TSLA vs Cybertruck expectations

[cvalue13]

This is the quote from Elon: "I just want to temper expectations for Cybertruck. It's a great product, but financially it will take – I don't know – a year to 18 months before it is a significant positive cash flow contributor,"

yes though I’ve found the comments to be a bit of a see-saw, and the only two ways I can reconcile the see-saw:

(1) it’s just plane ole’ confused/confusing, ot
(2) it’s vacillating between “significant” like the Model Y (truly significant) or “significant” like the Model S/D (nominally significant)




2022 Q4 Earning's Call January 25th (Q&A):

“to be clear, for 2023, Cybertruck will not be a significant contributor to the bottom line, but it will be [in 2024]."​

2023 Annual Shareholder Meeting May 16:

"I said it's going to be hard to make the cost of affordable because it is a new car A new manufacturing method so um in in the grand scheme of things relative to the production rate of all the other cars we make it will be small um but it's still very cool um yeah"​

At the end of the day, though, the GFTC line presently has a max capacity of 250K/yr. Which according to Musk’s recent comments won’t be hit, as a total annual production, until at least 2026.

Bulls projecting eg 2.4M total Tesla’s produced in 2024, and 4M total in 2025, and 5.5M in 2026.

So on the most optimistic view of both CT production in 2026 (250K) and total cars in 2026 (5.5M), CTs are 1/22nd of production (assuming ~equiv avg total margins across all offerings)


That’s just one possible future, of course

Of course if other model demand softens significantly, and no other new models come out, then maybe CT is more like 1/16th of 4M total in 2026, and *more* material contributor? But that is mixed news scenario for investors, net-net.

But as see-saw as Musk’s comments have been, even the most bullish read doesn’t have CTs being pumped out by either the numbers, or time proximity, that even bullish investors would be pricing in too deeply

Sponsored

 

[FarAway]

Here is another take with a view from the "other" side.... I think Mr. Murray raises some valid concerns. (emphasis mine)


By Charles J. Murray
Automakers are now learning an important lesson: Not all car buyers are wealthy environmentalists.
This should be obvious but apparently isn’t, which is why the auto industry is now wringing its hands over electric vehicle sales problems. General Motors, Ford, Mercedes, Nissan, Toyota and even Tesla have raised red flags about slowing demand. GM scaled back plans for 2024 and said it would delay the opening of a new electric truck factory. Ford is considering cutting shifts at its F-150 Lightning plant. Nissan is transferring more resources to hybrids rather than EVs. Mercedes has described the EV market as “brutal.” And Toyota’s chairman, Akio Toyoda, said last week that “people are finally seeing the reality” of EVs.
The problem, it seems, is that the so-called next wave of EV buyers isn’t cooperating. The EV is not trickling down. At least not for those prospective buyers.
But this should have been obvious. It certainly was for Martin Eberhard and Marc Tarpenning, founders of Tesla Motors. In a now well-known tale, Eberhard and Tarpenning in 2003 gathered consumer data for their nascent company by driving up and down the streets of the wealthy suburb of Palo Alto, California, and peering into driveways to see what kinds of cars the suburbanites owned. What they found tucked between the $2 million homes was Priuses. Many of the driveways contained one luxury car and one Prius, which was the environmental darling of the day. So they’d see a Porsche and a Prius. Or a BMW and a Prius. Or a Lexus and a Prius.
Economists have since identified this phenomenon. They call it “conspicuous conservation,” a wrinkle on Thorstein Veblen’s century-old theory of conspicuous consumption. The idea is that some modern consumers purchase products as a way of displaying their green virtue.
In 2003, Eberhard and Tarpenning couldn’t have known the term “conspicuous conservation,” but they had the wisdom to understand what they were seeing: Environmentalism had come to the doorstep of the wealthy. Thus, they concluded, they could sell electric cars to the affluent. And they believed the EV would eventually trickle down to the middle class.
In its early years, this was the real genius of Tesla. Selling to wealthy environmentalists and enthusiasts became a goal. And it kept the company afloat until its bizarre stock market performance later enriched it.
Eberhard and Tarpenning, however, seldom got due credit for their flash of genius. Up to that point, Detroit’s marketers had believed that electric cars should start at the bottom of the market and rise up. No sane consumer, they thought, would pay more for a vehicle that offered less. Therefore, a top-down economic model wouldn’t work.
Clearly, Detroit was wrong. Wealthy enthusiasts bought Teslas. And here we are now, and the time has come for the EV to trickle down — and it’s not happening. Working-class consumers just aren’t cooperating. It seems that they have their own ideas about what to do with their disposable income.
None of this is new, of course. Middle-class consumers have always had many reasons for buying cars. They need their vehicles to go to work, to Grandma’s, to college and to go on vacation. They need them for all these things, and yet they need them to be inexpensive.
What they don’t need is a costly second car. And, too often, EVs have become just that. An EV’s initial cost is still too high and its practicality too low, especially for the less affluent.
The auto industry is now running head-on into these realities. That’s not to say that it can’t overcome them. But middle-class adoption clearly isn’t happening at the pace automakers foresaw.
Tesla knew from the beginning that trickle-down would be necessary and would be a challenge. And now that promise is coming due.
Buyers of the next wave won’t purchase an EV so they can park it next to their Porsche.

