Cash crunch or the pause that refreshes?
The automaker has recently started to offer temporary discounts and perks on its vehicles – leading to the belief that Tesla is potentially facing some rare demand problems.
I highly doubt it. Last report was that Tesla has >$20B cash.
This is much more likely a signal to the markets (analysts, media, etc) that they are “taking action” and that the stock should start to go up instead of down.
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This is incorrect. No demand problem as far as anyone can see. This is:
- As often happens in Q4, they want to juice sales.
- The primary reason they happen to have some completed and unsold vehicles in stock is because people are declining to take delivery now in the hopes of getting a hefty tax credit (up to $7500) if they choose to take delivery in 2023 instead.
That said, it does appear that sales are slowing, or that they can now produce vehicles more quickly, because when ordering, the delivery dates are not 6+ months in the future anymore, they are 1-4 months in the future.
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If true, frugal management. 
The Captain
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I noticed, years ago, that a company announcing another RIF tended to juice the stock. It is as if “Mr Market” figures, “Good, employees are nothing but a cost. Toss more people on the street, and there is more loot for the “JCs””.
Steve
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What about demand in China?
https://www.msn.com/en-us/money/news/tesla-to-suspend-output-at-china-factory-later-this-month/ar-AA155o3f
https://electrek.co/2022/11/22/tesla-squash-rumors-low-demand-china-no-more-price-cuts/
the automaker also launched a new cash rebate with its insurance partners in China.
Sina Technology News reported that the demand levers only brought about half the amount of orders that were expected:
It is reported that Tesla has launched two rounds of heavyweight price cuts and promotions in the past month. However, the two rounds of promotions did not receive the desired effect from Tesla. After announcing the price cut, Tesla China’s official website was “paralyzed” by the influx of traffic, but according to Sun Shaojun, the founder of Auto Fans, only about 50,000 orders were received by Tesla in this round. Rather than the 100,000-170,000 rumored by the outside world.
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Not sure why this is a problem. Honda just recently offered us a big discount to buy a car this week. Oh… wait… they didn’t…
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When is Tesla’s next generation of cars coming out?
If Tesla models are more tech or computer equipped are they updating the computer hardware in early 2023? The Nvidia equipment may be shifting to a new generation. It is in the PC world. Some tech is being blown out for Christmas. The cost of the new tech after Christmas will be substantially higher. (the reason I bought a tower two weeks ago)
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Tesla is continuous innovation. Early 2023 will see the addition of HIGH definition radar.
https://electrek.co/2022/12/06/tesla-radar-car-next-month-self-driving-suite-concerns/
Tesla ordered 4nm chips from Taiwan Semiconductor (TSM) which probably won’t arrive until 2024/25
https://electrek.co/2022/11/21/tesla-massive-order-next-gen-self-driving-chips-tsmc/
As for the new vehicle platform
The Captain
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Oops.
Safety is at the core of our design and engineering decisions. In 2021, we began our transition to Tesla Vision by removing radar from Model 3 and Model Y, followed by Model S and Model X in 2022. Today, in most regions around the globe, these vehicles now rely on Tesla Vision, our camera-based Autopilot system.
https://www.tesla.com/en_eu/support/transitioning-tesla-vision
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Older RADAR had very low resolution, all you saw was a blip on the screen but it didn’t tell you what you were seeing. Like a walking cane, it tells you there is something there but no details. The RADAR that Tesla is now adding is HIGH DEFINITION.
Elon has also previously commented on HD radar, saying “A very high-resolution radar would be better than pure vision, but such a radar does not exist. I mean vision with high-res radar would be better than pure vision.”
The Captain
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I don’t know the difference between low res and high res radar in the sense Tesla is using it, but the low res stuff is pretty amazing. It can detect and render properly things like fire hydrants, garbage cans, street signs, etc.
Apparently it wasn’t good enough for Tesla.
The Captain
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The way I heard it explained is that whenever there was a conflict between vision and radar, the system always went with vision. And whenever there was radar data and no vision data, the system didn’t move due to potential danger. So they concluded that the radar could be eliminated.
I suspect that there was more to the story, both regarding shortages of laser assemblies and cost reduction opportunities.
I am tempted to start a new thread for this next thing, but will start here and see if there is much response … when will it be an opportune time to invest in $TSLA? I nearly did last week, but I’m now glad I didn’t. Any thoughts?
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Agreed, but it wasn’t just a “blip on a screen” like you claimed.
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• The way I heard it explained is that whenever there was a conflict between vision and radar, the system always went with vision.
I don’t know the details, I repeated what Elon Musk said which I take at face value. There is an old saying among navigators, “Don’t go to sea with two clocks.” When they don’t agree you don’t know which one is right. This is what was happening to Tesla. They figured that vision alone would do but a better radar would be even better. Now for my speculation, in fog, in rain, and in the dark vision degrades considerably. Here is where radar helps provided it can return a sufficiently detailed picture. In a sense, the vision clock for when there is light and the radar clock when vision fails.
At Seeking Alpha someone commented that with the addition of radar all the previous data would need to be updated, a red herring if my above hypothesis is correct.
• when will it be an opportune time to invest in $TSLA? I nearly did last week, but I’m now glad I didn’t. Any thoughts?
When you have the money and the guts to do so.
I confess that I didn’t expect TSLA to fall this low but it is not all that unusual for a growth company. AMZN went from $5.33 on December 10, 1999 to $0.30 on September 28, 2001,* a -94.40% drop. TSLA is down ‘only’ -73.39%, to match AMZN it would have to fall to $28.70 to match AMZN, a further 73.7% drop from here. It’s possible. 
I’ve said it before and I repeat, buy stocks that bounce back. The stock price cannot tell you that, only the business can, that is what we need to look at. There is no telling when and where the bottom will be.
As for the current situation:
• A burst bubble, not just TSLA but the whole growth market
• Tax loss selling time
• Funds window dressing
• Lots of Tesla/Musk haters - some with very deep pockets
• Musk selling to finance Twitter
• Margin calls
• Stop loss orders triggering
On the flip side, Tesla’s ttm P/E is 34.31 (Yahoo), and forward P/E 28.82
The trailing PE ratio is 33.67 and the forward PE ratio is 28.82 . Tesla’s PEG ratio is 1.28.
If you believe Tesla will bounce back then it is a raging buy.
One thing we know, tax loss selling and window dressing end this week.
Some things to consider, inflation, looming recession, China covid mess, Fed speak, IRA kicking in next week,
Expected earnings report January 25. Maybe wait to see how the market reacts
The Captain
For full disclosure, my TSLA cost basis is $115.48 so down only -5.52%
- On or around September 28, 2001 ARM Holdings dropped 60% in a day on an earnings report. The next day I doubled my ARMH position. It also coincided with the bottom of the dot com bust bear market.
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I just did some more numbers…
Those who held on at the bottom would now have shares at $81.82, a 30.2% CAGR.
Charlie Munger has it right, the best way to make money in the market is to sit (on shares that bounce back).
The Captain
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Yep. But the key is to buy a (or the) company that will bounce back! On Dec 10, 1999, there were 100 big internet-related companies, Amazon was just one of those 100. Most failed abjectly (went to zero), some muddled along till today (Cisco for example), and only one or two were blockbusters that provided a 30% CAGR over the next few decades (Amazon for example).
By the way, this is related to the VC model of investing. They invest in all 100 of them in their infancy. They don’t care if 90+ of them go to zero as long as they hold the one or two that provide 5,000+% returns over time.
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