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  • Nysoz
    replied
    Definitely harder to scale as Tesla grows which is why the uber bulls modeling all the way out to 2030 are crazy, not even counting their bullish assumptions. But this is why Tesla continues to buy and secure their supply chain for future growth. They have goals of hitting 3TWH batteries by 2030. They're doing everything possible now to secure the raw materials and batteries to get that future goal. Supply agreements, trying to develop new techniques to get that material out of the ground efficiently.

    Tesla doesn't own a transmission plant because their cars don't have a transmission in the traditional sense. It's just battery, motor, wheels. It's why EVs don't need as much maintenance than an ICE car.

    They're more vertically integrated than any other company, especially compared to other OEMs. When a supplier can't make a part needed as good or fast as Tesla wants, they try to make it themselves. On the car side, they make their own seats, designed their own chips, created an alloy to allow part casting, redesigning wiring harnesses to be more efficient (not yet in cars). Then when it's hard to scale in the traditional sense, they use first principles thinking to reinvent the entire process and make the next reiteration easier to scale.

    Watch the Sandy Munro teardowns of EVs. It shows why Tesla is so far ahead of others for mass production of EVs currently compared to the competition. Their ability to be more efficient and compact in design, weight reduction is key. In the shareholder meeting, Elon does mention their manufacturing efficiency is probably the hardest thing for others to copy.

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  • Tim
    replied
    Just brief counter point or 2.

    ”As Tesla continues to scale, they'll grow into their valuation, once again just with car manufacturing alone”

    Casual read I noted 50% growth and increase a number of times. Tesla’s plants are assembly operations.
    There is a relevant production capacity for a facility. New facility for capacity requires a long lead time and suppliers and integration and resources that are not necessarily able to handle that ramp up rate in a sustainable manner. The larger the base, that next 50% capacity becomes a huge problem and it gets bigger.
    Tesla has little vertical integration for parts. They don’t make the components which are primarily custom. Just an example would be the transmissions, which seem to be very well designed. Tesla doesn’t own a transmission plant. There are only a few manufacturers.

    ”Of course, the transmission works closely with the engine and axle to form the powertrain and power the truck’s performance, so it’s essential that these components are spec’d as a group and will complement each other to do what you need them to do. That doesn’t necessarily mean spec’ing a fully integrated powertrain all offered by one company—though many fleets do take advantage of this option—but just that in general, it’s important to understand that you’re not spec’ing individual components as much as you’re forming a unit that will work in concert.”

    Continuous scaling of the supply chain and parts manufacturing for the 50% sustained growth also conflicts with not having patents. The suppliers and competitors are free to dip into “commodity” products. That 100% supply can actually be constrained or reduced.
    “Tesla is willing to buy every single battery for a reasonable price from any supplier.” This is an example of the issue. Batteries are not proprietary but they are a constraint.

    This is why IBM exited the PC business. Growth was there, but it was becoming a commodity business. Growing into a multiple is based on profitable growth. The 50% growth is going to be tough, not only for Tesla’s capacity, but for all the supply chain. Just some of the risk. The software is scalable, Microsoft proved that in a commodity PC environment. Assembly is much harder to scale.

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  • Nysoz
    replied
    White.Beard.Doc just trying to keep topics in appropriate sections

    The safety score is interesting and I wonder if there's something else contributing to the score other than the listed criteria. I'm sure Tesla is aware that there's significant litigation possible with FSD and autonomous driving. I speculate that they're going to continue to market it as level 2+ autonomous driving until they get it much better. Once you get to level 3-5, the liability theoretically goes from driver to manufacturer.

    I've always said that FSD is a way harder problem than Elon has been showing with his ever optimistic timeframes. I think they'll solve it sooner or later since the latest videos are showing decent overall progress. Training the car is difficult and requires a lot of paying attention. They're wanting to roll it out to the people that will pay the most attention as well as in areas that are easier to train first. There are a lot of dumb people out there, even malicious ones, that are wanting to get the beta and push the software past it's limits to get attention for their goals.

