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

[willow_hiller]

I’m telling you, FSD is a requirement for Elon’s goal. He’s not pretending it’s important, it’s bloody well central.

Elon has always had incredible foresight. And in this case it's clear that he's anticipating the end of the vehicle-ownership model as we know it, faster than any of us are anticipating.

It's not a matter of whether autonomous vehicles become more reliable than humans, it's a matter of when. And when that happens, people will resist trading in their personal cars for hailing rides, but the convenience and economics will make it much more attractive. No more car payments, no more car insurance, no more parking fees, no more service and maintenance.

Even if traditional automakers can retrofit their cars with Waymo-like computers and sensors, the overall demand for cars will be dramatically reduced. Cities that currently have millions of cars on the road (and sitting idle in garages) will be served by an order of magnitude fewer vehicles. And those automakers will be making even thinner profits than they do now, because all of the margin will be going to the company that owns and licenses the autonomous software.

 

[Ogre]

You and I know that fix ain't coming.

As long as the Citadels of the world have the SEC and members of congress on their payroll, it ain't happening.

As the mule used to say, "Ken Griffin needs a new yacht"

A bunch of guys from the SEC and the financial firms are sitting at a bar hanging out and someone says "who's buying the next round?".

SEC dude: I don't know, but it ain't me.

SEC dude and his buddies laugh while the guys from Goldman Sacs and Citadel play rock scissors paper.

 

[heltok]

Let‘s consider taking Elon literally at his word when he repeatedly says the following things:

- Tesla will choose volume over margin. If they have excess production capacity they will lower prices & margins to create demand for that capacity.
- Tesla could sell cars for zero profit (and hopefully profit off the install base with software services)
- He doesn’t care about short term focused Wall Street opinions
- The mission is most important

When I think about the above, I accept that if it comes to it, Elon will continue to drop pricing to relentlessly increase production, probably to the point that he really would prefer zero profits, or at least cashflow neutral, vs having stalled growth.

I believe in the mission - if Tesla really is able to achieve 20m vehicle run rate and ungodly amount of energy storage deployment by 2030 that will be one of the greatest capitalistic achievements of all time. If that requires running the company at single digit operations margins, I would actually be ok with that. Even if all the moon shots end up failing (no Robotaxis/L5, no Optimus), and TSLA is never worth more than it is now, I would still consider that a massive success for humanity and would be proud to be an investor.

I would even say the same thing if the company was only worth $100 Billion in 2030, as shocking as that would be to the bank account, at least everyone would be driving good & cheap EVs, their houses & workplaces would be powered at least in part by Tesla, and the world would be on its way to Master Plan part 3 being a reality.

Yeah. And even this hypothetical that some of the bears are drawing up is not really making any sense. Tesla are not done cutting costs, they are just getting started. 4680 v2 v3 v4 etc, lithium refining, new LFP batteries, inhouse LFP, parallell manufacturing, optimus, HW4 sharing development costs with millions of vehicles etc. No radar, no USS, no ads, no stealership etc. Competition is so screwed in this scenario... But it will not happen, their demand is growing and at some point they will have saturated their production with the current factories. Tesla are not gonna run out of demand at $30k for a Model Y before 2025 before incentives. Margins are not going to zero... It's a hypothetical world war scenario Elon is talking about, not the current world is slightly messed up but mostly normal that we currently live in...

 

[Singuy]

The current stock performance is literally self inflicted just from Elon not giving specifics but saying the same thing that we have heard before.

If the team yesterday broke down pre-sale FSD revenue and then post sale FSD revenue, the current trajectory they see as wide release vs prior to wide release, their expectations of take rate from the fleet and revenue growth trajectory, the stock wouldn't be so beaten down. All everyone want is some information on FSD if you want the company to go all in on FSD. Wall street just want some clear numbers so they can put in a model.

AWS and Nvidia server growth was a small percentage of revenue when they started to break them down, but the market was forward looking. Nvidia was valued as an AI/server company when their gaming revenue was like 5x their server revenue.

FSD revenue maybe small today but you show wallstreet some YOY growth of 300% or something and the stock will reflect accordingly. Just that small snip of insurance revenue growth from last call got people excited. Next time on SAY, make sure to ask such a question and only direct the question to Zach who will actually break things down before Elon repeat his antic again.