Charles J. Murray is a Chicago-area author who writes about the history of technology. His most recent book is ”Long Hard Road: The Lithium-Ion Battery and the Electric Car.”

 

[SpaceYooper]

Here is another take with a view from the "other" side.... I think Mr. Murray raises some valid concerns. (emphasis mine)

Yeah, I largely agree with what he is saying. It's part of my concern with what has happened with some of the changes to the CT. They revealed a truck that seemed to be aimed squarely at the market selling the most vehicles in the US (Full size trucks) and their current owners. The CT was big, it was long, it was said to have an optional range over 500 miles, and the towing/payload numbers were insane for a 1/2 ton. The icing on the cake was the price points for the ranges advertised. It was literally the first full size EV truck that made sense for the consumer public.
Initially they said the the single motor variant would come out first...then when seeing the reservation numbers they said the tri-motor (500+ mile range would be first). Because small businesses aside, RANGE IS WHAT TRUCK OWNERS WANT.

Now the truck is smaller, (I'm not saying it's small) with a smaller bed. (So it can fit in someone's garage yet look around the country...how many truck owners are parking in their garage?). And the running narrative is that it is going to have far less then the 500+ miles of range for several more years and be significantly more expensive.

Did they change their target and just build another EV that fits the article's narrative?

 

[cvalue13]

I think Mr. Murray raises some valid concerns. (emphasis mine)

to the extent this view is contributory (even in part), note that it’s exacerbated by the prior historical interest rates (inflating prior uptake above baseline) and current interest rate outlook (deflating current/future uptake below baseline) - which is a big swing.

a $25K model would increase SAM, but not remedy the constraint

bTW, I’ve always thought this dynamic was why Tesla (rightfully) put such emphasis on charging infrastructure. That’s a net-net mixed thesis, though. If significant infrastructure is needed to increase SAM of a vehicle, it may as well be priced into the margin of the vehicle - which to date it isn’t.

 

[Crissa]

I'm not sure what you are taking issue with. I was saying the goal of an investor is to minimize the risk and increase the potential reward by buying the companies you judge to have the best odds. Obviously, if they are con artists that are operating fraudulently, that does not bode well for the future of the company. But we don't live in a black and white world.

I'm not sure why you think that investors shouldn't gauge the moral and ethical implications of their investments.

You invested in a company who was found to have gotten that reward illegally through misrepresentation and fraud. You got paid off. The company got away with little more than admitting that it happened.

Why doesn't that reflect upon you, as an investor, who enabled that sort of behavior by looking the other way?

-Crissa

 

[PilotPete]

I'm not sure why you think that investors shouldn't gauge the moral and ethical implications of their investments.

You invested in a company who was found to have gotten that reward illegally through misrepresentation and fraud. You got paid off. The company got away with little more than admitting that it happened.

Why doesn't that reflect upon you, as an investor, who enabled that sort of behavior by looking the other way?

-Crissa

And at the same time, what evidence do you have of wrongdoing? Accusations? Competitors already try to manipulate stock prices by slinging mud. If you move your money in and out of the stocks based on accusations, then you are feeding into the con. Do you believe in “innocent until proven guilty”?

 

[HaulingAss]

I'm not sure why you think that investors shouldn't gauge the moral and ethical implications of their investments.

You invested in a company who was found to have gotten that reward illegally through misrepresentation and fraud. You got paid off. The company got away with little more than admitting that it happened.

Why doesn't that reflect upon you, as an investor, who enabled that sort of behavior by looking the other way?

