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

[wipster]

Ok… I’ll ask you this since I’ve seen others suggest similar gap between deliveries and production.

We ended Q3 with a large inventory because Tesla delivered fewer units than they produced. So I can’t quite connect how people are expecting another delivery shortfall versus production. This would mean Tesla ends the year with absolutely massive inventory from 2 quarters where deliveries didn’t keep up with production.

After Q3, I would think the reverse would be more likely and Deliveries would be higher than Production.

Help me out here, did I dream up the idea that we had a large number of vehicles in transit and inventory at the end of Q3? Are you really expecting Tesla will end the year with 40,000-50,000+ cars in inventory?

The reason for my delta is the number of vehicles still in transit, be it ships, trains, trucks, etc. I hate to call it inventory, but that's where it's shown on the balance sheet.

Realize this is just a shot from the hip. One of the reasons I want to see everyone else's best educated guess.

 

[Webeevdrivers]

Holy crap! JHC! This is a disaster on an epic scale. "Tesla is the Gold Standard”. Other than that, a complete cluster. I don’t see how the Government approach of throwing money at the problem is going to help. When Tesla opens up their network in the US, it will be absolutely inundated by non-Tesla EVs.

I hope Tesla has found a way to monetize this.

Tesla can’t just flip a switch and “open the network”. Existing V1, V2 and V3 superchargers are not software or hardware compatible with CCS. I’m sure it can be done but it won’t happen overnight.

V4 superchargers I believe are a step closer to being CCS ready, but I haven’t seen much info on their roll out.

Jmho. Not an expert.

 

[ShareLofty]

Tesla will have to quickly adjust the US MY offerings. I have a LR AWD 5-seater on order that I previously assumed would qualify for the $7,500 rebate in 2023. I will need a different solution, as I am not interested at the current MSRP without full subsidy. I don't think I'd take the 7-seater (+$3K) just to qualify. I may not (or may?) be a typical buyer...nonetheless, Tesla will have to solve this problem for my business. Guess we'll see if there's really a demand problem real quick!

You assumed incorrectly. Tesla never stated it would qualify. This isn’t a Tesla problem, it’s your problem. You can either find one in the next three days, lease one, or add the third row.

 

[Ogre]

The reason for my delta is the number of vehicles still in transit, be it ships, trains, trucks, etc. I hate to call it inventory, but that's where it's shown on the balance sheet.

Realize this is just a shot from the hip. One of the reasons I want to see everyone else's best educated guess.

I hear you. My point here is that in order for there to be a gap, the number of cars in transit would have to be greater than the number in transit at the end of Q3.

We started the quarter with thousands of cars in inventory, those are cars which were quickly delivered but produced in Q3. So the ”D” in P&D started the quarter with a surplus.

Just doesn’t seem like people are taking that into account.

 

[MP3Mike]

Tesla can’t just flip a switch and “open the network”. Existing V1, V2 and V3 superchargers are not software or hardware compatible with CCS.

Your don't know that. V2 and V3 in Europe are software and hardware CCS compatible. It could be that in NA all that is needed is an adapter and app configuration change.

 

[ShareLofty]

A Form 4 just dropped but don’t worry it was just Drew

 

[wipster]

I hear you. My point here is that in order for there to be a gap, the number of cars in transit would have to be greater than the number in transit at the end of Q3.

We started the quarter with thousands of cars in inventory, those are cars which were quickly delivered but produced in Q3. So the ”D” in P&D started the quarter with a surplus.

Just doesn’t seem like people are taking that into account.

I'm taking it into account, but I can't remember off the top of my head when production hasn't exceeded delivery (2nd qtr 2022 maybe?). I know it doesn't seem to make sense, you'd think D would catch up, but P is always increasing, so even if they delivered the delta from Q3, they'll always be making more.

Time waits for no one...

 

[Ogre]

You assumed incorrectly. Tesla never stated it would qualify. This isn’t a Tesla problem, it’s your problem. You can either find one in the next three days, lease one, or add the third row.

You are 100% correct here. But the incentive does put Tesla in a weird place. I doubt insaneoctane is alone.

The IRS really put manufacturers in a weird place dropping this significantly different interpretation at the last minute.

 

[Ogre]

I'm taking it into account, but I can't remember off the top of my head when production hasn't exceeded delivery (2nd qtr 2022 maybe?). I know it doesn't seem to make sense, you'd think D would catch up, but P is always increasing, so even if they delivered the delta from Q3, they'll always be making more.

Time waits for no one...

Chased down 3rd quarter numbers. They had 22,000 cars in transit/ inventory at the start of the quarter.

In the third quarter, we produced over 365,000 vehicles and delivered over 343,000 vehicles.

 

[geometro]

For anyone looking, I’m seeing:

- No Model Ys in the Austin area
- Plenty of Model Ys in the Bay Area available

I suspect there is just more near Fremont and they couldn’t get them out to other parts of the country quickly enough.

 

[TSLA Siempre]

I'm taking it into account, but I can't remember off the top of my head when production hasn't exceeded delivery (2nd qtr 2022 maybe?). I know it doesn't seem to make sense, you'd think D would catch up, but P is always increasing, so even if they delivered the delta from Q3, they'll always be making more.

