I’ve been a bit less enthusiastic about TSLA in recent weeks, but that changed recently. Here are some of my thoughts:
• I’ve been worried that delays in CyberTruck and the $25k/Gen-3/Model 2 vehicle mean that Tesla’s previous stated 50% CAGR goal won’t be achieved in 2024 and probably not 2025 even.
• I’m usually fairly tolerant of Elon’s behavior and tweets, but they’ve been getting worse and worse. Between his “foolish” Anti-Semitic tweet, not only bringing Alex Jones back onto Twitter, but joining in “Spaces” event with him, and then his worrying performance at the Sorkin Dealbook interview, I was questioning his decision making abilities as well as him thinking Twitter was somehow important to the planet.
• I strongly disagree with Elon’s approach to Tesla advertising, especially considering he just spent billions on a company that makes most of its money from advertising.
So, what changed?
CyberTruck is an amazingly engineered vehicle. Whether you care for the looks or not, the innovations that have gone into this vehicle will change the automotive world forever. The decades old CANbus is replaced with an ethernet ring that has specific timing characteristics. The almost 100 year old 12 volt auxiliary system is replaced with a 48 volt system, which affects everything from Air Conditioning, seat motors, to steering. The first production steer by wire system with a speed progressive ratio. Lock to lock is only 360 degrees, so the modified yoke/steering wheel actually works now. The giant castings, pioneered on the Model Y, are even larger here. The 4680 cells have the potential to lower costs without hurting performance from the previous 2170 cells.
Tesla even sent engineering specs and documents to other OEMs and Tier 1&2 suppliers, not out of the goodness of their hearts, but because having a supply chain that can support these innovations will help Tesla with CyberTruck and new / refreshed vehicles down the road.
Pricing for CT is high enough that Tesla should find them profitable as production ramps.
The Gen-3 vehicle is going to be built in Austin, not in a totally new GF (in Mexico), as originally planned. This removes GF completion as a delay factor in this new vehicle, and keeps the engineers closer to the production line.
NHTSA had been investigating Tesla’s AutoPilot system for a couple years now, looking at almost a thousand accidents, but that’s been concluded. You probably heard about a “massive” recall of almost all Tesla vehicles, but the changes in the recall are not even a slap on the wrist for AutoPilot. No functionality is being removed nor reduced, just better warnings/notifications when AutoSteer is disengaged, and enforcement of where AutoSteer can be used (matching the prior owner’s manual statements). I consider it NHTSA coming up with something just to save face after that long investigation. It’s an overhang removed from the risk bucket.
Tesla is expanding production yet again at the Shanghai Giga-Factory. Tesla has been cutting prices to keep demand up with production, so this is Tesla showing confidence that near term demand really isn’t a problem. Additionally, Tesla is expanding production at the same time other OEMs, both legacy and EV startups, are cutting production capability and/or delaying new EV models.
So, why is Tesla doing this? I think it’s because they want to be ready when the world’s economies turn around and people resume buying vehicles again. GM and Ford will not be able to re-scale production (assuming people even want their first-gen EVs that are not optimized that like Teslas are), and certainly not in a manner in which they can compete on price and be profitable like Tesla. Toyota and Stellantis are further delaying their already delayed entries into EVs, making the classis “The Innovator’s Dilemma” mistake of keeping current customers happy instead of moving along the tech innovation disruption line.
And yesterday Jerome Powell made it pretty clear that rates won’t continue to rise and that there’s a view to interest rate cuts next year. Lower rates mean lower car payments. Just as Tesla had to cut prices to keep people being able to afford their vehicles, that pricing pressure will move the other way, especially as Tesla is likely to be the only real EV game in town mid/late next year. I think this has moved the market as a whole today, but stocks like Tesla are some of the more direct beneficiaries.
I think it’s going to be choppy for TSLA for the next 6-9 months. Macro impacts won’t all be positive, CyberTruck will have some early production issues, and growth in deliveries won’t be at the pace we’ve seen the past few years. But, I’m confident that Tesla’s vehicle engineering is second to none and that the $25k vehicle will be the EV sea change we want it to be, even if it will be later than we want it to be.
Tesla is the largest “normal” corporate holder of Bitcoin on its balance sheet. MicroStrategy, Marathon, and Galaxy Digital own more than Tesla, but they are all in the Bitcoin business in one way or another. Tesla owns ~ 10,000 BTC - current value ~$400M.
I disagree with this. Tesla cutting prices to not reduce production is not a sign of confidence in future demand. It’s a statement that it doesn’t have the elasticity to reduce production when needed because the cost to operate all giga factories is too high.
I love cars. Model 3 is the best car in the world from a value perspective. Model Y is in a similar spot. And can’t stand looking at those cars anymore! Tesla production costs are kept down because the cars don’t change. But now they have to because they look old and tired.