-Crissa

An investor has more say in how a company is run than a non-investor, but any one investor cannot dictate company policies. I've worked a number of hard, dirty, dangerous jobs with long hours and relatively low pay relative to a professional, and I had zero political clout. My motto is to be honest, work hard, make good decisions and take care of myself so I don't have to depend upon government handouts. Part of that strategy involves smart investing.

While I am no fan of Bill Gates, I also know he was not the only person pushing the boundaries of what defines anti-competitive behavior. I also think the personal computing revolution advanced much faster with Microsoft's dominance in the early days (and I'm sure you disagree with that).

You can sit your moral high horse and throw rocks at me, but I did what I felt I needed to take care of myself, and my family, and I didn't break any laws or any of my personal morals merely by investing in MSFT. If that would be against your moral code, I recommend you don't do it. My guess is that you are simply jealous at the huge profits I realized as I watched my MSFT shares get bid up by othr investors, even if you will almost certainly deny jealously. I was not born with a silver spoon in my mouth, I could either complain about that endlessly or engage my brain to make the most of my own talents. I chose the latter, as I am naturally not a big complainer, and it wouldn't have changed anything anyway.

You do you, I'll do me.

 

[JBee]

Hindsight is 20/20.

On the day, the progress and corruption in IT were less defined as they are now.

That by itself doesn't excuse morality, to act in good faith to what you know at the time, but it does weigh the argument of decisions made at the time, as to not repeat them. You will find that the last 5 years will reveal to have similar, much more morally corrupt motivations now, than it did in the 90's or 00's.

In general I take the view as EM does; that patents suck to make progress for humanity.

But what sucks even more is that we continue to let money itself, make all these choices for us.

 

[Crissa]

And at the same time, what evidence do you have of wrongdoing? Accusations? Competitors already try to manipulate stock prices by slinging mud. If you move your money in and out of the stocks based on accusations, then you are feeding into the con. Do you believe in “innocent until proven guilty”?

https://www.crf-usa.org/bill-of-rights-in-action/bria-16-2-c-united-states-v-microsoft.html

Proven in a court.

You can sit your moral high horse and throw rocks at me, but...

You didn't do your due diligence. Anyone could have known what the contracts they were offering were, and how they were promoting vaporware.

??‍

You're the one defending the system where you pass the buck. You didn't have to defend the system. That's on you, not me.

-Crissa

 

[PilotPete]

https://www.crf-usa.org/bill-of-rights-in-action/bria-16-2-c-united-states-v-microsoft.html

Proven in a court.

Sorry, not what I meant. After a court rules, the stock price has adjusted for the penalty. And, hopefully, the company changes their behavior. I was referring to PRIOR to the court ruling. In the case of MSFT, PRIOR to 5 Nov 99, when the questionable behavior is occurring, and the stock price is rising because of the profits of said behavior, and a court hasn’t ruled, THAT is the point where you just have accusations of wrong doing, but no judgement. That is when much of the greatest gains are coming and there is no conviction. What do you use then to determine morally right v wrong?

In the case of MSFT, one of the issues was the bundling of explorer with windows. The accusation was that was stifling competition in the browser business. But at one time windows was small enough and there was no competition in browsers that it didn’t matter. And then one day it did. But no two judges, and no two juries will ever agree on what that day was. How do you morally judge a company as to when they can’t bundle the browser with the OS when no one agrees on when the crossover happened? And what can be accused as “pressuring” in a complaint can also be interpreted as ”just trying to stay in business”.

Now, if you think that “Proven in court” proves right and wrong, then I would ask you to review the following Supreme Court cases and then tell me if you still believe that a court decision “proves” moral actions in ANY way;

Scott v Sanford
Buck v Bell
Plessey v Ferguson
Betts v Brady

 

[CyberGus]

Was Microsoft as bad as Purdue Pharma? Hardly. Did they leverage their monopoly power illegally? Yes they did.

There are many, many companies that gain value over time. Since I have a finite amount to invest, I prioritize the companies that I like, and that I believe in. Like $TSLA. They're not perfect, but I believe in the mission of transitioning to a sustainable energy future.

 

[TyPope]

They went from having multiple competitors considered 'the standard' to holding the monopoly on nearly the entire chain of software from firmware to Office.

They are life-changing returns. They also destroyed so many jobs, created so many security breeches, made so many misrepresentations and predatory contracts, and repeated so many mistakes that already had white papers and been solved in the open source and unix worlds...

