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

[Todd Burch]

Interesting thread on Biden’s semiconductor sanctions, has relevance to AI computing and self driving cars:

https://twitter.com/x/status/1580889341265469440

And VW just announced a partnership with a Chinese robot/chip company to help accelerate their ADAS development efforts. This might end up putting Tesla even further ahead.

 

[oldTAVguy]

How much truth?

Tesla will not start German mass battery production before 2024 -Handelsblatt

Tesla will not start mass production of battery cells at its European gigafactory near Berlin before 2024, German business daily Handelsblatt reported on Friday, citing experts, two of whom are close to the company.

www.reuters.com

 

[Knightshade]

Edit: Around 29 minutes in Alexandra explains that a 1% excise tax will apply to all share buybacks due to IRA, from January 2023.

Yup, which honestly I find the least compelling reason in the discussion.

If a buyback makes sense or not is a pretty fundamental question- does tesla have anything better to do with that $ (and that might include safety margin/black swan insurance among many other things)

I can't find any calculation of that decision where 1% is especially material either way.

 

[TheTalkingMule]

How much truth?

Tesla will not start German mass battery production before 2024 -Handelsblatt

Tesla will not start mass production of battery cells at its European gigafactory near Berlin before 2024, German business daily Handelsblatt reported on Friday, citing experts, two of whom are close to the company.

www.reuters.com

IMO I still think Elon would prefer to manufacture cells and even packs elsewhere in Europe. The German govt has taken a few pokes at Tesla to try and support VW, and I think Elon's response will be similar to when Panasonic tried to lean on him.

There's no shortage of cells today, so he can afford to put this decision off and wait until Putin is out of Ukraine. Open a cell plant somewhere over by Poland.

 

[Unpilot]

Nice Pre-Market head fake.

 

[scaesare]

Two? Looks like 3 to me.

View attachment 863530

 

[Artful Dodger]

Creating the Robotaxi fleet is going to take insane amounts of cash.

No, it will create itself out of FCF from high margins. If Tesla's gross margins on software FSD approach the 80% avg in the tech industry, then Robotaxi itself will likely have ~50% g.m.

This implies that if Tesla sells just half of Robotaxi production to 3rd party / fleet operators, then they get to keep the other half their production to create the Tesla Network for free (or at least self-funding).

Elon can write a business plan, wot?

 

[Nocturnal]

Yup, which honestly I find the least compelling reason in the discussion.

If a buyback makes sense or not is a pretty fundamental question- does tesla have anything better to do with that $ (and that might include safety margin/black swan insurance among many other things)

I can't find any calculation of that decision where 1% is especially material either way.

The 1% only matters if they were already considering doing it in the near term.

 

[M|S|M MYP]

"MADEIN" is one word in case you did not know

 

[UncaNed]

Not quite.

Twitter wanted.... the original deal both parties signed and agreed to. That's it.

Elon tried to negotiate a CHEAPER deal in recent weeks- and of course twitter asked for additional clauses then- that's how negotiations work-- if you want a lower price you have to give the other side something to agree to it. No deal was reached, so Elon said Ok I'll agree to buy at original price- but when motioning the court to dismiss added a couple caveats to said offer. Twitter (and the chancery judge) said no to that too because again twitter wants the original deal. The judge basically said "If you haven't closed the original deal by 10/28 you need to let me know so I can set a new court date to go to trial in November" without any of the caveats Elons original motion tried to insert.

The original deal was supposed to close within 2 business days of the twitter shareholder vote- which happened about a month ago. The only person who has caused this deal not to be closed on time per original terms is Elon (and there's a variety of theories about why).


I'll remind this thread there's a whole other one where discussion like this goes:

Elon & Twitter

Source is Business Insider https://t.co/yokZFkSzbJ “MVP runs venture capital funds with more than $1 billion in assets, according to its website. It also specializes in secondary market transactions, where existing startup shareholders and employees sell their private stock to get liquidity...

teslamotorsclub.com

Yeah, but the original deal was for a Twitter with only 10% Bots; aren't there way more Bots than advertised, hence the value of Twitter (since it has far fewer actual human users than advertised) is lower than advertised, hence worth less than the original offer? I don't understand why Elon has to pay the same price for a Twitter who's value was misrepresented by Twitter.

EDIT- Apparently I was mistaken, thank you @Knightshade .

 

[BornToFly]

This is my fault. I bought shares at 225 near the open.

 

[TheTalkingMule]

I don't see this NASDAQ headfake/MMD holding, sentiment seems positive today. Shorts still feel short to me, time for more covering.

