Long-time lurker, first time poster in this specific forum. I studied economics in college, have worked in the automotive aftermarket for over 20 years now, and have a fair amount of experience in small-scale manufacturing/production. I have been a cars and racing guy most of my life, and have also always been fascinated by technology (my brother and I were weened on Atari 2600 Combat and Pitfall!). I have been following Tesla since they started stuffing batteries into the Lotus Elise, and I've been a Tesla investor since 2018. Immediately after I drove a friend's Model 3 for the first time I was confident the entire auto industry was about to completely change. My friend also said to me at the time, "I've never even really liked cars, but this thing is awesome. My dad and I both ordered one. He bought his just to show the technology off to his friends." It was at that point that I invested a small chunk of change in Tesla stock. My only regret is that I didn't initially buy more (join the club, right?)!
I fortunately bought the big Covid dip of early 2020 much more heavily.
First, I wanted to say thank you to all the long-time posters here. I have thoroughly enjoyed following along, have learned a lot, and have made some nice money as a result of my time invested here. Thank you very much for your continued insights and for supporting each other!
I'm not sure why, but I finally felt compelled to finally chime in on a few topics after yesterday's EC.
Large-scale production- I have friends and coworkers who are convinced that car company XYZ (insert your flavor of the day) will quickly catch up or surpass Tesla sales with their version of an EV. I feel like Elon tackles this subject every time he speaks, but it just doesn't seem to sink in for many people. Manufacturing things is
difficult, particularly complex things. Building an efficient machine that 'builds the machine' on a grand scale is a painstaking and time-consuming process. I see Tesla as being incredibly far out in front of everyone in this regard and I think much of that lead starts with the thinking from the top down. I about spit out my drink last night when I heard the mgmt. team's reaction to the financial analyst who asked about R&D and incubators. The one gent (can't remember name) was incredulous and even dropped an F-bomb. To him it was so incredibly obvious how wrong that way of thinking was about what they are trying to achieve. They were all like, "What is this guy even talking about?" Everything on that whole segment of the call about embedding mgmt. into the production process spoke of how these Tesla factories are completely rewriting the rules of manufacturing on a grand scale. To me, this hearkens back to the industrial revolution...a clean-sheet way of doing things without the constraints of the old ways. That is a fundamentally different environment for innovation, and these guys are establishing a new benchmark for output. That doesn't even take into account the fact that these groundbreaking production facilities are being built in less time than it takes the average contractor to build a new home. It makes my brain hurt just thinking about that fact. Unless the traditional auto manufacturers are setting aside much or most of what they've done or learned in the past about how to operate, they will never again achieve a leadership role in the auto industry.
Priorities and foundations- I'm sure the internet will be rife today with complaints about no new Tesla vehicles in 2022. I think that is an incredibly short-sighted view. Refining and pushing production of their already successful products through the roof is going to build the foundation for the next wave of incredible products. This is just a phase of a much greater cycle that must occur to provide the required foundation. It reminds me of the laser focus on the Model 3 when it was released. Getting past that hurdle is what took Tesla from a boutique manufacturer of luxury cars to a mass producer. The single-minded focus to ensure the success of the Model 3 at all costs is one of the things that really drove me to invest in the company. Yes, there was still talk of all the wild innovations tumbling around in mgmt.'s heads (and there always will be because that is what excites them), but at the end of the day it was all about checking off bullets on the Model 3 checklist to get from point A to point B. That's what we're seeing again in '22.
Component shortages- The company I work for manufactures products composed of a single-page BOM and we have been struggling over the past year to ship them. I can't fathom what that list looks like for these cars. As mentioned on the call about seat adjusters, the tiniest widget can derail the ability to deliver a vehicle. Surpassing past shipments and those of everyone else in the industry was a monumental accomplishment for Tesla in 2021. These component shortages strain and stress every fiber of the organization, particularly the employees. Having a line of people many thousands deep who are screaming, "Where's my *sugar* I ordered?!?" can be detrimental to the collective mental health. In manufacturing, 2021 was the equivalent of making the Tesla team 'battle-hardened'. I believe they are going to come out the other side much stronger and shred all expectations when the shackles of supply constraints slip partially or completely from their wrists.
Dojo- I've already seen some comments from the public about how Dojo is worthless if Telsa isn't even going to use it for FSD. Anyone thinking that way is completely missing the point. Elon's comments about Dojo last night were merely a window into how he thinks about any problem with a lack of constraints. He was simply stating that they will use the best tools to get the job at hand complete. If using GPUs allows them to solve FSD, great. Then they will use Dojo to enhance FSD if possible. Or, maybe they will use Dojo for something else. Maybe it will only be good for making lattes. Or, maybe they will build something that nobody at Tesla has even conceived yet, and whatever that 'thing' is may only be spawned from what they are going through right now. The process of development and discovery will dictate the way forward, and that is something fluid and dynamic. They will use, design, and bulid whatever tools they need to get from A to B. Dojo is just one attempt to help bridge that A-to-B span. It could prove to be worthless or priceless. They just won't know until they know, and Elon was simply recognizing that fact in his typically matter-of-fact way.
Overall, I am more bullish than ever on Tesla after last night's call. This year will be a circling of the wagons and a consolidation of funds and capability. The revenue and profits generated by scaling in '22 will fund Tesla's future. Everyone wants their shiny new toy today, but chasing that path would be foolish from a business perspective. I believe the plan they laid out is the correct one. Exercising some patience now will make the company significantly more durable, which will pay them and their shareholders back in multiples in the years ahead.
For the record, I am still not a Tesla owner. Being a car nut, I've
really, really wanted one for a long time. I drive my friends' Teslas and we've had a bunch of them come through our business. They perpetually impress me. I decided early on however that I would put any available Tesla car money into Tesla stock instead. The current apple of my eye would be a revised Model Y Performance from Austin (white paint over white interior if anyone is dying to gift me one
). With Austin going into full swing soon, being patient seems to become more challenging by the day!
Thanks for reading my musings.