    As for investing and the possibility of it blowing up, all my price targets/goals doesn't include much FSD revenue at all. Tesla bears really continue to underestimate the growing efficiency and profit margins as Tesla continues to scale and grow 50%+ annually. Last quarter EPS was 1.45 and analysts are estimating 1.49 for this quarter despite delivering 20% more vehicles. These vehicles include higher margin model S, price increases that are probably going to be realized, as well as increased output from the higher margin Shanghai factory. Tesla bulls are estimating closer to a reasonable 1.8 EPS which would be an annualized P/E ratio of around 111. As Tesla continues to scale, they'll grow into their valuation, once again just with car manufacturing alone.

    Where the Tesla mega bulls get it wrong for their price targets is that they're too enthusiastic about FSD and start modeling in robotaxis sooner than I think it'll come into play. Also, they model all the way out to 2030 and Tesla's goal of 20M cars a year then discount the share price back to today. I think the furthest you should guess is 2025 since Austin and Berlin could have the capacity for continued 50%+ growth until then. They'll need to announce more factories between now and then in order to have a path to their ambitious 20M cars 2030 goal.

    There's still a lot of risk and forward looking in the company. Even if the stock trades largely flat for years like it did previously, I still make quite a bit selling options hoping it stays in my predicted price range.

    ---

    They also just had their shareholder meeting. Here's some cliff notes from a youtuber.

    Tesla is poised to still grow 50%+. Model 3 is the best selling premium vehicle in the world. Model Y should become the best selling vehicle globally by revenue by 2022 and numerically by 2023.

    Free cash flow will continue to be strong going forward.

    Tesla is open to licensing FSD as Elon thinks it'll overall save lives.

    Elon hopes that all the recent price increases are temporary as they want to make the cars as affordable as possible. Cost pressure of the supply chain difficulties have increased prices temporarily.

    Shanghai now produces more cars than Fremont. Fremont will continue to grow output by another 50%.

    Tesla AI day was a success and they have 100x more applicants. Trying to change the perception that Tesla is just a car/hardware company but also a software and AI company.

    Tesla is moving headquarters to Austin, TX.

    Cybertruck Semi Roadster delayed to end of 2022/2023 because of parts supply and supply chain issues, not just chips. Tesla is willing to buy every single battery for a reasonable price from any supplier.

    Tesla insurance starting next week and most of the country next year aspirationally.

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  • Tim
    replied
    Originally posted by Zaphod View Post
    The other thing is if dems pass that EV package that applies to everyone, even GM/Tesla, that will be an additional boost for them.
    Tesla, Toyota and Honda get $4,500 less than Ford, GM, and Stellantis (old Chrysler). Not too happy about it. Why? Labor. A bow to the unions, Some might call this a payback, others call it simply incentives. Some in the proposal get a bigger boost.
    I like trees.Not sure $3B for Tree Equity doesn’t have some benefits. Just not sure if it is really to benefit the environment. The vehicles are $6B.
    Best I can tell, tree headed to specific neighborhoods. Might be payback, others call it payback. The neighborhoods haven’t been disclosed. I let you guess. It’s not yours.

    With the current stalemate, it seems like some pork may not make it.

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  • Tim
    replied
    Originally posted by Nysoz View Post
    Yeah, there's speculation there was a prototype to be displayed in the back but they couldn't get it working and for some reason spandex was their plan B. I think even Elon thought it was pretty cringeworthy when he stopped it after a bit. There was some big name robotics/AI name that was supposed to be involved with the day but never came out. But all speculation.

    Tesla/SpaceX were top picks for engineering students from some 2019 and 2020 survey for what those are worth.
    Private equity was really hot at one time.
    Petroleum engineering was really hot at another.
    Web design was really hot at another and one didn't need to be an engineer.

    The point is some majors and some companies run through phases of popularity.
    I would not make investment decisions based upon college graduates pursuing or accepting first job offers. I would be interested in where the top engineers from Cal Tech and MIT go. But I still wouldn't invest on job placement data.

