Tesla, the investment

[Nysoz]

My investment in Tesla has always been a 5-10 year investment plan. Also getting more yield out of my shares/margin by selling covered calls and puts at a share price that makes more sense than current valuation. Even if the share price stays largely flat for 5 years as the company grows into their valuation, I'm making quite a bit of returns by selling the options. It's also easier for me to hold since I got a good deal of my position in the $40-60 (split adjusted) range. I have picked up some more along the way as well though.

They have a long way to grow still and lots of ups and downs along the way. The swings in share price are not for the faint of heart. They're still executing in their growth and still have the potential to disrupt a few more industries. If they hit large speed bumps along the way by not hitting their growth targets or other intangibles I'll have to re-evaluate then. But until that happens I'm still invested for the long run.

[Jaqen Haghar MD]

I did get a little chuckle out of seeing that Tesla did not hit 500,000 cars again this year. Musk has opened every year, for I don’t know how many years now, with “this year we are projecting 500,000...”. Soon, I guess.

I hope for the best with Tesla and hope someday they are able to make cars with the quality and reliability of Toyota and the technology of a space ship....

But I don’t feel super comfortable investing in a company where you’d have to own the stock for 1,200 years to get the earnings to match the stock price. It seems to be a pretty emotional trade on the imaginary future prospects of the company. It’s just too rich for my blood.

Maybe the tired old metrics don’t apply and this is a new area 😬, but these differing views on Tesla is what makes the market, a market.

[Tim]

Top ten?

https://driving.ca/volkswagen/features/feature-story/these-are-the-top-10-automotive-manufacturers-in-the-world

The question is unit of measure. Is it vehicles sold, sales , or market cap. Depends as an investor which you think translates into profits. From an investment perspective, bigger is not necessarily better.Not a thing wrong with being a niche player, 1% is not a dominant market share.

If from a customer perspective one needs to rely on lemon laws, ..... tends to trash the brand name. Worst case scenario.

[Kamban]

They gave us a loaner. I just didn’t imagine us needing to drive a loaner within the first two weeks of buying a new car.

We didn’t see pictures of the original bumper but it was described as paint imperfections. They knocked $1600 off the price for having to restore it, which I was happy to take in exchange for something relatively minor and cosmetic. (I couldn’t tell any difference in the bumper when we actually received it, and wouldn’t have known there was originally an issue unless they mentioned it.)

Nysoz and Tim, I’m not as deep in the weeds as you both with regards to Tesla’s factories, production capacity, financials, retooling, etc. All I know is that a month ago, I couldn’t wrap my head around how they had a market cap larger than the next nine biggest automakers combined. Or the wildly high P/E ratio. Or how their valuation could be so big while their revenue and number of cars produced is so comparatively small. It didn’t pass the common-sense test. And all I can say is that owning one has not been clarifying - it’s only added to my confusion and reinforced my skepticism.

The problem with Tesla is that they are ramping up production so quickly and adding new features so often ( heated steering wheel, new headlights, updated center console) that they don't do good QC before the car leaves the factory. 95% of the cars are well made. Unfortunately the 5 % that is not causes a lot of headaches and dissatisfied customers.

My previous Model 3 SR+ was flawless and the current Y has not had any issues so far. But one can clearly make out it is not a 50K luxury car. It is a 30K Honda interior with a 20K tech built in. So far the tech has worked well. It has served my main purpose - to have a car with a "full tank" each morning and not be going to Costco for gas every week or every other week. And during oil production crunches when the supply becomes less and prices shoot up, I don't have to worry at all.

The other issue is the other EV's are too expensive (Porsche), expensive and with less range (Audi), poor range and battery issues ( Leaf}, not adequate supply and quantity( KIA and Hyundai) or too new with limited supply and unknown quality (Ford). I am not sure of vW 3 and 4. Tesla is the most established EV on the market and unfortunately it sometimes is plagued with quality issues affecting a certain percentage of vehicles.

[Nysoz]

No one is going to argue that current valuation makes sense with their current number of cars sold and P/E ratios.

in order for it to make some sense, you have to look forward into the future then discount share price back.

with 2 factories going up in Berlin and Austin, and Shanghai continuing to expand they’re on track to increase production 50% a year which is their goal now. If they’re able to do that that’s 3.8m cars in 2025 or 150-200b in revenue depending on average sale price just in cars. This is where profit margin comes into play. If they’re able to get back on track with increasing profit margins (last quarter their profit margins dipped) then their P/E ratio won’t be astronomical anymore.

also another problem analysts had is thinking Tesla is just a car company. As listed above they do much more than just a car company but it’s hard to look past it because that’s all you see

https://cleantechnica.com/2020/09/18/tesla-approximately-a-dozen-startups/

it’s also hard to get a sense of the product when you immediately have issues. They do have a lot of things to work out and improve on. I really hope you get everything fixed in a timely fashion and have a good experience. If they can’t fix it in a timely fashion and meets criteria for lemon laws or whatever then I do encourage you to return it if that’s the only way to get their attention.