I hate them, yes, because they lied, cheated, and then covered it up. Kids in the aughts were given Microsoft history of computing which taught them that Microsoft invented the graphical UI and basically every innovation.

I hate liars.

And then, when they'd built all that, they turned their predatory attitude towards their employees, requiring every department to turn over and fire some percentage of their workers every quarter. They defined toxicity at every level, and have repeated it over and over again.

-Crissa

Hey! Just like Apple!

 

[Arctic_White]

yes though I’ve found the comments to be a bit of a see-saw, and the only two ways I can reconcile the see-saw:

(1) it’s just plane ole’ confused/confusing, ot
(2) it’s vacillating between “significant” like the Model Y (truly significant) or “significant” like the Model S/D (nominally significant)




2022 Q4 Earning's Call January 25th (Q&A):

“to be clear, for 2023, Cybertruck will not be a significant contributor to the bottom line, but it will be [in 2024]."​

2023 Annual Shareholder Meeting May 16:

"I said it's going to be hard to make the cost of affordable because it is a new car A new manufacturing method so um in in the grand scheme of things relative to the production rate of all the other cars we make it will be small um but it's still very cool um yeah"​

At the end of the day, though, the GFTC line presently has a max capacity of 250K/yr. Which according to Musk’s recent comments won’t be hit, as a total annual production, until at least 2026.

Bulls projecting eg 2.4M total Tesla’s produced in 2024, and 4M total in 2025, and 5.5M in 2026.

So on the most optimistic view of both CT production in 2026 (250K) and total cars in 2026 (5.5M), CTs are 1/22nd of production (assuming ~equiv avg total margins across all offerings)


That’s just one possible future, of course

Of course if other model demand softens significantly, and no other new models come out, then maybe CT is more like 1/16th of 4M total in 2026, and *more* material contributor? But that is mixed news scenario for investors, net-net.

But as see-saw as Musk’s comments have been, even the most bullish read doesn’t have CTs being pumped out by either the numbers, or time proximity, that even bullish investors would be pricing in too deeply

The real bull thesis for TSLA isn't from its EV side, but rather from solving autonomy and unleashing a fleet of Robotaxi.

In my model, I have Tesla's EV business contribute 20% or less to the net profits. Of their EV business, Cybertruck will be but a small portion. Ergo, I believe that Cybertruck will be just a footnote when it's all said and done. Just a speculation on my part.

 

[HaulingAss]

https://www.crf-usa.org/bill-of-rights-in-action/bria-16-2-c-united-states-v-microsoft.html

Proven in a court.

You are wrong about that. It was never proven that what Microsoft did was illegal. Microsoft agreed to settle, without admitting any wrongdoing, to finally escape the endless years of litigation the government had inflicted upon Microsoft.

The outcome of the multi-year trial, had it continued, was thought by legal scholars to be dubious. It could have gone either way. Most of the government claims, and there were a lot, were pretty dubious. Some of them I agreed with. It's not as black and white as Microsoft haters made it out to be. The agreed to remedies were pretty mild.

Regardless of what you personally believe, the fact is, no illegal activity was ever proven in a court of law. So, let's keep the basic facts straight.

 

[HaulingAss]

The real bull thesis for TSLA isn't from its EV side, but rather from solving autonomy and unleashing a fleet of Robotaxi.

In my model, I have Tesla's EV business contribute 20% or less to the net profits. Of their EV business, Cybertruck will be but a small portion. Ergo, I believe that Cybertruck will be just a footnote when it's all said and done. Just a speculation on my part.

Elon believes the energy side of the business will eventually exceed the auto side. Currently, I see positive momentum on this front, and think the delay of the Mexico gigafactory that will eventually build the compact cars is due to wanting to funnel more batteries into the energy side of the business over the next two years.

The reason I think Tesla wants to do this, besides accelerating the transition to sustainable energy, is that sales of consumer items like cars soften during economic hard times while Megapacks continue to experience unprecedented demand and can command higher margins than consumer items like cars (which are also more complex to build). Why funnel battery production into cars (which require huge investment to scale) when Megapacks can absorb more batteries, scale more quickly, and command higher profits?

Watch for the energy side of the business to break-out. It won't match the auto side in absolute dollars for a number of years, but superior margins and growth rates will probably unleash the share price from its auto-induced doldrums.

Sponsored