I was so surprised they actually made a profit from used cars when everyone else was suffering from used Teslas due to the price drops.
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Tesla, TSLA & the Investment World: the Perpetual Investors' Roundtable
- Thread starter AudubonB
- Start date
Sudre
Active Member
Question.... If all ICE manufacturers simply lied thru their teeth about how great their diesel engines were, what is to stop them from putting whatever battery they want into their vehicles when push comes to shove? The government's will due what they always do when they find out.... fine them 10 cents on the dollar.
They lowball so hard on trade in values I assume they could make plenty of money the moment the trade in is done if they really wanted to (by immediately selling it to a used car wholesaler, thereby eliminating any holding risk)
I would agree, only if you show us what your company has done for humanity including a non-freaky truck that tens of millions of sane humans want to buy and own. Don't be shy. I'll keep other products you might wanna show us for later.
Do reply.
dhanson865
Well-Known Member
I'm not suprised after seeing the most desirable cars with FSD enabled, it's basically 10K+ profit guaranteed on each used car they turn it on and sell.
It sure is.
They offer Tesla owners absolute garbage trade-in values and then sell the car, perhaps after a wash, for 5-figures more than the trade in offer . . . . We've owned over a dozen MS's, and the trade-in values have gone from bad to beyond atrocious, BUT it's the only way to get the trade-in credit on sales taxes (at least in our state) and avoid the hassle of a private party sale.
Of course, the negative is that it just pisses off Tesla owners left and right. Why not ACTUALLY give some REAL trade-in credit for FSD (instead of mouthing the words) and the car itself (what a concept!) and stop with the outrageously low/insulting trade-in valuations?
They're jumping the shark over at Tesla of late. We may be done with Tesla for a while until they clean up their "screw our customers wherever we can" act. (And because Elon promised us a working horn on the MS's over a year ago--it's a friggin' SAFETY HAZARD, easy as all get out to fix, and we're still waiting. Pathetic: Tesla Model S and Model X steering yoke to receive push center for horn update)
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dhanson865
Well-Known Member
So when do we expect Model Y at Austin Texas to be at the full rate of production for a full quarter?
Everyone else wants to know when Cybertruck hits the road, I want to know when Model Y production plateaus.
Everyone else wants to know when Cybertruck hits the road, I want to know when Model Y production plateaus.
Gigapress
Trying to be less wrong
Here are my initial takeaways that aren’t redundant to what’s already been posted.
In the negativity, some important stuff seems to have passed people by:
Stuff that was actually negative in my opinion (on a time horizon of more than a year):
After seeing these results and Tesla’s guidance for near-term macroeconomic risk, I maintain my position that initiating buybacks would’ve been too risky and that Tesla management made the right decision to keep such a strong, conservative balance sheet instead of giving it away to appease shareholders upset with the falling stock price in Q3 and Q4. We made it to a point where we now have four factories producing meaningful cashflow instead of only two, so risk from a single factory being shut down is much lower, but all of them are now a selling into a much weaker automotive market that might get worse before it gets better. If an extended deep recession happens or another force majeure appears, there’s clearly a chance Tesla could run negative cash flow in 2023 and 2024. The $22B cash balance assures they can not only survive something as bad as a depression but actually aggressively grow and invest through it. Furthermore, other uncontrollable external risks remain, like natural disasters and wars, that could hamper production and/or deliveries and exacerbate the current financial challenges.
I wish Tesla would’ve addressed the advertising question because that’s been a topic of so much controversy. At least explaining their rationale would’ve been helpful so people understand what’s behind continuing the same strategy and slashing prices.
- In my bullish projections last year based on higher automotive prices I majorly underestimated the effects of potentially bad macros and the cyclical demand for cars. My bad.
In the negativity, some important stuff seems to have passed people by:
- Per Zach, half of the underperformance relative to the 20% auto gross margin target was an artifact of warranty adjustment on older generations of cars, which is a one-time item, and Autopilot deferred revenue, which will be recognized in the future and thus enhance future gross margin
- This was another quarter of forex headwinds. On average forex tends towards no impact but in individual quarters it can make a big difference. This should be factored out as random noise.
- Reiteration of the point that car companies selling at or near zero upfront profit margin is actually normal in weak years, because OEMs make high margins on service and post-warranty replacement parts. The next part that Elon didn’t say explicitly was the implication that those same high-margin replacement part sales could be coming eventually for the cars Tesla is selling now. There was discussion of future profit for insurance, FSD, connectivity and supercharging, but not this. Post-warranty service won’t be a big percentage of the business until growth stops and the fleet size stabilizes and has proportionally more older cars. However, good investors who understand business really should be looking at the net present value of expected profits over the lifetime of the vehicles instead of just what’s recognized at the time of sale. Remarkably, even amidst an industry downturn Tesla is still maintaining good gross margins relative to other competitors and generating positive free cash flow while investing in growth and having a young fleet.
