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Tesla, TSLA & the Investment World: the Perpetual Investors' Roundtable
- Thread starter AudubonB
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insaneoctane
Well-Known Member
I'll give 'em $36K for the raven X just to help them out...
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insaneoctane
Well-Known Member
The issue is we do just don't know when TSLA will pop. Might be tomorrow....might be 2024 or ?. We don't know about the catalysts that we don't know about. We don't know how the stock will react to the ones that we do know about. We don't know about the macro. We don't know when FSD might have it's ChatpGPT moment. We all just speculate. Certainly none of us want to be on the sidelines when this juggernaut ignites. Unfortunately I've purchased too many shares closer to TSLAs ATH than to my first lot from 2013 than is ideal. I knew Tesla would eventually grow past any current SP eventually which is how I have bought some shares over $300 (split adjusted). The EPS chart below demonstrates a growth shape quite different than *I* expected a couple years ago. But, I'm in, not out. I am not patient, but am forcing myself to look beyond and HODL. No one ever promised HODL with TSLA would be easy, but I still certainly believe it will be lucrative. So, we can continue to share views and opinions here, but no one "knows" when.
It really simply boils down to the fact where unfortunately for Tesla, the exact period at which they are trying to meaningfully ramp up production of 2 new factories is when the Fed decided to take the fed fund rate from 0 to 5.5%. It just is what it is. Buying power from consumers has really been drying up and TSLA can't drop COGS fast enough to offset.
In the past, they've been able to drop COGS in relation to dropping ASP and sometimes even more which has resulted in higher margins.
It is worth pointing out that Tesla still hasn't reached the "strive for efficiency" phase out of Berlin or Austin yet. The periods AFTER Tesla reached volume production for the 3/Y out of both Fremont and Shanghai is when margins expanded materially even with ASP dropping.
It's just bad timing for Tesla to be frank. If the Fed rate cycle had started after Berlin/Austin had reach volume production and we in the stages of maximizing efficient, I think the way earnings would have played out would have been materially different.
And even more unfortunate for Tesla is that legacy auto can just milk their current manufacturing lines that they been running for ages, reduce any investments in launching new products or ramping their currently announced ones (which they're actively doing this) to preserve as much margin as possible and stuff inventory channels with dealerships and claim "demand" healthy. They're obviously sacrificing their future in order to keeps margins/profits steady but eventually dealership lots will be stuffed full (already seeing signs of this in various ways) and they'll be left with no future investment to rely on to drive any future growth.
My only gripe/frustration with how Tesla has handled this period is that Tesla has been too stubborn on advertising (I think it's clear at this point that there's a lack of informed consumers situation), Tesla hasn't been utilizing their cash as much as they should to provide their own financing, and using FSD/Enhanced Autopilot to soften the margin hit but discounting it to increase adoption (especially when it comes to FSD). Why they don't do something like advertise a temporary monthly FSD subscription drop from $199/month to $99/month is beyond me at this point.
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Long term tesla wins and we win.
Short term is anyone's guess although Tesla is doing better than anyone IMO in navigating headwinds while still accelerating production/deliveries/development.
I totally agree with all you say.
Not sure if it's literally true, but I heard somewhere that it is the legal responsibility of a public company to "maximize shareholder value." That is the directive, and it seems like the vast majority of companies interpret that -- as you noted -- to mean they need to maximize TODAY's shareholder value, with zero concern for what their decisions will mean in 10 years, 2 years, or sometimes even 6 months.
It sounds like these companies are just investing in future stranded assets...investing and building up more hydrocarbon/fossil fuel infrastructure and the vehicles to burn it, all while the writing is on the wall that these "assets" will decrease in value and ultimately just be huge liabilities that will need to be cleaned up and disposed of long before the design life is up.
On the one hand, this short-term thinking of other businesses makes Tesla look even better as a long-term investment...but on the other hand, this short-term thinking looks like an overall headwind for humanity as a whole.
If the SR S/X are using a software locked battery; that should allow Tesla to sell people a pure margin software unlock for additional range.
If they are using LFP cells to make that pack; this is even more better for margin methinks! Since S/X don’t qualify for IRA anyway.
I would love to see them bring S/X to high volume production; they’re SUCH great cars, if they were profitable at a more affordable price, Tesla could fill a large price gap between the 3 and Y to the S or X.
Again; I wouldn’t want to be a Tesla competitor trying to sell into that price point.
Final point; the news is often running in the background in the gym at work. Maybe it’s just a slow news day; but local and national news had S/X pricing front and center. I had my headphones in so I’m not sure what was said; but dang those are some SEXY CARS! Basically 3 free infomercials in the 90 minutes I spent in the gym!
If they are using LFP cells to make that pack; this is even more better for margin methinks! Since S/X don’t qualify for IRA anyway.
I would love to see them bring S/X to high volume production; they’re SUCH great cars, if they were profitable at a more affordable price, Tesla could fill a large price gap between the 3 and Y to the S or X.
Again; I wouldn’t want to be a Tesla competitor trying to sell into that price point.
