Saul has an excellent summary of the earnings report but does not allow comments.
They do tell us that electric vehicle sales are slowing. Reduced incentives in China. Slowing economy there. Rising vehicle inventory. Rising lithium inventory. Falling lithium prices. And GM decides to slow investment.
In every new product, early adopters like to get the product first, try it out and impress their friends. After they are supplied, sales can slow for a while.
They tell us hydrids are selling better than Evs. That might be due to lack of charging stations and the need for plug ins for recharging in apartments and parking lots. Give it some time.
If EVs fail to meet the carbon reduction goals, what happens next? Hydrogen? Ammonia? Methanol? Does EPA/industry etc have a back-up plan?
I am not sure why you think this Paul. Anyone can comment. Maybe you are thinking of a couple of years ago when he didnāt allow discussion of Tesla on his board but that has been lifted.
Only approved posters can comment on Saulās board. I donāt know if it is difficult to get on the āApprovedā list but it is not open for everybody to comment
I can tell from a distance I would never ask Saul for a single word. He is not worth it and no one in finance on our level is. I do not like old men setting up nonsense.
I have seen these guys in action for decades. The internet breeds them. No gurus need apply.
There was mixed responses to Telsa cutting prices on this board.
My own take is that Musk had to cut prices and it makes sense.
It is painful this quarter but a year from now it will be very good profits for Tesla. That does not mean the company is not overvalued. The mcap of $800 B is far too rich. There are reasons for a premium on Teslaās shares but nowhere near this.
I have not requested access to post. The rules were always very strict before so I seldom posted except if I thought it really added value in line with the rules.
There is a link at the bottom right āRequest the ability to Postā if anybody wants to request access. Not sure the process, I think posting history is reviewed before being granted access.
Personally, I am not bothered but just pointing out what I think Paul was referring to when he said he doesnāt allow comments.
This thread is not about Tesla but about Saulās board. I think it is a fine board and Saul keeps it manageable by being very strict about relevant postings. Iāve had my share of posts removed. Not that I liked it but I respect Saulās right to manage HIS board as he sees fit. Donāt like it? Post elsewhere.
I post occasionally when I think I have something useful to say.
The Captain
PS: It might be a good time to add to TSLA but wait for the bottom that can only be seen in retrospect. Do it like momentum players do it.
I donāt think thereās much surprise that Tesla posted weaker margins and earnings this quarter, given the price cuts. What did surprise me were Muskās comments on the CT ramp and Monterey. He lowered expectations on the CT ramp, emphasizing that it will be slower and more difficult than perhaps people outside were thinking, due to the innovative features of the vehicle. Which, fine - but given Teslaās supposed focus on making sure that product design meshes with manufacturing processes, thatās a little off-brand.
Even more surprising were his hints that they may not be blasting forward full speed ahead on Monterey. I get why. The macroeconomy isnāt as favorable to car manufacturers as it was. You might not necessarily want to be putting another billion into a new plant if interest rates are going to stayā¦well, Musk would call them āhigh,ā but theyāre really just back to historical norms. Exceptā¦if you really thought FSD was going to be ready to turn on for full level 5 autonomy in either 2024 or 2025, wouldnāt that concern kind of disappear? Weird.
One minor thing that really caught my attention was Musk mentioning regulatory approval for Level 5 autonomy as a reason why theyāre not putting as much emphasis on areas outside the U.S. He noted (correctly) that theyād have to go through a massive regulatory review before they could offer it in other countries. He then contrasted that (incorrectly IMHO) with the US, where he said you can offer that kind of new product as long as you take responsibility for it. I think he is vastly underestimating the regulatory review heāll need to go through before even California lets him offer a Level 5, rather than a Level 2, system.
Teslaās gross profit margin slid to 17.9%, down 719 basis points. The companyās auto gross profit margins, excluding regulatory credits, fell to 16.3%.
Teslaās auto gross profit margins excluding regulatory credits peaked at 30% in Q4 2021. Teslaās core margins tumbled to 19% in Q1 and 18.1% in Q2 of this year.
The USian auto industry is all about ramping ATP and GP to the sky. The likes of Farley and Barra were looking at Tesla GP and drooling. Now, that fat GP is evaporating. Maybe big three āJCsā will find another hobby horse to ride, now that their dreams of huge EV GP may be evaporating?
