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

[Cosmacelf]

I had to disagree with this, and let me tell you why - namely, if TSLA existed in non-rigged trading system, I'd agree 100%.
We all know it is the opposite. This along with induced FUD, 'inflation', korona money printing, folding banks, and another oil/gas war does not help at all.

It is what it is, hence the price but don't tell me TSLA is over valued. It is not.

I didn't mean to imply that TSLA was overvalued. I wanted to point out that TSLA is not the unique unicorn that we here in this forum have a tendency to think it is. There are other growth companies that will generate outsized returns (but maybe not right now in this market!). When building a growth portfolio, I would absolutely have TSLA in there and probably overweight too. But it wouldn't be a bad idea to seek out other growth company opportunities and sprinkle some money in those 2-3 other stocks.

 

[growler23]

Checkout Zeekr videos. I’m BTW talking about city driving.

Indeed, rather than a flat tax, a state EV tax should be based on either miles driven or electricity consumed (which is already taxed). That would be similar to a gasoline tax. EV inspections are not required in my state and many others. Tesla should be able to provide the necessary information to state tax collectors. But the question remains as to whether the already existing taxes on electricity are sufficient, making any further EV tax unnecessary.

Another fundamental point I have yet to see mentioned is that the US gas taxes (fed + state) as currently implemented are nowhere near enough to actually pay for our roads. Apparently in Texas we are about at the US average (roughly 50%), so half of the road spending comes from elsewhere. The gas taxes (in general, state and federal) were not indexed to inflation, making this sort of inevitable, even if spending on roads did not increase.
This may not matter in the "EV's must pay" debate but it is a salient background point. if we are discussing "how to fairly pay for our roads".

Source:
How Are Your State’s Roads Funded?

 

[Tiger]

I'll comment....just not on that obvious clickbait crap.

Those people have shown them self to be nothing but shamless self-promoting clowns.
They have provided zero beneficial information.

Rent seeking scabs they are.

I agree that (sadly) very little pushback from Kevin's side (GLJ admitted he was prepared for more), but otherwise quite "informative" interview (lots of different viewpoints).

 

[unk45]

Request for clarification: aren't Tesla sourced loans and leases detrimental to the fast cash conversion cycle? Rather than receiving sales price for a car before paying suppliers, they instead carry the cost along with future revenue stream.

Or can this be offset by 3rd party revolving credit facilities? A $5 Billion line of credit, expandable to $7 B, was established earlier this year with Citigroup.
Tesla TSLA May Get Up to $7B Credit Line, Indicating It’s Nearing Investment-Grade Status

You've answered your own question. Under FASB lease transactions are recorded over the lease life, not as immediate income. Hence they definitely do depress immediate income.
Securitizations can be used to change that, BUT, a huge BUT, in order to do so there can be no recourse to the originator. In several parts of Europe that is done with lessors buying their vehicles outright. Loans are a different matter.

Frankly I expect to see some serious innovation from TSLA. With quite a bit of experience designing leases I have both biases and ideas. I'm quite confident that Zach and Elon already know what they might do.

Specifics I do expect in coming months:
-specialized fleet sales including police, taxi, rental and corporate tailors products;
-products that include Supercharging and other tailored support services;
- products oriented to specific vehicles especially Semi, Cybertruck and Models S and X;
-Continuing Tesla Energy innovation (already advanced with utility-level) including more grid services packaging links such as have already been done in several markets.
-packaging vehicles with property management and development. (already happens in a very small and ad hoc way in a handful of locations)

There will be containing innovation, much of it that will optimize treatment within various tax jurisdictions and much that will be optimized by specific buyer classes. These things already happen in many places around the world, but Tesla may be unique because they known pecisely what to do in each place, because of the direct sales model.

Then we can expect Tesla to have more clever ways of sales, service and financing in places that prohibit direct sales. Some of their approaches will surprise us. Tiny hint: look at the Hertz/Uber driver deals.

 

[Ogre]

To add more evidence to this, in this Earnings call, there was a specific institutional investor question asking for current adoption rate of FSD. Basically, investors are looking for clues if there is any evidence of Musk’s prediction of Tesla making profits on FSD or if people are ready for FSD. Unfortunately, Musk was vague in his response and never gave a clear answer.

For people looking to predict, when the FSD rerating on TSLA will start - You have the answer. Investors will start pricing in FSD and its implications when we hear Zach or Musk talk about increased FSD adoption. Investors may not wait till there is FSD regulatory approval to re rate the stock.