 

[Nocturnal]

I love when she does this. Let’s see if once again she can call the top in half the time.

If she calls that right even in full time I'll fly to your mountain and give you a big hug.

 

[Knightshade]

FSD revenue maybe small today but you show wallstreet some YOY growth of 300% or something and the stock will reflect accordingly. Just that small snip of insurance revenue growth from last call got people excited. Next time on SAY, make sure to ask such a question and only direct the question to Zach who will actually break things down before Elon repeat his antic again.

The problem is from what little we DO know, take rate isn't growing significantly.

And remains damn near 0 outside of North America.

Which is probably why Elon refused to speak to that # at all just yesterday on the call, and Tesla has historically refused to say anything about it.

Assuming pricing on it will remain unchanged, take rate is also unlikely to change until either capabilities change significantly-- or the nerfing/overregulation of current ones in China and the EU are changed.

 

[Chunky Jr.]

If there is an expectation that TSLA goes sideways for a year or two, I hope too many people don't sell and wait until the doldrums are over. That would not be good for the stock price at all.

 

[Singuy]

The problem is from what little we DO know, take rate isn't growing significantly.

And remains damn near 0 outside of North America.

Which is probably why Elon refused to speak to that # at all just yesterday on the call, and Tesla has historically refused to say anything about it.

Assuming pricing on it will remain unchanged, take rate is also unlikely to change until either capabilities change significantly-- or the nerfing/overregulation of current ones in China and the EU are changed.

Not true, ever since the introduction of EAP, the take rate outside of the US for that product increased. I think Troy had it at 7% in the EU or something? Also FSD pricing increased, so even if take rate stayed the same, the increase in price PLUS more cars being pushed out will give some solid YOY growth numbers. Then we add in wide release being available 3Q of last year which most likely boost subscription sales.

 

[Ogre]

If there is an expectation that TSLA goes sideways for a year or two, I hope too many people don't sell and wait until the doldrums are over. That would not be good for the stock price at all.

Struggling to see the stock stock here after the Cybertruck launch.

Unless Cybertruck turns out to be a dud and cancellations huge.

This mental image causes cognitive dissonance.

 

[WattsHappening]

Aunt Cathie bought 256K shares today.

 

[insaneoctane]

Why are energy margins so low? Don't they have a really long backlog? When the vehicle backlog got too long, Tesla increased prices and, thus, margins went way up. Yet, here we have low energy margins (11%) AND long backlog? What am I missing?

 

[Knightshade]

ever since the introduction of EAP, the take rate outside of the US for that product increased
I think Troy had it at 7% in the EU or something?

Do you mean this chart? There was indeed a spike around Q1->Q2 2021 when EAP came back to Europe. And then a pretty steady decline after- to a lower rate than it was before EAP came back. Which is the opposite of an "ever since" increase. it was a one-off spike that faded to worse than before.

This is what you want Tesla to start reporting to "show growth"?

I don't think that word means what you think it means.

Struggling to see the stock stock here after the Cybertruck launch.

Unless Cybertruck turns out to be a dud and cancellations huge.

I don't think it'll be a dud AT ALL.

But I do think delivery #s won't be material to the financials any earlier than next year

Actually speaking of that... Last comment on targeted annual production I'm aware of was back at battery day in 2020.... and Elon said I think 250-300k a year.

Which seems... crazy low in hindsight? Anybody aware of any more recent comment on planned output?

Because honestly I'm starting to wonder how we get anything near 900k more production in 2024 (needed for 50% unit growth over 1.8M this year) if they're only making 300k CT... Even Moar expansions at all the other plants I guess?

 

[AndrewZ]

Elon has always had incredible foresight. And in this case it's clear that he's anticipating the end of the vehicle-ownership model as we know it, faster than any of us are anticipating.

It's not a matter of whether autonomous vehicles become more reliable than humans, it's a matter of when. And when that happens, people will resist trading in their personal cars for hailing rides, but the convenience and economics will make it much more attractive. No more car payments, no more car insurance, no more parking fees, no more service and maintenance.

Even if traditional automakers can retrofit their cars with Waymo-like computers and sensors, the overall demand for cars will be dramatically reduced. Cities that currently have millions of cars on the road (and sitting idle in garages) will be served by an order of magnitude fewer vehicles. And those automakers will be making even thinner profits than they do now, because all of the margin will be going to the company that owns and licenses the autonomous software.

