Musk endeavours

[odysseus2000]

A major part of the cost of insuring cars is the cost of repairs and this is a major problem for Tesla because of the complexity of their cars.

The insurance on one of my ICE cars has gone up a third this month 'due to the increased cost of repairs'.
I wonder if I am subsidising the increased cost of repairing Tesla and other EVs.... no doubt there are stats somewhere.

A cursory search gives this

inter alia
..." many BEVs are often deemed irreparable, leading to premature write-offs because of high battery cost and the lack of value the UK ecosystem can recover from them.”
Currently, the cost of a replacement HV battery is causing a significant increase in the risk of ‘total loss’ or write-offs.

... BEV incident claims are currently 25.5% more expensive than their ICE equivalents and can take 14% longer to repair, suggests Thatcham.

So not only the increased cost of repair, but the hire cars, as previously discussed.

V8

My house insurance has gone up over 15% this year & loads of other things are well ahead of last years price.

It looks to me like everybody selling has realized that folk are prepared to pay more & are sellers are sending prices up until they eventually feel some resistance to higher prices.

Politicians may like to say how wicked inflation is, but they are happy to see the huge debts they have created being eaten away with inflation. As of now interest rates are having no effect as those who have to pay them are able to raise prices to cover their higher repayments. At some point folk stop buying & price rises stop, but we seem some ways from that point.

Regards,

[odysseus2000]

Elon Musk worked his magic on the Tesla earnings report, reached from here:

https://ir.tesla.com/#quarterly-disclosure

He stated that Tesla expect to sell more cars this year than last, no indication on %, but as most competitors have switched to plug in hybrids, the demand for batteries has collapsed bringing prices down which will boost Tesla margins and/or allow price cuts. Additionally, they expect to increase cash flow going forwards.

FSD was again touted as getting better by the day & it was stated that they have models available stretching outwards for several months, so that they have a good road map of what is coming & how to train them using existing data.

An intriguing idea was put forward of using existing & future FSD hardware like Amazon Web Services (aws) when not needed for driving. This is a very high margin business essentially using what has already been bought to generate revenue in exactly the way Amazon do with their compute which is only needed for their business a few times of the year & at other times powers aws.

Tesla have over 35,000 Nvidia chips running.

Elon when asked if FSD would be transferable between cars, said No!

The car business has been redefined to build the new generations of cars on the same production lines as existing models, thereby reducing the capex dramatically.

Optimus may be put into Tesla factories by the end of next year & go on sale after proven.

One manufacturer is in talks to license FSD, no name supplied.

Regarding regulators & FSD, there are already several states that allow self drive cars & the belief is that if FSD can be shown to be safer than humans, regulators will have to approve it as otherwise they would be killing people.

Tons of other stuff.

Market likes it, Tesla up over 13% in the after market.

Regards,

[odysseus2000]

Transcript of earnings call:

https://x.com/farzyness/status/17829046 ... DCpgdbFBxg

Worth reading & thinking about.

Regards,

[Hallucigenia]

Investor deck : https://digitalassets.tesla.com/tesla-c ... Update.pdf

Even more worth reading & thinking about.

Since this is a financial site and not a technology site, how about looking at the numbers? Bearing in mind that even after dropping from $299/share in July to $145 now, this is still a $450bn market cap company on a P/E of 53 (ignoring that tax refund in Q4) and a PSR of nearly 5.

The big story is (or at least should be) that despite accepting lower margins (gross margin continues to grind down, now 17.4% compared to 19.3%), inventory increased by $2.7bn (15% of quarterly revenue). Inventory days ballooned from 15-16 days throughout 2023 to 28 days in Q1, contributing to a free cash flow of -$2.5bn.

And despite the compression of margins, deliveries dropped by 36,065 per quarter, or 9% yoy. If repeated, that would annualise to a drop of 144,260 fewer vehicles per year, which puts in context the excitement over the Cybertruck which has a total production capacity of 125,000/year, and which is probably only going to do what, ??40k this year?? The way they say "We produced over 1,000 Cybertrucks in a single week in April" sounds like a stress test of the production line using stockpiled components rather than what is currently sustainable. But it puts in context the excitement over the Cybertruck versus the amount of discussion about the lack of deliveries. Musk tries to distract with talk of the supply problems in the factories, but what Tesla really has is a demand problem.

