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

[Buckminster]

Ford down 5%
AMZN up 4%

 

[Gigapress]

Um, Fremont is not even close to being one of the most expensive cities on the planet. It's not even a Silicon Valley suburb, it's a bunch of random land way out in the East Bay.

*Correcting this only because you are usually meticulously correct.

To clarify, I was referring to the greater San Francisco-San Jose-Oakland metro area, which is the labor market Tesla is competing in for the Fremont plant. This metro area is around 8th most expensive in the entire world, depending on whose ranking you look at. How many automotive factories are sited in the suburbs of New York City, Geneva, London, Singapore or Hong Kong? Although I didn't look very hard, I found zero.

That being said, the City of Fremont in particular is a very wealthy, very high-cost location to be manufacturing anything. Key inputs like labor and energy are quite expensive relative to places where most car factories are.

Fremont has:

• Median household income of $155k
• Median home price of $1.4M
• $5.20/gallon gasoline
• $90/MWh average industrial electricity rate

Compare this, for instance, with Bowling Green, Kentucky, where GM has a car factory:

• Median household income of $43k
• Median home price of $270k
• $3.20/gallon gasoline
• $63/MWh average industrial electricity rate

Fremont is not in the heart of Silicon Valley, but it's right next to it. If it's not a suburb of Silicon Valley, then I don't know what is. I think that for R&D reasons it's beneficial for Tesla to have a factory that's a half-hour drive away from their global Engineering HQ in Palo Alto, despite the extreme expense. Nonetheless, there's a reason why GM and Toyota were willing to abandon the NUMMI plant and sell it to Tesla in 2010 for just $42M. This factory was constructed back in 1960, when this location was vastly cheaper than it has become now.

This matters for forecasting, because Fremont is still contributing roughly 30% of Tesla's total global production volume, and so it is substantially affecting global average profit per car sold that we see in the financial reports. Granted, Fremont does benefit from selling high-margin S & X, but for 3 & Y it's certainly suboptimal. Even so, Tesla's Q3 report says that the new factories still are producing cars at higher cost than the established factories. If Berlin and Austin remain more costly, despite Fremont's inherent handicaps, then that probably implies that there's still a lot of future cost reduction to look forward to from these newer, better production systems. This is a major reason not to overreact to Q3's automotive margins when looking forward to the future. The price cuts happened before much of the cost reductions have materialized.

 

[SOULPEDL]

Now that the Ford workers are getting all that money, won't this cause inflation?
(I'm in a strange mood... just some humor to fend off the macro fears.)

 

[Artful Dodger]

Volkswagen says EV orders are down 50% in Europe

After releasing its results for the first nine months of the year, Volkswagen’s CFO said EV orders are down 50%...

electrek.co

Did VW also mention how much sales of their ICE vehicles were down YTD? I don't think they make any compelling vehicles (ICE or EV), certainly not if you'd like to drive that new car inside of any large European city's low-emissions zone in the coming years. EVs are the only reasonable choice, it's just that VW doesn't make the best value EVs (buggy software, high prices, middling specs).

 

[FireMedic]

I heard they have a terrible fire department though.

just like their auto manufacturer…they’re terrible also; no redeeming qualities, going to ZERO!

 

[SOULPEDL]

Did VW also mention how much sales of their ICE vehicles was down YTD?

I fully expect the other shoe to drop on ICE prices globally, but lagging EVs possibly due to the existence of Dealerships (ICE inventory). It's the sense I get from folks like CarEdge who repeatedly claim inventory is not moving and is way over-priced for afFordability.

 

[GOVA]

Thx 4 reply……..
Wow i’d be in shock if we hit 160 by year end.
I just don’t see another $50 drop with some of the positive news coming out. I do see Tesla exceeding expectations for 4th quarter as the bar has been lowered. I’m expecting a ^^^^ big move.

Let's see how much of an fortune teller are you.

 

[Gigapress]

I was trying to understand why US GDP in Q3 was the highest since 2014. What does the US actually make here besides pills and ICE vehicles?
So I looked it up - #1 is oil and gas exports. This does nothing to curb inflation. Are we simply a natural gas rich economy. Something tells me this won't end well.

