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To me this was Elon saying you are not going to trick me into opening the kimono until I am ready.Respectfully, I disagree.
Here's the portion of the call (word for word from the transcript)...
...If there is no $25,000 vehicle being worked on, is it really realistic to think that you can sell more than 3 million vehicles with two very high-volume cars and Cybertruck in 2024, or how do we think about that or what else is missing in that equation?
Elon Musk
Yes. I mean, it's apparent from the questions that the gravity of Full Self-Driving is not fully appreciated. If an asset has 5 times more utilization than the -- it's like dividing the cost of that asset by 5....
He literally answers the question about not working on the $25K EV with FSD and how people don't get the math...
Thanks for explaining that.We know he's a clown to be ignored but now that he's walked into my house, I must respond.
+15b (Tesla Q4 expenses)
+ 2b (Tesla Q4 Capital Expenditures)
- 6b (Remove Tesla Q4 payroll)
$11b - Total Spend with Vendors in Q4
$5.7b Accounts Payable at Dec 31.
So of the $11b in spend with vendors in Q4 (90days), Tesla owes vendors $5.7b. That means they have 47 day terms. Many Fortune 100 companies pay in 60 days. In my opinion, Tesla is paying bills too soon . . . .there's room for improvement to generate more cash flow.
i disagree. Employees at the level of "Smart people" in engineering don't give significant weight to the monetary dimension of the job once it gets to "I can easily live with that."It's easy to forget that a low valuation is powerful bait for attracting top talent. Even in an era of part shortages, the biggest limiting factor to Tesla's long-term growth is a lack of enough smart, capable people. Telsa's wages are only industry-leading once employee stock options are considered. Smart people get this. A lower share price could easily be the difference between an individual deciding to take the plunge and diving head-first into work at Tesla vs. taking the easy way out and living on the earnings from their last lucrative job or remaining where they are. A low share price makes Tesla a much more attractive place to work. It is also powerful incentive for people already integrated in Tesla to remain.
It's counter-intuitive but a low share price is actually very good for Tesla's long-term trajectory. And this is really an important turning point for the company in terms of transitioning into the next phases of their growth. You can't bring successful new products to market in ever-increasing numbers without an ever-increasing supply of human talent, Tesla's most limiting factor.
Between 2019 and yesterday’s earnings call, things did not “go well.” There’s a matter of a global pandemic and massive supply chain disruption that forced Tesla to push back production on three previously announced models. It’s also clear that Tesla was taken by surprise by the overwhelming demand for the Model Y that’s hoovering up the available battery supply
They need more factories for growth >50% and for higher gross margin (localized delivery, reduced congestion).Well... if they don't need more factories, I wonder how Berlin responds? Could be a strategy to get it open at least. Maybe board it up some to send the message loud and clear. (OK, no don't do that, I'm a shareholder.) But that could be a new posture following the China growth story, then say they don't need more factories this year. Now watch Berlin open...
As Elon mentioned as well, from what we're seeing, the pace of growth in 2022 will, again, be determined by supply chain and logistics, which is quite difficult for us to forecast.Despite these constraints, it's important to begin the ramp of Austin and Berlin to ensure that we are prepared once limitations ease, enabling us to increase total output more quickly in the future.
I can appreciate the prioritization of Optimus, given labor shortages, and the emphasis of FSD, given that it's needed for Optimus. And as an FSD Beta user, and semi-longtime Autopilot user, I've been gratified to see Tesla's autonomy progress.Elon should have told us why he is so bullish on FSD, and not just from a cost perspective. Is there exponential growth in the number of users having 0 intervention drives? Are there thousands of FSD Beta testers choosing to let the car drive in places they used to drive manually? How is the march of 9’s progressing? Etc. Instead he chose the “ye of little faith” approach.
Cars will 'park' while driving to the next customer.Yeah, the other barrier to people choosing a robotaxi over a bus, as Elon said is a bus carries ~5x more people per lane-space than a car. Where are all the single-user robotaxis going to fit on the roads??
