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

[Buckminster]

https://twitter.com/x/status/1710120764601508258

https://twitter.com/x/status/1710120113838387488

https://twitter.com/x/status/1710053010812858829

 

[Moon Buggy]

What reason is there to believe prices are done coming down? The reality is that rates don’t appear to be coming down any time soon, and real rates are at risk of moving up at the long end.

Whats unrealistic IMO is this idea, pushed by people like Gary Black to name one proponent, that 2.3-2.4m vehicles will be moved next year with no meaningful reduction in ASP. For that matter, moving 10m vehicles in the future with no reduction in ASP. Elon doesn’t believe that, I’m quite sure.

I think Gary Black's stance is that price drops have not led to enough volume growth to offset the loss on margins, so why not at least try some level of investment in an education campaign.

There has already been a meaningful reduction in ASP. Where does it end?

And, for sure, two things can be right. Lower prices will sell more cars and this is a good thing for the world and maybe it's even good for the company in the long run. But it is likely to slow earnings growth unless Tesla can offset the loss in revenue through other means, and if you have several quarters in a row of flat earnings, it's going to bring down the share price.

 

[Bet TSLA]

Sniff . Maybe I can get second place. $28,678.82 for me.

Some of us are just more "hardcore" than others. But, hey, you definitely rate high on the "choosing to be bold when caution is called for" camp. I'm afraid I make something of a habit of it.

 

[Bet TSLA]

I think Gary Black's stance is that price drops have not led to enough volume growth to offset the loss on margins

So we should just ignore that line upgrades lead to (possibly significant) cost improvements, thus better margins? We have no real idea whether the price cuts are greater than or less than the cost reductions. Never mind the continued falling cost of battery materials.

Gary Black is best ignored.

 

[Artful Dodger]

BREAKING: Tesla has cut the price of the Model Y Long Range and Model Y Performance to all-time lows.

There's a direct connection between 3/Y price cuts and Panasonic 2170 cell costs. Hence yesterdays "Confidentiality" for the price regime now extended since 2015:

Oct 05, 2023 CT ORDER (PDF)​

Tesla negotiates better deals w. Suppliers, passes some on to Customers, takes the rest in increased Margins.

Winning.

 

[jamaatta]

I bet the increase of Chinese LFP-battery supply is putting pressure on Panasonic prices.

 

[insaneoctane]

Yes. This is all about taking market share. Checkmate.

I don't think taking market share is part of the mission, per se. But, if others continue to push ICEV, well maybe it indirectly is....

 

[Bet TSLA]

If you're consuming Isaacson's biography of Musk, this review of a review is worth a read:

Elizabeth Lopatto on Walter Isaacson’s ‘Elon Musk’

Link to: https://www.theverge.com/2023/10/1/23895069/walter-isaacson-biography-musk-review

daringfireball.net

Lopatto's review itself is the usual mishmash of crap that The Verge usually writes about Musk/Tesla. It's not even worth looking at.

But Gruber's observations are worth understanding if you want to know what Isaacson gets wrong. Isaacson is simply not a technologist of any sort, so he is incapable of telling truth from fabrication -- he just has to decide what subject matter expert to trust. Gruber provides a link to his own critique of Isaacson's Steve Jobs biography, and having listened to both biographies I can tell you that Isaacson gets everything wrong in exactly the same way.

Not that it isn't worth reading, and not that he doesn't get lots of stuff right. But the essentials of each man's work and accomplishments is utterly beyond him. He knows neither what is true nor what is important. It remains for somebody else to write an excellent Elon Musk biography.

If you're interested in reading a better Steve Jobs biography, give this a try: Becoming Steve Jobs - Wikipedia. Not perfect, but significantly better than Isaacson's work.

