Is Tesla a good investment?

[AdrianC]

Motley Fool: "However, don't be surprised if Tesla raises prices once it sees more strength in the EV market. This action can likely be traced to what the Federal Reserve decides to do with interest rates, as it significantly affects the rate consumers can get on a car loan. A lower interest rate gives the consumer more buying power, and Tesla will likely adjust its pricing based on this fact.

As a result, I think this is a relatively short-term trend and will likely reverse itself in the next few years. While Tesla stock is expensive, I still think it is a must-own stock because it is well-positioned in one of the most significant technological shifts many generations have ever seen."

Do you think Tesla will raise prices significantly any time soon? Is Musk looking for huge margins on hardware? It doesn't seem so.

They do have a great advantage over the legacy manufacturers in their ability to adjust prices quickly with inventory levels. That'll continue.

[MustacheAndaHalf]

https://www.fool.com/investing/2023/07/26/teslas-record-breaking-earnings-report-what-every/

Focusing on the first link, the conclusion seems bullish:

With shares remaining more than 30% off from all-time highs, investors today can add one of the clear-cut leaders of the future to portfolios at a tremendous discount relative to its long-term potential.

But the other link highlights that +50% revenue growth and +66% cost growth aren't a good combination.  That comes from some combination of China's slowdown and competition in the EV market there.  Will both of those pressures let up before the next quarterly earnings call?

[EchoStache]

Couple of interesting updates.

Significant price reductions on MS and MX.
-MS is now $74,990 with no up-charge for any paint color, which is normally as much as $4,000 extra.
-MX is now $79,990, includes tow hitch and no charge for any color. 

This makes MX eligible for federal tax credit as well, AFAIK.

The M3 refresh is now out and being produced in China.  Not available in NA anytime soon.  The refresh is both minor and significant at the same time.  The car does not look drastically different, but the front and rear have both been changed.  The front especially looks nice IMO.
-Range increased, around 5-10% AFAIK.
-Interior updated quite a bit including a rear seat screen that gives HVAC and heated seat control as well as entertainment access.
-NVH improvements including all laminate glass for noise reduction.  This is an important and welcome change.
-Suspension changes/improvements
-Stalks for turn signals and shifter removed.  I don't think this is a welcome change for most, but it's a change.
-New wheels.  Aero wheels look much better IMO.
-Upgraded stereo, although I can't imagine why.  The old one was fantastic and far more capable than anyone would want/need.  Went from 14 speakers and one subwoofer to 17 speakers and two subs.

So looks wise, the changes are subtle, but there are many changes that are not visible.

Apparently, this comes with a price increase although a big part of the purpose of the refresh was to reduce cost.  My WAG(wild ass guess) is that price will be a bit higher initially in order to clear out any remaining inventory which is currently discounted.  Suspect they will try to keep price higher to see if the refresh boosts demand enough to overcome the price increase.  Will be good for margins if so.

In response, Tesla stock dropped Friday, haha.  Not surprising for anyone who follows the stock and the FUD, considering Tesla is the most manipulated stock in the world by both the market and the anti-Tesla/anti-EV marketing campaign.

A decade oil/gas/legacy anti-Tesla/anti-EV FUD has been very effective.  Now, about half the population not only believes the FUD, but spread it for oil/gas/legacy for free....it's a standard response I get now:
-Too bad EV's are worse for the environment than gas cars
-Too bad all the power for your EV is generated by coal
-Too bad you have to spend $15-$25k for a new battery in 5 years
-Too bad it takes an hour to charge every time
-Too bad the batteries will be ruining the environment when they go bad in a few years and clutter landfills.
-etc, etc, etc.

[GuitarStv]

Weird that they're not just sticking with the legitimate complaint:
- Too bad replacing gas vehicles with EVs won't solve the underlying problems leading to catastrophic climate change, which requires a shift in our way of life and largely an end to the bad habit of individual personal transportation by 2000 lb metal box and flying in tubes of environmental doom for recreation.

[FINate]

In response, Tesla stock dropped Friday, haha.  Not surprising for anyone who follows the stock and the FUD, considering Tesla is the most manipulated stock in the world by both the market and the anti-Tesla/anti-EV marketing campaign.

A decade oil/gas/legacy anti-Tesla/anti-EV FUD has been very effective.  Now, about half the population not only believes the FUD, but spread it for oil/gas/legacy for free....it's a standard response I get now:
-Too bad EV's are worse for the environment than gas cars
-Too bad all the power for your EV is generated by coal
-Too bad you have to spend $15-$25k for a new battery in 5 years
-Too bad it takes an hour to charge every time
-Too bad the batteries will be ruining the environment when they go bad in a few years and clutter landfills.
-etc, etc, etc.

Wait, do you actually believe there's a coordinated effort against TSLA *and* that's why the stock dropped when you expected an increase? I mean, I get that conservatives tend to be anti-EV and make up all sorts of bogus arguments. But this isn't exactly the smart money investing crowd. And of course, the oil and gas industry hates EVs, but seems unlikely that they're manipulating shares of TSLA. Legacy auto makers are competitors, yet they've gone full-in on EVs, so I don't think we can call them anti-EV. And this is part of the problem for TSLA: Lots of very well made EVs coming to market, lots of competition. A much more plausible explanation is that the Model 3 refresh was more incremental than expected, still no pricing/specs for Cybertruck, and recent price increases have make the stock too rich for many investors.

[Viking Thor]

In response, Tesla stock dropped Friday, haha.  Not surprising for anyone who follows the stock and the FUD, considering Tesla is the most manipulated stock in the world by both the market and the anti-Tesla/anti-EV marketing campaign.

A decade oil/gas/legacy anti-Tesla/anti-EV FUD has been very effective.  Now, about half the population not only believes the FUD, but spread it for oil/gas/legacy for free....it's a standard response I get now:
-Too bad EV's are worse for the environment than gas cars
-Too bad all the power for your EV is generated by coal
-Too bad you have to spend $15-$25k for a new battery in 5 years
-Too bad it takes an hour to charge every time
-Too bad the batteries will be ruining the environment when they go bad in a few years and clutter landfills.
-etc, etc, etc.