Oil down on the rumblings of big repercussions for Saudis trying to cut supply even further. Good to see!

 

[Chenkers]

How much truth?

Tesla will not start German mass battery production before 2024 -Handelsblatt

Tesla will not start mass production of battery cells at its European gigafactory near Berlin before 2024, German business daily Handelsblatt reported on Friday, citing experts, two of whom are close to the company.

www.reuters.com

I read this report earlier and it appeared to contain more FUD than objective reporting. Citing "experts, 2 of whom are close to the company" doesn't sound highly credible reporting. They also cite the reason is that there are problems with a key part of the production process. If that's the case then why is Kato ramping and Austin gearing up for 4680 production. Earlier reporting was suggesting some Berlin production equipment would be diverted to Austin or delayed in favour of production for the IRA. This appears designed just to amp up the fear component. The report was also nicely timed for a really deep MMD.

 

[Knightshade]

Yeah, but the original deal was for a Twitter with only 10% Bots;

No, it really wasn't.

Bots aren't mentioned in the agreement at all. Mdau is not mentioned either (though a lot of folks seem to think mdau means something it does not)

And Elons own data scientists, per court docs, concluded the actual numbers were... roughly 5-10% (and they only got as high as 10 using a pretty....unusual confidence interval of just 80%), So his own folks found numbers largely in line with twitters claims that again weren't even IN THE DEAL.


The # of folks who are unaware of any of the actual facts, or what is in the actual deal, is fairly shocking.

FYI I'm gonna just start quote-replying in the correct thread to further posts in this one since there's a lot of misinformation in need of correction but this remains....not the actual correct thread to discuss it.

The 1% only matters if they were already considering doing it in the near term.

I mean, that was kind of the point of my post?

If they think it's a bad idea because of existential threats/black swans, or they have better business use for the $, then the 1% doesn't change that math.

If they think it's a good idea then there was already no good reason to wait till NEXT year anyway given how low the stock has dropped. In this case doing it before Q4 results makes the most sense, and the 1% doesn't change that math, there was already no reason to NOT do it this year if they planned to do it at all near term.

 

[Captkerosene]

Whenever I've done M&A deals the board of Directors (or what you yanks call the Officers of the company, hence the term D&O insurance) have to sign the warranties & disclosures document within the deal bundle.

That makes the board directly and personally responsible for any dishonesty.

Dishonesty does not trigger D&O insurance payouts. Dishonesty is fraud and bypasses insurance and goes direct to the guilty individual(s).

Fortunately I've always gone through the warranties & disclosures with a fine toothcomb so I don't have any personal experience of this going wrong. Hence I'd genuinely like to know how this is different.

I don't know the answer to the question. I believe there was a determination that there had been fraud.

I was the executor of my father's estate who had been a smallish shareholder of the Tribune Co. After paying legal fees for years I ended up writing a relatively big check to get the estate released from the lawsuit/s. It added years to the estate's final disposition.

I'm not a lawyer but even my lawyer had trouble keeping track of who was being sued by who and in what jurisdiction. Thousands of shareholders who had done nothing wrong - but had benefitted from the fraud - were being sued by multiple parties on the acquirer's side who had been damaged.

If I was a current TWTR shareholder, I'd sell my shares before the closing and possibly avoid future litigation. Just my ill-informed once-burned opinion.

 

[TSLA Pilot]

Commercial airplanes are designed with extreme degrees of safety. The FAA requires a one-in-a-billion rate of catastrophic failure.

The engineers achieve this with redundancy. Extra structural material, extra wheels on the landing gear, multiple independent structural load-bearing paths, extra flight-control surfaces and associated hydraulics and auxiliary equipment. Independent left-side and right-side electrical systems. Extra oxygen bottles. Duplicated or triplicated fluid systems. Triple-redundant electrical bonding, sealant application, and fasteners. We blow nitrogen gas into the fuel tank to make sure it can’t explode, even though that shouldn’t be possible in the first place because we systematically eliminate static electricity buildup in the tank to ensure there is no ignition source.

Did you know that every jet you’ve flown on has a RAT on it? A ram air turbine, that is. A heavy windmill power plant that gets hauled around as dead weight and only gets used in an extremely rare emergency, which probably will never occur in the entire multi-decade life of the aircraft.

View attachment 863635

All of this makes for an aircraft that is much less efficient than one that works 99.99% of the time. It's pure waste almost always. Extra weight. Extra fuel burn. Extra cost. Extra manufacturing operations. Extra maintenance. Extra pre-flight inspections. Because of this caution, you are paying substantially more for flights than you would otherwise, probably by hundreds of dollars worth.

