for the X and my wifes 3 stays perfect and pristine and we don't talk about every getting into that car dirty..EVER!

The X is the utility vehicle and we go camping in it, tow stuff, haul stuff, move stuff and it goes to all the kids events and my cycling events as well.

Anywho, not for everyone, but if I can get my car paid for by putting it on the robotaxi service for some amount of time, I'll weigh that appropriately for my needs when the time comes. And that time will come.

cool cool. Hope Elon's timing works out this time. The longer FSD beta continues, the longer gas cars are polluting the earth.

 

[Discoducky]

I thought the "$35K" referred to what was on the price sticker of my 2018 two-motor Tesla Model 3.
The sticker read something like ($35K [base price], $9K [long-range battery], $5K ["premium" interior],
$4K [all-wheel drive], $1K non-black paint). Total $54K. In car-dealer speak, that's a $35K car
with extra options!

It's just that they never came out with a totally-stripped stripped version (no radio, cloth-seat interior etc.)
but did approximate it with the "SR+". Perhaps the $35K base price was some contractual obligation
to help folks like me get the $10K+ in state and federal tax credits offered at the time.

Yep, the main reason that traditional auto sells bare bones cars is that there isn't enough demand for the high profit margin variants. Make no mistake, if they could, they'd only sell the highest profit margin versions

 

[canoemore]

They’re still expanding the auto business as fast as they can. It’s not like they said, “Actually, we’re not interested in buying every battery that suppliers can manufacture anymore, and we’re done building factories.”

Seems to me like the cars and batteries are just the boring, been there, done that part of the business now. Still immensely important, profitable, and nowhere near final scale. But time to move on to the next vision instead of dwelling on the present.

I certainly don’t begrudge anyone for being frustrated by the unsettled feeling that produces, but I don’t think it’s surprising. Very in character both for the company and for Elon.

 

[OrthoSurg]

My expectations are ridiculously high. Every earnings call disappoints me since I’ve been a stock holder. I want instant gratification on the stock price, but it’s gonna take a few weeks best case scenario to get back to the 1150 mark or so.

If you wanted 1150 tomorrow you just had to send a PM to Elon on Twitter to make him say:
“Cybertruck production started, first customers taking delivery 2022.”
“Giga Shanghai setting up the assembly line for $25,000 car to start production in 2023.”
And then walk out of the call.

 

[mrmage]

I was surprised that earnings was relatively low at only $2.54 a share. I'd have expected a knock out of the park for PD > 300k in the high 2.x or even $3.

These earnings were good, but lower than hoped for.

However, watching Dave's YT revealed the issue. Tesla paid an extra $340M in payroll taxes due to Elon's stock selling/exercising spree in Q4.

Adding that $340M to the profits would put the earnings solidly into the 2.8x range, so the profit model for Tesla is fully intact. If so, this was indeed a home run quarter!

Can someone else (cough cough @The Accountant ) confirm previous projections did not factor in the payroll tax?