Wait, do you actually believe there's a coordinated effort against TSLA *and* that's why the stock dropped when you expected an increase? I mean, I get that conservatives tend to be anti-EV and make up all sorts of bogus arguments. But this isn't exactly the smart money investing crowd. And of course, the oil and gas industry hates EVs, but seems unlikely that they're manipulating shares of TSLA. Legacy auto makers are competitors, yet they've gone full-in on EVs, so I don't think we can call them anti-EV. And this is part of the problem for TSLA: Lots of very well made EVs coming to market, lots of competition. A much more plausible explanation is that the Model 3 refresh was more incremental than expected, still no pricing/specs for Cybertruck, and recent price increases have make the stock too rich for many investors.

I wouldn’t call it a conspiracy but Tesla is very poorly understood by Wall Street analysts.

Thus you see significant drops from nothingburger short term events or from things that should be good in the long term, like refreshing a product and making it significantly better.

There is kind of a lull now in growth because energy is ramping relentlessly (100%+/ year) from
a smaller base, and Cybertruck is the next big growth driver but will take a while to ramp.

Then they have new factories being built in China (energy/Megapack) and Mexico (new compact car).

Tons of growth will come from the above in next 4-5 years. I’m very bullish long term, not that concerned with the day to day swings which seem very random.

If you look at before- Tesla essentially flat for several years then sudden explosion in 2020.

Instead of pricing in growth appropriately they wait until the growth explodes and then the stock does the same.

[mistymoney]

I thought the drop was because elon was being an mega ass again.

In ways that millions will not buy teslas, assishness....

[Viking Thor]

I thought the drop was because elon was being an mega ass again.

In ways that millions will not buy teslas, assishness....

Didn’t even notice him in the news, but whatever he might have said I doubt it moved the needle. Those that would not buy a Tesla because they don’t like him would have been in that camp for a while now.

The M3 refresh is very big news item. Lots of changes.

But it’s not available for a while in the US, which will be a drag on existing M3 sales. It’s available internationally being built at the China factory. Available in US most likely in 1Q as Fremont transitions.

They also decreased price significantly on the S and X which I think was part of the Wall Street reaction.

But, these models are only 4% of Tesla sales, and they were not really selling at the list price. Ie they would pile up in inventory and sell at a discount.

So in a very shallow/ shortsighted analysis this all looks like a drag on profits.

But the M3 refresh especially is very positive, even though there will be a hit for a quarter or two during the transition. From 2024 profit will benefit from it.

[FINate]

I wouldn’t call it a conspiracy but Tesla is very poorly understood by Wall Street analysts.

Thus you see significant drops from nothingburger short term events or from things that should be good in the long term, like refreshing a product and making it significantly better.

Let's see, Tesla went public around 12 years ago. If analysts still don't understand the company then the leadership has done a poor job explaining the business. That, or perhaps analysts aren't buying what Musk is selling.

Big swings in value based on "nothingburger" events is another way of saying high volatility, which makes it a playground for shorts and options traders. Again, I think it's fair to ask what leadership is doing to establish credibility with investors when providing forward guidance.

[MustacheAndaHalf]

A reporter who "covers Tesla, new vehicle tech and climate tech for CNBC.com" wrote an article titled 
"Tesla shares close down 5% after price cuts, Model 3 refresh".
https://www.cnbc.com/2023/09/01/tesla-shares-close-down-5percent-after-price-cuts-model-3-refresh.html

Most EVs are sold in China, making it a vital market for Tesla.  When Tesla cut prices earlier this year, it raised concerns the highly competitive Chinese market was the cause.  Further price cuts reinforce those concerns.

The analysts said the Model 3′s peers in China include XPeng’s P7, BYD’s Han and Seal and Leapmotor’s C01 electric cars.

Considering the increased starting price, initial sales volume for the Model 3 refresh in China may not be as high as previously expected, they said. Still, the analysts remain positive on the outlook for the vehicle’s sales this quarter as consumers have been waiting for the upgrade.

Tesla also faces further pricing pressure as China's economy slows.
https://www.reuters.com/markets/asia/why-is-chinas-economy-slowing-down-could-it-get-worse-2023-09-01/

UPDATE: From Twitter/X, a list of price changes this year.
https://twitter.com/biancoresearch/status/1698117692455084277

[Viking Thor]

A reporter who "covers Tesla, new vehicle tech and climate tech for CNBC.com" wrote an article titled 
"Tesla shares close down 5% after price cuts, Model 3 refresh".
https://www.cnbc.com/2023/09/01/tesla-shares-close-down-5percent-after-price-cuts-model-3-refresh.html

Most EVs are sold in China, making it a vital market for Tesla.  When Tesla cut prices earlier this year, it raised concerns the highly competitive Chinese market was the cause.  Further price cuts reinforce those concerns.

The analysts said the Model 3′s peers in China include XPeng’s P7, BYD’s Han and Seal and Leapmotor’s C01 electric cars.

Considering the increased starting price, initial sales volume for the Model 3 refresh in China may not be as high as previously expected, they said. Still, the analysts remain positive on the outlook for the vehicle’s sales this quarter as consumers have been waiting for the upgrade.

Tesla also faces further pricing pressure as China's economy slows.
https://www.reuters.com/markets/asia/why-is-chinas-economy-slowing-down-could-it-get-worse-2023-09-01/

UPDATE: From Twitter/X, a list of price changes this year.
https://twitter.com/biancoresearch/status/1698117692455084277

Right but essentially the only major change was a refreshed model that had not been significantly upgraded in 6 years. It will reduce sales for rest of year due to availability schedule / hurting outdated model sales and then be very beneficial when fully available in 2024.

Anyone seriously following the company would know that Models S and X were not selling at the list price, so reduction is not necessarily going to impact margin. Ie they were selling less total volume and much of it through discounted inventory versus the list price from the sales configurator on the website. So the avg selling price reduction is much less than list price reduction, and it will like increase sales volume. And it’s their niche products 4% of sales. Net =  nothingburger.

And yes I agree with previous poster (I’m too lazy to quote it separately) above this that mgmt doesn’t explain and do PR / IR well. That’s a flaw of theirs.