Yet it's deemed to all be worthwhile because we want the risk of catastrophic failure to be that low. Sometimes the first two systems fail and that third one is what saves everyone on board.

Why not treat Tesla's liquidity with the same degree of caution, considering the tragic consequences of hypothetical failure?

Such an extreme analogy, and inappropriate comparison.

It is not as if shares re-purchased by Tesla become cat litter--quite the contrary. They can be re-sold if needed. A portion of Tesla's cash hoard would be of much greater value if converted into TSLA shares as those shares will be worth so much more in the years ahead.

The status quo leaves Tesla with a HUGE cost--a massive cash balance in a high-inflation environment creates pure waste.

(Especially when at least one brave and smart person in Russia puts the entire globe out of Putin-induced misery.)

 

[Singuy]

How much truth?

Tesla will not start German mass battery production before 2024 -Handelsblatt

Tesla will not start mass production of battery cells at its European gigafactory near Berlin before 2024, German business daily Handelsblatt reported on Friday, citing experts, two of whom are close to the company.

www.reuters.com

So far "experts close to the company" have a track record of being 100% wrong this year.

 

[Knightshade]

I don't know the answer to the question. I believe there was a determination that there had been fraud.

I was the executor of my father's estate who had been a smallish shareholder of the Tribune Co. After paying legal fees for years I ended up writing a relatively big check to get the estate released from the lawsuit/s. It added years to the estate's final disposition.

I'm not a lawyer but even my lawyer had trouble keeping track of who was being sued by who and in what jurisdiction. Thousands of shareholders who had done nothing wrong - but had benefitted from the fraud - were being sued by multiple parties on the acquirer's side who had been damaged.

If I was a current TWTR shareholder, I'd sell my shares before the closing and possibly avoid future litigation. Just my ill-informed once-burned opinion.

Err....AFAIK the tribune case was dismissed with no liability allowed to the shareholders at all. And the supreme court refused to overturn the court that decided that, so it should be pretty settled law that Suing The Shareholders Is Not A Thing in cases like this.

U.S. Supreme Court Declines Review Ending Shareholder Fraudulent Transfer Litigation in Tribune

www.mcguirewoods.com

 

[TSLA Pilot]

@traxila described the reason perfectly. Tesla matters. We don’t. The standard of safety is not the same.



The inefficiency of allowing cash value to slip away from inflation was exactly the analogy I was making. It costs extra to get safety. Everyone knows that. Let’s think very carefully about whether, in the case of Tesla’s liquidity, that safety in worth the price.

This isn't a digital argument: ONE or ZERO.

A small beginning in a share buyback program would be an excellent opportunity for Tesla to not lose billions of dollars in value due to inflation, and, let's face it, TSLA as a stock is going to gain far more in value over time: a virtuous circle.

The "Tesla Jet" is NOT going to crash if a few token billion is spent in share buybacks over the next few years . . . . It's really a great place to put their excess cash. Tesla is cash printing machine, even after all their CapEx needs to come, and will very, very likely remain so for many, many years, because an increasing number of un-dumb people realize that EV's a "must have" solution to over a century of unchecked GHG dumping.

 

[TSLA Pilot]

Creating the Robotaxi fleet is going to take insane amounts of cash. My estimates are in the low trillions worldwide over the first few years [1]. Some of this will come from third parties buying teslas and joining the Tesla Network, but much will be internal Tesla investment.

I would much rather any spare cash be used to create the Robotaxi fleet than used for buybacks.

Indeed my worry is that Tesla has too little cash to fully take advantage of the Robotaxi opportunity. There will be a limited window when FSD is working, but rival systems are not (or are too expensive or not scalable). Reductions hardware costs, improvements in AI algorithms/training and the example of FSD to show what works, mean that effort required to create a rival robotaxi will be much, much less in 10 years.


[1] Assume 1.4 billion cars, half of which can be replaced by Robotaxi, each Robotaxi replaces 10 private cars. So 70 million Robotaxi required. Each Robotaxi is $50,000 including overheads, so $3.5 trillion is needed to build out the Robotaxi fleet. Lots of reasons why Tesla will not need all that in cash: competition reducing market share, revenue during rollout, third party investment through Tesla Network, still it drawfs the amount of cash Tesla has on hand at present.

The best RoboTaxi Teslas are the ones Tesla already owns, but were paid for by someone else: off lease Teslas.

Tesla has only offered closed-end leases for some time now, so every car off lease comes back to Tesla. There's your RT fleet, and, frankly, it just feels better to put a "used" car into fleet duty than a new one, but perhaps that's just me . . . .