Musk endeavours

[odysseus2000]

The payout was based on achieved performance, stopped by a court. Sure what he is doing won’t hinder progress on getting the pay reawarded as Wall Stree loves laying off workers & adjusting to new market conditions.

Meanwhile legacy auto are in trouble with VW reporting a 20% profit drop in the first quarter:

https://www.cnbc.com/2024/04/30/volkswa ... sales.html

Perhaps their board will take a pay cut.

Reuters is saying that the Tesla move might leave Ford and other US mnufacturers uncertain as to whether their newly-negotiated access to Tesla superchargers will still work?

That might be factual rubbish, of course, but access to the fast-expanding supercharger networks has all been part of the confidence-building operation that many manufacturers have been working to create, and suddenly it all seems a bit less certain. Musk only seems to have an on and an off button at present - maybe it's his Aspergers coming through?

BJ

From what I can tell, mostly anecdotal, most Tesla super chargers at least in the US are currently under utilised and as legacy motors has essentially stopped BEV going for hybrids, demand for charging and batteries has collapsed. Meanwhile there has been a significant drop in legacy profitability with, as mentioned earlier, VW pretax profits down 20% this quarter.

Tesla seem to be reacting to the current business situation by cutting back on anything that is not immediately needed while expanding their AI work. If this is the case Wall Street will be agreeable.

Regards,

[Hallucigenia]

Meanwhile legacy auto are in trouble with VW reporting a 20% profit drop in the first quarter:

https://www.cnbc.com/2024/04/30/volkswa ... sales.html

Perhaps their board will take a pay cut.

If VW are in trouble because their Q1 operating profit is down just under 20%, I would remind you that the equivalent number for Tesla is down 56%.

[odysseus2000]

Meanwhile legacy auto are in trouble with VW reporting a 20% profit drop in the first quarter:

https://www.cnbc.com/2024/04/30/volkswa ... sales.html

Perhaps their board will take a pay cut.

If VW are in trouble because their Q1 operating profit is down just under 20%, I would remind you that the equivalent number for Tesla is down 56%.

There is no question that auto business is currently hard on all players, not just a gas v electric dynamic although the removal of subsidies in Germany for electric will not help Tesla. Tesla are reacting by cutting costs & boosting spending on what they see as the next profit growth area: AI.

VW are not getting traction despite having long established production of ice engines & they so far have not taken any serious actions to improve their profitability, just trying to talk up the business.

Regards,

[Hallucigenia]

[/quote]

No one investing in high beta tech cares about p/e, but they do care about growth with a peg of 3.8 according to:

https://www.nasdaq.com/market-activity/ ... peg-ratios

Sure not low, but not excessive by Nasdaq standards

PEG is not a measure of growth, growth is one of the inputs you use when calculating PEG. But since you mention it, how about comparing Tesla to the trillion=dollar club (whatever we're calling them these days), and the growth implied by their current PEG as per your Nasdaq link?

Company  P/E    PEG	Growth
Msft    39.69	2.06	19.3% 
Apple	27.79	2.06	13.5%
NVIDIA	72.97	1.24	58.8%
Alphabt	28.39	1.28	22.2%
Amazon	61.62	1.52	40.5%
Meta 	28.93	1.12	25.8%
			
Tesla   70.49	4.99	14.1%

very high interest rates & relentless fud by legacy auto & legacy oil.

That's the same for everyone - if you can't stand the heat, get out of the kitchen. But what's this? According to the IEA :
Growth in electric car sales remains robust...Electric car sales keep rising and could reach around 17 million in 2024...In the first quarter of 2024, electric car sales grew by around 25% compared with the first quarter of 2023

The market is fine, it's the manufacturer that's seen deliveries down 9% yoy that has a specific problem.

& this after arson attacks in Germany,

Err - that's a supply shock, not a demand shock. Normally if production is constrained like that, you see inventory shrinking and maybe margins growing a little bit. Instead the complete opposite happened.

If you look at days sales at VW it is around 24:

Again it's a sign that Tesla is just another car manufacturer now, the brand is no longer "special", but the point is not the absolute number, but the sudden rise in inventory from 15 days to 28 days. That's just huge and they don't seem to give a real reason for it. You could sort of understand it a bit if they were stockpiling ahead of a big launch, but it just seems to have been a complete failure to read the market.

I guess it's just about possible that "someone" panicked over the arson attacks and told the other factories to produce flat out to compensate before having it pointed out to him that it didn't get round the rules of origin problem that was the reason for starting production in the EU in the first place.