Logically FSD gets so good that people actually start buying it or subscribing to FSD months before regulatory approval.

I don’t know why people are looking for FSD adoption to increase before it’s out of beta.

There are 3 big spikes to FSD adoption coming.

#1 When all the features are there on purchase with no beta BS.
#2 When the nag/ hands free is largely gone and I can nap at least in the highway.
#3 Robotaxi.

I seriously doubt adoption increases before we get out of Beta. Most early adopters have it already.

 

[generalenthu]

You've answered your own question. Under FASB lease transactions are recorded over the lease life, not as immediate income. Hence they definitely do depress immediate income.
Securitizations can be used to change that, BUT, a huge BUT, in order to do so there can be no recourse to the originator. In several parts of Europe that is done with lessors buying their vehicles outright. Loans are a different matter.

Frankly I expect to see some serious innovation from TSLA. With quite a bit of experience designing leases I have both biases and ideas. I'm quite confident that Zach and Elon already know what they might do.

Specifics I do expect in coming months:
-specialized fleet sales including police, taxi, rental and corporate tailors products;
-products that include Supercharging and other tailored support services;
- products oriented to specific vehicles especially Semi, Cybertruck and Models S and X;
-Continuing Tesla Energy innovation (already advanced with utility-level) including more grid services packaging links such as have already been done in several markets.
-packaging vehicles with property management and development. (already happens in a very small and ad hoc way in a handful of locations)

There will be containing innovation, much of it that will optimize treatment within various tax jurisdictions and much that will be optimized by specific buyer classes. These things already happen in many places around the world, but Tesla may be unique because they known pecisely what to do in each place, because of the direct sales model.

Then we can expect Tesla to have more clever ways of sales, service and financing in places that prohibit direct sales. Some of their approaches will surprise us. Tiny hint: look at the Hertz/Uber driver deals.

Well, solar financing was ground zero for this innovation and SCTY did this spades. There are surely economic upsides and it can foster adoption, as these innovative financing structures have proved in the past.

The downside is, it becomes hard to differentiate true economic performance vs what the accounting numbers say. Clearly in case of SCTY, it had become a cottage industry trying to understand the true merits of the business.

I did hear that Tesla is offering 2% financing on the model Y in Germany (may be it was up thread?) and something this simple is reasonable.

Also, Tesla is more dynamic with their pricing than every other player, and it is not clear if they lose any flexibility from entering into these arrangements. I am sure though that there is a reasonable middle path between Financial innovation on the SCTY scale, and mostly doing the vanilla stuff they do today. Also solar financing was complex because of regulatory regime. That is not the case here.

 

[Christine69420]

I seriously doubt adoption increases before we get out of Beta. Most early adopters have it already.

Nope. Only early adopters in North America. Us in the rest of the world cannot get it no matter what we do.

 

[Artful Dodger]

Nope. Only early adopters in North America. Us in the rest of the world cannot get it no matter what we do.

Hahahacked!

Hacked Tesla FSD Beta demo from Ukraine validates Elon Musk’s Autopilot vision | Teslarati (2021-09-06

 

[Ogre]

Nope. Only early adopters in North America. Us in the rest of the world cannot get it no matter what we do.

So we have potentially a 4th spike in adoption, or in fact likely a series of small spikes are each region spurs local adoption once it's available. Regardless, unless/ until we hit those (now 4) triggers, FSD adoption isn't going to start rising fast.

 

[MP3Mike]

That would be similar to a gasoline tax. EV inspections are not required in my state and many others. Tesla should be able to provide the necessary information to state tax collectors.

What Tesla can do isn't really a determining factor. Every EV manufacturer would need to be able to follow what ever rules the state tax collectors make. Are they all capable of that? And of course there is the issue that you should only be paying tax on miles driven inside the state on actual roads. (Oregon solves this by using a GPS device to track and only record miles driven in state on roads. Miles driven on private property shouldn't be included.) For example, I drive about 50% of my miles out of state, by taxing where you fuel your vehicle, like done with ICE vehicles, they sort of solve the issuing of getting the money to the correct taxing district.

I really don't want Tesla, or any OEM, tracking where I drive.

 

[Mengy]

Feel free to comment:

I watched it this morning and honestly the first 45 minutes of it (non-Tesla topics) are a pretty great interview. I actually agree with Gordon on a lot of what he says in the first 45 minutes. He uses historical keynotes and data to paint a very bearish narrative for the market, and his thesis honestly has some merit. It's worth hearing and considering.

