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

[wtlloyd]

First, the take rate will eventually be well above 50% because driving manually is too dangerous. Second, as you scale up a software business, the gross margin goes above 80%. Third, the price for un-supervised FSD will be a lot higher than $100/month. Fourth, you completely left out OEM deals.

We are not talking about 2 million cars or 6 million cars. We are talking about more than 100 million cars.

Insurance pricing will have the last word and tilt the scales in favor of FSD. And once RT is truly ubiquitous, lower income folks will have monthly passes supported by progressive local government.
Our experience to date limits the future we can envision, but has no hold on the future to come.

 

[alexxs88]

What time period are you basing this on?

Do you think it jives well with the time period the OEMs usually take to develop a new model from scratch, only this time including the licensed Tesla package for FSD?

If, let's say five years, is the average period to bring a new model from sketches to the showroom floor. How well will your statement apply?

Is your confidence level high that FSD will be L2 in five years, considering the pace of improvement of late?

"If we're talking new designs" then that is the earliest this will happen for other OEMs.

You're saying pace of improvement? What time period should we look at? If we look at it over 10 years, it's impressive, but not AS impressive. Secondly, I've seen people in the field saying that from this point forward it gets exponentially more difficult to solve the edge cases. I'm a software engineer, but I try to limit my confidence in situations like this. Since I have to model this somehow, it seems more logical that it gets harder, rather than easier.

No OEM would just move over all their designs to a completely new solution/model, especially when it's unproven. So the progression with OEMs will be painfully slow. The first step will always be one OEM with one model. Then we can start the countdown of the next few years for another model from the same OEM and at least 5 years for another model from another OEM. Depending on the take rate of the first, profit numbers etc. BMW for example are charging 4500$ on the base price of a new 5-series for their driving assistant package. How will the profit split look like so that it makes sense for them to ditch this money cow and split the profits with Tesla on FSD?

 

[2daMoon]

SP says, "Hello Upper BB, fancy meeting you here"

 

[SOULPEDL]

What the heck, it's like Tesla wants us to drive for free!

 

[Artful Dodger]

Anybody know when Waymo and Cruise are launching in China? /S

 

[Krugerrand]

You're literally just repeating my point. The challenge to build a car company is orders of magnitude simpler than building autonomous driving on the cheapest sensor stack out of all its competitors. If you can't see that, then you're truly living in a dream world. Why else do you think they'd be >8 years over their own deadline? Because it's too easy?

‘Hard’ is not defined solely or even primarily by ‘time’. When all is said and done, we’ve no idea how Elon or anyone else at Tesla involved in it all will view The 9 Circles Of Production Hell vs solving FSD vs the endless list of other solved problems. To date, Elon still views the early days of keeping Tesla alive at the top of his ‘most difficult time of my life - chewing glass and staring into the abyss’ list.

Factually, we’re this many years down the road with still not done FSD because;

1. Several throw away what we have and start from scratch approaches initiated
2. Have had to wait for technology to catch up

Secondly, China was a win for Tesla until this year. Sales are dropping like a rock in China because of newly popped up Chinese EV companies that somehow are managing to undercut them on price while offering a more compelling product. This exactly what I meant. There's no reason to believe any concession done to Tesla now isn't to get something (better) in return.

I understand that’s the narrative you want to hold on to. I think it’s bullocks.

The two points don't contradict themselves in any way. Sometimes the short term pain is too great and needs to be relieved. As I said before, Tesla's sales in China are suffering, they're priced like a growth company whose revenues and profits are shrinking. The pain is very much immediate. Giving away IP or training data (or whatever else) that might hurt them in the future is a compromise if it solves today's problem. And it's exactly what they've done with the original factory that has spurred so many competitors in an unbelievably short time.

Nope. Not buying that either.

As I say to other emotional bulls, let's agree to disagree, I don't feel the need to convince anyone of anything.

And definitely not buying that.

 

[NicoV]

Shall we refer to the $140 local bottom of last week as the “Gerber-Black” bottom?

https://twitter.com/x/status/1784942410444808261

 

[alexxs88]

1. Several throw away what we have and start from scratch approaches initiated
2. Have had to wait for technology to catch up

How do you know they won't have to throw it out away again? How do you know technology has caught up to the level needed to have level 4/5 using Tesla's sensor stack? Or if it is indeed possible.