My lay partner pointed this out when I was glowing about the earnings call. Seems like an obvious issue, no? Requires Boring solutions?
How is it a gamble to improve and increase capacity to produce the best selling vehicles Tesla has to offer, which generates billions upon billions dollars of profit?I know that this isn't what other people want to hear, but I've been a bull since '13. What Elon said has shaken me and the bull case significantly, and I think we are in for another period of the lost years from '14-'19.
Imo, Tesla is taking too many gambles to maintain the 50% growth per year, and I think it will ultimately bite back in the ass.
I don't care about a cheap Tesla - I would really just like a smaller Tesla. Either a small, sporty hatchback or a little convertible would be a blast (roadster is far over my pay grade, and certainly don't need 0-60 in 2 seconds). Would buy either in a heartbeat.I see no way to build a 25K car worthy of the Tesla name. Tell me what you'd skip from the Model 3 Standard to get to that price range. 25kWh battery? 10" tablet? Manual adjustable seats? 25% size reduction? Would that be enough to make the car cheap enough? And would a separate production line for manual seats, 10" tablet and downgraded software actually be cheaper?
Even European car brands have trouble reaching that price point without compromising. The Renault Zoe/Dacia Spring have abyssal crash ratings, and VW has stopped production of their supermini e-UP and badge engineered derivatives.
In terms of production growth, 50% seems to be quite achievable at this time. Are you worried about demand? Are you considering that Tesla has yet to enter a number of large countries and that word of mouth is quite strong?Imo, Tesla is taking too many gambles to maintain the 50% growth per year, and I think it will ultimately bite back in the ass.
The long term future of Tesla is still great and that's why I'm investing, but the short-to-medium term will will be extremely painful.How is it a gamble to improve and increase capacity to produce the best selling vehicles Tesla has to offer, which generates billions upon billions dollars of profit?
Maths don't lie. If you don't think earning growth will increase valuation, then you shouldn't be investing at all.
Any constructive input you want to put into the discussion? Not trying to call you out, but suggesting anything like the period of 2014-2019 without acknowledging that it would mean Tesla would have a P/E in the teens is fear mongeringI know that this isn't what other people want to hear, but I've been a bull since '13. What Elon said has shaken me and the bull case significantly, and I think we are in for another period of the lost years from '14-'19.
Imo, Tesla is taking too many gambles to maintain the 50% growth per year, and I think it will ultimately bite back in the ass.
Just an FYI...I drive FSD Beta every day. In my opinion, people spend an inordinate amount if time focusing on what it can't do and precious little on what it can do. No, it is not ready for wide spread release nor Level 5 status. That said, it is correct and safe 99% of the time. In fact, it has saved me from imminent accidents more than once. As it exists right now, when used in conjunction with an attentive driver, it is saving lives. It is avoiding accidents, saving people potential medical expenses and repair bills, and reducing the owner's exposure to potential rising insurance rates from accidents.I believe the way Elon handled that question turn some investors bearish. FSD is currently the only execution fails at tesla because unlike any of their other products, we are still stuck at this "dream" phase (kind of like what Elon said, we want to go to the moon but that's just a desire to which is the easy part).
If Elon framed it as "currently our demand for our 3/y products are beyond our expectations, and with the advent of FSD that we feel can drive demand further, we feel the 25k car is not yet necessary. However we do believe in making teslas affordable to all this project will be executed depending on market conditions ". That would have been a better answer.
Right now analysts are discounting high demand for teslas due to a shortage of new cars in general and may not last as supply chain ease.
What is a gamble? They're focusing on making as many Model Y as possible this year, which has insane demand and is more of a given and delaying production on CT, Semi and Roadster, which are much more of an unknown.I know that this isn't what other people want to hear, but I've been a bull since '13. What Elon said has shaken me and the bull case significantly, and I think we are in for another period of the lost years from '14-'19.
Imo, Tesla is taking too many gambles to maintain the 50% growth per year, and I think it will ultimately bite back in the ass.