Exports, as I said. We make and sell oil. That's fueling the boom. Bad news IMO.

"Trade In July 2023, the top exports of United States were Refined Petroleum ($9.44B), Aircraft Parts ($8.81B), Crude Petroleum ($8.8B), Cars ($5.51B), and Commodities not elsewhere specified ($5.45B)."​

Source is AI from my browser.

The US economy's largest sector is services, but it also includes a wide variety of natural resources, agriculture, manufacturing and more. It is certainly not just oil & gas. In fact, the USA has the most highly diversified national economy in world history.

As for "what does the US actually make here", in 2023 the US manufacturing sector is setting yet another all-time record for output and is the global leader in many manufacturing industries. The only country with more gross manufacturing output is China, and not by as wide of a margin as most people think.

U.S. Manufacturing Economy

Applied Economics in US Manufacturing

www.nist.gov

The US economy is also one of the least dependent on international trade relative to domestic trade, especially if trade with Mexico and Canada is considered quasi-domestic. This is mainly due to the population size, natural resource endowment, and geographic isolation of the US. Looking at exports as the primary source of growth doesn't really make sense.

 

[EXOTIC1]

Let's see how much of a fortune teller are you.

Track record is pretty good if looking
I feel much more confident about the uptick, not so much where the bottom is
Let’s revisit this post end of January……
I see $300 end of 2024 minimum

 

[SOULPEDL]

The US economy's largest sector is services, but it also includes a wide variety of natural resources, agriculture, manufacturing and more. It is certainly not just oil & gas. In fact, the USA has the most highly diversified national economy in world history.

As for "what does the US actually make here", in 2023 the US manufacturing sector is setting yet another all-time record for output and is the global leader in many manufacturing industries. The only country with more gross manufacturing output is China, and not by as wide of a margin as most people think.

View attachment 985557

U.S. Manufacturing Economy

Applied Economics in US Manufacturing

www.nist.gov

The US economy is also one of the least dependent on international trade relative to domestic trade, especially if trade with Mexico and Canada is considered quasi-domestic. This is mainly due to the population size, natural resource endowment, and geographic isolation of the US. Looking at exports as the primary source of growth doesn't really make sense.

What I see is that the US is actually getting more dependent on imports, what do you mean? Our US deficit is nearly 1T with about 100B rise last year alone.

Spoiler: Trade Deficit

The reason might be that the US consumed more from everywhere including America, only more so from international sources. Could you imagine what this would look like if US didn't export Oil and Gas as their primary products? Ya, not good.

Car parts were listed as a significant import which makes sense. People servicing (foreign) vehicles vs buying new (Tesla's because they can't afford them yet ).

 

[SOULPEDL]

After hours seems to trade more than open hours lately. Nice recovery there, was seeing a repeat of yesterday for a moment.

I always wonder why they don't just start selling off in AH to drive down the prices? (No physical shares?) Like a battle zone where everyone takes a break.

The actions in AH lately make more sense to me. Heck, it seems I moved the market AH one time - I forgot to set the trade limit! My brother Bob was like "Was that you?" Those were the good o'l days when the volume was low. Maybe not so easy today.

 

[Artful Dodger]

Amazon (NASDAQ:AMZN) Jumps on Impressive Q3 EPS, Revenue Beats | Tipranks (1 hour ago)

 

[Gigapress]

What I see is that the US is actually getting more dependent on imports, what do you mean? Our US deficit is nearly 1T with about 100B rise last year alone.

Spoiler: Trade Deficit

View attachment 985571

The reason might be that the US consumed more from everywhere including America, only more so from international sources. Could you imagine what this would look like if US didn't export Oil and Gas as their primary products? Ya, not good.

Car parts were listed as a significant import which makes sense. People servicing (foreign) vehicles vs buying new (Tesla's because they can't afford them yet ).

I mean that the US is an extreme outlier in terms of the amount of international trade in proportion to the overall economy. In 2022, US exports were $2T and imports were $3T, whereas overall GDP was $25T, which means the US trade-to-GDP ratio was 20%. (calculated as (exports + imports)/GDP). Per Wikipedia, this is lower than every other country in the world except Ethiopia, Nigeria and Sudan. Most countries of comparable wealth as the US fall in the 50-200% range.