My logic is simple (welcome to disagree). Tesla was FORCED into this sensor stack. Waymo chose theirs. There's no logical reason to believe any group of engineers is worse than the other.

 

[unk45]

Sure they can export it and make a profit. Can't sell it in China and make a profit. In the meantime they've made BYD a better company and Greely too. Now Greely is taking the very best 4680 form battery cells and packaging them into a vehicle built by gigapress's and selling those to Waymo to compete against Tesla in the RT market, likely beating Tesla in all 3 areas. So sure, teach China how FSD should be really done. Great.

Short term win, long term ..not so rosy.

Just make certain that nobody notices that the Gigpress itself was designed and built by a Chinese-owned company when no non-Chinese-owned company was willing to take the risk.

Never, ever, admit factual evidence. Indulge in prejudgement/s'
That's easier.
Whatever you do don't admit that BYD has built better batteries.
Prejudice is so much more satisfying/s

I apologize for sarcasm. Like others who've dealt with China for a long, long time (my first business trip to Beijing was in 1978) I am acutely aware of how much development has happened and the countless foreign entities that have contributed.

Today, however, Chinese technologies ahem been fundamental in some areas and brought efficiency to others. China no longer has even the least expensive workforces.

Just look at the sequences.
-The Marshall Plan and adjuncts helped produce modern Europe, In the early 1950's people laughed at Isetta;
- in the early 1960's Americans laughed at the Toyota Crown, by the mid-1960's they bought Datsun 1600 Sports because they were a better MG;
-in the late 1970's they launched at Hyundai;
-now they're still ridiculing China...
Every one did have foreign help. Every one 'borrowed' foreign technology.
Every one now has technology leader in several categories.
-does BMW need help to design a new car, even a BEV?
-Does LG need help to develop the most efficient refrigerator?
- Does Kyocera need help with ceramic rotor blades"?
-Does BYD or CATL need help to develop a new and better battery?
-For that matter does Huawei really need foreign chips? Does TW need help designing solar panels?

Sure, politicians ares till arguing about two decades ago. Protectionism delivers it's own rewards.
Just look at any high tariff country and see how well their innovation is doing in comparison to others?
So, before saying 'oops' or worse about the last one, just lookout which countries have balance of payments surplus with China and how they get there.
Nothing is perfect in human governance including that of China. It is both easy and compelling to blame as much as we can on protectionism. In the end that is not really what is happening now.

Geopolitically there are territorial and rights debates, including revisionist versions of ancient history.
Those are not the stuff producing Tesla success. To the contrary Tesla thrives while actively encouraging everyone everywhere to advance a sustainable world.

Tesla is not about Market Share or protection of patents. It's about advancing human sustainability.

In the process Tesla upsets dozens of conventions, including those of prejudice.

We should judge them on the success in reaching the mission, not politics.

 

[alexxs88]

Yes it would take a major redesign. At the speed other OEMs make major design changes, it would take at least 3 years to roll out to their customers. Realistically more like 4 or 5 years. Where do you think FSD will be by then? Probably a damn good L2 system in my opinion.

Precisely. So if it's still L2, is it a big enough incentive for them to split profits when they can keep it to themselves?

 

[2daMoon]

You're saying pace of improvement? What time period should we look at? If we look at it over 10 years, it's impressive, but not AS impressive. Secondly, I've seen people in the field saying that from this point forward it gets exponentially more difficult to solve the edge cases. I'm a software engineer, but I try to limit my confidence in situations like this. Since I have to model this somehow, it seems more logical that it gets harder, rather than easier.

No OEM would just move over all their designs to a completely new solution/model, especially when it's unproven. So the progression with OEMs will be painfully slow. The first step will always be one OEM with one model. Then we can start the countdown of the next few years for another model from the same OEM and at least 5 years for another model from another OEM. Depending on the take rate of the first, profit numbers etc. BMW for example are charging 4500$ on the base price of a new 5-series for their driving assistant package. How will the profit split look like so that it makes sense for them to ditch this money cow and split the profits with Tesla on FSD?

