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

[dhanson865]

Those things would certainly reduce cost--but at what price? Doing those things would take away from Tesla's panache and is typical bean-counter thinking. My bet is on finding ways to provide the same functionality but at a lower cost. "If you buy oats, you go to the feed store and buy quality oats. However the oats are much cheaper after they've been through the horse."

The bullet points were not mine, I was responding to the bullet points. In several cases disagreeing with them.

 

[2daMoon]

In other news, YAY SPACEX!!

SpaceX cleared by FAA to launch first orbital Starship flight

SpaceX aims to launch Starship as soon as Monday from its private facility in Texas along the Gulf Coast.

www.cnbc.com

There's no way Elon will launch Starship before Thursday of next week.

If you know what I meme, and I think that you do...

 

[Paul_SF]

Can anyone check for truckloads of hair going towards Starbase?

I’m thinking that’s how they’ll get the Burnt Hair essence done.

Can’t wait to get mine.

 

[SmokyPeat]

There's no way Elon will launch Starship before Thursday of next week.

If you know what I meme, and I think that you do...

We'll see. The weather doesn't always cooperate. This launch will be far too significant to shift just to fit some silly number. But it could happen.

 

[Artful Dodger]

There's no way Elon will launch Starship before Thursday of next week.

If you know what I meme, and I think that you do...

Ideally, Elon spends time preparing for the Conference Call on Wednesday, and works-in the sub-orbital flight as a spectator in his spare time on Thursday. It's no biggie...

Cheers!

 

[Cosmacelf]

So I finally got to try Rivian's Driver+ on a long trip in my wife's R1S SUV. In a nutshell, I like it better than Autopilot just because of the lack of nags and lack of false slow downs. Full report: Rivian Trip Report with Driver+, Autopilot Competitor

 

[JusRelax]

There's no way Elon will launch Starship before Thursday of next week.

If you know what I meme, and I think that you do...

If anyone needs it... the youtube link is already up. You'll definitely want to turn on notifications for this one. IMO, generations from now this will be seen as the most historic moment of our lives!

 

[stealthyc]

So then I'm curious to know, have you tried FSD on the routes that DirtyTesla drives, and if so does it function as well as it does for him? Wondering if there is a training effect from his driving same route so many times and giving feedback.

Good question, I may try it sometime

 

[Buckminster]

New thread:
X.AI Discussion

Threads of the day:
SpaceX Starship - Orbital Test Flight - Starbase TX
Analyst TSLA Price Targets Gary Black dropping targets

 

[CaliBear1]

I will echo James Douma's comments on the price cuts and advertising question.



Linked to relevant timestamp. Whole interview is top-notch, as usual.

Let's unpack what Mr. Douma meant. Tesla has detailed, comprehensive data on everything that could possibly be relevant and measurable for making this decision. For example:

• Usage stats for the Tesla app and Tesla.com, such as page access requests, average time spent browsing, how often people play with the vehicle configurators and what different options they select, etc.
• What new refreshes or models are in the pipeline and when they intend to reveal them and begin production
• Foot traffic statistics at the showrooms
• Detailed geographic location data on all of these measures (except for the internet stuff for the minority of people using VPNs)
• How Supercharger and Service Center construction in an area subsequently affects demand
• Amount of inventory in every delivery center on the planet
• Test drive impressions and customer comments
• Surveys of employees at showrooms regarding customer questions and interests
• Initial quality complaints upon delivery
• Frequency of buying upsells like paint or FSD
• Mix of SR/LR/P variants
• Referral code usage
• Repeat purchase data for each customer or household
• Changes following posts on Twitter, major product reveal events on Youtube, etc.

I would be surprised if Tesla doesn't have at least one person (but probably a whole team) whose full-time job is to study this stuff and develop automated analysis tools to integrate all this data into insights. Like James, I personally trust Tesla to make the best decisions possible with this treasure trove of relevant information that no other OEM has due to lacking this degree of vertical integration and software prowess. Tesla would have to be incredibly incompetent at marketing and business analysis not to outperform all of us external analysts on strategizing this.

----------------------

Furthermore, Elon has said multiple times in the last few months that automotive demand has been weakening globally, for Tesla and the whole industry, and has said that higher rising interest rates are the main problem. We also can see signs of this in the growing inventory levels at dealerships of other OEMs. The credit market is almost certainly a major factor driving the recent price cuts.

Indeed, car sales for the whole industry remain significantly lower than the in years past. For instance, in the US, sales are depressed around 10-20% relative to 2020 and early 2021, which was already much lower than the peak years of 2017-2019. Tesla is selling into tough macros for automotive. Maybe this is due to lingering supply chain shortages, but maybe it's demand too.