Final point; the news is often running in the background in the gym at work. Maybe it’s just a slow news day; but local and national news had S/X pricing front and center. I had my headphones in so I’m not sure what was said; but dang those are some SEXY CARS! Basically 3 free infomercials in the 90 minutes I spent in the gym!
bkp_duke
Well-Known Member
Just my 0.02 - but I would bet that Tesla has an abundance of 16850-based packs (which only the S/X use). If memory serves me, they have a contract with Panasonic Japan for a certain number of cells per quarter of 18650. So, they have to find some way to sell them. Nothing else uses them, not even powerwalls.
Margins on the S/X are high, so if they have to trim back a bit to push more sales of those, fine by me.
Motor Mouth
Member
Hey now, I'm sure Fisker owner's are rapidly buying up TSLA stock. Both of them...I'm shocked that Fisker joining NACS isn't giving TSLA a lift in after hours trading.
insaneoctane
Well-Known Member
Higher interest rates + below makes Tesla's job harder....
If SR S/X are currently using a software locked battery, that doesn't mean there may not be a purpose built SR battery pack in future.
The current pack could be software locked to the approximate specs of a purpose built SR battery, the decision on whether or not to proceed with the SR pack might be dependent on actual demand for SR S/X.
Software locking can be a late lever in any end of quarter push, a decision might be made to deliver some software locked vehicles just to clear inventory. Or Tesla may try to up sell customers with SR orders an inventory LR. If there is an full priced order for an LR, that would always take priority.
Assuming Tesla finds out that there seems to be steady demand for 30,000 SR vehicles per year, they might still only size SR pack production to 20,000 per year, because later software locking has useful flexibility.
Assuming Tesla does decide to make 20,000 SR packs per year, the next step could dropping one motor and offering an SR RWD S/X for an even lower price, the aim would be to allow X to qualify for the IRA.
Coming back to the decision to drop the 75 kWh model S/X at the time there was not sufficient evidence that those vehicles were competitive with Model 3/Y, at the time making all 100 kWh was the right decision.
What has changed?
Tesla has found additional savings, streamlined and improved Model S/X production,
I doubt that we are looking at a massive increase in production volumes, just getting back to past peak production numbers with a small increase.
Considering supply and demand we can make some semi-educated guesses.
Demand:
India, Indonesia, Brazil and many other places in the world are currently under served for quality transportation options. many other places in the world are under served for transportation full stop.
Tony Seba tells us that when there is a "phase change disruption" the new system can often be bigger than the old system. A simple example of that is mobile phones, Many families around the world that never had a landline now have at least one mobile phone. Often every member of a family has a mobile phone,.
While current demand for vehicles is 80 Million per year, that isn't a real measure of demand in particular unmet demand. We may find that the peak annual demand for EVs is much higher than 80 Million.
Supply:
Where there are customers with an aspiration to have clean transport, Tesla will not ignore those potential customers.,
In round terms 20 Million Tesla vehicles per year in 2030 probably means at least 14 Million Gen3 cars.
If we considered the obvious locations for Gen3, Mexico, US, EU and China, that probably gets us to 10 Million Gen3 cars from 4 factories. (perhaps more).
So perhaps 2 additional Gen3 factories are needed by 2030, if we consider factories ramping that might be 3 new factories.
The considering the demand equation above 20 Million by 2030, doesn't necessarily mean Tesla is stopping there, especially when additional demand is becoming increasingly apparent.
Scaling;
4680 cell production and Gen3 vehicle production are both capex efficient and when they are fully mature any new factories are a relatively dimply cut-and-paste. 3-4 models are all that will be needed worldwide, and any local adaptions are likely to be minor,
Jeff Dahn is doing R&D on sodium batteries, eventually it is likely the entry level Gen3 vehicle can have a sodium battery.
IMO 4680 cell production can be cost competitive with BYD and CATL in all chemistries.
We don't yet know if Tesla can make a 4680 sodium battery, but that is an obvious target.
Locations:
India and Brazil can have local vehicle parts supply, that makes them likely locations.
Indonesia doesn't have an established eco-system of automative parts supply as far as I can tell, Chinese parts suppliers could be convinced to establish factories in Indonesia, but this is a stretch and probably a bad idea.
For energy storage batteries, there is no complex parts supply chain issue, that can IMO be more or less done anywhere in the world, with reasonable capex and a reasonably fast ramp.
Even for India and Brazil, I would be inclined to start with energy storage battery production and vehicle import.
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Perhaps you did nit read earlier posts. Brazil has substantial battery production today, from CATL and BYD. Both supply packs for various truck and bus builders, plus stationary storage serving, among others, the large wind turbines, mostly in northeastern Brazil. As for import that is already tariff free fir BEV, although BEV busses and trucks are built here for domestic use and exports. BYD, JAC, Volkswagen busses and some others are producing in Brazil toady or building the plants. Similar developments are happening in Indonesia and India.
the question is why Tesla is such a late entrant in these places.
Yes, I did read all of that. My post was more about trying to guess when / how Tesla will start out in Brazil.
One option for Tesla is initially building Megapacks using cells from BYD or CATL.
Why Tesla is such a late entrant in these places is hard to guess, but they are a fairly new company who has only been a high volume automobile manufacturer since 2012. They have tended to do "lower risk" factories, in more established markets first. I think China was assumed to be in that category at the time.
To be clear the opportunities in India and Brazil are enormous, and do fully justify expanding production to those markets. Gen3 further de-risks that expansion.
They're on their way, won't be long!
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