But still given the size and impact of the company journalists and analysts (especially) could attempt to understand the company.

Doesn’t matter in the long term- eventually the fair value will be reflected. I am happy with the progress and medium to long term picture.

3 years from now will be really good and 5 years fantastic. Tesla has shown the ability to grow rapidly and execute and several huge incremental profit engines in the pipeline.

[lemonlyman]

Down on Friday. Up yesterday. Down today. Explanations for daily moves are nonsense. On hardware, they aren't slowing down on auto scaling so they get long term advances on purchase contracts for raw materials and batteries as the largest purchaser in the world in addition to vertical scaling. Energy division is on a massive growth curve. For software, it's not important that Tesla didn't solve FSD in 2018 or 2023. V12 is end to end neural networks and Tesla's data collection is unparalleled while compute is growing exponentially. An FSD dedicated 10,000 H100 compute cluster went online last week. It didn't matter that it took SpaceX 4 years instead of 1 year to land rockets. Even if it takes 3 more years to solve FSD, it's an insane driver of value and it's going to get done. 11.4.7 drove me through rural mountains over the weekend. It was awesome.

More products and services are in the pipe. Agree with Viking Thor on taking the 3-5 year perspective. Short-termers are loud and negativity sells better.

[waltworks]

I don't think the concern is that Tesla won't solve FSD, the concern is that either it takes several decades, or that someone else (or possibly a couple others) does it first.

-W

[lemonlyman]

I don't think the concern is that Tesla won't solve FSD, the concern is that either it takes several decades, or that someone else (or possibly a couple others) does it first.

-W

I know. That's the alpha.

[AdrianC]

Been looking at inventory on the Tesla site the last few days.

Wasn't surprised at $3k off a Model 3 RWD, what with the refresh coming out soon, though to me the refreshed model is less attractive than the current model (I like blinkers on a stalk).

I was surprised with $3k off a Model Y AWD, and others are reporting $5k+ off in other locales.

So, they are discounting inventory on their top selling models. Is that a concern?

[Viking Thor]

Been looking at inventory on the Tesla site the last few days.

Wasn't surprised at $3k off a Model 3 RWD, what with the refresh coming out soon, though to me the refreshed model is less attractive than the current model (I like blinkers on a stalk).

I was surprised with $3k off a Model Y AWD, and others are reporting $5k+ off in other locales.

So, they are discounting inventory on their top selling models. Is that a concern?

Not a concern for me in the least, and no different than has been the case ever since the Covid related new car bubble popped a year or more ago.

Ever since then they periodically have discounted cars in inventory in certain locations, provided short term incentives, or reduced the base configurator price (which is more important). Every car company does this frequently but in the dealership it’s a hidden process where the car could be going well above MSRP or way below with incentives. Also Tesla is steadily reducing their cost of manufacturing the cars.

My things I look at as a long term investor are things like getting the various new products launched and scaled (cyber truck, compact car, semi), scaling the energy business, and progress on FSD.

I am more concerned with setbacks in those areas if they occur but they have enough revenue streams ongoing or building that a small setback or delay  in one is not that concerning if it doesn’t impact the long term business.

[ChpBstrd]

I don't think the concern is that Tesla won't solve FSD, the concern is that either it takes several decades, or that someone else (or possibly a couple others) does it first.

AI seems to be progressing on a longer timeframe than most computing applications.

1980s - trading algorithms cause 1987 stock market meltdown, video game opponents
1990s - can beat any human at chess, better weather predictions
2000s - can plot optimal route on map
2010s - can translate voice dictation into text / instructions. Social media algos can addict users.
2015ish - can translate languages, badly.
20teens - can drive, badly, under extremely controlled conditions
2020s - can write book reports based on internet sources, weather prediction improves marginally
2023 - can drive well under extremely controlled conditions (e.g. mapped neighborhoods in perfect weather)
2030s - ?

Storage, transfer speeds, size, power consumption, speed, cost, graphics, etc. are all attributes of computing that improved at exponential rates per decade. AI seems to be making incremental yet significant functional improvement on the scale of each decade. Instead of following Moore's law, AI seems to be evolving at a similar many-decades speed as the internal combustion engine, LED, airplane, or solar panel.

That's not to say the pace of improvement won't speed up (e.g. AI is the only tech that could possibly optimize itself) and it's not to say the developmental plateau is anywhere near. It is simply to note that advances in AI are not proceeding according to the pace of advances in other aspects of computing. I.e. when computers get 10x faster, AI seems to become 2x as functional.

So maybe Tesla has the FSD product by 2030, and maybe it works well enough in most places under most conditions to become as common as cruise control was in the late 1980s.

[maizefolk]

I disagree with that characterization of AI as not accelerating over time.

AI as we currently know it as been part of public perception for less than 10 years. In 2014, asking a computer to figure out if a bird was in a photo was essentially impossible (contemporary xkcd comic). However there was already a breakthrough brewing in academic circles. It wasn't actually a new algorithm, but the understanding that certain sorts of algorithms produced better and better performance when trained on really big piles of data. <-- seems obvious in retrospect, huh?

2015, computers started to exceed the performance of human beings at certain, narrowly defined, tasks related to recognizing handwritten letters.

2017, AlphaGo (trained on huge numbers historical Go games) beat the worlds top ranked Go player. And in 2018, AlphaGoZero, trained on nothing more than the rules of Go, beat AlphaGo consistently.

2018, Computers out perform dermatologists at accurately identifying skin cancer.

2020, AI can accurately predict protein folding with trackable amounts of computer power required, a big rate limiting step in biology (we'd been dependent on someone being able to crystalize the protein so it could be imaged which is labor intensive, slow, only works for certain proteins).

2021, text-to-image generative AI first becomes available.

2022, Within a year the photos produced by AI from text prompts are so realistic they are winning photography contests (not just art contests, but it is winning those too).

Also 2022, the first large language models become publicly accessible (ChatGPT, built on GPT3.5).

2023, ChatGPT's output in good enough lawyers use it to replace writing their own legal briefs (not a good idea) and asking ChatGPT to explain how to do things or what a given error message means has largely replaced asking professors or TAs for help when learning to program (personal experience).