But it seems to have just been a massive screw-up due to misreading the market.

Can’t find what VW profit or loss per electric car is, but the performance of the ID4 is so bad that depreciation is murderous & a lot of early VW eV buyers are trapped & very unhappy with VW who deliberately made their electric offerings under perform gas cars to protect their legacy business. German clean air cars have fallen as a result so Germans get to breathe more pollution. Diess was turning VW around but they fired him, so they are now back to the account lead short term profit & ignore the future.

So much bad stuff- and yet Tesla are the ones selling fewer cars. And it's not like Teslas don't have huge depreciation either.

And as you say "Analyzing legacy auto like it going to stay as it is forever is a ticket to the poor house." They are already evolving.

But if we're talking profit per car, I would note that in this last quarter, the profit Tesla made from building cars ($2,563m) only just exceeded their fixed costs of R&D and SG&A ($2,525m), when as little as a year ago they were 87% higher ($3,456m versus £1,847m). And they don't have profitable ICE cars to fall back on. The reality is that by focusing all your energy on other Western companies, you're ignoring the fact that everybody is having their lunch eaten by low-cost Chinese producers. They're the ones driving that 25% increase in global sales.

The move by legacy auto to talk up gas & talk down electric

That may be the view inside the Tesla echo-chamber but that's certainly not what I see on the outside. They can see what's coming, and can feel the regulations, but they can also listen to their customers and know that some of those customers won't be switching for a considerable time.

If Tesla were not launching new models, Optimus, FSD etc, you could complain about r&d but as they are it is a complement to them that they are doing it with less cost.

Sorry but that's a classic cope. History suggests there is no short cut to research. Trust me, going back to the 1990s, R&D at 7% of sales has been a pretty reliable minimum for a "tech"-led company with good growth prospects. And given what Tesla is claiming to do at multiple bleeding edges, you'd expect rather more. For comparison, Microsoft are spending 12.8%, NVIDIA are down to 11% thanks to their explosive growth but were close to 30% until recently, Meta are currently up around 28%, Alphabet are 14.8%.

Anyone can claim to be a technology-led company, but you have to do actual research and development to back it up.

Cybertruck is a msjor trial Off many new architecture features including 48 volt & steer by wire etc

That's fine, all manufacturers need those kind of models to establish new technology, just as VW/Porsche are doing with the new PPE platform in the Q6 e-tron and new Macan. But Cybertruck was hyped as a major contributor to sales volume, and it's just not looking that way, what with half the promised range and costing nearly double to produce compared to the original aspiration.

Probably the better route would have been to use an updated Model S to prove new technologies, and then do a pickup with less novelty, optimised for manufacturing. Maybe do a stainless-steel cargo bed if you want something new, just don't make the whole thing out of stainless.

The move towards autonomy is what is needed to boost margins at Tesla & is the reason for why the business has so much long term potential.

OK - so let's hear you quantify the potential. You seem to live in this entirely subjective echo-chamber, where you never face up to the fact that ultimately valuation matters. So what's it worth? Bearing in mind that they are far from the only company working on autonomous cars, and they have yet to get a Level 3 system approved, they're not going to attract "monopoly" -type pricing.

In the past you've said autonomous cars would make TSLA go up 10x. That would be over $5tn market cap, or adding the equivalent of Apple and NVIDIA combined. Even if it was at an NVIDIA/TSLA kind of P/E of 70, that implies it would be adding at least $64bn/year of net profit to their bottom line (even ignoring any additional shares issued to directors).

Analyzing Tesla like it is a legacy business is never going to be sensible at this stage in the companies life.

Analysing Tesla like its valuation will never be based on financial reality is never going to be sensible either....

[odysseus2000]

Hi Hallucigenia,

Thank you for your long post.

My general feeling is that you are reading way too much into 1 quarter and being too pessimistic in your analysis.

Yes, q1 was poor but steps have been taken. Earlier on this board I estimate that based on a 10% cut in staff at average salaries that this would add about $1 billion to pre-tax profits

Tesla has 140k employees, so if cut is 10% of work force, that is 14k jobs gone.

Average us salary is over $59k, round to $60k, so $14,000x 60,000 = $840 m saved after redundancy costs have been paid out.

Tesla revenue is 97b (2023), pre tax profits was $10b for 2023, so almost a 10% increase in pre tax profits from these job cuts.

Since that post on April 16th there seem to have been many more firings, some say to over 20% of the work force that, if true, will add close to $2b to pre-tax profits.