That would not surprise me at all. That will cost them their companies entirely if they are not careful. The American public will more rapidly than they expect switch to EV at much lower sticker prices. Musk is not playing the game. He will take all the market share he can get.
@captainccs Anyone in the US who could afford a Tesla was not taking the bus. This barely even mattered in NYC with the subway and taxis because those workers were working remotely.
Instead, the money supply increased because of the emergency and people were buying more wildly.
I intended this as a discussion of Tesla. But thought referencing Saulās post was preferable to repeating the info here.
I donāt spend much time on Saulās board. I prefer growth stocks with a forward PE less than 60. His are too speculative for me. But I do read his posts when he comments on a stock of interest to meālike Tesla.
Saulās summary of the earnings report provides valuable insights into the electric vehicle (EV) market, and your comments raise important questions about the future of EVs and alternative technologies. Hereās a breakdown of the key points:
Slowing EV Sales: The report highlights a slowdown in EV sales, which can be attributed to various factors, including reduced incentives in China, a slowing economy, rising vehicle and lithium inventory, and falling lithium prices. These challenges are affecting the growth of the EV market.
Early Adopter Effect: Itās common for early adopters to drive initial sales of new products, and once the market saturates with these buyers, sales can slow. This pattern is not unique to EVs but can be seen in various industries.
Hybrids vs. EVs: The preference for hybrids over EVs may be linked to infrastructure challenges, such as the availability of charging stations and the convenience of recharging in apartments and parking lots. Over time, as charging infrastructure improves, the balance may shift.
Alternative Technologies: The question of what comes next if EVs fail to meet carbon reduction goals is essential. Several alternative technologies are being explored, including hydrogen fuel cells, ammonia, and methanol. These technologies have their advantages and challenges, and their adoption will depend on various factors, including technological advancements and infrastructure development.
EPA and Industry Planning: Regulatory bodies like the EPA and the automotive industry need to have contingency plans in case EVs do not meet carbon reduction goals. These plans might involve shifting focus to alternative technologies, enhancing existing technologies, or developing new strategies to reduce emissions.
The future of the automotive industry and its contribution to carbon reduction will likely involve a combination of technologies and strategies. Flexibility and adaptability will be essential to address the evolving landscape of sustainable transportation.
I have some issues with all the points, but Iāll primarily comment on this one.
All these other alternatives are at least a decade behind BEV in producing a real product. They also seem to all have one thing in common ā retaining the idea of a gas station where you go fill up. The also have another thing in common ā the price a the green version of the fuel is more expensive than most all forms of EV fuel sources.
Of course we need to continue to build out the fast DC charger network. But all of the alternatives require the use of a new fueling infrastructure. Most EV charging can take place at home, even with slow 120v chargers. And about 2/3rds of homes have garages or car ports where they could (if they choose) install an L2 charger today.
The so-called EV slowdown is really a slowdown in the growth rate that can probably be explained by a combination of factors, such as
higher interest rates increasing the new-car monthly payments
a lull after a surge caused by COVID
buying delays caused by numerous non-Tesla car makers announcing they will switch to the Tesla charging standard
Seems unfair to focus on EVs when big item purchases in general are being negatively impacted by high interest rates. It would be a problem specific for EVs if market share against their gas counterparts was being lost. Is there any evidence of that in any of the large car markets? In the US, Q3 2023 EV market share was at 7.9%, a substantial increase from Q3 2022 (6.1%).
Musk has indicated that the price cuts (at least those outside of China) are due to rising interest rates, not competition from ICEs or other EVs. Unlike other car manufacturers, Tesla is unwilling to sell their BEVs at a loss, so it makes sense to slow production until the economic environment improves.
I had previously argued that Teslaās sales were limited only by production. The global economic environment has changed to where I now see significant limitations due to the macroeconomy. It is prudent for Tesla to be cautious if they believe there is a high probability of a severe global recession.
In general in the US the inventory to sales ratio remains at less than half of what it was pre pandemic. The problem for the EV segment in particular is that EV production appears to be growing more than demand.
A new study by Cox Automotive shows that dealerships across the U.S. are sitting on a significant number of brand-new electric cars. As it turns out, automakers are really good at building new cars at volumeāwho could have guessed? Theyāre so good, in fact, that the supply of new EVs has outpaced the current demand way ahead of schedule.