Also 2023, Thousands of people are willing to pay $1/minute just to have phone calls with an AI clone of some person they follow on social media.

Also 2023, Amazon is flooded with self published books full of AI generated content and AI generated photos.

Also 2023, Television and movie writers have been striking for the past four months in part because they're genuinely worried about having their work replaced in whole or in part by ChatGPT and its siblings.

Overall we're not very good at predicting what AI will do 2-3 years from now, but based on the history of the last decade it'll continue to outperform humans in more and more arenas at an accelerating rate.

[mistymoney]

I disagree with that characterization of AI as not accelerating over time.

The one thing that stood out to me is that the thought and industry leaders in this field took a collective crap in their pants at some sudden leaps forward in the past year or so. And I'm willing to bet there is plenty that is not salient to the lay public here, or even those in the know under a certain level.

[MustacheAndaHalf]

Down on Friday. Up yesterday. Down today. Explanations for daily moves are nonsense. On hardware, they aren't slowing down on auto scaling so they get long term advances on purchase contracts for raw materials and batteries as the largest purchaser in the world in addition to vertical scaling.

The stock price of the 6th largest public U.S. company is "nonsense"?

Speaking of nonsense, your claim that Tesla is "the largest purchaser in the world" isn't accurate, and probably reflects a blind spot for Chinese EV vehicle makers.

BYD, a Chinese conglomerate, is the largest EV company based on the nearly 1.9 million EVs it manufactured in 2022, according to EV-Volumes. About half of those were plug-in hybrid EVs (PHEVs), and the other half were battery electric vehicles (BEVs).
Tesla built 1.3 million EVs in 2022, the most by a U.S. company and second most in the world. Tesla built the highest number of battery electric vehicles in 2022.

https://www.fool.com/research/largest-ev-companies/

[lemonlyman]

Down on Friday. Up yesterday. Down today. Explanations for daily moves are nonsense. On hardware, they aren't slowing down on auto scaling so they get long term advances on purchase contracts for raw materials and batteries as the largest purchaser in the world in addition to vertical scaling.

The stock price of the 6th largest public U.S. company is "nonsense"?

Not sure you read what I said even though it's quoted.

Speaking of nonsense, your claim that Tesla is "the largest purchaser in the world" isn't accurate, and probably reflects a blind spot for Chinese EV vehicle makers.

BYD, a Chinese conglomerate, is the largest EV company based on the nearly 1.9 million EVs it manufactured in 2022, according to EV-Volumes. About half of those were plug-in hybrid EVs (PHEVs), and the other half were battery electric vehicles (BEVs).
Tesla built 1.3 million EVs in 2022, the most by a U.S. company and second most in the world. Tesla built the highest number of battery electric vehicles in 2022.

https://www.fool.com/research/largest-ev-companies/

So half of the "EVs" BYD make have 7kwh - 10kwh battery packs while all of Tesla's are > 50kwh. Should probably do the math on those volumes and battery sizes before that response and Tesla is producing 1.8 million this year.

[lemonlyman]

I disagree with that characterization of AI as not accelerating over time.

The one thing that stood out to me is that the thought and industry leaders in this field took a collective crap in their pants at some sudden leaps forward in the past year or so. And I'm willing to bet there is plenty that is not salient to the lay public here, or even those in the know under a certain level.

For real. My industry is pedal to the floor trying to adjust. Simple prompts that save hours of time is great for my business but will have major ripples in future labor demand. That's before more real world robotic automation.

Also, this excerpt from the Walter Isaacson book has some key info on Giga Mexico and the next car platform:
https://www.axios.com/2023/09/08/walter-isaacson-elon-musk-book-excerpt

[lemonlyman]

Potential for tech earnings appear to be taking hold with analysts. Morgan Stanley raised price target from $250 to $400 based on Dojo accelerating robotaxi completion and Dojo as a SAAS service.
https://www.bloomberg.com/news/articles/2023-09-11/tesla-to-surge-thanks-to-dojo-supercomputer-morgan-stanley-says?embedded-checkout=true

[ChpBstrd]

More signs of economic nationalism seem to be appearing, and that is bad for US tech stocks which are dependent upon China for some percentage of their growth or for manufacturing.

Apple's iPhones seem to have been hit with two zero-day vulnerabilities at the same time as the Chinese government is banning their workers from using iPhones. These events just happened to coincide with Huawei's release of the Mate 60 smartphone, which arguably out-specs the new iPhone 15 and features 7nm chips.

This pattern of state discrimination in favor of national champions is likely to extend to Tesla's market share in China in one way or another. Maybe it will be narrowly targeted regulations, technology transfers, government contracts, subsidies, or whatever, but it seems unlikely China will let American shareholders earn a fortune taking significant market share in their local market. That chapter of the growth narrative for US stocks probably needs to be quietly deleted.

[lemonlyman]

More signs of economic nationalism seem to be appearing, and that is bad for US tech stocks which are dependent upon China for some percentage of their growth or for manufacturing.

Apple's iPhones seem to have been hit with two zero-day vulnerabilities at the same time as the Chinese government is banning their workers from using iPhones. These events just happened to coincide with Huawei's release of the Mate 60 smartphone, which arguably out-specs the new iPhone 15 and features 7nm chips.

This pattern of state discrimination in favor of national champions is likely to extend to Tesla's market share in China in one way or another. Maybe it will be narrowly targeted regulations, technology transfers, government contracts, subsidies, or whatever, but it seems unlikely China will let American shareholders earn a fortune taking significant market share in their local market. That chapter of the growth narrative for US stocks probably needs to be quietly deleted.

For sure. Real worry for the company.

[mistymoney]

up nearly 10% today??

newsfeed seems to indicate due to dojo.

Pleasant surprise for the morning coffee reading.....

[lemonlyman]

https://insideevs.com/news/687256/tesla-pepsico-covers-1600-miles-48-hours/

Awesome! But how much is it? 😅

[MustacheAndaHalf]

Speaking of nonsense, your claim that Tesla is "the largest purchaser in the world" isn't accurate, and probably reflects a blind spot for Chinese EV vehicle makers.