[Nysoz]

Not one thing is unique in vehicle assembly. Parts go together to make a product.

Tesla is not unique in science, manufacturing, pricing or distribution. The stopped production and fell short of their delivery goals. Not much, but someone miscalculated (again). 499,550.

Just 450 more. Niche manufacturer currently.

I guess having a new way to make parts to speed up the assembly process, creating new manufacturing techniques, saving money isn’t going to be impressive no matter what they do as long as the end product still looks like a car.

they missed by 450 cars with their main factory shut down for 8-9 weeks at the height of covid. Just curious, how many cars will they have to make a year before you consider them not niche?

[SpacemanSpiff12]

Surprised that they have not given you a loaner.

Also, I would not have accepted a new car that required a new bumper.

They gave us a loaner. I just didn’t imagine us needing to drive a loaner within the first two weeks of buying a new car.

We didn’t see pictures of the original bumper but it was described as paint imperfections. They knocked $1600 off the price for having to restore it, which I was happy to take in exchange for something relatively minor and cosmetic. (I couldn’t tell any difference in the bumper when we actually received it, and wouldn’t have known there was originally an issue unless they mentioned it.)

Nysoz and Tim, I’m not as deep in the weeds as you both with regards to Tesla’s factories, production capacity, financials, retooling, etc. All I know is that a month ago, I couldn’t wrap my head around how they had a market cap larger than the next nine biggest automakers combined. Or the wildly high P/E ratio. Or how their valuation could be so big while their revenue and number of cars produced is so comparatively small. It didn’t pass the common-sense test. And all I can say is that owning one has not been clarifying - it’s only added to my confusion and reinforced my skepticism.

[Kamban]

The service center is unable to give us an estimate for when the repairs will be finished.

So far, I am not enjoying my experience in the manufacturing revolution.

Surprised that they have not given you a loaner.

Also, I would not have accepted a new car that required a new bumper.

[Tim]

Remains to be seen whether centralized or decentralized storage of energy is more efficient and in which situation is best. Current capacity is 14 minutes. This reminds me of data storage and retrieval. IBM magnetic tape drives, big disc drives for random access, punched cards for loading programs, etc. etc. More power and storage in your phone now then in a data center.

Not one thing is unique in vehicle assembly. Parts go together to make a product.

Tesla is not unique in science, manufacturing, pricing or distribution. The stopped production and fell short of their delivery goals. Not much, but someone miscalculated (again). 499,550.

Just 450 more. Niche manufacturer currently.

https://www.agritechtomorrow.com/article/2018/03/using-windmills-to-deliver-water/10595

The supplemental power was a hand pump.
This works for a farm, not for a city.
Not one new concept in EV is new. Just trying to build a better mousetrap. Too much innovation and competition to dominate as you dream.
Just an alternative point to consider.

[Nysoz]

burritos the way the tax credit proposal is made, more than likely tesla will sell the extra 400k cars in the US and phase out before the $25k car comes out

SpacemanSpiff12 yeah unfortunately when they introduced the heat pump to the model 3, there's some bad sensors and heat pumps out there. I agree that they do need to improve in a lot of areas and should test things more rigorously in areas outside of California before mass production.

Tim there isn't a model 3/y demand problem. the question is why model s/x orders were down which we can only guess at. is there an actual demand problem where no one wants the car? is it because people were waiting for the refresh? the old model s was at $69420 but with the refresh back up to $79990. we'll have to see what numbers look like with the increased price.

their quarterly and annual figures are improving as expected with a growth company. this past quarter margins took a hit for sure. they claim they had an explanation for it, so we'll have to see in profit margins recover in future earnings or not.

they're revolutionizing manufacturing by changing the ways cars are made. cars have been made largely the same way for like 100 years. if you watch the sandy munro teardowns and his commentary, he's worked for all the big auto manufacturers and they're all very resistant to any real change. Tesla is constantly trying to improve the product/manufacturing techniques when they can. for better or for worse, they put the new version into mass production before enough testing for some of their changes (as above I don't agree with).

they do have some suppliers but do make a lot of stuff in house too. as mentioned before, they have their mega casting with a new metal alloy they created themselves. their motor/powertrain and all their software is done in house. Their fsd chip is made in house. the new batteries are proprietary as well with the new form factor, composition, tabless design. manufacturing of the battery is supposed to be greatly improved with the dry electrode manufacturing technique. the way the place the battery cell into packs with cooling and in the future batteries integrated into the frame of the car. the heat pump and octovalve management system all in house. they also make their own seats.

if there was no moat, then every ev would be as efficient and perform as well as a tesla, but that's just not the case.