I'm not "saying" pace of improvement, I'm "seeing" pace of improvement.

It has been getting harder to solve edge cases for years already, yet, the pace of solving edge cases has ramped up thanks to the drastic leap from V11 to V12.

Any OEM that doesn't make at least one model capable of being licensed for Tesla FSD will be behind any other OEM who does.

The OEM will get all the profit from the vehicle sale. This should keep the lights on for them.

Licensing will not be costly to them, but it will limit application of FSD to BEVs ONLY. This will accelerate the mission. Remember, the Mission?

Tesla will manage use of the TAAS and SAAS aspect through their network (FSD subscription, Robotaxi, etc.) and that will be the profit center for Tesla, which they might share with the OEM, or not. (won't even mention the Superchargers)

This makes the best kind of sense for those OEMs as it won't require them to invest billions trying to reinvent the FSD wheel, yet, allow them to keep selling cars with their marque on them. (along with the "Tesla Inside" sticker, of course)

But, you didn't actually answer the question regarding what timeline is your thesis based upon?

 

[dhrivnak]

What the heck, it's like Tesla wants us to drive for free!

View attachment 1042847

Actually that is quite high to me, as Erie insurance for my Model 3 is $53/month.

 

[Gigapress]

Insurance pricing will have the last word and tilt the scales in favor of FSD. And once RT is truly ubiquitous, lower income folks will have monthly passes supported by progressive local government.
Our experience to date limits the future we can envision, but has no hold on the future to come.

Also, traffic caused by crashes is a major negative externality of human driving. It messes up people’s days, the randomness of the timing makes scheduling journeys more difficult, it clogs up the road network, and it occupies first responder resources. Accidents in large metros cost the local economy dearly. Not much in the world of politics is more universally unpopular than traffic. I could see government subsidies for low-income and for minors, like most cities offer subsidies for mass transit passes.

 

[2daMoon]

My logic is simple

Something we can agree on.

 

[Musskiah]

You are making a tenuous assumption that those incremental revenues come without incremental costs being recognized at the same time.

It is likely true that there are some unrecognized costs as well, yes. Here's what I responded previously in this regard, in case you missed it...

I agree there should be a better understanding of exactly how much drops to the bottom line. Perhaps someone with a greater understanding of how the costs of unrecognized revenue are treated/accrued/accounted @The Accountant can bring clarity. @unk45 threw his hat in the ring I see. Regardless, I think its safe to assume the unrecognized revenue WILL be much higher margin revenue.

 

[Knightshade]

Actually that is quite high to me, as Erie insurance for my Model 3 is $53/month.

Comparing insurance costs between any two people who don't live on the same block, with the same credit score, age, driving record, and a myriad of other factors is a fairly pointless exercise.

Even moreso for EVs whose coverage costs seem to vary even between companies for the same person very wildly.... (last comparison I saw checked like 10 different companies for the same individual on a Tesla and found multiple quotes that were 2-3x the lowest ones with others in between that range- identical risk being insured only thing changing was which company quoted it.)

 

[Featsbeyond50]

Did I wake up in 2020 this morning?

 

[M|S|M MYP]

Anybody know when Waymo and Cruise are launching in China? /S

2 weeks maybe?

 

[larmor]

And the winner of the OEM FSD licensing is: Baidu...

 

[unk45]

Insurance companies will offer a huge discount for miles driven on FSD. If supervised FSD stays at $100/month, a lot of customers will save enough on insurance to justify the price.

Not anytime in the foreseeable future.
Loss frequency goes down.
Loss severity goes up.
Just compare a superb level 2 with, say;
-Large commercial aircraft have very, very rare accidents. Even the infamous B737Max has had an excellent safety record. But, when one happens just look at teh enormous catastrophic costs.
-Maritime shipping has very low accident rates. Just catch fire on a car carrier and lose countless Lamborghini, Bugatti, Porsche and other VAG vehicles or;
-Inagine wiping out a major highway bridge.
The moral is LOSS SEVERITY is a huge thing as loss frequency declines.
Insurance rates will not decline in any substantial way so long as loss severity reigns, and that has rarely ever happened in any category.