BYD, a Chinese conglomerate, is the largest EV company based on the nearly 1.9 million EVs it manufactured in 2022, according to EV-Volumes. About half of those were plug-in hybrid EVs (PHEVs), and the other half were battery electric vehicles (BEVs).
Tesla built 1.3 million EVs in 2022, the most by a U.S. company and second most in the world. Tesla built the highest number of battery electric vehicles in 2022.

https://www.fool.com/research/largest-ev-companies/

So half of the "EVs" BYD make have 7kwh - 10kwh battery packs while all of Tesla's are > 50kwh. Should probably do the math on those volumes and battery sizes before that response and Tesla is producing 1.8 million this year.

So your only point is that Tesla has bigger batteries?  Not that Chinese consumers are preferring BYD over Tesla when they buy EVs?  That seems a bit short sighted, considering it is Chinese consumers rather than you who make the purchase decision.  I start to see why you can't make sense of Tesla's price moves, either, since you're ignoring the competitive landscape in China.  That was my main reason for posting, to make people aware that Tesla in the U.S. isn't the sole story of Tesla's stock overall.

[lemonlyman]

Speaking of nonsense, your claim that Tesla is "the largest purchaser in the world" isn't accurate, and probably reflects a blind spot for Chinese EV vehicle makers.

BYD, a Chinese conglomerate, is the largest EV company based on the nearly 1.9 million EVs it manufactured in 2022, according to EV-Volumes. About half of those were plug-in hybrid EVs (PHEVs), and the other half were battery electric vehicles (BEVs).
Tesla built 1.3 million EVs in 2022, the most by a U.S. company and second most in the world. Tesla built the highest number of battery electric vehicles in 2022.

https://www.fool.com/research/largest-ev-companies/

So half of the "EVs" BYD make have 7kwh - 10kwh battery packs while all of Tesla's are > 50kwh. Should probably do the math on those volumes and battery sizes before that response and Tesla is producing 1.8 million this year.

So your only point is that Tesla has bigger batteries?  Not that Chinese consumers are preferring BYD over Tesla when they buy EVs?  That seems a bit short sighted, considering it is Chinese consumers rather than you who make the purchase decision.  I start to see why you can't make sense of Tesla's price moves, either, since you're ignoring the competitive landscape in China.  That was my main reason for posting, to make people aware that Tesla in the U.S. isn't the sole story of Tesla's stock overall.

I said Tesla was the largest purchaser of batteries in the world. You said that wasn't accrurate by giving 2022 sales compared to BYD. So I asked you to do some math on battery sizes because just auto is more. You also completely ignored Tesla's energy division in battery purchasing. Tesla is the largest purchaser of batteries in the world. I'm not sure what you're even arguing here.

*It seems like you misunderstood I said Tesla was the largest purchaser of batteries vs largest “producer” of “EVs” in general and got real bent out of shape about it.

[lemonlyman]

I start to see why you can't make sense of Tesla's price moves, either, since you're ignoring the competitive landscape in China.

And yeah, it’s completely accurate to say I don’t understand Tesla’s daily price moves.

I can’t process:
Institutional buying and selling
Options market pressure
Insider stock sale plans
Employee stock vesting
Retail buying and selling
Macro environment affects
Foreign investment fund activity
A litany of other things

So I’m going to keep investing in the future business activity I can model from company disclosures. Since you can process all these things on the daily, you must have access to information no one else does and an IQ of 1000. Good for you and good luck in your trading.

[TomTX]

So your only point is that Tesla has bigger batteries?  Not that Chinese consumers are preferring BYD over Tesla when they buy EVs?  That seems a bit short sighted, considering it is Chinese consumers rather than you who make the purchase decision.  I start to see why you can't make sense of Tesla's price moves, either, since you're ignoring the competitive landscape in China.  That was my main reason for posting, to make people aware that Tesla in the U.S. isn't the sole story of Tesla's stock overall.

Comparing sales volume between a $5k enclosed golf cart and a $40k vehicle purely by ignoring revenue in favor of number of vehicles.... is just silly.

Fortune Global 500 has BYD at spot 212, Tesla at 152.

That said, BYD is very likely to continue being a major EV competitor.

[MustacheAndaHalf]

Comparing sales volume between a $5k enclosed golf cart and a $40k vehicle purely by ignoring revenue in favor of number of vehicles.... is just silly.

You're just making stuff up.  The bestselling BYD Qin Plus costs $18k to $25k and has a top speed of over 90 mph.  All of the top 3 BYD EVs have top speeds over 90 mph (150kph).

[FINate]

For those with a WSJ subscription: They put together an interactive valuation tool for TSLA. Plug in your own numbers and see the 2030 discounted cash flow valuation. How much is Tesla worth? You decide!

Key Variables (for 2030, dollars in 2023):

• Number of cars sold
• Average price per car
• Operating margin
• Average cost of capital
• Value of other operations

Default assumptions are 1) 7M cars 2) $30k/car 3) 10% operating margin 4) 10% avg. cost of capital 5) $200B from other operations. For a total enterprise value of $381B.

Changing (1) to 20M cars sold (almost 2x what Toyota sold last year) bumps the valuation to $647B, which gets it closer to present market cap. If Tesla can maintain current operating margins (which have been declining) while selling 20M cars then it can attain a $1T valuation.

Changing (1) to 10M cars sold and (3) to 18% operating margin gives a valuation of $723B, so right around current market cap.

Interesting tool, and of course you're free to plug in whatever assumptions you want.

[mistymoney]

For those with a WSJ subscription: They put together an interactive valuation tool for TSLA. Plug in your own numbers and see the 2030 discounted cash flow valuation. How much is Tesla worth? You decide!

Key Variables (for 2030, dollars in 2023):

• Number of cars sold
• Average price per car
• Operating margin
• Average cost of capital
• Value of other operations

Default assumptions are 1) 7M cars 2) $30k/car 3) 10% operating margin 4) 10% avg. cost of capital 5) $200B from other operations. For a total enterprise value of $381B.

Changing (1) to 20M cars sold (almost 2x what Toyota sold last year) bumps the valuation to $647B, which gets it closer to present market cap. If Tesla can maintain current operating margins (which have been declining) while selling 20M cars then it can attain a $1T valuation.