At least one anomaly is being fixed slowly, I was always amazed that their R&D was only 3-4% of sales, when Musk talks like it's a company spending 15%, there just seemed a real mismatch between the talk and the R&D activity. It's up to 7% now, which is the minimum to be considered a technology company IMO, but it still doesn't really match the talk and the valuation.

For comparison with the yoy Q1 deliveries of "struggling" car manufacturers :

Tesla -9%  
VW    +3%
BMW   +1%
Ford  +7% (results out this evening)

But ooh look, squirrel! Nvidia! Robots!

[odysseus2000]

Investor deck : https://digitalassets.tesla.com/tesla-c ... Update.pdf

Even more worth reading & thinking about.

Since this is a financial site and not a technology site, how about looking at the numbers? Bearing in mind that even after dropping from $299/share in July to $145 now, this is still a $450bn market cap company on a P/E of 53 (ignoring that tax refund in Q4) and a PSR of nearly 5.

The big story is (or at least should be) that despite accepting lower margins (gross margin continues to grind down, now 17.4% compared to 19.3%), inventory increased by $2.7bn (15% of quarterly revenue). Inventory days ballooned from 15-16 days throughout 2023 to 28 days in Q1, contributing to a free cash flow of -$2.5bn.

And despite the compression of margins, deliveries dropped by 36,065 per quarter, or 9% yoy. If repeated, that would annualise to a drop of 144,260 fewer vehicles per year, which puts in context the excitement over the Cybertruck which has a total production capacity of 125,000/year, and which is probably only going to do what, ??40k this year?? The way they say "We produced over 1,000 Cybertrucks in a single week in April" sounds like a stress test of the production line using stockpiled components rather than what is currently sustainable. But it puts in context the excitement over the Cybertruck versus the amount of discussion about the lack of deliveries. Musk tries to distract with talk of the supply problems in the factories, but what Tesla really has is a demand problem.

At least one anomaly is being fixed slowly, I was always amazed that their R&D was only 3-4% of sales, when Musk talks like it's a company spending 15%, there just seemed a real mismatch between the talk and the R&D activity. It's up to 7% now, which is the minimum to be considered a technology company IMO, but it still doesn't really match the talk and the valuation.

For comparison with the yoy Q1 deliveries of "struggling" car manufacturers :

Tesla -9%  
VW    +3%
BMW   +1%
Ford  +7% (results out this evening)

But ooh look, squirrel! Nvidia! Robots!

So, let us analyse this.

No one investing in high beta tech cares about p/e, but they do care about growth with a peg of 3.8 according to:

https://www.nasdaq.com/market-activity/ ... peg-ratios

Sure not low, but not excessive by Nasdaq standards & this after arson attacks in Germany, very high interest rates & relentless fud by legacy auto & legacy oil.

If you look at days sales at VW it is around 24:

https://finbox.com/OTCPK:VLKA.F/explore ... sales_out/

Ford is similar at 22:

https://finbox.com/NYSE:F/explorer/days_sales_out/

BMW 99 (2022):

https://www.morningstar.com/stocks/xetr/bmw/performance

In terms of profitability Ford loses $47k per electric car sold:

https://www.dailymail.co.uk/yourmoney/c ... 0it%20sold.

Can’t find what VW profit or loss per electric car is, but the performance of the ID4 is so bad that depreciation is murderous & a lot of early VW eV buyers are trapped & very unhappy with VW who deliberately made their electric offerings under perform gas cars to protect their legacy business. German clean air cars have fallen as a result so Germans get to breathe more pollution. Diess was turning VW around but they fired him, so they are now back to the account lead short term profit & ignore the future.

The move by legacy auto to talk up gas & talk down electric is bad for lungs, but great for Tesla who get to pocket the fines laid on legacy auto for failing to meet emission standards.