Still, there's yet more nuance to these pricing and marketing decisions.

1) Tesla has also been saying they're finding that the sensitivity to price has been very high, which aligns with the expectations of fundamental microeconomic theory for expensive purchases that constitute a large portion of the average customer's overall household budget. Price cuts are the simplest and most effective way for Tesla to drive order flow in the short term. At Investor Day and the Q4 earnings call, they emphasized the dominant importance of price and affordability, and said that the primary limiting factor is affordability.




2) In line with the affordability consideration, gas price fluctuations appear to strongly influence short-term interest in buying Tesla cars as well as other EVs, hybrids and other eco vehicle options. Gas prices have fallen majorly since the peak in summer of 2022, which was when Tesla vehicle demand skyrocketed and the company hiked prices to record highs to stave of the stampede of orders pushing the backlogs to untenable lengths. Below is a chart I made with data from the US Energy Information Administration. Gas prices have returned to 2021 levels and so have Tesla's average vehicle prices, roughly speaking. Granted, correlation alone does not imply causation, and even if there is causation here it's probably not the only significant factor, but I'm confident the decline in fuel prices has played a meaningful role. I don't understand why this isn't getting more attention in the conversation these days.

View attachment 928412


3) Tesla's demand curve is not static because it's increasing over time. The positive feedback loop of Tesla's word of mouth sales force continually drives more interest in the products even if Tesla does absolutely nothing to advertise. The more Teslas Tesla sells, the more Teslas Tesla sells. This means that simple analysis like "Tesla needs to drop prices to sell more cars as production volume increases" is not necessarily true, at least until Tesla is saturating each market segment they currently serve. The customers are educating other future customers and providing social proof that the cars are good.


4) There's big-picture branding, marketing and competitive positioning considerations. Tesla's brand is partially built around *not* doing traditional advertising. Almost everyone bought one either because of independent research or someone telling them about it. I have seen multiple people's eyes light up with surprise and intrigue when I've told them that last year Tesla was the top-selling and most-profitable luxury car brand in America despite not paying for a single ad. That's the kind of fact that makes people think "hmm, there must be something special going on here and I want to know more". Everyone knows that ads are often misleading and deceptive, but winning on sales without them is a strong signal that can't be faked. This narrative is spoiled if Tesla starts paying for ads, and it would open up new possibilities for negative attacks on demand fears whenever Tesla increases the amount of advertising.

This lack of paid advertising also makes Tesla ownership kind of feel like being in a club of special people "in the know" who either are up-to-date on the latest technology and smart enough to recognize something good when they find it, or they have cool friends who explained it to them and gave test rides. Marketing primarily via cult proselytization actually is a viable strategy for a business like Tesla.



I think Tesla isn't too concerned about short-term cash flow. The mission is the focus and that mainly depends on mass production in the 2030s and beyond. Now that the company has no financial stress and a very well capitalized balance sheet, the priority needs to be targeting the brand positioning for the future. The mission demands optimization for the long game. A few billion dollars around the margins in the next few years is just a rounding error in comparison to the impact of improving performance in the 2030s and 40s.


5) Price cuts themselves generate attention for Tesla that's tantamount to advertising.

6) Expectations of imminent refreshes of Model 3 may be influencing short-term demand

7) I've saved the best for last: Tesla already has a massive social media presence, especially on Twitter, with Tesla's account having 20M followers and Elon's having 135M followers, and this lets them advertise for free. Tesla's social media presence is *elite* among major consumer brands and it's more than an order of magnitude ahead of other automotive OEMs.

Of the top 50 accounts on Twitter, almost all of them are famous individuals, not organizations. Elon's account is now #1, having recently passed Barack Obama's account. For the few organizations in the top 50, it's mainly sports teams/leagues, social networks, and top news media. Beyond these particular industries, Tesla is one of the most followed organizations of any kind on Twitter and is getting closer to this elite level with every passing year. In fact, I was unable to find any companies selling physical goods to consumers that have more Twitter presence than Tesla. This is especially remarkable considering how few customers Tesla actually has so far compared to companies like Walmart, Nike, Starbucks or McDonald's. Watch what happens as time goes on and Tesla really goes mainstream and is putting up Toyota-like sales numbers.