Yes, the IEA do say sales of electric cars are rising, but a lot of this is in China and for small cars that Tesla currently has no competitor for. Musk said they would make a smaller car on existing production lines to cut overheads and if this happens they will have a lower cost smaller car to compete with.

The arson attack in Germany messed with deliveries causing Tesla to have to send cars to Europe to cover some of the lost production leading to cars on ships and an inventory build. I don’t think one can credibly blame Tesla preparations for the actions of terrorists!

Average r&d means nothing. It is what Tesla create that matters and the less folk needed to do it, the better.

Legacy has always hated electric, that was why GM axed their EV1 and had all the cars forcibly collected and crushed. VW board did the same thing with Diess who was trying to lead them to electrics and now they have German politicians making electric car sales more difficult by cutting incentives whereas in the UK the benefit in kind tax reduction is still attractive.

Sure folk are being told by everyone that electric cars are no good but in the by and by the reality will sink home and in the mean time everyone has to breathe all the pollution that comes from ice engines. When I talk to various folk in my neighbourhood about electric cars it is amazing how ill educated they are. Comments range from not being enough electricity, that electricity come from coal and diesel, that electric car batteries soon fail, that diesel engines are more efficient, that electric cars are too heavy,… On and on it does. Clearly legacy auto has done a great job of fostering fud at extreme levels, but there is nothing so vengeful as a person who eventually realises that he/she has been fed a bunch of lies and so I still believe there will be a rapid decline in ICE cars.

Cyber truck has been a huge success, grabbing the attention of the celebrity crowd who once loved Range Rovers and producing massive free publicity for Tesla. It is not designed to compete in its current form with the F150 for builders but it going after higher margin, but lower volume customers.

Ark have done various studies including this one that is now 1 year old:

https://ark-invest.com/articles/valuati ... arget-2027

They give a 2027 target of $2000 per share if FSD works and can be made into a viable business. The analysts seems more bullish than then although perhaps not the best discussion with her colleagues:

https://youtu.be/ZUVMXtty2No?si=m0GVtHiRT5N-98AS

In addition to the FSD aspects, the availability of having substantial compute in cars opens up the possibility of using them like the Amazon Web Services where when the car is not driving it can be part of a large compute engine. Similar is possibly true of dojo, but what the real situation is there is difficult to know. In principle dojo time could be sold for AI training but whether it is any good who knows.

Meanwhile we have the exciting possibilities of Optimus and what it can do and when it can become an income stream for which there is nothing as far as I can tell baked into the share price.

All of this is going to come with a high p/e and if growth gets back on track, a lower peg. We have recently seen how Wall Street reacts when FSD becomes potentially available in China as a reality check that successful FSD will boost the share price.

Regards,

[Howard]

Is the problem fairly straightforward to diagnose?

Tesla sold around 1.8 million cars last year and their turnover was around $90 billion.

With reducing sales after discounts of around 20% in 2024 a realistic worst case assumption is that they might sell 1.6 million cars in 2024 with a turnover of $64 billion.

That’s a shortfall of income around $26 billion in 2024.

The competitors have had a good 2023 and most big auto manufacturers have had a good start to 2024 with a mix of ICE, PHEV and BEV models to satisfy healthy demand. They are taking all the volume they can.

There must be a morale issue as well. It can't be much fun working for a company which ruthlessly cuts 20% of its staff. See link below.

https://twitter.com/TroyTeslike/status/ ... 5301582931

In the short term are the savings from cutting the workforce going to be enough?

Howard

[odysseus2000]

Is the problem fairly straightforward to diagnose?

Tesla sold around 1.8 million cars last year and their turnover was around $90 billion.

With reducing sales after discounts of around 20% in 2024 a realistic worst case assumption is that they might sell 1.6 million cars in 2024 with a turnover of $64 billion.

That’s a shortfall of income around $26 billion in 2024.

The competitors have had a good 2023 and most big auto manufacturers have had a good start to 2024 with a mix of ICE, PHEV and BEV models to satisfy healthy demand. They are taking all the volume they can.

There must be a morale issue as well. It can't be much fun working for a company which ruthlessly cuts 20% of its staff. See link below.

https://twitter.com/TroyTeslike/status/ ... 5301582931

In the short term are the savings from cutting the workforce going to be enough?

Howard

Everyone is reading way too much into 1 quarter.

The auto market is tough as VW announced with their recent 20% down.

Car prices are coming down fast as battery supplies ease & we rapidly enter the territory where BEV are both much cheaper to buy & much cheaper to run. People have been taught to hate BEV, but low price is a complete antidote to such emotions.