Additionally, about a third of that international trade was just with Mexico and Canada. So only about 13% of US economic activity is international trade beyond the big, isolated island called North America.

Furthermore, for the stuff that's most important (like energy, food, software, freshwater, medicine, timber, financial services, minerals, aircraft, weapons, advanced electronics, etc.) the US is largely self-sufficient.

 

[Singuy]

Ford to pull 12B of future EV investments due to reduced demand

Ford will postpone about $12 billion in EV investment as buyers become more cautious

Ford said customers in North America are unwilling to pay a premium for an EV.

www.cnbc.com

 

[2daMoon]

Ford to pull 12B of future EV investments due to reduced demand for their EVs

Ford will postpone about $12 billion in EV investment as buyers become more cautious

Ford said customers in North America are unwilling to pay a premium for an EV.

www.cnbc.com

FTFY

With this news, I suppose Tesla probably should go ahead and build a second CT line to take up the slack.

Someday soon, Ford will be complaining about how customers are unwilling to pay a premium for an ICE vehicle.

 

[mongo]

Cybertruck is made of steel.... Lots of it I'd assume.

This is US Steel pricing for 1Y. That's about +50% since Aug and may have influenced CT pricing/plans.
Yes, we know Tesla has contracts, but this is part of a much bigger trend and I don't think Tesla makes their own steel... yet.

View attachment 985512

Summer of 2020, it was only $6. hence the initial $39K CT pricing made sense. (Maybe it should have been plastic like the Saturn, and lighter.)
Another way to look at this... how much is that Bullet Proof feature adding to the CT costs and efficiency?

View attachment 985514

That's the stock price of the company US Steel, not the price of the commodity steel in the US.

Trend is close though.
Cybertruck unveiling was November 2019, hot rolled steel was $500 a ton then vs $936 a ton now.
However, if Cybertruck weighted 4 tons and was 100% steel, that's only $1,744 cost increase, + 20% GM = $2,100 impact (stainless, of course, costs more).

 

[Singuy]

FTFY

With this news, I suppose Tesla probably should go ahead and build a second CT line to take up the slack.

Someday soon, Ford will be complaining about how customers are unwilling to pay a premium for an ICE vehicle.

U.S automakers throwing in the towel AFTER the IRA has passed? What a plot twist. At this rate they should just rename the IRA to the Tesla Tax Credit Act.

 

[SOULPEDL]

I mean that the US is an extreme outlier in terms of the amount of international trade in proportion to the overall economy. In 2022, US exports were $2T and imports were $3T, whereas overall GDP was $25T, which means the US trade-to-GDP ratio was 20%. (calculated as (exports + imports)/GDP). Per Wikipedia, this is lower than every other country in the world except Ethiopia, Nigeria and Sudan. Most countries of comparable wealth as the US fall in the 50-200% range.

Additionally, about a third of that international trade was just with Mexico and Canada. So only about 13% of US economic activity is international trade beyond the big, isolated island called North America.

Furthermore, for the stuff that's most important (like energy, food, software, freshwater, medicine, timber, financial services, minerals, aircraft, weapons, advanced electronics, etc.) the US is largely self-sufficient.

Thanks for the info @Gigapress.
Ya, US trade is not much compared to total GDP (and not that we encourage trade either). On our own big island it seems.

 

[SOULPEDL]

That's the stock price of the company US Steel, not the price of the commodity steel in the US.

Trend is close though.
Cybertruck unveiling was November 2019, hot rolled steel was $500 a ton then vs $936 a ton now.
However, if Cybertruck weighted 4 tons and was 100% steel, that's only $1,744 cost increase, + 20% GM = $2,100 impact (stainless, of course, costs more).

Figures. Thanks for pointing that out.

 

[Skryll]

Ford to pull 12B of future EV investments due to reduced demand

Ford will postpone about $12 billion in EV investment as buyers become more cautious

Ford said customers in North America are unwilling to pay a premium for an EV.

www.cnbc.com

Fossil fuel wins again - is this part of UAW deal ?