$TSLA or $TSLQ This Week?

Waiting for one of these to base and tell me what direction we’re going. I have no qualms shorting or going long $TSLA. But this new $TSLQ inverse etf makes shorting all the easier:

$TSLA daily, weekly, and monthly charts

$TSLQ provides inverse (-1x) exposure, less fees and expenses, to the daily price movement for shares of Tesla stock.$TSLQ daily, weekly, and monthly charts


Time for another Shot/Chaser juxtaposition.

How the Fanbois turn! One of Musk’s biggest Aggrandizers on Twitter, Mars Whole Catalog, said this a week ago on November 22, 2022. A week later, just hours ago, he’s now turned a 180 on what Musk should and should not say on Twitter:

Might as well add Tesla news - good or bad - to this thread:

‘So (we’re wondering) when will we ever get to the point where Tesla wants to talk about helping with the financial costs, that’s my biggest grievance,’ he said.

Due to their unreliability, some of the most sensitive devices had to be connected back to the grid as he couldn’t risk losing power to them.

With four Powerwalls not working ‘we’ve essentially paid for $50,000 worth of product that isn’t turned on’, he said, which is ‘hemorrhaging from our original plan’.

Tesla reportedly has a new Model 3 design in the works, according to four sources speaking to Reuters with knowledge on the matter. The new model, going by the codename “Highland,” will have fewer interior components and a slightly redesigned exterior, with the goal of both cutting production costs and increasing the appeal of the now five-year-old midsize electric sedan.

The redesigned Model 3 may also have some powertrain performance adjustments, although it’s unclear if this means we will see a faster or more tame vehicle. The sources say that the production of the new model will begin at Tesla’s Shanghai Gigafactory in the third quarter of 2023. It’s planned for Tesla’s Fremont, California, plant as well, though no timeline was provided.

Tesla’s Model 3 was originally designed to be the company’s EV for the masses and was supposed to start at an affordable $35,000. But since it went into production, the vehicle was only available at that price for a very short period — and only as a special order. That version had some interior downgrades, like no phone chargers, cloth seats, and an uncovered center console storage bin. Currently, the most affordable Model 3 starts at $46,990.

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Supposedly, the current Model 3 costs Tesla around $35k to make (not considering improvements due to the rumored Highland update).

And there is supposedly one in development (alluded to by Musk) that will cost half that. Given that Musk’s statements are typically a stretch… and the desire to have high margins… maybe this “cheap” one will retail for around $30k.

Timing… of course… always a wild card here. Assuming this has a resemblance to reality. But Musk has said the big volume would be in the lower priced vehicle. Naturally. Performance, range, amenities… tbd.

He is no fool who gives what he cannot keep to gain what he cannot lose.


I’d love to see a short range Tesla that sells for $35,000. The more of these Cushman carts, EV bikes, EV scooters, and just plain EVs we see in the Keys, the more people are now open to EVs and PHEVs. Get us a $35k Tesla to go along with the $30k Chevy Tuscon EV (or whatever the name is) and I can bet that will be the big tipping point for EV purhcases down here.

The Key West Kia/Hyundai dealer can’t keep their EVs in stock. And same with the Ford/Toyota dealer who also can’t keep their hybrids in stock.

We need more chargers in the Keys. That will help mainlanders who own EVs are who are too nervous travelling all the way down this archipelago where not even 10 chargers are installed at this moment.

p.s. Just nibbled on $TSLQ.

and some $TBF

and some $SPXS

Daily for $TSLQ (inverse of $TSLA)

Daily chart for $TBF (ProShares Short US 20 Year Treasury)

Daily chart for $SPXS (Direxion 3x S&P 500 Bear) (nibbled last Friday, might add EOD.

Those are my 3 “short” plays at this moment. I’ve got some longs going on too.

Speculation here, but a $30k Chevy is worth a lot more to Chevrolet, which has fleet mileage goals it has to achieve, so even if it doesn’t make a big profit on each EV car, it still allows the parent to profit on the other big hulking iron that they deliver to dealers.

Tesla doesn’t have that “advantage”, so they need to set a higher price point.

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Goof, could you explain your $GM opinion further? By the way, it’s the Chevy Equinox EV which is GM’s $30K car which I believe will do very well in the Keys.

US DoT requires manufacturers to hit certain fleet mileage goals or be penalized with large monetary fines. (This is not new, been going on since the Carter administration and the OPEC oil embargo. The numbers, of course, keep advancing.)

DoT does not tell the manufacturers “how” to do it, just that they have to have an average fleet mileage to achieve the goal. (No, I really don’t know the internal metrics of it all.) I do know that the big three make most of their profit from bigger cars and light (pick-up) trucks, and that in some cases they actually lose money on their small cars, but keeping them in the mix allows them to sell more of their pricey bigger vehicles.

So Chevy (for instance) can probably use the lower cost EV’s to drastically lower their fleet mileage average (and make more profit by selling more pickups). Tesla has only its passenger cars to look to for profit.

Put in totally hypothetical numbers for illustration: Tesla can sell 1 car and make $10,000 profit. (They don’t have to worry about MPG standards, of course.) Chevy can sell 1 EV car and make $0 profit, but also sell 3 $60,000 trucks and make $15,000 profit on each and still be within the DoT regs.

There’s a lot here to unpack, but here’s the money quote:

A difficult mitigating factor: profit margins on small cars run from slim to nothing. GM says it loses about $1,000 on each small car it makes, which is one reason the automaker is pushing its Yellowstone program so hard.