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  • Nysoz
    replied
    Yeah, there's speculation there was a prototype to be displayed in the back but they couldn't get it working and for some reason spandex was their plan B. I think even Elon thought it was pretty cringeworthy when he stopped it after a bit. There was some big name robotics/AI name that was supposed to be involved with the day but never came out. But all speculation.

    Tesla/SpaceX were top picks for engineering students from some 2019 and 2020 survey for what those are worth.

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  • Brains428
    replied
    The humanoid robot thing didn't have to be a guy in a spandex suit. He could've introduced the idea or renderings of a prototype. It's not unheard of that it may exist in the future, and possibly our lifetimes given what Boston Scientific has already done.

    At face value, I wouldn't doubt that Tesla and SpaceX are desirable engineering jobs. I don't have any insight to the truth of that statement (as in, I don't understand that job process and what candidates pursue, as well as how hard to these companies recruit candidates).

    The growth numbers are YoY, right? As opposed to YTD. The only reason why I pointed that out was because of the contention that Tesla wasn't flat on the year. It would be dumb for me to say that it hasn't outperformed the broad market since 3/2020.

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  • Nysoz
    replied
    Zooming out a bit TSLA is up 73.03%, VTI is up 29.31%, QQQ is up 26.82%, SPY is up 27.33%, IWM is up 43.74%, XLE is up 79.44% the past year.

    TSLA is (conspiracy hat on) pretty influenced by the options market. It's one of the largest volumes options market there is. With the large share price, that's a lot of money in and out. I wouldn't be surprised if it stays largely flat, with large volatility, for another few years and explode up again. I do expect a beat with the next 2 catalysts with production/delivery numbers and earnings. What that'll do to the stock price with ongoing macro, who knows.

    All my share price and revenue expectations are from current product manufacturing and FSD take rate and associated planned growth with 2 new factories nearing completion. It doesn't include completed FSD/robotaxis/cybertruck/semi/fully ramped energy storage and arbitration/AI/machine learning. The hyper bulls that do include these have ludicrous price targets.

    If all you got from AI day was the weird humanoid robot then I encourage you to watch it again or watch some highlight reels. Most of these Tesla events are to showcase what they're working on and hiring events. They're working on the hardest problems and creating an advanced super computer/chip stack. It encourages the brightest minds to want to work for the most cutting edge company. That's why Tesla/SpaceX are the most desirable jobs for engineering students. As for the weird humanoid robot, things are ridiculous and silly until they're not.

    Investing in TSLA is a long term bet on their innovation and execution with lots of ups and downs along the way. I smooth out the process by selling options on TSLA.

    I don't revere Musk but do applaud him for his goals of reaching for a more renewable future and seemingly dragging the whole industry with him.

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  • Brains428
    replied
    TSLA is up 10.7% ytd. VTI is 16.6%. QQQ is 14.9%. SPY 17.35%. IWM 13.35%. XLE 44.2%.

    TSLA has underdelivered on many fronts. You know this because of the lack of promised FSD, robotaxis, cybertruck, etc.

    AI day humanoid sideshow.

    I applaud people who have made money on it. There just aren't a lot of clear eyes on the bullish side, especially if one reveres Musk.

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  • Tim
    replied
    Originally posted by udrag14 View Post
    TSLA is just a different beast. It isn't just one company. I see TSLA being closer to Google than Ford.
    TSLA's biggest asset and biggest risk is Elon. A small ship is easy to steer. When you get on a tanker you need a captain that can stand head to head with the owner and survive. Virtually every other tech company has brought in someone that can go head to head with the owner. It is not that the "team" is incompetent, survival is a factor in every discussion. The default seems to be not crossing Elon. It is a question of if Elon can handle it from a professional management standpoint.

    No opinion, but it is a risk.

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  • udrag14
    replied
    Originally posted by Brains428 View Post
    The TeslaQ crowd questions the number of deliveries and overall accounting practices (I'm not savvy enough to confirm their suspicions, just part of the opposition narrative).

    Chamath has apparently sold out of his Tesla position. Who knows how much of that is taking profits to make up for his lack luster 2021.