Changing (1) to 10M cars sold and (3) to 18% operating margin gives a valuation of $723B, so right around current market cap.

Interesting tool, and of course you're free to plug in whatever assumptions you want.

I do not have a WSJ sub......how much "other" are you inputting for energy division? supercharger network, storage, solar/roofing, etc? With ford, GM, etc... signing on for the superchargers, I'm think there is going to be a lot of money there.

But Ford, GM, Honda, Jaguar, Nissan, Mercedes-Benz, Polestar, Rivian, and Volvo have said that their vehicles will be able to use Tesla's Superchargers starting in 2024, and EV experts expect more automakers to follow suit.Sep 22, 2023

[FINate]

For those with a WSJ subscription: They put together an interactive valuation tool for TSLA. Plug in your own numbers and see the 2030 discounted cash flow valuation. How much is Tesla worth? You decide!

Key Variables (for 2030, dollars in 2023):

• Number of cars sold
• Average price per car
• Operating margin
• Average cost of capital
• Value of other operations

Default assumptions are 1) 7M cars 2) $30k/car 3) 10% operating margin 4) 10% avg. cost of capital 5) $200B from other operations. For a total enterprise value of $381B.

Changing (1) to 20M cars sold (almost 2x what Toyota sold last year) bumps the valuation to $647B, which gets it closer to present market cap. If Tesla can maintain current operating margins (which have been declining) while selling 20M cars then it can attain a $1T valuation.

Changing (1) to 10M cars sold and (3) to 18% operating margin gives a valuation of $723B, so right around current market cap.

Interesting tool, and of course you're free to plug in whatever assumptions you want.

I do not have a WSJ sub......how much "other" are you inputting for energy division? supercharger network, storage, solar/roofing, etc? With ford, GM, etc... signing on for the superchargers, I'm think there is going to be a lot of money there.

But Ford, GM, Honda, Jaguar, Nissan, Mercedes-Benz, Polestar, Rivian, and Volvo have said that their vehicles will be able to use Tesla's Superchargers starting in 2024, and EV experts expect more automakers to follow suit.Sep 22, 2023

Their baseline scenario values "other" at $200M $200B, which is for everything in Tesla outside the core automotive business. This amount simply gets added to the discounted cash flow valuation. It's left as "other" because these are unproved technologies and business models, so there's very little to base estimates on.

[Viking Thor]

For those with a WSJ subscription: They put together an interactive valuation tool for TSLA. Plug in your own numbers and see the 2030 discounted cash flow valuation. How much is Tesla worth? You decide!

Key Variables (for 2030, dollars in 2023):

• Number of cars sold
• Average price per car
• Operating margin
• Average cost of capital
• Value of other operations

Default assumptions are 1) 7M cars 2) $30k/car 3) 10% operating margin 4) 10% avg. cost of capital 5) $200B from other operations. For a total enterprise value of $381B.

Changing (1) to 20M cars sold (almost 2x what Toyota sold last year) bumps the valuation to $647B, which gets it closer to present market cap. If Tesla can maintain current operating margins (which have been declining) while selling 20M cars then it can attain a $1T valuation.

Changing (1) to 10M cars sold and (3) to 18% operating margin gives a valuation of $723B, so right around current market cap.

Interesting tool, and of course you're free to plug in whatever assumptions you want.

I do not have a WSJ sub......how much "other" are you inputting for energy division? supercharger network, storage, solar/roofing, etc? With ford, GM, etc... signing on for the superchargers, I'm think there is going to be a lot of money there.

But Ford, GM, Honda, Jaguar, Nissan, Mercedes-Benz, Polestar, Rivian, and Volvo have said that their vehicles will be able to use Tesla's Superchargers starting in 2024, and EV experts expect more automakers to follow suit.Sep 22, 2023

Their baseline scenario values "other" at $200M, which is for everything in Tesla outside the core automotive business. This amount simply gets added to the discounted cash flow valuation. It's left as "other" because these are unproved technologies and business models, so there's very little to base estimates on.

These "other" businesses are already significant and growing rapidly. For example energy is growing 100+% per year with mega pack backlog orders of 2+ years. FSD is already significant revenue even without full autonomy, potential for robotaxi and Optimus, etc.

Very real chance that other is more value than vehicle sales by 2030. They are already significant profit contributing with high growth so any realistic  model would include them.

[Viking Thor]

Hadn't looked at the default WSJ variables but they are beyond absurd.

30k average price in 2030! with 10% margins? And then practically nothing for the other rapidly growing businesses?

I would happily bet a lot of money that this baseline would be exceeded; if you doubled their profit assumptions would still feel its a fantastic bet to exceed.

[ColoradoTribe]

Hadn't looked at the default WSJ variables but they are beyond absurd.

30k average price in 2030! with 10% margins? And then practically nothing for the other rapidly growing businesses?

I would happily bet a lot of money that this baseline would be exceeded; if you doubled their profit assumptions would still feel its a fantastic bet to exceed.

Agreed, someone can correct me if I’m wrong, but I believe Tesla energy and storage revenue for Q3 2023 was just over 1.5 billion with 13% margin. Margins and revenue for energy and storage have both been increasing rapidly in recent quarters. Insurance and super charging network revenue are also on the rise. A baseline of 200 million for 2030 is absurd when energy and storage alone generated around 195 million just last quarter. The WSJ is assuming a business sector that grew over 100% YOY will now flatline for 7 years?

[FINate]

Hadn't looked at the default WSJ variables but they are beyond absurd.

30k average price in 2030! with 10% margins? And then practically nothing for the other rapidly growing businesses?

I would happily bet a lot of money that this baseline would be exceeded; if you doubled their profit assumptions would still feel its a fantastic bet to exceed.

Agreed, someone can correct me if I’m wrong, but I believe Tesla energy and storage revenue for Q3 2023 was just over 1.5 billion with 13% margin. Margins and revenue for energy and storage have both been increasing rapidly in recent quarters. Insurance and super charging network revenue are also on the rise. A baseline of 200 million for 2030 is absurd when energy and storage alone generated around 195 million just last quarter. The WSJ is assuming a business sector that grew over 100% YOY will now flatline for 7 years?