Now, the competition. The legacy EV makers didn’t cut production for the most part, but they can slow down while demand picks up. And it will, as rates go down. The number of models available is fantastic and growing. The German manufacturers are 100% committed to EV and MANY legacy drivers will choose them for their first EV because they hate Elon. Or American Manufacturers. At least the Jewish ones will not pick Tesla.
I could be totally wrong, but I want to make public I’m a Tesla investor (great company), I’m not a Tesla lover (tired design), and I drive an EV I love from a manufacturer I don’t invest in (they have a long way to go to become modern).
There’s no evidence to support that. And again, Tesla is actively expanding production at the Shanghai GF. You don’t do that if demand is weak, period.
In the US, GM and Ford have weak demand, and so GM has delayed introduction of new EV models while Ford has cut back on its previous plans to expand production.
I think Tesla saves far more money from its unique construction and assembly processes. The Giga-castings is an obvious one. Note that both Models 3 and Y were designed and produced before Tesla had giga-castings, so it’s clear the look of the car doesn’t matter for this.
The evidence says otherwise:
Elon has certaintly damaged the Tesla brand, but EVs from other companies cost more and/or offer less.
Last month, Thomas Schaefer, the CEO of Volkswagen passenger cars, admitted, according to Reuters, that the group’s flagship brand is “no longer competitive” owing to high costs and low productivity.
We’ve heard “the competition is coming” for Tesla for a decade now. Could it finally be here? There’s no data to say it has, at least not yet:
I disagree with that statement. I live in Germany and the German government stopped subsidies on EVs prematurely.
From my point of view, it is not only to help with the budget crisis, but also to support the big legacy automobile industry in Germany. Except for VW and in part BMW, we don’t have really any suitable choices for EVs, except foreign manufacturers. The German manufactures and are still trying to catch up.
I can see the emotions taking over, so I will not extend much.
Others EVs cut their accelerated plans because demand cooled and there are a lot of options to choose from, hence prices are lower. But they didn’t cut current production, not yet to my knowledge. They cut expansion and beginning of new models production because they can’t compete with tesla in the efficiencyof production. And they have their ICE cars to fall back to without losing money (yet).
Do you think Tesla would have cut prices so aggressively if demand was the same of 2021? Come on, be real. Model 3 lease is $262 per month now…
I never disputed that tesla sells more, although BYD is coming. My only point was there are options, which wasn’t true 3, 4 years ago. That’s all.
Tesla will continue to be leader in EV, forever probably. That’s why I invest in tesla and not on ford or gm. I’m just reading the market movements.
BMW has 4 models in the US, I think 7 or 8 in europe. Mercedes has also 4 selling now in US. Audi has 3 in the US, more in europe. VW has 1 and Porsche 1 (both in US, none in Europe).
As a reminder, Tesla has 4 models only. 5 if you include the cybertruck.
The other OEMs have to decide how much software work they’re willing to do at their end to integrate finding the chargers in the car’s navigation. There’s probably some Tesla back-end API they need to call to get the list of chargers and the current use status. I assume Tesla has written this API already.
There’s a question of who’s making the adapters. The specs are published by Tesla, and now the SAE has approved a standard, so presumably OEMs don’t have to order them from Tesla. Maybe Tesla has decided to make them and sells them to the OEMs, but maybe the OEMs contract them out on their own.
• Then there’s the question of how payment for charging is handled. Today, Tesla supports non-Teslas in the Tesla app at SuperChargers with the MagicDock to connect to CCS vehicles. I suspect none of the OEMs want their owners to run the Tesla app, so these OEMs will have to integrate the protocols (APIs) Tesla supplies within their own apps.
• As OEMs signed up, the dates for supporting NACS got further and further out. It might be that the OEMs signing up later need more time to do the integration, but I personally suspect that Tesla has a support team to help OEMs with the integration and as OEMs signed up, booking them got further and further delayed. I don’t know if Tesla is charging for the integration. I’d be surprised if it were free, but I’d be surprised if it were a significant amount of money.
• The direct revenue for this is more cars paying for electricity from the Tesla SuperChargers. Tesla’s rates per kWh aren’t bad, but they’re definitely more than homes/business nearby are paying. Then again, Tesla is apparently paying all the costs of running and maintaining the SuperChargers.
• The real benefit for Tesla is having other vehicle owners going to Tesla branded fueling stations (SuperChargers), and watching Tesla vehicles charge faster. Some other OEMs claim fast charging rates faster than Tesla, but only at specific CCS chargers and only under certain conditions. These OEMs haven’t optimized for Tesla’s charging and what few reports I’ve seen from them using the MagicDock is that they charge slower than their advertised speeds as well as slower than most Teslas at the same charger.
Thank you Smorg. So, is it accurate to say that Tesla will have the equivalent of a network of gas stations that pretty much any electric car can fill up at (once the mfg has done the Tesla integration work)? The competitors avoid having to make a huge capital expenditure for their own charging networks, and Tesla gets a continuing stream of revenue in perpetuity + the advertising component of their name on all the chargers.
