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

[UncaNed]

Agree. Dont remove sensors and other hardware until the replacement capability is in place and fleshed out. Dont make people lose functionality or have coming soon that people that bought a car a year earlier still have.

We better Tweet Elon and let him know that he's doing it wrong!!!

 

[Right_Said_Fred]

Enough with the advertising debate. People are just running around in circles now.

If you read this after having repeated yourself again, go ahead and delete the post so a mod won’t have to do it for you.

 

[bkp_duke]

How Expensive is it to Buy a Tesla Now vs Pre-Covid?

January 2020

Tesla AWD Model Y List Price: $52000

Interest Rates: ~ 3.5%

Monthly Payment ($10k down): $764

April 2023

Tesla AWD Model Y List Price: $50000

Interest Rates: ~ 6.5%

Monthly Payment ($10k down): $782


Ignoring other factors for now, Tesla's most sold car is still more expensive than it was over 3 years ago.


Other factors:

Supply / Demand Curves: All else equal, as volume increases, prices needed to sustain demand should decrease. Tesla has increased production rate by a factor of 4 in 3 years, yet the affordability of the car has not gone down.

Wage Inflation: Average wages were up ~4%,4%, and 6% the last 3 years. Assuming white collar jobs matched these, raw purchasing power should have went up ~ 15% and so higher monthly payments should be tolerated.

Total Inflation: However total inflation has been even higher the past 2 years, while lower in 2020. Inflation obviously increases costs of other expenses reducing purchasing power for cars. I'd say this washes out wage inflation for now.

View attachment 931774




Summary

The economic factors presented to Tesla in 2023 should mean that prices should even be lower than they currently are. Monthly payments are actually higher than 3 years ago while supporting a much larger base of potential customers.

Costs also inflated but should see some alleviation later this year, unfortunately those lag price cuts.

Price cuts effect on demand are not instantaneous, we may not see most effects until later this year.

Thus, this is the worst period of time for financials. Prices may need to be cut again. Q1 or Q2 should be the worst of it. Peak FUD is now through rest of Q2 and probably Q3.

Conclusion

Tesla does not have a demand problem, in fact, I would argue it is up. (I am surprised by this finding)

Tesla does not have an advertising problem.

Tesla has a "the economy sucks and there's nothing we can do about it but be patient" problem.

Investors need to suck it up and be patient too.

Nominated for Posts of Particular Merit.

 

[Krugerrand]

Will this advertising cost some amount of conventional currency and likely positively impact to sales? Then it seems worth using our knowledge/experience to ponder where things might be headed, which I think adds a lot more value than spending time discussing daily stock price movements that may or may not have anything to do with reality or the underlying business and that are pretty much guaranteed to change the next day and the next day after that.

Oh, I hadn’t realized everyone was simply pondering. My bad.

@Buckminster if you’d be so kind to provide the link to the Pondering Advertising thread. Thank you.

 

[betstarship]

I'm reading up on FSD deferred revenue recognition and, in particular, its history here:

Tesla Autopilot - Wikipedia

en.wikipedia.org

Thinking about the ramifications here on the financials...

If I were to recognize ~$1.75B in pure 100% profit in a quarter (due to the official release of FSD to the public), I'd want to phase that out over time while picking up the take-rate of that feature across the entire vehicle base of current owners as well as new purchasers. It just seems wild to create a 7% increase (using $25B in quarterly revenue as the line in the sand number) in quarterly profits and have nothing to show for it in future quarters without a plan to increase the take-rate across the entire vehicle base of current and new vehicle purchasers.

Also, are they really going to offer just a button on the UI to enable this massively expensive feature? Like enable FSD, take thousand's of dollars from my checking account and wire it over in a single business day?