Regards,

[Adamski]

My own valuation of Tesla...

I prefer free cash flow as not as easy to manipulate as earnings. I've worked as a qualified accountant at plc's and P&L shenanigans are par for the course

The directors Highlights report, the Income Statement and Shareholder decks should take with a large pinch of salt. Cash flow however difficult to do "smoke and mirrors".

FCF
March 31, 2024 -2.535B
December 31, 2023 2.063B
September 30, 2023 849.00M
June 30, 2023 1.005B

Trailing free cash flow, 12 mths $1.3b

Price to FCF multiple 35 (avg s&p 500)

Valuation $45b

Tesla market cap $574b. At its peak it was $1.2 trillion.

That's why I'm always banging on about it being massively over-valued and over-hyped.

I like Tesla cars its just valued at a surreal level.

[odysseus2000]

My own valuation of Tesla...

I prefer free cash flow as not as easy to manipulate as earnings. I've worked as a qualified accountant at plc's and P&L shenanigans are par for the course

The directors Highlights report, the Income Statement and Shareholder decks should take with a large pinch of salt. Cash flow however difficult to do "smoke and mirrors".

FCF
March 31, 2024 -2.535B
December 31, 2023 2.063B
September 30, 2023 849.00M
June 30, 2023 1.005B

Trailing free cash flow, 12 mths $1.3b

Price to FCF multiple 35 (avg s&p 500)

Valuation $45b

Tesla market cap $574b. At its peak it was $1.2 trillion.

That's why I'm always banging on about it being massively over-valued and over-hyped.

I like Tesla cars its just valued at a surreal level.

I agree absolutely about the ease of manipulation of many financial metrics and that free cash flow is often a good proxy for health of a business, but it too can be manipulated. The only metric that seems transparent, unless there is fraud, is sales.

However, the equity class that is often called High Beta Tech (HBT), steers its own way through financial statements and is never valued like say a utility or other business that is relatively stable. The predominant metric for HBT is growth and Tesla was doing well on this metric until the last quarter.

We are now in wait and see mode as to q2 and what effects the large redundancies and the continuing capex on Nvidia and associated AI technology which was a major contributor to the negative free cash flow in q1 will have on the business going forwards.

Regards,

[Howard]

Is the problem fairly straightforward to diagnose?

Tesla sold around 1.8 million cars last year and their turnover was around $90 billion.

With reducing sales after discounts of around 20% in 2024 a realistic worst case assumption is that they might sell 1.6 million cars in 2024 with a turnover of $64 billion.

That’s a shortfall of income around $26 billion in 2024.

The competitors have had a good 2023 and most big auto manufacturers have had a good start to 2024 with a mix of ICE, PHEV and BEV models to satisfy healthy demand. They are taking all the volume they can.

There must be a morale issue as well. It can't be much fun working for a company which ruthlessly cuts 20% of its staff. See link below.

https://twitter.com/TroyTeslike/status/ ... 5301582931

In the short term are the savings from cutting the workforce going to be enough?

Howard

Everyone is reading way too much into 1 quarter.

The auto market is tough as VW announced with their recent 20% down.

Car prices are coming down fast as battery supplies ease & we rapidly enter the territory where BEV are both much cheaper to buy & much cheaper to run. People have been taught to hate BEV, but low price is a complete antidote to such emotions.

Regards,

No this isn’t a short term problem for Tesla involving one quarter. The situation has been deteriorating for more than a year.

Some of us paid attention to the obvious indicators.

If you look back to the posts on this thread in December 2022 and January 2023 you will see Tesla’s decline was forecast. Only those posts promoting irrational themes about their competitors have proved wrong.

BYD’s success in growing rapidly and profitably was noted.

Tesla price drops of 13-24% over the final quarter of 2022 were noted. Tesla price cuts caused huge cuts in their residual values which caused problems for their leasing and finance operations early in 2023 .

Reuters predicted Tesla’s problems in March and provided this quote.

"Tesla's facing a serious problem of a very limited product mix," said Cui Dongshu, secretary general of China Passenger Car Association (CPCA). "Its slowness to respond to Chinese consumers' preferences has led to a very passive positioning for Tesla to rely on few means such as price cuts to stay competitive."

The early signs were noted and recorded on this thread a year ago. The recent quarter is mainly just the culmination of a serious drop in demand caused by a limited product range, increased competition and the effects of price cutting which was not effective in controlling declining volume.

With Q2 starting down it looks like a challenging task to recover in the medium term.

regards

Howard

[Hallucigenia]

My general feeling is that you are reading way too much into 1 quarter and being too pessimistic in your analysis.