Tesla also probably benefits indirectly from SpaceX driving traffic and attention to Tesla's tweets. SpaceX has 29M followers.
View attachment 928399

Some of this, of course, depends on which social media platform each company prioritizes. For example, Apple has an order of magnitude more subscribers and views on Youtube than Tesla has. Many companies are more active on Facebook than Tesla is. Nevertheless, Twitter is the biggest platform for businesses to update the public on their products and services, and you only need traction on one platform anyway, because people will share compelling content on other platforms and in real life. Facebook, Google and Youtube get more advertising revenue but for direct engagement I'm pretty sure Twitter is #1. Tesla's account garners about 1-2M views on normal tweets and every few days exceeds 10M on more notable tweets like the Cybertruck crash test demo video from April Fool's Day. This is approximately the same view count as President Biden's tweets. In contrast, Mercedes-Benz rarely gets more than 100k views on a tweet at best.

So, Tesla already is advertising and educating consumers on the products. The question is actually whether Tesla should spend money on bribing other companies to promote the ads beyond what comes from subscribed followers and the organic interest generated by the Twitter & Youtube suggestion algorithms. I think competitors pay for ads fundamentally because they and their products are not intrinsically interesting enough per se, but Tesla does not have this limitation.

Gigapress. You rock!

 

[NicoV]

Looking at Electric Vehicle registrations in Europe: 14 countries, 90+% of BEV market we can already see that the wave keeps unwinding. I would say deliveries have started about a week earlier than previous quarter. It’s mostly Model Y, so we’re seeing the effect of Berlin production being delivered continuously in EU.

 

[Artful Dodger]

Advertizing? Ducks. Marketing? Drakes!

 

[Cobbler]

So, Tesla has increased prices in Belgium within 2 weeks?
Before: 44990€ (I compared it with the Atto3), now its back to 45970€



View attachment 898895View attachment 898894

Update 15/4/2023 for Belgium:
BYD lowered prices for ATTO3 with 2000€, 90 days after introduction.
Model 3 RWD AND LR remained the same price. Performance M3 dropped with €3000

 

[Cult Member]

Ideally, Elon spends time preparing for the Conference Call on Wednesday, and works-in the sub-orbital flight as a spectator in his spare time on Thursday. It's no biggie...

Cheers!

Who said you should always separate work and private life? I agree, he will master it.

 

[unk45]

I like this kind of approach. Tesla could use this.

The world when Steve Jobs introduced 'Think Different' for Apple was enormously different from that of today.

That was after the internet, but before mass social media, but just after the first iPhone was appearing.
When that was happening Advertising was just beginning to be important on cable TV although that had ben around for decades.

Then, when Steve Jobs equated Advertising with Marketing only the nerds fo Chiat Day and their like knew the different but they made their money on broadcast TV placements, and a little on print media, still in phsical magazines.

Back then, by coincidence I was teaching Marketing 101 to excited undergraduates . I was adjunct because I was doing startups then. Everyone was excited about an articulate fellow named Barack Obama. Not a five minute walk from my office then was a weirdo group trying to produce something called a Tesla Roadster on a Lotus chassis. My students were wildly optimistic as was I. Then, I was helping make an integrated marketing approach with a heavy dose of Advertising.
Now it is 2023. traditional advertising is mostly dead and dying. It no longer works. Cost per reach is as high as ever, but unaided recall si abysmal (even for Super Bowl placements, the ads are recalled but usually not their stated objectives.

Broadcast TV is pretty much dead, but Internet search placements and social media activity are the efficient and directed primary efforts of successful campaigns. So, what does that mean? Now people searching for cars are very likely to see Tesla, now any conversation about cars or renewables generates comments about Tesla. News coverage always talks about Tesla. Globally that happens, even in countries where tesla is not sold. Almost every teenager anywhere who is rich enough to have internet access is inundated with commentary about Tesla.

So what does that paragraph mean for us? Basically it means that Tesla is a master of 21st century marketing, one that values unaided recall, placement and unsponsored attention in a way very, very few have managed. It also means that Tesla, alone among major OEM's, has become more efficient in marketing that has anyone else. Proof is quite obvious in owner loyalty with repeat sales by far the highest in the auto industry in every country that has such measures easily available. Intention to buy among prospect regularly tops the industry everywhere too.

We can go on and on. We do not need to do that. We only need to see Tesla Free Cash Flow and Gross Margins plus inventory levels. Even if the 19th of April brings lower margins the Free cash Flow will be stellar. Those results provide the evidence if we choose to believe them.

Finally, unlike many consumer product categories Tesla is oriented First towards present and future buyers with no concern about non-prospects. Second, Tesla is oriented towards politicians and governments that can provide support or deny it. Third, Tesla is oriented towards recruitment of the best engineers and employees. Fourth, Tesla's oriented toward investors.

Every one of those is quite precisely and explicitly targeted. So, is there a place for advertising? NO! not in any conventional way. This is the 21st century not the 20th.