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In more real numbers:

Tesla sells a $60k car and makes ~$16k (Tesla overall has a 26.6% gross profit margin).
GM sells a $60k SUV and makes ~$15k, but the dealer takes $2-5k of that, leaving GM with $10-13k (GM overall has a 12.9% gross profit margin)

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Mark, the gross margin on Tesla with all the discounts going on - is it still 26.6%?

> The main question is whether Tesla will be able to maintain high demand for the Model 3/Model Y in China? In recent months, the estimated order backlog dried out and the company lowered prices by 5-9%.

So far my nibble is under water. But I’ll be adding more very soon. I hope the price/action descends to the up trendline and then bounces upward. Under that trendline is where I’ll place my stop/loss. Note the horizontal support held yesterday:


OK, but we were talking about Tesla selling a $35k car. There is no way they are going to pull that kind of margin out of that.

(And while dealers do get a piece of the purchase price, it’s not as though Tesla doesn’t have at least some of those expenses. Just up the street from me is a Tesla “showroom”, fully staffed, in a building at the high-price mall where the Sears Auto Center used to be. Metal sitting around, salespeople on the floor, can do everything there that you could do at a dealer.)

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I don’t know. We will find out on Jan 25, 2023 after the market closes.

The margin on a $35k Tesla would be somewhere around zero. That’s why they don’t sell a $35k vehicle right now.

This is a very good point! Tesla has dealer expenses, but most of those are subtracted AFTER gross margin is calculated. I suspect that for traditional car manufacturers, gross margin is calculated with most dealer expenses not included. I think it would have to be that way because in most cases, the auto manufacturer probably doesn’t even know what the dealer charged (“market adjustment” stuff).

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Rob who frequents this board worked for Ford.

Yo Rob, good points being made here and I’m wondering if maybe you know how Ford figures gross margin on its cars?


Yo Rob, good points being made here and I’m wondering if maybe you know how Ford figures gross margin on its cars?

Sorry. I never got into those details. Just knowing certain vehicle lines and how much money they were making or losing for the Company.

Entry level cars lost money but provided CAFE credits. Stuff like Ford Fusion made money, but required high capital expenditures to maintain competitiveness, so the Company chose to no longer compete. Mustang makes money, but it isn’t a good thing to be a one-car car company… and Ford is really just a truck company now (crossovers are considered to be trucks per Federal standards due to a variety of design features).

Those trucks are fabulously profitable. At one time, the plant that built the Super Duty was the most profitable manufacturing facility of any kind in the world. Still a cash cow. And it’ll remain a cash cow since EVs only compete on the margins for such vehicles. The smaller trucks (F150) are likely to be highly cannibalized by EVs, probably leading to Ford’s efforts to greatly expand Lightning production before others each their lunch.

Overall, I’m expecting a difficult EV transition for all legacy automakers. They may start making a lot of EVs, but they’ll be cannibalizing profitable ICE vehicle lines with unprofitable EVs… at least until those EVs become profitable. And Tesla POTENTIALLY can crush legacy automaker EV returns if they’re out for blood because they are so far ahead on cost reducing the products. Tesla’s current margins are high enough to put ICE manufacturing out of business… and Tesla continues to innovate into ongoing improvements. Heck, most automakers have too many “rules” and internal politics to negotiate the whole concept of one piece cast front and rear ends like Tesla is pioneering.

I remember one of my guys spending most of a year trying to get a common sense design implemented without success. The overall vehicle program manager sat in our meetings to see what the problem was because he didn’t understand it… it was “rules”… The “required” solution was very expensive and lower quality. And this was a start for me losing the joy of the job… it got much worse over the next few years and I retired early at 57. Didn’t need the money. Didn’t need the BS. Didn’t need the wasted efforts.

</rant on internal design rules that cripple rather than enable>

He is no fool who gives what he cannot keep to gain what he cannot lose.

Before COVID, I was renting new Ford Fusions to travel up to Virginia. Every one of them was a hybrid, and the Level 2 Driver Assistance back in 2019 was incredibly good.

I loved those cars.

Thanks for your input. I’m learning a lot about old line auto biz from you and others on Twitter. Very interesting how this business has never been overturned on the dealer end until now.

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Ford gross margin is 11.26% (according to CNBC quote).

I agree that the transition of legacy automakers to EV will be difficult for a the reasons you mentioned and a few others not mentioned. At least Ford is being realistic and saying that they won’t catch up to where Tesla is today for another 3 years. Meanwhile GM is waving their hands around, making some nice, very nice, EVs … that you can’t buy because they won’t sell you one until 2024 at best. And for some odd reason they still run constant ads for their cars (Lyric for example) that can’t be purchased! And oddly enough, Ford is also running ads for vehicles that can’t be purchased (F150 Lightning, I’ve tried to purchase one for months and it is not possible). Why spend all that money on advertising right now???

Tesla has an advantage coming from both sides. First, they’re ahead when it comes to cost reduction, and second, they are ahead technologically. Nobody in their price range comes close to their efficiency. That means that they can put an 80kWh battery into a car and get 350 miles (EPA) out of it. Others haven’t been able to do that, they need 95kWh or 100kWh to do that. And 100kWh battery costs a lot more than an 80kWh battery, so technological advancement provides even more cost advantage. But Tesla has a big disadvantage … it’s managed by a nut, and bad management is the biggest cause of issues with businesses.

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