- COGS per car only fell by $1k QoQ, but Zach said commodity prices for Tesla remain very close to the peak from 2022 and we should expect substantial deflation in the coming quarters. The price cuts seem to be leading ahead of upcoming cost decreases.
- As Elon pointed out, delayed car purchases during an automotive market downswing largely come back as pent-up demand during subsequent boom times
Stuff that was actually negative in my opinion (on a time horizon of more than a year):
- Tesla is targeting energy margins targeting in the mid-20% range. If we take a more conservative interpretation of what was meant by that, then it means the cost of a Megapack is roughly $350/kWh, much higher than I would’ve thought. However, as I posted earlier today, Zach’s comment was somewhat ambiguous and under-defined with respect to what the ~25% margin was including. Another possibility is Tesla is sandbagging. In any case, we will need to wait and see.
- Berlin and Austin gross margin probably won’t beat Shanghai. Possibly might be sandbagging too, but I would’ve expected the next generation to beat Shanghai even with more expensive labor.
After seeing these results and Tesla’s guidance for near-term macroeconomic risk, I maintain my position that initiating buybacks would’ve been too risky and that Tesla management made the right decision to keep such a strong, conservative balance sheet instead of giving it away to appease shareholders upset with the falling stock price in Q3 and Q4. We made it to a point where we now have four factories producing meaningful cashflow instead of only two, so risk from a single factory being shut down is much lower, but all of them are now a selling into a much weaker automotive market that might get worse before it gets better. If an extended deep recession happens or another force majeure appears, there’s clearly a chance Tesla could run negative cash flow in 2023 and 2024. The $22B cash balance assures they can not only survive something as bad as a depression but actually aggressively grow and invest through it. Furthermore, other uncontrollable external risks remain, like natural disasters and wars, that could hamper production and/or deliveries and exacerbate the current financial challenges.
I wish Tesla would’ve addressed the advertising question because that’s been a topic of so much controversy. At least explaining their rationale would’ve been helpful so people understand what’s behind continuing the same strategy and slashing prices.
Commodities will continue trickling through, although some like Nickel have been heading back up lately, but I also think the price reductions aren’t done yet and Q1 would have included a good chunk of realized sales at prices higher than current. Elon is ready to sell at basically zero margin like one of the established automakers but while banking on autonomy rather than post-warranty servicing.
cliff harris
Member
Energy deployment growth is awesome. Also sounds like cybertruck production is pretty much on schedule.
If there was any bad news about cybertruck we would have found out, but apparently none. I think from a PR point of view, and wall st POV, this is the year of the cybertruck.
As an investor, I suspect this is really the year of the megapack and the semi. I'm so sick of reading the comments of the drooling idiots on twitter about how they hate elon and wont buy a Tesla. Luckily... megapack and semi purchase decisions are made by accountants, not the general public. Anything that broadens the companies profit base so it has more B2B and less B2C is good from where I'm standing.
I fully expect all the trade-happy readers of clickbait to sell, and drive the price down, maybe to $150? but I don't think it will be there long. Release of proper cybertruck pricing and specs will nudge it back up, and any news regarding semi or megapack ramp will do the same.
Anyone who sells now will regret it. Don't read the clickbait or twitter. Just hold. I'm selling maybe 5% of my holding at $250, 10% at $300, 25% at $400.
If there was any bad news about cybertruck we would have found out, but apparently none. I think from a PR point of view, and wall st POV, this is the year of the cybertruck.
As an investor, I suspect this is really the year of the megapack and the semi. I'm so sick of reading the comments of the drooling idiots on twitter about how they hate elon and wont buy a Tesla. Luckily... megapack and semi purchase decisions are made by accountants, not the general public. Anything that broadens the companies profit base so it has more B2B and less B2C is good from where I'm standing.
I fully expect all the trade-happy readers of clickbait to sell, and drive the price down, maybe to $150? but I don't think it will be there long. Release of proper cybertruck pricing and specs will nudge it back up, and any news regarding semi or megapack ramp will do the same.
Anyone who sells now will regret it. Don't read the clickbait or twitter. Just hold. I'm selling maybe 5% of my holding at $250, 10% at $300, 25% at $400.
The people on the social platform Musk owns complaining about buying the car Musk makes while their home uses energy which has an increasingly high chance of having been stored or generated on a Tesla product.
It tracks.
I’m not an accountant, but the way it works here is that if I buy or sell stuff in dollars, for accounting purposes it gets converted to euros (the main currency of my account) using the exchange rate of the date of the transaction. No actual currency exchange, you only do that if needed by your cash position.
FSDtester#1
Large Member
What about the other 60% ? Waiting to sell at $1000? $2000? Higher?
Thanks to everyone for the great posts.