    Cathie Wood sold a large position. Not the first time. ARK has also had a rough year with TSLA essentially flat for this year (but as Nysoz knows, a great stock to trade because of liquidity).
    TSLA has not been flat. Actually, it is doing quite well in the tech arena. [https://www.bloomberg.com/news/artic...out-hurts-ark]

    ARK has a policy that it sells a position after 15 percent gains. TSLA has a huge run up recently and this is just trimming the position.

    TSLA is just a different beast. It isn't just one company. I see TSLA being closer to Google than Ford.

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  • Nysoz
    replied
    Yeah the tslaq crowd sometimes jumps through hoops to justify their beliefs. Tesla didn’t sell any cars in this specific country this specific month = no demand. I think some of them believed that Tesla just pushed cars into the ocean and counted it as a delivery.

    To be fair, the TSLA mega bulls make equally ridiculous claims with price targets of like $10-20T market cap in 2030.

    Yeah chamath sold to fund other opportunities. He thinks TSLA can still 2-3x from here in the future but claims he has opportunities to 10x his capital and the money has to come from somewhere.

    Ark selling always makes headlines but they rebalance often keeping TSLA around 10% of their portfolio. They were trimming on the way up to 900 and buying more on the recent dips to the 500-600s. Makes sense to stick to their investing thesis despite still being their strongest conviction.

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  • Brains428
    replied
    The TeslaQ crowd questions the number of deliveries and overall accounting practices (I'm not savvy enough to confirm their suspicions, just part of the opposition narrative).

    Chamath has apparently sold out of his Tesla position. Who knows how much of that is taking profits to make up for his lack luster 2021.

    Cathie Wood sold a large position. Not the first time. ARK has also had a rough year with TSLA essentially flat for this year (but as Nysoz knows, a great stock to trade because of liquidity).

    Leave a comment:


  • Nysoz
    replied
    Yes Tesla is currently in growth mode. They're optimizing their new factories better than the OEMs can. With moving towards stamped parts for the front and back ends of their cars, they've removed 100s of parts and processes, assembly robots to simplify the manufacturing the car and further maximizing the use of factory floor space. I just mention market share because it doesn't matter if they sell 100% or 60% of a growing market as long as they're continuing to grow as fast as they can and sell everything they make.

    EVs are different than ICE cars in terms of importance of software and battery management. The Mach-e has an 88 kwh battery and has a range of 270 miles with their AWD trim. The Model Y has a 75 kwh battery with a range of 326 miles (one can argue about the EPA range of real world driving and such). That's additional cost of the batteries for less range and performance. As for marketing, Ford spent $2.8B in marketing in 2020. Tesla has $0 in marketing budget.

    As Tesla scales and makes their supply/manufacturing line more efficient, Tesla's profit margins will just continue to get better. Tesla's gross profit margin was 21.02% where Ford's was 10%. Manufacturing lines aren't profitable when producing small numbers of vehicles and become profitable with scale. So since Ford is just starting the Mach-e or Lightning vehicles, you can be sure they're losing money on those at first.

    The car dealership model will be much harder to get rid of due to historical agreements and protection laws in place. Tesla (and all car manufacturers) is still banned selling directly to customers in multiple states.

    Tesla is profitable without the regulatory credits. $354M of their $11958M revenue was from credits or 3%. GAAP income was $1142M. Their automotive gross margin was 28.4%.

    The EV production race is just starting, but Tesla has a multiple year head start. With them continuing to grow and innovate it'll be difficult for the OEMs to catch up. Ford and SK are building a Lightning manufacturing and battery plants that will open in 2025 with 200 gwh of batteries. Tesla is planning on 100 gwh by 2022 and 3 twh by 2030.

    I do wish all EVs the best and I agree that the government doesn't like Tesla due to no unions. The competition has been coming for 5+ years now and we're all still waiting.

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  • Tim
    replied
    A ton of assumptions that may or may not pan out.
    Originally posted by Nysoz View Post
    Going to respond to the Tesla points in the other thread to try and keep things on topic.