 

[insaneoctane]

Tesla made a decision to continue ramping as fast as possible into the headwind of a possible recession and increasing interest rates. I think commitment to the mission made Tesla wiling to do this because if things didn't turn around soon, they were ultimately willing to sell at low/zero margin with the possibility of a future play on FSD revenue. I believe that the 4680 ramp hasn't gone as quickly as hoped and therefore Tesla's battery COGS hasn't dropped as quickly as hoped. Feels to me that Tesla might have even taken their foot off the gas at least a little at Austin & Berlin due to 4680 availability. Interest rates are, somehow, still going up. I think Tesla is simply cutting prices to keep demand in check with production and while I am sure there have been some COGS reductions and enhanced efficiencies as production continues to ramp, I suspect that margins will still take a hit from this latest reduction. I don't think Tesla planned to be here, but they knew it was possible. The unintended side effect of Tesla having to do this is the collateral damage to legacy automotive. They are in no way prepared to deal with this and they'll be hitting up the US taxpayers much sooner than previously expected. I do wonder just how long it will take to see interest rates drop and the market to firm back up? The good news is Tesla is in a strong position to be able to survive quite a bit.

 

[Buckminster]

So Troy has argued that Tesla is demand constrained. That remains untrue (Tesla lower costs accordingly as they have again today) except for S/X.

Crazy idea:

Elon is waiting to advertise the Cybertruck. Doesn't make sense as it will only increase waiting lists?? Yes, but the innovative design might grab that much more attention that people will truly learn about all the "common to all" vehicle features such as FSD. A big CT event will maybe reach ~30% of world population but most will only see what the media wants them to see. Advertising ensures people see what Tesla want them to learn. What is the value to Tesla of half the world's population learning that their cars self drive?

Given that this would sell more S/X, advertising is legitimately mission led.

 

[Artful Dodger]

"Lodger's Rules of Acquisition": (c) 2023 | 6th Revised Edition | 04:00 ET, Oct 06, 2023

1. Volatility Is Not Risk; Geldings don't Buck
2. Market Makers are Not your Friends; It's their Rodeo to Rig
3. Ignore the Media; They're Paid to Lie (Look Behind the Curtain)
4. This stock cycles through its Trading Channel; Take your Time, then Act!
5. Remember: Time is your Friend; Emotion is your Enemy; Math is your Ally
6. When In Doubt, Buy/Sell Half; There are always more Opportunities
7. Don't Overtrade; Especially Short-term Options
8. Stay Healthy; Avoid Margin

Cheers to the Longs!

 

[Huskyf]

https://twitter.com/x/status/1710120764601508258

https://twitter.com/x/status/1710120113838387488

https://twitter.com/x/status/1710053010812858829

That's normal because they cut price of the car

 

[Acroyear]

…
He has been consistently wrong, for like 7 years, on Autopilot/FSD advancement. Has he been starving the FSD team of resources because he thinks success is just around the corner ... for seven years? 200 core developers is kinda small for such an important effort.

Many others have already eloquently rebutted your post but I’d like to call out this point. Unless you’re part of the development team, you really have no idea if 200 developers are not enough for FSD development. It’s a common mistake of people who have not done software development to think adding more developers equals faster progress. VW had around 10000 developers and no one thinks their rate of progress is worthy of praise.

 

[Right_Said_Fred]

These price cuts are enough hit to margins I fear share price is inevitably headed to under $200 in the next few months.

What reason is there to believe prices are done coming down? The reality is that rates don’t appear to be coming down any time soon, and real rates are at risk of moving up at the long end.

Whats unrealistic IMO is this idea, pushed by people like Gary Black to name one proponent, that 2.3-2.4m vehicles will be moved next year with no meaningful reduction in ASP. For that matter, moving 10m vehicles in the future with no reduction in ASP. Elon doesn’t believe that, I’m quite sure.

I've decided to no longer sync my phone to the atomic clock, but to you guys showing up in this thread when there’s news which can be perceived as 'bad'. Much more accurate.

Why not also join us when there's 'good news' to celebrate?!

 

[SPadival]

Jeff Lutz on price cut & GM impact

https://twitter.com/x/status/1710223891287699705

 

[Artful Dodger]

I believe that the 4680 ramp hasn't gone as quickly as hoped and therefore Tesla's battery COGS hasn't dropped as quickly as hoped.