Was on a flight and was enjoying them. Even some of the trolls posts.
I was too far behind for a real time troll smackdown
... they got handled by the usual suspects!Summing up the last 20 + pages, we may not go to the moon in the next month or so.
However Q3 of this year should be when the countdown at the launchpad starts.
Then in 2024 and beyond, if you have any dry powder left..shame shame.
2024 will be the year of CyberTruck significance - this year its only going to ship in low volume, and probably be a financial drag initially while it does it - whereas Model Y is going to claim the throne of the worlds best selling vehicle.
cliff harris
Member
I think it will be a little while to hit $400, so I'll reassess when we are there. Luckily I dont need to withdraw those funds any time soon. Maybe if by then Teslabot and FSD are real serious products, I'll want to hold the rest as long as possible. If FSD grinds on and Teslabot has no commercial value, maybe things look different.
The company is so amazing, that I cant imagine ever selling ALL my stock, unless close to death! I'd rather be that dumb schmuck who sold 90% of his TSLA below $500 than that absolute muppet who sold 100% of his TSLA
. We could be the people who feel smug holding apple stock around the iMac era, wondering what the company could possibly do next...
Well researched and balanced article (sounds like writer actually listened to the call) on earnings in major German newspaper Süddeutsche (behind paywall unfortunately), excerpts:
www.sueddeutsche.de
Tesla: Elon Musk präsentiert Quartalszahlen und hat ein großes Ziel
Der Chef sieht seinen Konzern bestens aufgestellt für die Zukunft einer Welt selbstfahrender E-Autos und bittet Investoren um Geduld.
www.sueddeutsche.de
If FSD was real in 5 years, what would you do as a CEO of the company?
The answer is sell as many cars as you can now, which will become FSD customers later. Conquer market share, squeeze competition, put cars that historically have sold themselves on the road, conquer "mindshare" in customers and potential ones, leverage on brand loyalty, which you are very good at. Put cars on the streets which will increase data harvesting for FSD.
The point is that a lot of investors don't like these long waits. 5 years, in Wall Street terms, in an entire generation. They literally don't care about a game that long. Even if its a complete, armageddon-style revolution as real self-driving.
Real self-driving will change everything. It is a matter of time tho. Maybe 5 years, maybe more.
Now, Elon - who is the CEO and calls the shots - believes FSD will be here, in 5 years or even less.
So he decides accordingly.
This is a building quarter, not a gotcha quarter.
Now, maybe,
Tesla should take their own medicine and apply price adjustments to FSD too:
give back some money to those who payed 15k, -which we know are not a lot - and make it 5k or 3k for everyone and sell it to a lot more customers. They could even make trial offers like "100$ for a week" and get millions for free.
The answer is sell as many cars as you can now, which will become FSD customers later. Conquer market share, squeeze competition, put cars that historically have sold themselves on the road, conquer "mindshare" in customers and potential ones, leverage on brand loyalty, which you are very good at. Put cars on the streets which will increase data harvesting for FSD.
The point is that a lot of investors don't like these long waits. 5 years, in Wall Street terms, in an entire generation. They literally don't care about a game that long. Even if its a complete, armageddon-style revolution as real self-driving.
Real self-driving will change everything. It is a matter of time tho. Maybe 5 years, maybe more.
Now, Elon - who is the CEO and calls the shots - believes FSD will be here, in 5 years or even less.
So he decides accordingly.
This is a building quarter, not a gotcha quarter.
Now, maybe,
Tesla should take their own medicine and apply price adjustments to FSD too:
give back some money to those who payed 15k, -which we know are not a lot - and make it 5k or 3k for everyone and sell it to a lot more customers. They could even make trial offers like "100$ for a week" and get millions for free.
I found this gem at the end of page 8 of the report:
Cost reduction remains the main enabler of delivering on our mission.
Cost reduction remains the main enabler of delivering on our mission.
This is a super important point. I recall reading an analysis, that I cant find now, that showed legacy OEMs make so much money from their off-warranty fleet that buys parts from them, and of course the legacy dealers make so much money on service during the whole lifetime of the car. It was silly for Elon to say years ago that service shouldn’t be a profit center — it absolutely should be, within service of the overall mission of the company.
As more and more of the Tesla fleet comes off-warranty, those cars stop being a source of warranty expense and start being a source of high margin parts and service revenue — revenue that can be fully captured by Tesla and not shared with corrupt independent dealers.
The analysis that I read on this issue pointed out that this need for profits from the off-warranty fleet is a large barrier to entry for start up auto makers who are denied this profit source for years and years. It will take a long time for any auto OEM start up to be in a position to have a large fleet of money-making off-warranty cars.
Tesla is only now at the start of getting that off-warranty fleet, and related high margin revenue, to a very large size with the Model 3 ramp up cars starting to come off warranty.
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