Time waits for no one...

I think it's best to look at inventory in units of days of production or days of sales.

 

[Todd Burch]

For anyone looking, I’m seeing:

- No Model Ys in the Austin area
- Plenty of Model Ys in the Bay Area available

I suspect there is just more near Fremont and they couldn’t get them out to other parts of the country quickly enough.

This is pretty common I think. Since there are just a few days left in the quarter, Tesla continues to sell local to the factory since they can get them delivered in a short time period.

 

[MC3OZ]

If Elon can monetize a bottle of burnt hair perfume at 2x the price of premier luxury brand, he can monetize the charging network. The question is how this rollout will happen. Once it's open I see a flood gate of people going only to Tesla's chargers because even if there's a 10% chance of finding down chargers at EA's station, you would skip it. This will make Tesla a monopoly.

I think an over looked fact is that Tesla intends to grow EV production faster than any other manufacturer.

Particularly in the US, I see Tesla possibly gaining rather than losing EV market share for the next 3-4 years. If not in percentage terms, definitely in raw numbers.

So the Supercharger network needs to expand fairly rapidly just to accommodate all of the new Tesla vehicles on the road.

The need upgraded chargers for the Cybertruck and Semi, so lots of expansion needs to happen anyway.

Tesla can also be selective about when and where chargers are opened to other car brands. Charging needs to be at least adequate for all Tesla vehicles in an area before it is opened to other brands.

When we look at the existing fleet of EVs from other brands on the road it may not be that large, compared to the number of Teslas on the road.

 

[thesmokingman]

You are 100% correct here. But the incentive does put Tesla in a weird place. I doubt insaneoctane is alone.

The IRS really put manufacturers in a weird place dropping this significantly different interpretation at the last minute.

Somewhere Manchin is having a nice laugh over this.

 

[Artful Dodger]

I invest most of my net worth in Tesla because I see clear paths to both production and demand raising to ridiculous levels over time. Along that journey one of those two things will always be the limiting factor. And if they do it perfectly it will oscillate between the two over time. It's your loss if you can't acknowledge that.

Go back and read my treatment here on TMC of supply and demand for TSLA shares during the S&P 500 inclusion in Dec 2020. To pretend I don't understand basic microeconomic theory and practise is both disingenous and laughable.

The PROBLEM you aren't acknowledging is the short-term manipulation of demand via Media FUD. In China, there's a steady stream of rumors saying "PRICE CUT NEXT QUARTER!" (so you're foolish to buy now). Look at actual events in Q4. This has nothing to do with balancing Supply and Demand by adjusting prices, which is occurring naturally over time as production increases and costs decrease.. Q4 was all about attacking Tesla's sales through delaying some portion of demand via targeted FUD.

It's no coincidence that just 2 days after the U.S. Treasury Dept delayed announcing IRA rule to March that Tesla offered a $7,500 discount on December deliveries in the USA. The Treasury delay created uncertainy for certain potential customers, and Tesla acted swiftly to remove it. This cost gross margin, and is an yet another backhanded attack by an Adminstration that is hostile to Tesla (interfering with the functioning of the free market). Any wonder Elon's promoting the other side? Any wonder he thinks all subsidies should be removed?

Let that sink in.

 

[thesmokingman]

Demand problems? Some must not be reading the writing on the freaking walls. ICE bans in may countries by 2035. What does that mean to these folks I wonder??

 

[Paul_SF]

So, if this year TSLA lost ~69% and next year gains ~420%, we are 100% in a simulation and Elon is part of the whatever is that is running it, or the poor soul that is subject to it. And the rest of us are here for the ride. Can't make this stuff up! /s

 

[AndrewZ]

Was thinking the same thing. Not sure if it would be needed but if tesla could drop the price back down to $55k (and still make a healthy profit) they would sell like crazy. That is what I paid for my Y and would pick one up for my wife if that happened.

These arbitrary MSRP amounts are stupid imo. Creates random demand cliffs as a $55k model y could have crazy demand but the same car at $56k would have demand cut back dramatically. Wonder if the could play around with various software locks that could be unlocked after purchase to help keep the car eligible for the tax credit.

Question is do they look to cut the price of the 5-seater or lean more into the 7-seater and then have room to increase prices further

Maybe drop the price of the 5-seater and increase the price of the 7-seater to offset? I can think of many considerations and possibilities. $80k is a really generous ceiling for a vehicle like the Y IMO regardless of number of seats.

 

[Paracelsus]

So, if this year TSLA lost ~69% and next year gains ~420%, we are 100% in a simulation and Elon is part of the whatever is that is running it, or the poor soul that is subject to it. And the rest of us are here for the ride. Can't make this stuff up! /s

https://twitter.com/x/status/1608412221729828864

 

[Tommy O]

Question is do they look to cut the price of the 5-seater or lean more into the 7-seater and then have room to increase prices further

Maybe drop the price of the 5-seater and increase the price of the 7-seater to offset? I can think of many considerations and possibilities. $80k is a really generous ceiling for a vehicle like the Y IMO regardless of number of seats.

I hope they go cutthroat and cut prices to absolutely annihilate the competition in the US. It's time they pay for dragging their feet and spreading lies for so long.