HOWEVER, once he pivots to Tesla it's like his cognitive skills go right out the window. It's truly amazing how rational and intelligent he can seem when talking about non-Tesla financial topics, but once he starts talking about Tesla it's like he switches into a super FUD machine ignoring facts and data in spectacular ways.

This interview has actually convinced me more than ever GLJ is purposefully spewing a narrative he knows to be false in order to support some anti-Tesla agenda for some unbeknownst reason. I think he knows the stuff he says about Tesla is ridiculous.

I did wish Kevin had pushed back on at least a few of the ridiculous things GLJ said about Tesla though. He pretty much let GLJ say whatever he wanted to unchallenged.

 

[Artful Dodger]

This interview has actually convinced me more than ever GLJ is purposefully spewing a narrative he knows to be false in order to support some anti-Tesla agenda for some unbeknownst reason.

It's well-beknowst.

 

[Drumheller]

What Tesla can do isn't really a determining factor. Every EV manufacturer would need to be able to follow what ever rules the state tax collectors make. Are they all capable of that? And of course there is the issue that you should only be paying tax on miles driven inside the state on actual roads. (Oregon solves this by using a GPS device to track and only record miles driven in state on roads. Miles driven on private property shouldn't be included.) For example, I drive about 50% of my miles out of state, by taxing where you fuel your vehicle, like done with ICE vehicles, they sort of solve the issuing of getting the money to the correct taxing district.

I really don't want Tesla, or any OEM, tracking where I drive.

I don't want tracking either. However, smart phones already track everywhere you go, down to specific addresses. Google exposes this to Android users in their profile data. Every device spies on you and sells that data to marketers and the govt.

I think Tesla respects privacy far more than the average company.

 

[Curt Renz]

What Tesla can do isn't really a determining factor. Every EV manufacturer would need to be able to follow what ever rules the state tax collectors make. Are they all capable of that? And of course there is the issue that you should only be paying tax on miles driven inside the state on actual roads. (Oregon solves this by using a GPS device to track and only record miles driven in state on roads. Miles driven on private property shouldn't be included.) For example, I drive about 50% of my miles out of state, by taxing where you fuel your vehicle, like done with ICE vehicles, they sort of solve the issuing of getting the money to the correct taxing district.

I really don't want Tesla, or any OEM, tracking where I drive.

Indeed this gasoline vs. EV tax issue gets complicated. The GPS system is interesting. The ultimate solution may be for states to abolish both taxes, and build/maintain roads with money solely from their general funds. Everyone (including non-drivers) benefits from the existence of roads, e.g. buses, delivery trucks, emergency vehicles, etc.

 

[Artful Dodger]

FRC (First Republic Bank) was halted on the NASDAQ in the Pre-market this morning at 9:12 a.m. ET on news of a take-over: (pre-Market Low was $1.60 @ 4:01 a.m.)



'Squawk on the Street' crew react to JPMorgan's takeover of First Republic | CNBC (3 hrs ago)

Now, does this 3rd bank failure make the FED blink, or do they just do whatever the FED they want?

 

[AZRI11]

It's well-beknowst.

Gordon got his PPP loan through JPMorgan Chase.

 

[Electroman]

Gordon got his PPP loan through JPMorgan Chase.

Paid? or Forgiven? Which one ?

 

[Thekiwi]

Elon didn’t say Tesla wouldn’t push through, but he has been sounding the recessionary alarm for a while now and was saying the rate hikes needed to stop last year. Now he's saying that his data availability through his own companies, including Tesla, gives him great insight into the state of the economy and not that his VC bros are struggling lol

I think autos are right up there with real estate in terms of being affected by interest rate movements, these are large purchases that are generally financed and that's not considering overall tightening of financial conditions, decline in asset values across the board leading to less cash available for spending on cars (among higher earners with lots of assets), etc.

Agree that Autos & RE are being heavily impacted, but Elons comments about recession, inflation and what the Fed should do, have consistently been incorrect over the last year (despite his supposed fantastic real time data from his companies).

No doubt the Fed reversing and cutting rates would be great for Tesla itself - lower rates would make car buying much easier - but that would likely be inflationary economy wide (the exact opposite thing we need).

I also wonder - do large price cuts impact what lenders are willing to loan to customers against a new Tesla?