Well it's customary to look at results when they come out, they're a check in with reality, otherwise you're living in fairyland. I think I'm being pretty fair; maybe you are not reading enough into them?

Tesla revenue is 97b (2023), pre tax profits was $10b for 2023, so almost a 10% increase in pre tax profits from these job cuts.

Which just matches sales going down by 9%, you're barely better off. Except one employee wants to be paid $56bn. If saving $1bn is going to help the shareprice go up, what effect will -$56bn have? You can't have it both ways, but last time I looked, $1bn was less than $56bn....

Yes, the IEA do say sales of electric cars are rising, but a lot of this is in China and for small cars that Tesla currently has no competitor for. Musk said they would make a smaller car

Don't think you can dismiss it as just China. UK car sales in Q1 were up 10.4% and UK BEVs were up 3.8% in 24Q1, but Tesla was down 11.9% whilst MG was up by the same amount, Nissan, Vauxhall and Mercedes were all up over 20%, Peugeot, Honda and BMW were all up over 40%. You can't just dismiss it as "a tough market" or "interest rates" - there is something going on here that is specific to Tesla.

And I think we know that Tesla's idea of a small/"cheap" car will be competing against the BMW X1 and Mini rather than the Dacia Sandero and Kia Picanto - I've not followed closely, presumably it will be lithium rather than sodium-based? But it does point to the opportunity cost of all that resource expended on the Cybertruck.

The arson attack in Germany messed with deliveries causing Tesla to have to send cars to Europe to cover some of the lost production leading to cars on ships and an inventory build. I don’t think one can credibly blame Tesla preparations for the actions of terrorists!

That's why I wasn't giving them too hard a time about the inventory bulge. But still, $2.7bn of cars, assuming an average cost of $38k, is 70,000 cars. Last year they sold just over 350k cars in Europe, so 90k/quarter. Are you really saying there were 70 days of European sales stuck mid Atlantic? Come on.

Average r&d means nothing. It is what Tesla create that matters and the less folk needed to do it, the better.

Yes - but R&D spend is a better indicator than you might think of how serious they are about it, and it gives one an idea of the timescales. I'm really not surprised that they've taken so long delivering Cybertruck or FSD, the talk was clearly way ahead of the resources being put into development. And I question their ability to grow in the way that the valuation requires, if they're cutting 20% of the people who would make that happen. Still, R&D of 7% is a start - perhaps they can now make auto wipers that actually work.

And here we have one example of how cutting the workforce forces them to cut their technological ambitions, they're giving up on the longstated plan to cast the underbody of the small platform in a single piece, and will now do it the existing way in three pieces. It also takes out a load of risk to the schedule, takes out a lot of upfront cost in optimising the casting, and reduces the long-term cost to insurers as minor dings mean you don't have to replace the entire underbody. It's almost like someone has taken Musk to one side and explained to him that after the pickup and the lorry, he now has to start delivering things on time even if they are not as technologically advanced as he would like.
https://www.reuters.com/business/autos- ... 024-05-01/

Legacy has always hated electric, that was why GM axed their EV1 and had all the cars forcibly collected and crushed.

Jeez, the EV1 was the last millennium, nobody is thinking about it. Move on.

VW board did the same thing with Diess who was trying to lead them to electrics and now they have German politicians making electric car sales more difficult by cutting incentives whereas in the UK the benefit in kind tax reduction is still attractive.

BIK is all that's left, it's a long way from £5k for everyone. And they're losing a lot of their exemptions for Congestion Charge etc.

there is nothing so vengeful as a person who eventually realises that he/she has been fed a bunch of lies and so I still believe there will be a rapid decline in ICE cars.

You may think that, but in the real world it's about money and the availability of vehicles with the right spec for what people need.

Cyber truck has been a huge success, grabbing the attention of the celebrity crowd who once loved Range Rovers and producing massive free publicity for Tesla.

That may count as a huge success in your world of feelz and vibez, but it doesn't count for much on the bottom line.

It is not designed to compete in its current form with the F150 for builders but it going after higher margin, but lower volume customers.

But that was the original vision, "We wanna get gasoline, diesel pickup trucks off the road".

And I think it would have worked better if they'd kept their original focus on solving Big Problems rather than indulging the boss on something he thought was "awesome" but "I actually don’t know if a lot of people will buy this pickup truck or not, but I don’t care."

You can get away with that attitude at a private company, but not when it's publicly owned, and you sense that's been part of the problem behind the scenes, that he's been encountering resistance to some of his more outlandish schemes.