Edit: Excuse me, $3B in deferred revenue. That'd make it 12% increase in quarterly revenue.

https://twitter.com/x/status/1650473379072286732

 

[Ogre]

People just need to stop using 2022 to compare ANYTHING to. It is not in any way typical of anything. Saying Ford "Grew" because sales are higher this year than last year is nonsense. All of the "Averages" and growth numbers people quote using 2022 as the baseline are so completely off base it's not even funny. "The $48k average car price" people quote based on the 2022 average resulted in massive sales declines across the industry which they have yet to recover from. Save for BMW, Mazda, and Tesla, every major auto company had double digit sales declines between 2021 and 2022.

If you compare sales between Q1 2021 and Q1 2022, industry sales declined a whooping 16%. Down an insane 600,000 vehicles from 3.966 million to 3.336 million. In 2023 they managed to claw back roughly 250k units in sales I suspect heavy discounting was a big part of that.

This is my long winded way of emphasizing that anyone backing their case using any numbers from 2022 is so full of BS they don't deserve the time of day. GM "Grew" 17.7% in Q1 2023... right. Except sales are 13.5% lower than they were in Q1 2021. It's all just bullshhhhhhhhhhh......

Source

 

[Buckminster]

Oh, I hadn’t realized everyone was simply pondering. My bad.

@Buckminster if you’d be so kind to provide the link to the Pondering Advertising thread. Thank you.

Need for Tesla Advertising / PR

 

[Krugerrand]

I guess you missed 2 important points. 1. I mentioned that buybacks aren't my idea of a good thing, but 2. Tesla already said they were considering doing them. So, not really my choice, but if they do it I think the impact - at least WS perception - will be positive. Your quote is undisputed, but also marginally irrelevant to my point. I get that you may be against a buyback, but at that point you're arguing with Tesla, not me.

You said: ‘but what I see as the next chess move from Tesla that can truly move the needle is to release something on the under-the-radar thus far stock buyback‘

My question was to address that thought process and was entirely rhetorical given Tesla’s recent position; mission first. Mission so important that we don’t care about what WS thinks of our GMs.

Tesla talked seriously of the current economic climate. It wouldn’t make sense that Tesla would initiate a buyback when the future is currently uncertain and right now they’re giving WS the middle finger.

FYI, I don’t have an opinion on a buyback.

 

[growler23]

It just doesn't work like that. People aren't all exactly the same and they aren't all interconnected to each other to the same degree. That's going to have diminishing returns.

^^^
This...(gasp)...
is..(gasp)...
why..(gasp)...
we..(gasp)...
need..(gasp)...
to..(gasp)...
finally ..(gasp)...
ship..(gasp)...
C Y B E R T R U C K !!!!!!!!!!!!!

(Sorry, lot of frustrated impatience here. But when it comes it will bust into a whole new circle of interconnects)

 

[M|S|M MYP]

How Expensive is it to Buy a Tesla Now vs Pre-Covid?

January 2020

Tesla AWD Model Y List Price: $52000

Interest Rates: ~ 3.5%

Monthly Payment ($10k down): $764

April 2023

Tesla AWD Model Y List Price: $50000

Interest Rates: ~ 6.5%

Monthly Payment ($10k down): $782


Ignoring other factors for now, Tesla's most sold car is still more expensive than it was over 3 years ago.


Other factors:

Supply / Demand Curves: All else equal, as volume increases, prices needed to sustain demand should decrease. Tesla has increased production rate by a factor of 4 in 3 years, yet the affordability of the car has not gone down.

Wage Inflation: Average wages were up ~4%,4%, and 6% the last 3 years. Assuming white collar jobs matched these, raw purchasing power should have went up ~ 15% and so higher monthly payments should be tolerated.

Total Inflation: However total inflation has been even higher the past 2 years, while lower in 2020. Inflation obviously increases costs of other expenses reducing purchasing power for cars. I'd say this washes out wage inflation for now.

View attachment 931774




Summary

The economic factors presented to Tesla in 2023 should mean that prices should even be lower than they currently are. Monthly payments are actually higher than 3 years ago while supporting a much larger base of potential customers.

Costs also inflated but should see some alleviation later this year, unfortunately those lag price cuts.

Price cuts effect on demand are not instantaneous, we may not see most effects until later this year.