 

[adiggs]

Regarding declining market share ... an important point that I haven't seen people talking about recently; only that Tesla is losing market share, how the competition is growing faster, and how Tesla can't sustain what it's got.

Tesla losing market share has been an inevitability from the beginning when they went off and got practically all of the market. The math makes any other outcome impossible. To make up some numbers to illustrate...

If Tesla sold 100 units in year 1 while the competition sold 10 units, then Tesla has 91% market share (10/11ths).

In year 2, Tesla grows 50% and sells 150 units. Meanwhile the competition goes nuts and sells 50 units. Tesla's growth in units is higher, but as a % Tesla grows 50% while competition grows 500%. OMG!

Then people project off these numbers and conclude that Tesla will grow to 225 in year 3, while competition grows to 250 in year 3.


I made up the numbers to illustrate the idea. The question I ask myself - who is going to add 1M units to their 2022 unit deliveries first and faster? Who is making the decisions, doing the engineering, doing the investment, etc.. to sustain or even increase their growth rate? Who out there has a chance of matching Tesla's growth rate once they clear 1M or 2M units? Heck - who is going to get to 1M units before 2030?

Growing at a high % off of nearly non-existent numbers is "easy". By "easy" I mean that effectively every car company since ~1900 that has tried to has gone bankrupt and mostly disappeared. We just assume that the current car companies can easily transition to EV manufacturing. But can they? Are EVs more like a new product / market that, like the ICEv market, is so difficult that virtually all entrants go bankrupt and fail at?

So far the economics and evidence I see is more consistent with this being a new market that exhibits characteristics of the car market - an important one being that new entrants (including incumbent ICEv manufacturers entering this new business) nearly all go bankrupt and fail at. As opposed to this being a new product line in the already existing car market - maybe it really is enough different that it isn't just a new product line in an existing market. H'mm...

But in the meantime, looking at growth rates, investors can get all excited about growing from 50k to 100k units in a year, and project out the inevitable demise of Tesla who can only grow at 1/2 or less of that rate.


Rate matter. Absolute numbers also matters, and a high rate off of small numbers is "easy".

 

[Thekiwi]

Regarding declining market share ... an important point that I haven't seen people talking about recently; only that Tesla is losing market share, how the competition is growing faster, and how Tesla can't sustain what it's got.

Tesla losing market share has been an inevitability from the beginning when they went off and got practically all of the market. The math makes any other outcome impossible. To make up some numbers to illustrate...

If Tesla sold 100 units in year 1 while the competition sold 10 units, then Tesla has 91% market share (10/11ths).

In year 2, Tesla grows 50% and sells 150 units. Meanwhile the competition goes nuts and sells 50 units. Tesla's growth in units is higher, but as a % Tesla grows 50% while competition grows 500%. OMG!

Then people project off these numbers and conclude that Tesla will grow to 225 in year 3, while competition grows to 250 in year 3.


I made up the numbers to illustrate the idea. The question I ask myself - who is going to add 1M units to their 2022 unit deliveries first and faster? Who is making the decisions, doing the engineering, doing the investment, etc.. to sustain or even increase their growth rate? Who out there has a chance of matching Tesla's growth rate once they clear 1M or 2M units? Heck - who is going to get to 1M units before 2030?

Growing at a high % off of nearly non-existent numbers is "easy". By "easy" I mean that effectively every car company since ~1900 that has tried to has gone bankrupt and mostly disappeared. We just assume that the current car companies can easily transition to EV manufacturing. But can they? Are EVs more like a new product / market that, like the ICEv market, is so difficult that virtually all entrants go bankrupt and fail at?

So far the economics and evidence I see is more consistent with this being a new market that exhibits characteristics of the car market - an important one being that new entrants (including incumbent ICEv manufacturers entering this new business) nearly all go bankrupt and fail at. As opposed to this being a new product line in the already existing car market - maybe it really is enough different that it isn't just a new product line in an existing market. H'mm...

But in the meantime, looking at growth rates, investors can get all excited about growing from 50k to 100k units in a year, and project out the inevitable demise of Tesla who can only grow at 1/2 or less of that rate.


Rate matter. Absolute numbers also matters, and a high rate off of small numbers is "easy".

The marketshare of total automotive market is what matters, and Tesla is growing it’s marketshare.

Everyone forgive me for using this analogy yet again, but it is amazing how frequently the pattern fits:

The iPhone share of “The Smartphone Market” vs the total mobile handset market.