    Tesla's market share of EVs doesn't matter as long as they continue to sell every car they make. The cheaper models are backlogged until March/April and they're prioritizing higher margin trims. So demand > supply for the foreseeable future. Market share matters more when the market is saturated with buying options.
    From a manufacturing standpoint, the assumption if that every vehicle produced is sold at a profit using full absorption costing. By this I mean every cent spent in the company is allocated to each vehicle. Not only the direct costs, but the fixed, variable, overhead including product development. Your statement ignores many things in running a manufacturing entity. Tesla currently is still in a growth mode. The manufacturing most efficient is running a factory at 100%. That is 3 shifts per day 7 days per week 365. Maximizing production is the manufacturing expertise. Tesla last year completely shut down production. The question is how much can they produce and at what cost. Examples of how efficiencies work at Amazon and Walmart. Production volumes and efficiencies are very significant. Market share and volumes count.
    This is especially true with the supply chain. T&C's for firm volumes get much better prices, i.e. lower material costs. Total market and market share matter.Right sizing capacities matter. Under utilization is a cost. It is not just selling everything you make.


    The Mach-e is a decent car for sure, but the software is awful. Perhaps it'll get there soon. Then throw in needing to recall most of them for fear of the glass roof/windshield detaching shows mass production of an EV is different than an ICE. Same thing about the Bolt and all the battery fire/recalls/replacements.
    The move to EV is not about software. It is about the power source and what the public buys in volumes. Market acceptance is sometimes depends on marketing campaigns and appeal.

    The electric F-150 will be a great hit and Ford will sell as many as they can make. The one problem I see is that pricing is higher than the ICE version. Ford is tricky with this pricing because the base Lightning price is for commercial buyers and not for retail customers. The Cybertruck will sell as well if/once people get over how funny it looks.
    Make no mistake. The large auto companies are very good at marketing and pricing. Price elasticity is one of their core competencies. I am not sure if Tesla will develop the core competencies. Much of theirs had been Elon and leading edge based. Image. Not sure that will translates into volumes of scale.

    Just to note, the Ford EV's have a year's backlog and the products haven't come close to full capacity. These were down scaled more of a trial test run. The volumes remain to be seen.

    Then the next headache will be the dealership model. Dealerships exist to service cars and upsell on products. They don't get much from the actual vehicle sale so some dealerships tried to mark up the Mach-e $10k over MSRP. With EVs, they need less maintenance so there's less incentive to sell them. When the Ford EV does needs maintenance a lot of dealerships don't know how to fix them yet.
    This is a logistics problem. How it shakes out I have no idea. It will become efficient. Reminds me of the transition of distribution of PC. It was shelf space and distributors to dealers. What changed? The used to manufacture PC's by the thousands and stock inventory. New model was build to order with the ability to customize.
    Ships in 5 days. Customers would wait 5 days to get exactly what they want. Distributors disappeared.Retail carries little stock and they earn on knowledge and placing the factory order. Drop ship directly to a customer might be in the future. That model actually exists in new cars. Toyota Mfg->Distributor->Dealer-> Customer. The distribution channels only involve the split of profit from the manufacturer to customer. That split will change. The same with service.


    TSLA is no doubt overpriced for current production and prices in future growth and profits. It's up to the investor/market to figure out how much they want to pay for that future growth. P/E isn't a great metric for evaluating companies that are growing as fast as Tesla is. With Tesla turning profitable, you'll see the P/E contract over the next few earnings quarters/years.
    "The other thing is if dems pass that EV package that applies to everyone, even GM/Tesla, that will be an additional boost for them."

    This is important. Currently Tesla is not making money on each car without the credits. Operationally that means each car is losing money. The more you sell, the more you lose. Again, volumes count. The more cars sold the more credits(profit). The question is how long will the credits last and how long the country will redistribute tax dollars for vehicles. Self sustaining needs to factor in building out capacity that may or may not materialize.

    The game is actually just starting for EV vehicle production. Market share counts. No clear winners and I doubt the government will pick Tesla as the winner. Let the competition show up before you pick a winner.

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