Ark have done various studies including this one that is now 1 year old:

https://ark-invest.com/articles/valuati ... arget-2027

They give a 2027 target of $2000 per share

Wow - proof if ever it was needed that even if you have a fancy model, garbage in means garbage out. I don't have time to fisk it all, but just to take some examples of the inputs it relies on to come to this central target of $2000 in 2027 with a 50% range between $1400 and $2500, they assume :

• Average gross margin of 28.5% (range 23-34%, currently it's 17.4%)
• 22% chance of Robotaxi commercialisation (not announcement) in 2023, giving 4 years of ramp up
• $3bn (ie <0.6%) of dilution from shares given to directors and employees

Do you seriously think any of these inputs are realistic. Just on the dilution front, p146 of the 2024 proxy statement says that as of 31 December 2023 there were 363m shares to be issued to the directors. Now 304m of those are Musk's infamous 2018 award, and I'm not sure if they all vest by 2027 but just the rest of them account for several times more dilution than Ark assume, never mind those given to employees.

And then we have the production forecasts, of 10.3m in the bear case and 20.7m in the bull case, for 2027. Remember that TTM they produced (not sold) 1.839m vehicles and that at present they claim production capacity of "over" 2.35 million cars, although that includes 125k/year for the Cybertruck factory when they've only just managed 1000 in a week of production test.

Don't get me wrong, I think one of the most impressive things about Tesla is how they've assembled a global production system for a whole new technology from scratch. But in 12 years of inhouse production, they've got to production of 1.8m and claimed capacity of 2.35m. Do you seriously think they can be producing 15m cars as a central forecast, within 3 years? Having just sacked 20% of the workforce?

I could go on, but life's too short. You do yourself no favours quoting such numbers uncritically, you're smarter than that.

In addition to the FSD aspects, the availability of having substantial compute in cars opens up the possibility of using them like the Amazon Web Services where when the car is not driving it can be part of a large compute engine. Similar is possibly true of dojo, but what the real situation is there is difficult to know. In principle dojo time could be sold for AI training but whether it is any good who knows.

Meanwhile we have the exciting possibilities of Optimus and what it can do and when it can become an income stream for which there is nothing as far as I can tell baked into the share price.

But people have been talking about profiting from distributed computing for decades, pretty much as soon as GIMPS and Seti@home were a thing back in the late 1990s. Again it just feels like Musk spitballing as a way to distract from what's actually happening in the here and now.

The markets usually look 18 months ahead. Let's say that's doubled for sexy tech companies. Can you see any of these things making a material contribution - 10%, even 1% to total revenues in 3 years time? So $10bn/year, even $1bn of cold hard cash?? If not, then they're not worth wasting brain time on.

[Kantwebefriends]

"BIK is all that's left"

Apart from paying 5% VAT on electricity versus how much tax and duty on petrol? Around 50%.

[Kantwebefriends]

"BIK is all that's left"

Apart from paying 5% VAT on electricity versus how much tax and duty on petrol? Around 50%.

My memory was wrong. The tax and duty make up about 50% of the pump price, so that's equivalent to a 100% rate on the fuel.

The 100% tax-and-duty exceeds the 5% tax by twenty-fold. A fine example of regressive taxation I'd think. Yet nobody ever mentions that aspect of it - the richest couple in the street are having their Tesla's fuel subsidised by their poorer neighbours. That's in addition to having their Tesla's purchase price subsidised too.

Living off the poorer while virtue-signalling frantically - ain't life fine and dandy?

[Watis]

Here's an article looking at the issues facing Tesla on the BBC News website today:

https://www.bbc.co.uk/news/business-68947020

Watis

[Howard]

Down to earth review of driving a Cybertruck in Texas.

Includes interesting comment on the truck's awareness of a road situation which is relevant to FSD.

https://www.businessinsider.com/tesla-c ... ety-2024-4

regards

Howard

[odysseus2000]

Hallucigenia

Well it's customary to look at results when they come out, they're a check in with reality, otherwise you're living in fairyland. I think I'm being pretty fair; maybe you are not reading enough into them?

Yes, but one has to view results in the context of what is happening in the rest of the market that the company operates in. Although the main stream media has not picked up on the significance of the electric car revolution and how prices are declining it is nonetheless happening dramatically. This is great for consumers but for legacy auto it is murderous.

The VW ID3 sells for Eur39k in Germany:

https://ev-database.org/car/1831/Volkswagen-ID3-Pro

The VW ID3 in China sells for $23k:

https://carnewschina.com/2024/01/03/the ... :text=With updated information and specs,starting price of USD 16,600.