https://www.statista.com/statistics/...wide-by-model/

competition is coming, but has been coming for years. the second place 'car' costs $4200 with a 10 kwh battery. I thought the vw id3 was going to possibly be a challenger but rumor/speculation is that vw juiced their sales numbers by selling up to 25% of the cars sold to themselves/dealerships. now there's a lot of those cars on lots being sold as used/demo cars. also, supposedly they might have to recall every id3 ever produced because of software issues as they can't do over the air updates yet. the electric f150 and vw id4 don't have a battery supplier anymore due to IP issues. manufacturers are going to keep finding out making an ev isn't the same as making an ICE car.

evs are growing world wide. 43% more than last year where ICE cars went down by 20%. it's still in its infancy and will probably continue to grow. Tesla has 80% of the US ev market share and around 18-20% of worldwide ev market share.

then this is just the car side. I'm still looking forward to the energy side. if I was in the middle of widespread power outages, freezing without water or food, and no lights on for miles except for 1 house, I'd want to know why and how. with decentralization being a new hip phrase, becoming less reliant on centralized power is going to be the next big thing.

https://www.teslarati.com/tesla-save...-power-outage/

[SpacemanSpiff12]

But at least you get to tell people you own a Tesla.

There’s lemons under every brand but there’s a reason Tesla is still at the bottom of the various reliability rankings.

Hah. That's the funny part - I didn't want the car and I definitely don't broadcast that I own it.

It's my wife's car. She had been interested in one for a while, she has a new job which requires a long commute everyday, we're ahead of schedule on our savings rate and financial goals, etc. I talked myself into it, hoping that the autopilot and FSD features would make her commute safer when she's driving early morning or on-call in the middle of the night.

On the bright side, we're rapidly approaching lemon law territory! What's the saying? When life gives you lemons, use the lemon law to force your crappy car manufacturer to give you a refund? I think that's it.

[CordMcNally]

But at least you get to tell people you own a Tesla.

There’s lemons under every brand but there’s a reason Tesla is still at the bottom of the various reliability rankings.

[SpacemanSpiff12]

This is one of the reasons why Tesla is revolutionizing manufacturing.

This made me smile. We've owned our new Tesla for just under a month. We've been able to drive it for about eight days in that span.

The day before we were supposed to pick up the car, the dealership called us saying, "we have some news about the car that's going to sound bad at first, but it's actually good news because we're going to give you a small rebate!" That's what you want to hear before you pick up your brand new car, right? There was significant cosmetic issues with the front bumper which - to their credit - they replaced before we got the car. But it wasn't exactly a good omen.

The car spent a few days in a body shop getting a paint protection film wrap because our roads are horrible and debris is constantly showering the front of our cars, but also because we read some concerning stories about Tesla's below-average paint jobs. (See above.)

Ten days after getting the car, the cabin heat abruptly stopped working. In the middle of a significant cold snap, with a small child in the car. Which also meant we were unable to defog the front windshield. Apparently this is a widespread problem. The car has been in the service center for almost two weeks now, awaiting parts (which are presumably backordered because this same problem is happening to many of their vehicles) and service (which is presumably similarly backlogged).

The service center is unable to give us an estimate for when the repairs will be finished.

So far, I am not enjoying my experience in the manufacturing revolution.

[Tim]

“It has to happen sometime, why not at the end of a quarter to get the new lines up for the new quarter?”
“the model s/x refresh will relight demand”

Seems like we both interpret the corporate action the same way. There is a demand problem.

It is a very very reasonable assumption of the action, the business reason and why they did it.

Please cut me a break. The pricing action is super important from a market share perspective. Nothing personal, it’s business.

These choices make or break momentum internally and externally.

The monthy, qtrly, and annual results were negatively impacted.

I am not indicating a judgement whether these were the right choices. They are indications that serious threats were perceived to take these actions.

Your hope is they were successful. Tesla “revolutionized manufacturing”? How? They have a vertical integration and reliance on suppliers and assemble cars. There should be no battery shortage. Remember, they built a battery plant to solve that. It’s not adding up and it’s not proprietary. Competition is coming.

Marketing and branding is their competitive advantage.
Haven’t looked at Ford/GM, but Tesla has zero “exclusive” contracts. It’s called low moat, barrier to entry.

“Tesla's Global Market Share Charts and Data
First a simple verbal overview of Tesla’s approximate global market share. In 2020, a flat year for the industry overall, and an up year for Tesla, the company’s market share is roughly 0.8%. Or a little less than 1% of the total automobiles produced on Earth last year”.

They have a long way to go to be the dominant player that vendors will bet the ranch in. This is reality. Deal with it.

Tesla delivered 1/168 of the Chinese-markets vehicles.
Tiny in Europe as well.

https://www.google.com/amp/s/www.torquenews.com/1083/here-s-what-tesla-s-current-market-share-looks-globally-us-china-and-europe/amp

Tesla is huge only on market cap, not in manufacturing and delivering cars. Niche player, but I don’t mean that in a derogatory way. That is the actual data.

[burritos]

$25,000 tesla with a possible tax credit from Biden?