Thus, this is the worst period of time for financials. Prices may need to be cut again. Q1 or Q2 should be the worst of it. Peak FUD is now through rest of Q2 and probably Q3.

Conclusion

Tesla does not have a demand problem, in fact, I would argue it is up. (I am surprised by this finding)

Tesla does not have an advertising problem.

Tesla has a "the economy sucks and there's nothing we can do about it but be patient" problem.

Investors need to suck it up and be patient too.

Thanks Elon for the wonderful summary!

 

[Knightshade]

Also, are they really going to offer just a button on the UI to enable this massively expensive feature? Like enable FSD, take thousand's of dollars from my checking account and wire it over in a single business day?

That's how software add-ons have always worked- though it's charged to your credit card on file, not your checking account AFAIK.

There was a whole controversy about it a few years ago when people were "accidentally" buying things like FSD or EAP for thousands of dollars with a button press in the app-- to where Tesla ended up offering a 48 hour refund period for such purchases.

 

[betstarship]

Looks like Tesla is already being valued as a SaaS company, just one that doesn't have any SaaS products in public release (e.g. FSD).

I was reading this article and happened upon the "rule of forty": SaaS Valuation Multiples: 2015-2023 – Aventis Advisors

...which is the calculation of the sum of the company’s growth rate and profitability (EBITDA margin in this case). For Tesla, that's 18% for automotive sales and 21% for EBITDA margin [1]. That'd sum to 39%...or one healthy SaaS company!

[1] Tesla EBITDA Margin 2010-2023 | TSLA

If you look at SaaS multiples over time:

...and TSLA multiples over time: Tesla Price to Sales Ratio 2010-2023 | TSLA

They look pretty similar starting in 10/2020...when Tesla first put out the beta program for FSD:

Tesla Puts Full Self-Driving "Beta" Capability In Hands of Select Few

After an evening tweet on October 20 promising "FSD beta rollout happening tonight," Tesla CEO Elon Musk appears to have followed through. The automaker's long-

www.motortrend.com

If Wall Street, recognizes TSLA as a SaaS company and, especially, one that's super strong - I think it'll get back to 8-14x valuation (at 39% Rule of 40) multiples based off of this chart:

Currently, it stands at 6.58x P/S.

 

[ZeApelido]

Nominated for Posts of Particular Merit.

I impartially agree.

 

[Gigapress]

Enough with the advertising debate. People are just running around in circles now.

If you read this after having repeated yourself again, go ahead and delete the post so a mod won’t have to do it for you.

May we instead keep having circular discussions about premature ultrasonic sensor removal?

 

[Knightshade]

May we instead keep having circular discussions about premature ultrasonic sensor removal?

I mean, without the sensors how does anyone know when the discussion gets too close to hitting the wall?

 

[Mengy]

Man, with the GM Bolt being discontinued this year I really wish the Tesla Compact was going into production much sooner, like early 2024. Feels like a huge opportunity will be languishing until someone else can fill that affordable EV hole.

 

[Thekiwi]

Tesla China still having a fantastic 1st month of quarter local sales rate:

 

[Thekiwi]

Relevant:

 

[navguy12]

Just a note - don't agree with this part.

The BMS on all Tesla vehicles is fully programmable, and has been upgraded and changed multiple times with new algos for even the oldest (2012 / 2013) S cars.

If anything, there are "issues" with the 3/Y having worse (but still good by industry standards) degradation curves than the S/X.

Can you provide a link to some discussions regarding the 3/Y having worse degradation curves than the S/X please? Thanks. Cheers.

 

[WattsHappening]

San Jose could use robocars in the next decade

San Jose could use autonomous cars as a form of public transportation that would haul...

www.sfgate.com

Quote:
'The transportation system would use Glydways vehicles, owned by Plenary America. These automated electric transit cars would have their own dedicated roadway, separate from traffic, Brian Stanke, project manager of the connecting service, told SFGATE.'

Reaction:
Uh, there may be a much better solution way before then, one that doesn't involve public funding.