The reliable anti electric car lobby are flighting a good rear guard as in this 1 min 21 sec rant by Clarkson:

https://youtu.be/mpe0bosV7Fc?si=MtM38g7Y1OwhLXhD

Battery car prices are collapsing and Tesla are doing well to stay where they are in light of intense competition and are addressing the issues with massive job cuts that look to be around 20% staff reduction. In this context what are legacy doing? Diess understood the issues and VW fired him and now VW and others are in a terrible position where most of their output is massively over priced.

Which just matches sales going down by 9%, you're barely better off. Except one employee wants to be paid $56bn. If saving $1bn is going to help the shareprice go up, what effect will -$56bn have? You can't have it both ways, but last time I looked, $1bn was less than $56bn….

No, the Tesla pay award that will be voted on, on the 13th of June would give Musk stock options which are equity price dependent, but something like $(40-56) billion. As the market cap is about $540 billion, this is about 10% dilution but not $56b in cash as many are claiming, but options that are priced on Tesla’s share price. I am happy to give this level of pay to Musk who has brought Tesla to its current level. Whether enough other share holders will feel likewise is to be determined.

That's why I wasn't giving them too hard a time about the inventory bulge. But still, $2.7bn of cars, assuming an average cost of $38k, is 70,000 cars. Last year they sold just over 350k cars in Europe, so 90k/quarter. Are you really saying there were 70 days of European sales stuck mid Atlantic? Come on.

The inventory bulge is a consequence of the luddites and the intense price competition. It is an industry wide thing and not just a Tesla thing.

Yes - but R&D spend is a better indicator than you might think of how serious they are about it, and it gives one an idea of the timescales. I'm really not surprised that they've taken so long delivering Cybertruck or FSD, the talk was clearly way ahead of the resources being put into development. And I question their ability to grow in the way that the valuation requires, if they're cutting 20% of the people who would make that happen. Still, R&D of 7% is a start - perhaps they can now make auto wipers that actually work.

And here we have one example of how cutting the workforce forces them to cut their technological ambitions, they're giving up on the longstated plan to cast the underbody of the small platform in a single piece, and will now do it the existing way in three pieces. It also takes out a load of risk to the schedule, takes out a lot of upfront cost in optimising the casting, and reduces the long-term cost to insurers as minor dings mean you don't have to replace the entire underbody. It's almost like someone has taken Musk to one side and explained to him that after the pickup and the lorry, he now has to start delivering things on time even if they are not as technologically advanced as he would like.
https://www.reuters.com/business/autos- ... 024-05-01/

Totally missing the point. The price of cars is collapsing and that is driving the market. At this rate of decline, no one is going to bother repairing a car with major structural damage, they will be scrapped and a new one issued. That has been becoming the industry norm for years now and current prices are increasing its rate of adoption.</i>

Jeez, the EV1 was the last millennium, nobody is thinking about it. Move on.

Legacy still thinks electric cars will go away, they still think ICE as in the firing of Diess.


BIK is all that's left, it's a long way from £5k for everyone. And they're losing a lot of their exemptions for Congestion Charge etc.

Coming but not here yet, there is still an exemption till end of next year for the congestion charge:

https://tfl.gov.uk/modes/driving/electr ... d-charging

Note also after the latest London Mayor election, the policies of clean air are likely to intensify against ICE and Hybrids.

odysseus2000 wrote:
there is nothing so vengeful as a person who eventually realises that he/she has been fed a bunch of lies and so I still believe there will be a rapid decline in ICE cars.

You may think that, but in the real world it's about money and the availability of vehicles with the right spec for what people need.</i>

Its about money, its always about money and ICE are more expensive than BEV and getting more so by the day.

<i> It is not designed to compete in its current form with the F150 for builders but it going after higher margin, but lower volume customers.

But that was the original vision, "We wanna get gasoline, diesel pickup trucks off the road".

And I think it would have worked better if they'd kept their original focus on solving Big Problems rather than indulging the boss on something he thought was "awesome" but "I actually don’t know if a lot of people will buy this pickup truck or not, but I don’t care."

You can get away with that attitude at a private company, but not when it's publicly owned, and you sense that's been part of the problem behind the scenes, that he's been encountering resistance to some of his more outlandish schemes.