Tesla battery COGS is not dependent upon 4680s whatsoever, COGS is a function of the cost and supply of LFP packs from 2 different suppliers (CATL and BYD), while everyone else competes with them. Recent LFP cost reductions are well-documented: (in case you missed this)

• EV, energy storage battery prices set to fall more, report says | Reuters (Sep 07, 2023)
• Chinese LFP battery prices fall to 12 month low as lithium prices slump | Benchmarkminerals.com (Sep 30, 2023)
• CATL starts battery price war with low-cost lithium offer | Benchmark Source (23 hrs ago)

Perhaps do some basic math on Tesla's profit per vehicle, how it will be affected by the change in COGS, and how total Auto profit will increase due to increased sales (at least 476K in Q4). You'll feel better. I'm not worried whatsoever.

I bet the increase of Chinese LFP-battery supply is putting pressure on Panasonic prices.

Indeed. Chinese LFP is about to become so cheap that only mass-sensitive vehicles like Cybertruck and Semi will need High-Nickel 4680s, while NMC 2170s will work well for LR vehicles.

Oh, wait... that's EXACTLY what Tesla told us on Battery Day, Sep 22, 2020

Cheers to the Math-Makers!

 

[cliff harris]

I thought this chart might be of interest showing Tesla's UK market share:

Source: UK EV Share At 23.4% — Tesla Leads - CleanTechnica

I think its interesting for the many US posters here, as I know that the share of BEVs in the US that Tesla has is MUCH bigger. This can blind investors to the situation in other markets where there actually is some real competition. I especially think the MG4 is a very cost-conscious competitor to the model 3 here.

Especially relevant today when discussing further 3/Y price cuts. Maybe not in the US, but here in the UK I can see Tesla being concerned about lower price rivals. The MG4 is also small, and more suited to UK roads. Still, the guy who I know who bought an MG4 would have definitely got model 3 if it was price-comparative!

 

[CorneliusXX]

I've decided to no longer sync my phone to the atomic clock, but to you guys showing up in this thread when there is perceived 'bad news'. Much more accurate.

Why not also join us when there's 'good news' to celebrate?!

How else would you expect the Global Pessimism System to remain accurate?

 

[Mike Smith]

I think Gary Black's stance is that price drops have not led to enough volume growth to offset the loss on margins, so why not at least try some level of investment in an education campaign.

There has already been a meaningful reduction in ASP. Where does it end?

And, for sure, two things can be right. Lower prices will sell more cars and this is a good thing for the world and maybe it's even good for the company in the long run. But it is likely to slow earnings growth unless Tesla can offset the loss in revenue through other means, and if you have several quarters in a row of flat earnings, it's going to bring down the share price.

Gary would be correct, except he doesn't understand the purpose of the price cuts. If it was just to generate more sales then he would be correct in saying advertising makes more sense.

But what Tesla also needs to do is block out the competition, or there wouldn't be enough battery materials for everyone. When Elon said he doesn't see a shortage of battery materials he meant after Tesla destroys much of the competition.

This explains why Tesla is already heavily discounting megapacks despite being sold out for years - to dissuade competitors from starting their own megafactories.

Competitors Tesla can block out now will probably be blocked out forever. As Tesla increases volume, lowers prices and ties up materials supply there will be no way for them to enter.

This doesn't hurt the mission because the competitors who get blocked out will be the ones who were going to use battery materials the least efficiently.

 

[jkirkwood001]

Says who? You? Because that’s the way it’s always happened?

Not convinced you’ve proven anything to support your conclusion. Unless you’re in the room, you’ve got no idea what’s going on. A couple of books doesn’t suddenly make us all knowing, particularly when we can point out blatant falsehoods in those books. A couple of interviews of past employees years later isn’t any more helpful either as each has their own reality of what happened. It’s like asking three people at the scene of an accident what happened.

Hey back off, @Krugerrand . At every step, @Cosmacelf stated these were their opinions (AND those opinions are relevant to TSLA stock). Not like many others here who state their opinions like facts ("There's zero chance Tesla will ..." or "Musk was wrong to..."). Now you're just being argumentative and trying to belittle someone (none of us is currently "in the room" these days, so what's your point? Some of us have worked for Elon directly in the past, but not you as I recall.). Not helpful.