Even the Apple of 2023 spends a very small amount on traditional advertising. 'Think Different' was brilliant in 2007. In 2023 not at all, now the entire strategy is to build loyalty with an 'ecosystem' which existed as a concept in biology and botany back in 2007.

So, do we all know about the Tesla ecosystem? Do we know about Superchargers? Do we know about at home service? Do we know about OTA updates?

Oh my goodness, Tesla, launched when Steve Jobs was launching the iPhone, has adopted the most similar 2023 solutions that Apple has. OMG! That is Evolution (stolen from the Canadian Mad Hungarian who sold me a Tesla T-shirt I still wear.)

In honor of 21st century Marketing, here is an unsponsored placement (I hope the mods can let this one survive as an example of Tesla's approach):
model-3-evolve-by-madhungarian

 

[Prunesquallor]

Is it known what the payload is they're launching with this inaugural flight?!

Im giddy.

Well, it will (at best) end up in the Pacific. Cyberboat?.

 

[philw1776]

You also could “buy once” by putting $15k into a money market account and withdrawing the subscription every month. Especially if it didn’t increase for your ownership of the car!

So glad I bought FSD for $7K when I bought my Model Y. Not because it works so well, as for me it has not, but for the fun of watching it morph.
Disclosure: Been away from home & my Tesla for the last 2 FSD updates. Can't wait to get home next week and drive a fun car again.

 

[Prunesquallor]

It's technically an orbital flight with the perigee inside the atmosphere. They are going to give it the same delta V it takes to get into a stable orbit above the atmosphere but aim it differently so it comes back into the atmosphere just before a full round trip occurs.

Much harder than normal flights that are termed "suborbital", it will have a higher maximum altitude than those sorts of flights.

Yeah. Energy is most important quantity to see if the extreme performance needed is achieved (kinetic much higher component than potential [speed more important than altitude]).

Also, second stage entry speed will be essentially that of orbital entry, so good test of thermal protection, guidance, etc.

 

[GSP]

The 3 and Y are still premium cars with many features and comforts that could be removed or modified for a more affordable Gen 3 vehicle. For example:

• Seats
  • Cloth upholstery instead of premium leatherette
  • No seat warmers
  • Simpler stitching pattern
  • Manual position adjustment instead of motors
• Powertrain
  • Smaller motor with less than 208 kW of power
  • Simpler, less capable suspension
• Traditional sheet metal roof instead of glass
• Wheels: 17 inches instead of 18
• Sound system: basic instead of 14 premium speakers
• Side mirrors that don't have motors for folding in and out (or no mirrors at all)
• Basic rearview mirror instead of electrochromic mirror (or no mirror at all)
• Manual steering column adjustment instead of motorized
• Smaller console screen

I guess these changes could cut a few thousand bucks from the cost.

Good thought starter list. My first thoughts are:

Cloth is fine, but option for leatherette will probably be needed for premium variants.
No seat warmers - WTH, are we going back to the stone age? Front seats only would be OK though.
Smaller console screen - I think this would be a mistake, with everything crammed into the screen with small fonts and button sizes. 15" is already pushing the minimum useable size IMO. Also, the value of a large screen for Netflix, games, youtube, etc. is going to be more important in the future.

The rest of this list seems fine to me, but maybe only do the ones that have significant cost reductions.

I expect most of the cost reduction to be from advanced manufacturing and engineering design changes. Things like 48 V, Iron Nitrite magnets, 75% less SiC, no LV battery [I made that one up], new assembly process, minimal paint, or no paint for some models, etc.

GSP

 

[GSP]

It will certainly be interesting to see when the average person feels like it is "good enough" to spend money on (based on maybe driving in a friends car with it etc). Right now I would be pretty astonished to see the take rate increase much as overall it doesn't work well for the average driver. Clearly it can depend on where you live perhaps, but it's not really super usable for general city-driving other than as a novelty.

A lot of Youtubers definitely show "good" drives. For example I drive in the same city as DirtyTesla, and I could easily provide a route within blocks of where he drives in which the car cannot function correctly and will require intervention after intervention. These are not super weird back streets or anything, they are ones I travel for regular trips to stores and around town and so forth, and the car frankly just is not capable of driving in a sensible fashion yet. To be clear I am not trying to say FSD Beta is "bad" or anything, and it certainly improves over time, but while I enjoy watching it evolve, it is very far from being a hands-off drive-anywhere-around-town type experience.

I should add that I'm not trying to say someone like DirtyTesla is only intentionally showing good drives, just that a given route a block away from another can be the difference between apparent 100% success and 100% failure.

If you haven't already, you should suggest some of your routes to DirtyTesla. Chris has been doing videos of lots of different routes, including viewer suggested routes.

GSP