Tesla always makes expensive cars, learns from them, makes some money and then makes a cheaper version, the Cyber is no different.

odysseus2000 wrote:
Ark have done various studies including this one that is now 1 year old:

https://ark-invest.com/articles/valuati ... arget-2027

They give a 2027 target of $2000 per share


Wow - proof if ever it was needed that even if you have a fancy model, garbage in means garbage out. I don't have time to fisk it all, but just to take some examples of the inputs it relies on to come to this central target of $2000 in 2027 with a 50% range between $1400 and $2500, they assume :
Average gross margin of 28.5% (range 23-34%, currently it's 17.4%)
22% chance of Robotaxi commercialisation (not announcement) in 2023, giving 4 years of ramp up
$3bn (ie <0.6%) of dilution from shares given to directors and employees
Do you seriously think any of these inputs are realistic. Just on the dilution front, p146 of the 2024 proxy statement says that as of 31 December 2023 there were 363m shares to be issued to the directors. Now 304m of those are Musk's infamous 2018 award, and I'm not sure if they all vest by 2027 but just the rest of them account for several times more dilution than Ark assume, never mind those given to employees.

And then we have the production forecasts, of 10.3m in the bear case and 20.7m in the bull case, for 2027. Remember that TTM they produced (not sold) 1.839m vehicles and that at present they claim production capacity of "over" 2.35 million cars, although that includes 125k/year for the Cybertruck factory when they've only just managed 1000 in a week of production test.

Don't get me wrong, I think one of the most impressive things about Tesla is how they've assembled a global production system for a whole new technology from scratch. But in 12 years of inhouse production, they've got to production of 1.8m and claimed capacity of 2.35m. Do you seriously think they can be producing 15m cars as a central forecast, within 3 years? Having just sacked 20% of the workforce?

I could go on, but life's too short. You do yourself no favours quoting such numbers uncritically, you're smarter than that.

If the current gross margin is 17%, is it unrealistic to argue that if you can sell FSD for $10+k and earn an income as a Robo Taxi that margins in the high 20’s or higher can not be achieved. Essentially FSD is a no cost service to Tesla that they can sell for $10k+ giving computer industry margins.


odysseus2000 wrote:
In addition to the FSD aspects, the availability of having substantial compute in cars opens up the possibility of using them like the Amazon Web Services where when the car is not driving it can be part of a large compute engine. Similar is possibly true of dojo, but what the real situation is there is difficult to know. In principle dojo time could be sold for AI training but whether it is any good who knows.

Meanwhile we have the exciting possibilities of Optimus and what it can do and when it can become an income stream for which there is nothing as far as I can tell baked into the share price.


But people have been talking about profiting from distributed computing for decades, pretty much as soon as GIMPS and Seti@home were a thing back in the late 1990s. Again it just feels like Musk spitballing as a way to distract from what's actually happening in the here and now.</i>

Earlier you are berating me for talking about EV1 and now you are comparing a very old low power compute system to what is in each Tesla with all the potential benefits of an Amazon Web Services type of business.

<i>The markets usually look 18 months ahead. Let's say that's doubled for sexy tech companies. Can you see any of these things making a material contribution - 10%, even 1% to total revenues in 3 years time? So $10bn/year, even $1bn of cold hard cash?? If not, then they're not worth wasting brain time on.

Tesla can win in many ways that is what makes it so exciting as an investment. If they manage to lose Musk via rejecting his pay award then it can crash. Meanwhile most legacy is headed to the poor house, very like how Japan destroyed UK car making. Take your choice, place your bets!

If you think I am talking my own book and nonsense as well, then have a listen to what industry expert Munro says (11mins 45):

https://youtu.be/zl4VjvZu5os?si=1PIRgBTeoddP4OMM

Regards,

[odysseus2000]

Tesla model Y flies & spins 7 times & all occupants survive:

https://youtu.be/_BpdHM81DgI?si=qjMQyilN5jFmOdNn

Regards,

[odysseus2000]

Tesla to spend over $500 m on super chargers this year:

https://www.silicon.co.uk/e-innovation/ ... he%20wrote.

Regards,

[odysseus2000]

Nissan leaf price. Cut by 18,000 Australian dollars as Nissan sales collapse:

https://www.drive.com.au/news/nissan-le ... australia/

Regards,

[Howard]

Nissan leaf price. Cut by 18,000 Australian dollars as Nissan sales collapse:

https://www.drive.com.au/news/nissan-le ... australia/

Regards,

Ody, You do post some weird stuff. Your article states that Nissan only sold 484 Leafs in Australia last year. It states that the model is ageing and hence the cuts. If they sold zero this year it's hardly worth commenting on. A micro collapse?

Surely this thread should be covering significant stuff not clickbait like this?

Regards

Howard