Imagine if Tesla enters an agreement with a national gas station chain to put Tesla superchargers at all their gas station locations. The energy delivery side of the Tesla business could get huge. Not sure if this is practical (just brainstorming), but they could put solar on all the gas station roofs/covers, and put in Tesla battery packs combined with the solar.
The only way to make money selling electricity to charge cars is with a monopoly and high prices (which seems to be Tesla’s plan). It’s a massive capital investment with very uncertain returns. And please don’t compare it to a gas station. Everyone NEEDS to put gas in their cars and they MUST go to a gas station to do so (no one can extract gasoline at home). But most EV drivers charge at home at much better prices and convenience than using the public infrastructure. Charging publicly in high speed (under 30 minutes from 10 to 80%) is a need only while doing road trips, or in a high density city like NYC (most people live in condos without a charger), or fleet vehicles.
It’s a very uncertain revenue stream, but it’s Elon’s vision. We will see.
Studies have been done and putting solar panels and battery buffers will increase the cost so much that will be nearly impossible to achieve profitability. I know because I am trying to open an EV charging concept.
Hopefully, Electrify America, EVGo, Chargepoint, Blink, etc., won’t throw the towel and try and compete to avoid a complete monopoly (they have done a terrible job thus far).
What about semi-truck charging with super chargers? I assume Tesla will dominate that also. They could build superchargers into every truck stop and rest area and trucks could charge overnight while drivers sleep.
Semis will need a complete different set of chargers (Tesla Semis Chargers; Tesla says it takes 60 minutes to get it from 10% to 80%). They need to charge at a 1 Megawatt energy rate or more (a regular Tesla v3 supercharger can get you around 250kw energy disbursement; v4 will be up to 500kw, I think, but very few cars will be able to pull that much), which puts an enormous stress on the grid. Those stations are specially put together by Tesla and cost a fortune. Let’s assume the truck’s battery system is 1,000 volts (maybe more). To achieve 1MW, you would need a 1,000 Amps. That would demand a special power cooled cable and connector, otherwise it would catch on fire in seconds.
So, very beefy hardware, hence why only Tesla is doing it, and on a very dedicated corridor (North-South on CA coast for Pepsi).
Now imagine you have 4 semis charging at 1MW each, that is equal to the consumption of 150 houses. Big stress on the infrastructure.
There is some protocol issues to be dealt with, but the real reasons for not reaching full charging speed is not “compatibility”. For example, Porsche Taycan , Kia EV6, and Ioniq 5 have an 800 Volts battery system. Lucid Air and Hummer EV have a 1,000V system. Teslas have a 400V system. The supercharger V3 can dispense around 600 amps so its cars can charge around 250Kw. A Lucid Air only needs 350 amps to achieve 350Kw, which is much faster than Tesla’s 250kw and available on most Electrify America’s chargers (when not broken). But if you plug a Lucid on a V3 supercharger with a CCS magic dock, it can only get up to 150kw (400V * 350 Amps). But it’s just basic electricity math, not a “compatibility” problem.
This should go away with Superchargers V4, which will do about 1,000 Volts or more.
It is the best. And the most reliable too. VW was the last large EV manufacturer’s holdout (Stelantis still hasn’t adopted it, but they also don’t have a production EV in the US yet), and SAE approved NACS as a standard last week, after finishing all the research and documentation necessary (Tesla naming NACS and declaring it a standard was not enough ). Now we need to see if Tesla will respect the standardization process and not start to implement unilateral changes without consensus every time Elon has a teenager’s knee-jerk reaction.
We will move forward with NACS and the Supercharge network will be even bigger.
It’s still unclear how that will help Tesla’s top and bottom lines though. Back to the beginning of this thread, lowering prices to inflate demand is not sustainable.
Yesterday V12.1 rolled out to all Tesla owning employees, @telsascope
And…Juniper (the model Y upgrade with 20% more range and a significant refresh)set for June? https://youtu.be/4YQBnr9TkK8?si=4eTVB0cZIil2bksu . And, today ‘announcement of India Giga-factory imminent’? Sam Evans also reporting 10,000 new orders for Cybertruck, daily since going full production.
Also today, Sandy Monroe said that while walking the line at Tesla, he saw the Tesla humanoid robot, Optimus, doing things that lead him to believe that Optimus ‘can do anything a human can do on the Tesla factory line’!https://www.youtube.com/live/co9V5WJD2PM?si=slTPFStjuD7PI3U0
Take your pick. My opinion is that Cybertruck isn’t even about the Cybertruck (Me: Cybertruck is a high margin way of paying for multiple tech advances needed for the sub-$20,000 vehicle to be ‘successful’, scheduled to begin build by the end of next year.) https://youtu.be/y-jysQPnh_E?si=MgTFX75H6E3to6CC .
There are now so many catalysts set for 2024. IMO, Tesla share price is heading significantly higher in 2024.
). Now we need to see if Tesla will respect the standardization process and not start to implement unilateral changes without consensus every time Elon has a teenager’s knee-jerk reaction.