By the time something like this would become reality, the stock price appreciating to $2000 will be a zero net gain in real terms adjusted for inflation as it would have the same purchasing power as $184 today

 

[Singuy]

...EAP is, obviously, not FSD.





Do you mean this chart?
View attachment 930373

This is what you want Tesla to start reporting to "show growth"?

I'm not sure that word means what you think it means.

But it's post software sales which is what Tesla is now banking on. All of this should be in the same bucket.

And yes I want Tesla to show growth in REVENUE. See all that deferred revenue being piled on every quarter?

Lets do a calculation in revenue.

Q2 2019= 80k deliveries X 55% X 5k FSD price =220M
Q1 2023@ 420k deliveries X 10% X 15k = 630M

 

[FastEddieB]

https://twitter.com/x/status/1649178160796139521

Took some searching. Hidden under “Location”.

 

[Knightshade]

But it's post software sales which is what Tesla is now banking on. All of this should be in the same bucket.

And yes I want Tesla to show growth in REVENUE. See all that deferred revenue being piled on every quarter?

Lets do a calculation in revenue.

Q2 2019= 80k deliveries X 55% X 5k FSD price =220M
Q1 2023@ 420k deliveries X 10% X 15k = 630M

Of course since you just said the bump in take rate was from EAP, you're only getting 6k in 2023, not 15k.... And worldwide take rate rate was 8.1% at the end of that chart, not 10%.

I mean, I get what you're saying... but I don't think the revenue growth QoQ (rather than comparing to 2019) would look all that impressive.

For example:

Q4 2022- 405k times 8% times 10k (roughly splitting the difference between EAP and FSD with slight lean toward EAP)= 324M
Q4 2023- 420k times 8% times 10k (using same # to be fair)= 336M


You think Wall St is getting excited about a roughly 3.5% bump on SW revenue QoQ?

I think they'd be more likely to dislike the single-digit WW take rate on something Elon keeps saying it the key to the future of profits.

 

[Krugerrand]

If she calls that right even in full time I'll fly to your mountain and give you a big hug.View attachment 930366

I’m seriously conflicted now.

 

[bkp_duke]

Why are energy margins so low? Don't they have a really long backlog? When the vehicle backlog got too long, Tesla increased prices and, thus, margins went way up. Yet, here we have low energy margins (11%) AND long backlog? What am I missing?

Because except for the Megafactory, these are/were primarily hand built products to a large degree (megapacks). The Megafactory is the largest step towards automating megapacks that Tesla has taken. It's the "Model 3 moment" for Energy.

So, because of that, it's early ramp, and there are lots of costs associated with that (capex, lower efficiency as things are dialed in, etc.).

 

[Singuy]

Of course since you just said the bump in take rate was from EAP, you're only getting 6k in 2023, not 15k.... And worldwide take rate rate was 8.1% at the end of that chart, not 10%.

I mean, I get what you're saying... but I don't think the revenue growth QoQ (rather than comparing to 2019) would look all that impressive.

For example:

Q4 2022- 405k times 8% times 10k (roughly splitting the difference between EAP and FSD with slight lean toward EAP)= 324M
Q4 2023- 420k times 8% times 10k (using same # to be fair)= 336M


You think Wall St is getting excited about a roughly 3.5% bump on SW revenue QoQ?

I think they'd be more likely to dislike the single-digit WW take rate on something Elon keeps saying it the key to the future of profits.

Your end of chart ends in q2 2022 before wide release...EAP came back end of Q2, like June 25th end of Q2.

FSD and EAP are additive. You don't mix the numbers together. You can have a 14% FSD take rate and then PLUS whatever percentage of people who didn't buy FSD but bought EAP. You may have some FSD cannibalization but mostly you pulled more people into software sales.

 

[Krugerrand]

Why are energy margins so low? Don't they have a really long backlog? When the vehicle backlog got too long, Tesla increased prices and, thus, margins went way up. Yet, here we have low energy margins (11%) AND long backlog? What am I missing?

They aren’t efficient yet in their production process, haven’t reached a high enough volume to reach the next level of cost reductions etc... They aren’t going to tell us why anymore than any other company will. You’re just going to have to trust they’re working on it and it’ll get better.

Edit: what the Dr. said.