If Tesla were not launching new models, Optimus, FSD etc, you could complain about r&d but as they are it is a complement to them that they are doing it with less cost. Cybertruck is a msjor trial Off many new architecture features including 48 volt & steer by wire etc

The move towards autonomy is what is needed to boost margins at Tesla & is the reason for why the business has so much long term potential.

Analyzing Tesla like it is a legacy business is never going to be sensible at this stage in the companies life.

Analyzing legacy auto like it going to stay as it is forever is a ticket to the poor house.

Regards,

[Adamski]

..

Agree totally! The key issue for the company is Tesla has a demand problem. This can be clearly seen by looking at Tesla quarterly sales.

Tesla was growing exponentially until Q2 2023, since then they've been up and down, but in broad terms sales have levelled off. It's no longer a growth company.

The robo-taxis and other marketing hype has worked in the very short term, with today's melt up. Its difficult to predict as doesn't operate in the same universe of the rest of the stock market.

It's funny when this happens. Investors seem to love marketing hype, a good story, and fomo (fear of missing out), more than real results.

Tesla sales by quarter volumes:
https://www.statista.com/statistics/801 ... -by-model/

[Adamski]

Interesting to contrast the reaction of Meta with Tesla

Meta beat earnings forecast in Q1 but stock fell in after market trading. Verses Tesla which missed earnings estimate but stock surged.

Eventually investors will realise AI not going to match the hype. I can't see Robotaxis (Tesla Airbnb) being the next big thing. Or a £20k EV being profitable, except in China. Or the Metaverse goggles being in homes or everyone wearing smart glasses.

Last 12 months Meta up 138%, last night pre market down 13%. Tesla up 1% (on a rollercoaster), yesterday up 12%.

This AI-Robotics hype is silly and a big market correction is overdue. This hype train delusion cant continue forever. Personally I'd be relieved if the entire stock market went down 10%, mainly in Tech, it'd be a healthy adjustment.

[odysseus2000]

Interesting thoughts on Tesla last call:

https://x.com/farzyness/status/17831841 ... DCpgdbFBxg

Regards,

[odysseus2000]

VHS/dvd combo anyone:

https://x.com/farzyness/status/17833490 ... DCpgdbFBxg

Regards,

[odysseus2000]

If this is correct, Tesla was expecting to buy 300k Nvidia chips, but in the conference call Musk said to expect 80,000 by year end. They already have 35,000, suggesting only 45,000 to be bought:

https://x.com/smartertrader/status/1783 ... DCpgdbFBxg

300,000 Nvidia chips is circa $8b, so is only 1/6 th, then about $1.3b

Maybe this will impact Nvidia share price if analysts bother to stay informed.

Meanwhile Meta have thrown a bucket of ice cold water over AI’s immediate potential in yesterdays call.

Regards,

[odysseus2000]

Billionaire Ron Barron on Tesla (9:14):

https://youtu.be/lGI7kAdWafU?si=V1Dh6aKEmwz4vzFB

Regards,

[odysseus2000]

Xai closing on raising $6b:

https://www.ft.com/content/28983bdc-2a3 ... d9542ab69d

Regards,

[Adamski]

Billionaire Ron Barron on Tesla (9:14):

The bulls like Ron Barron are succeeding in pushing the stock up. Tesla is up 38% after recent lows!

I just find it incredible after a poor set of financials that its on another bull run. It is unique in the equity sphere, more akin to crypto, where it goes up because its going up.

In the Q1 2024 results the Tesla free cash flow, was -$2.5b. This is the same as VW. Compared to Microsoft +$21b.

Yet MS goes down 5% and Tesla up 40%!

[odysseus2000]

Billionaire Ron Barron on Tesla (9:14):

The bulls like Ron Barron are succeeding in pushing the stock up. Tesla is up 38% after recent lows!

I just find it incredible after a poor set of financials that its on another bull run. It is unique in the equity sphere, more akin to crypto, where it goes up because its going up.

In the Q1 2024 results the Tesla free cash flow, was -$2.5b. This is the same as VW. Compared to Microsoft +$21b.

Yet MS goes down 5% and Tesla up 40%!

You are missing the news. Tesla FSD preliminary approved in China:

https://www.teslarati.com/tesla-fsd-app ... ing-stock/

This in addition to various other approvals. Clearly FSD might not work, but if it does there are huge financial gains to be had & this is causing the run up in the stock.