Sorry, typo on my part. It's $200 Billion. Yes, $200 million would be absurd.

[FINate]

Hadn't looked at the default WSJ variables but they are beyond absurd.

30k average price in 2030! with 10% margins? And then practically nothing for the other rapidly growing businesses?

I would happily bet a lot of money that this baseline would be exceeded; if you doubled their profit assumptions would still feel its a fantastic bet to exceed.

Well, the idea is that users can plug in their own assumptions.

Plugging in $40k/car (reminder, 2023 prices) and 14% operating margin (Tesla's current) brings the valuation to $660B, which is still less than today's market cap.

[Viking Thor]

Hadn't looked at the default WSJ variables but they are beyond absurd.

30k average price in 2030! with 10% margins? And then practically nothing for the other rapidly growing businesses?

I would happily bet a lot of money that this baseline would be exceeded; if you doubled their profit assumptions would still feel its a fantastic bet to exceed.

Well, the idea is that users can plug in their own assumptions.

Plugging in $40k/car (reminder, 2023 prices) and 14% operating margin (Tesla's current) brings the valuation to $660B, which is still less than today's market cap.

Those would still be bearish assumptions.

The fact that there no modeling in the calculation outside of vehicles is just silly.

FSD and energy are already significant high growth revenue streams.

Sure they have “other” but if you leave so much of the business out out it’s not much of a model, and then the so called base case is extremely bearish even for the limited aspects of the business that are included.

[TomTX]

Comparing sales volume between a $5k enclosed golf cart and a $40k vehicle purely by ignoring revenue in favor of number of vehicles.... is just silly.

You're just making stuff up.  The bestselling BYD Qin Plus costs $18k to $25k and has a top speed of over 90 mph.  All of the top 3 BYD EVs have top speeds over 90 mph (150kph).

Sorry, I was thinking of the Wuling Mini EV and confused Chinese manufacturers.

[FINate]

Hadn't looked at the default WSJ variables but they are beyond absurd.

30k average price in 2030! with 10% margins? And then practically nothing for the other rapidly growing businesses?

I would happily bet a lot of money that this baseline would be exceeded; if you doubled their profit assumptions would still feel its a fantastic bet to exceed.

Well, the idea is that users can plug in their own assumptions.

Plugging in $40k/car (reminder, 2023 prices) and 14% operating margin (Tesla's current) brings the valuation to $660B, which is still less than today's market cap.

Those would still be bearish assumptions.

The fact that there no modeling in the calculation outside of vehicles is just silly.

FSD and energy are already significant high growth revenue streams.

Sure they have “other” but if you leave so much of the business out out it’s not much of a model, and then the so called base case is extremely bearish even for the limited aspects of the business that are included.

Tesla Energy accounts for around 7% of revenues.

What comes in from FSD is mostly deferred revenue, what had grown to somewhere in the ballpark of $1B before Tesla started recognizing some of this revenue.

Of course, "other" could grow to $500B or $1T businesses, but these are currently relatively small revenue streams which are difficult to value. Investors are either assuming very optimistic numbers for the automotive business, or they're banking on the "other" category exploding exponentially over the long term.

[Viking Thor]

Hadn't looked at the default WSJ variables but they are beyond absurd.

30k average price in 2030! with 10% margins? And then practically nothing for the other rapidly growing businesses?

I would happily bet a lot of money that this baseline would be exceeded; if you doubled their profit assumptions would still feel its a fantastic bet to exceed.

Well, the idea is that users can plug in their own assumptions.

Plugging in $40k/car (reminder, 2023 prices) and 14% operating margin (Tesla's current) brings the valuation to $660B, which is still less than today's market cap.

Those would still be bearish assumptions.

The fact that there no modeling in the calculation outside of vehicles is just silly.

FSD and energy are already significant high growth revenue streams.

Sure they have “other” but if you leave so much of the business out out it’s not much of a model, and then the so called base case is extremely bearish even for the limited aspects of the business that are included.

Tesla Energy accounts for around 7% of revenues.

What comes in from FSD is mostly deferred revenue, what had grown to somewhere in the ballpark of $1B before Tesla started recognizing some of this revenue.

Of course, "other" could grow to $500B or $1T businesses, but these are currently relatively small revenue streams which are difficult to value. Investors are either assuming very optimistic numbers for the automotive business, or they're banking on the "other" category exploding exponentially over the long term.

Mega pack deployments (energy storage) grew 222% YOY in Q2.

Their first factory is still scaling up and they are in process of building a second. They have an order backlog of over 2 years and likely can support explosive growth for the next decade as the energy grid transitions to solar and wind which are much cheaper to produce. But require either storage or extremely expensive coal or gas peaker plants.

The analyst s that follow Tesla have modelled it in, as well as supercharger which is also virtually assured of long term high growth as its now industry standard in North America.

[FINate]

Mega pack deployments (energy storage) grew 222% YOY in Q2.

Their first factory is still scaling up and they are in process of building a second. They have an order backlog of over 2 years and likely can support explosive growth for the next decade as the energy grid transitions to solar and wind which are much cheaper to produce. But require either storage or extremely expensive coal or gas peaker plants.

The analyst s that follow Tesla have modelled it in, as well as supercharger which is also virtually assured of long term high growth as its now industry standard in North America.

That's great, you're free to value that business however you think best. The WSJ link (https://www.wsj.com/finance/stocks/how-much-is-tesla-worth-you-decide-78b25ab1) is just a tool, and as such folks are encouraged to enter their own assumptions.

It is interesting though, that the discussion has drifted from Tesla's core automotive business as prices and margins have decreased while real competition as increased. Certainly, messing around with the WSJ tool, it's difficult to arrive at a much higher value for TSLA without very high assumptions that don't pass the giggle-test. So now the focus is on the "other" category. Can Tesla catch lightning in a bottle again with its energy business? Of course, anything is possible. But what are those odds and what is the potential value? How one answers that largely answers the question of this thread.

[AdrianC]

New RWD Model Y in the USA:
https://electrek.co/2023/10/02/cheapest-model-y-ever-tesla-starts-selling-model-y-rwd-in-us-for-44k/

https://finance.yahoo.com/m/d89eddb8-35fd-30c2-be98-596739ae178c/tesla-relaunches-a-model-y-in.html

The currently not available Model Y AWD used 4680 cells. Speculation is Tesla need all the 4680s for the truck.