Re- free cash flow, part of the decline is buying Nvidia chips for FSD. I.e. the decline in free cash flow is an investment in FSD not a sign of business collapse.

Further, Tesla was massively oversold with everyone leaning short & now the shorts have either covered or they will not need laxatives. When sentiment on Tesla gets overly bullish it’s a sell, when it gets overly bearish it’s a buy.

The problem with Microsoft is that they are not selling much AI stuff & have not, as far as I know, released sales of copilot. One thesis is that they are making a very expensive tool that no one wants.

Regards,

[Hallucigenia]

VW show no sign of building out a charging network to rival Tesla & will instead be supporting Tesla by using the Tesla net work.

https://www.bloomberg.com/news/articles ... automakers

Tesla Inc. eliminated almost its entire Supercharger organization, which has built a vast network of public charging stations that virtually every major automaker is in the process of tapping into in the US.

The decision to cut the nearly 500-person group, including its senior director, Rebecca Tinucci, was made by Chief Executive Officer Elon Musk in the last week, according to a person familiar with the matter. It comes in addition to the more than 10% staff cut ordered in mid-April, the person said.

The move will slow the network’s growth...Tesla had 6,249 Supercharger stations and more than 57,000 connectors as of the end of the first quarter.

[bungeejumper]

From this morning's FT:

“Hopefully these actions are making it clear that we need to be absolutely hard core about headcount and cost reduction,” Musk wrote in the memo

Ah yes, cost reduction. It does concentrate the mind somewhat that this was in the same month that Musk stepped up his insistence on his own $56 billion pay packet. A little maladroit, Elon?

BJ

[Adamski]

..same month that Musk stepped up his insistence on his own $56 billion pay packet. A little maladroit, Elon?

Touché. $56 billion whilst missing earnings, and laying off workers.

[odysseus2000]

VW show no sign of building out a charging network to rival Tesla & will instead be supporting Tesla by using the Tesla net work.

https://www.bloomberg.com/news/articles ... automakers

Tesla Inc. eliminated almost its entire Supercharger organization, which has built a vast network of public charging stations that virtually every major automaker is in the process of tapping into in the US.

The decision to cut the nearly 500-person group, including its senior director, Rebecca Tinucci, was made by Chief Executive Officer Elon Musk in the last week, according to a person familiar with the matter. It comes in addition to the more than 10% staff cut ordered in mid-April, the person said.

The move will slow the network’s growth...Tesla had 6,249 Supercharger stations and more than 57,000 connectors as of the end of the first quarter.

The usual fud. Remember when everyone said that Twitter would be unworkable after job cuts.

Regards,

[odysseus2000]

..same month that Musk stepped up his insistence on his own $56 billion pay packet. A little maladroit, Elon?

Touché. $56 billion whilst missing earnings, and laying off workers.

The payout was based on achieved performance, stopped by a court. Sure what he is doing won’t hinder progress on getting the pay reawarded as Wall Stree loves laying off workers & adjusting to new market conditions.

Meanwhile legacy auto are in trouble with VW reporting a 20% profit drop in the first quarter:

https://www.cnbc.com/2024/04/30/volkswa ... sales.html

Perhaps their board will take a pay cut.

Regards,

[bungeejumper]

The payout was based on achieved performance, stopped by a court. Sure what he is doing won’t hinder progress on getting the pay reawarded as Wall Stree loves laying off workers & adjusting to new market conditions.

Meanwhile legacy auto are in trouble with VW reporting a 20% profit drop in the first quarter:

https://www.cnbc.com/2024/04/30/volkswa ... sales.html

Perhaps their board will take a pay cut.

Reuters is saying that the Tesla move might leave Ford and other US mnufacturers uncertain as to whether their newly-negotiated access to Tesla superchargers will still work?

That might be factual rubbish, of course, but access to the fast-expanding supercharger networks has all been part of the confidence-building operation that many manufacturers have been working to create, and suddenly it all seems a bit less certain. Musk only seems to have an on and an off button at present - maybe it's his Aspergers coming through?

BJ