RWD Y looks to be a Chinese made battery like in the RWD Model 3. Probably need to buy this year to get the full tax credit.

[lemonlyman]

Mega pack deployments (energy storage) grew 222% YOY in Q2.

Their first factory is still scaling up and they are in process of building a second. They have an order backlog of over 2 years and likely can support explosive growth for the next decade as the energy grid transitions to solar and wind which are much cheaper to produce. But require either storage or extremely expensive coal or gas peaker plants.

The analyst s that follow Tesla have modelled it in, as well as supercharger which is also virtually assured of long term high growth as its now industry standard in North America.

That's great, you're free to value that business however you think best. The WSJ link (https://www.wsj.com/finance/stocks/how-much-is-tesla-worth-you-decide-78b25ab1) is just a tool, and as such folks are encouraged to enter their own assumptions.

It is interesting though, that the discussion has drifted from Tesla's core automotive business as prices and margins have decreased while real competition as increased. Certainly, messing around with the WSJ tool, it's difficult to arrive at a much higher value for TSLA without very high assumptions that don't pass the giggle-test. So now the focus is on the "other" category. Can Tesla catch lightning in a bottle again with its energy business? Of course, anything is possible. But what are those odds and what is the potential value? How one answers that largely answers the question of this thread.

Yeah, it’s a fun tool. I wouldn’t set a 5% terminal value on Tesla after 2030, but it is extremely difficult to model after that so I get it. Its biggest weakness is knowing most equities aren’t valued with DCF models. On the bearish side of Tesla, this is definitely a strong argument for not investing in the stock, but it’s also just one of many valuation techniques and a really simplified model. Like if you only used DCF, lots of good stocks would be uninvestible.

Thanks for adding it. I like playing with those.

[ColoradoTribe]

Mega pack deployments (energy storage) grew 222% YOY in Q2.

Their first factory is still scaling up and they are in process of building a second. They have an order backlog of over 2 years and likely can support explosive growth for the next decade as the energy grid transitions to solar and wind which are much cheaper to produce. But require either storage or extremely expensive coal or gas peaker plants.

The analyst s that follow Tesla have modelled it in, as well as supercharger which is also virtually assured of long term high growth as its now industry standard in North America.

That's great, you're free to value that business however you think best. The WSJ link (https://www.wsj.com/finance/stocks/how-much-is-tesla-worth-you-decide-78b25ab1) is just a tool, and as such folks are encouraged to enter their own assumptions.

It is interesting though, that the discussion has drifted from Tesla's core automotive business as prices and margins have decreased while real competition as increased. Certainly, messing around with the WSJ tool, it's difficult to arrive at a much higher value for TSLA without very high assumptions that don't pass the giggle-test. So now the focus is on the "other" category. Can Tesla catch lightning in a bottle again with its energy business? Of course, anything is possible. But what are those odds and what is the potential value? How one answers that largely answers the question of this thread.

We don’t need a WSJ tool to answer the title question of this thread. Since the start date of this thread TSLA stock price is up approximately 1,300%. Over that same period the S&P 500 is up approximately 50%. The question of this thread has been answered emphatically. Based on when it was asked in March 2018, Tesla has not been a “good” investment, it Tesla has been a phenomenal investment!

You are attempting to substitute a new question (or move the goal post). The question you are now putting forth is will Tesla continue to be a good investment? That’s a fair question, but does not change the fact that anyone that has bought and held Tesla stock for any extended period of time has done well with their investment. No good stock investment remains a good investment indefinitely. Plenty of folks have retired and made other life altering changes based on their TSLA gains.

I would also argue that the energy storage business is a profitable and proven winner that is growing exponentially. It will continue to grow as fast as Tesla can make or procure cells for the next decade at least. I would hardly characterize that as “catching lightening in a bottle.” Tesla didn’t catch lightening in a bottle with their auto business either like it was some happy accident of nature or blind luck. A lotta of vision and hard work to get where they are today. Folks who saw and shared that vision and invested accordingly, have been richly rewarded.

Tesla sold 10X the number of EVs as their closest “competition” in NA in 2022. Ford just cancelled plans for their battery plant. Mach-e sales are in decline. The UAW is striking and will continue to weigh down the Big 3’s ability to transition to EVs. The competition (with the possible exception of BYD) is no where in sight. Ford and GM are years away from profitability in their EV departments. Tesla is profitable, has virtually no debt and is sitting on $23 billion in reserve, despite pouring money back into the business (new plants, products and RND).

[bacchi]

The BESS market growth projections are all over the place; McKinsey suggests it'll be a $120B-150B market in 2030.

However, unlike EVs, there are many strong players in the BESS space. CATL, BYD, Siemens, Hitachi, LG, Tesla, and Panasonic, among others, are installing BESS systems around the world.

While it's a growing market, and it'll be profitable, it's very fragmented. Tesla isn't currently the leader in BESS and it may never be because the largest market is Asia, where CATL and BYD reign.

[ColoradoTribe]

The BESS market growth projections are all over the place; McKinsey suggests it'll be a $120B-150B market in 2030.

However, unlike EVs, there are many strong players in the BESS space. CATL, BYD, Siemens, Hitachi, LG, Tesla, and Panasonic, among others, are installing BESS systems around the world.

While it's a growing market, and it'll be profitable, it's very fragmented. Tesla isn't currently the leader in BESS and it may never be because the largest market is Asia, where CATL and BYD reign.

BESS is a global market. Tesla is building a battery storage factory in China to serve the Asian/South Pacific market. I agree Tesla’s storage products are similar to other offerings from the competitors you mention. Tesla may have a software advantage with Autobidder. It doesn’t really matter though. Global demand for these storage products is going to far exceed the global supply for the foreseeable future, so Tesla and anybody else that makes a competent product will sell every unit they can make and for a healthy margin (10-20%). Tesla may or may not end up the largest supplier, but there’s room for several companies to grow exponentially for the next decade plus. I think Wall Street is just starting to wake up to the potential here.