Thoughts on earnings call.

[TS_Buffalo]

Tesla is involved with a lot of things, not just cars and trucks. But the cars and trucks are still a focus for some people, because:

(1) some people happen to like cars and trucks. For example, there's far more activity and interest here on cybertruckownersclub.com than at megapackownersclub.com, even though energy storage is a far more important part of Tesla's business than Cybertrucks.

(2) at this time, most of Tesla's profits still come from old-fashioned car and truck sales. So those sales fuel Tesla's ability to develop other products. If vehicle sales are down, that affects the company as a whole.

Everyone realizes that Tesla is not valued solely on "how many cars they make". A quick comparison of TSLA's market cap vs. those of traditional automakers makes that very clear.

You make very good points, good response.

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[HaulingAss]

Tesla delivered 497,099 vehicles in 3Q 2025. Yet they only produced 447,450 vehicles (page 6 of the financial statement). So Tesla sold about 50,000 more vehicles than they actually built, by drawing down inventory. Inventory fell from 24 days in 2Q 2025 to only 10 days in 3Q 2025 (as also shown on page 6).

Selling a lot more vehicles than you make is indeed an effective way to boost quarterly profits and cash flow. Unfortunately, this approach is not sustainable.

Again, your comments are misinformed. From an accounting perspective, manufactured products like cars enter inventory as an asset when they are built. The costs of building the vehicles are expensed in the quarter the vehicle is delivered (not the quarter they were built). In quarters where production exceeds deliveries, the excess vehicles remain in inventory, and their costs are not expensed until delivery occurs in a future period.

You need to understand what you are talking about before telling others they are ill-informed. This is very basic to corporate accounting.

Two years of falling vehicle sales may not bode well for Tesla's continuing competitiveness globally in automotive -- especially given that overall EV sales grew during the same period.

I'm not sure you understand what the word "competitiveness" means. Tesla has industry leading margins on their EV sales, higher than all the large manufacturers make on their sales of internal combustion vehicles. When you compare Tesla's margins to other manufacturer's EV margins, the difference becomes even more stark. Because every other manufacturer is selling EVs at anywhere between barely break-even and a large loss, for every EV they sell. Tesla has put incredible downward pressure on the price of EVs and yet they still sell them with industry leading margins.

Your homework is to look up the meaning of "pricing power" and how that relates to competitiveness. Tesla has the most pricing power in the automotive business (excluding low-volume specialty brands with huge markups). Pricing power defines competitiveness.

In 3Q 2026, the automotive segment was responsible for $3.6 billion out of Tesla's $5.05 billion gross profit. So in terms of gross profit, it was the most important segment. Going forward, I expect this to be the case in 4Q 2025 as well.

Going forward (to me) means looking at more than the profits in the next 90 days. Looking meaningfully forward bodes very well for Tesla, because the goal is maximum profits, regardless of the source. Elon wisely put the brakes on costs associated with expansion of auto production years ago, in order to invest the profits in opportunities promising much higher returns. It's almost like he saw the future, the way he leveraged the free cash flow provided by current auto volumes to invest in AI and robotics at a critical juncture demonstrated excellent foresight (in hindsight).

The thing you cite as a net negative, is what makes Tesla such a compelling investment. Sure, non-auto profits are slightly less than half of auto profits, but two or three years ago they were basically zero or negative. It doesn't take a wizard in accounting to see how quickly Tesla is growing new non-auto making profits right before our eyes.

And here's the kicker: The huge investments in AI compute will pay off hugely, even if only looking at Tesla's auto production. When AI driving becomes fully autonomous, it will drive sales of new Tesla like nothing else and the margins will be the best they have ever been (because FSD software has near zero marginal extra cost for each new sale, coupled with rising margins due to economies of scale). Tesla's realistic current production capacity is somewhere around 2.7 million per year (not counting the Tesla Semi and Cybercab lines which are still being constructed). As that production capacity is fully utilized, Tesla's competitiveness will be untouchable.

Your claim is that the current outlook is poor for Tesla's future competitiveness in autos, my claim is it's never looked brighter. But you have to look further forward than 90 days to see this. With something like $44 billion in cash and cash equivalents, I'm not so sure why you are only focused on the next 90 days. Elon is no fool, he knows people will continue to attack Tesla on all fronts, that's why he maintains such a war chest of cash, he wants to continue to ensure he is unstoppable (and that's exactly what that $44 billion war chest ensures, come hell or high water).

No one has done more to electrify transportation than Elon Musk, although plenty have tried (and Elon has even encouraged those efforts by opening up Supercharging to all competitors). Autonomous driving and ubiquitous robocabs will accelerate the demise of ICE engines by making them too uneconomical and inconvenient. Automakers who currently rely on ICE sales for all their profits are the true losers in Tesla's trajectory.

But go back and study how cars made in one quarter, and sold in the following quarter, are represented in the financials when it comes to profits. You have some serious misunderstandings there, and it's not a good look when you try to tell others how it is.

 

[REM]

But even if that goal is achieved (which is not guaranteed), it's not going to replace the lost revenue from falling vehicle sales.

People still have no idea just how many trillions of dollars autonomous driving is worth lol. Not only will robotaxi, robovan, and eventually a cargo robo-carrier completely eclipse individual sales of vehicles, but we will look back on day and laugh that we privately owned them in the first place.

I think you are just expecting an unreasonable timeframe for all of this to transpire.

 

[HaulingAss]

People still have no idea just how many trillions of dollars autonomous driving is worth lol. Not only will robotaxi, robovan, and eventually a cargo robo-carrier completely eclipse individual sales of vehicles, but we will look back on day and laugh that we privately owned them in the first place.

It's hard for many people to even imagine driving a car to be a net negative. But that's only because cars represent personal freedom, both as an individual, and as a family. Freedom to travel where you want, when you want to. In complete comfort.

What some people seem to be missing is that robotic cars offer all that and more, and they will do it at a lower price. They will be even more compelling than a car you have to drive.

An interesting parallel: When elevators first came to multi-story buildings they were dumb. For many years each and every one of them needed a human operator to ensure you had a safe ride to the floor you needed to go to. This was considered normal.

Here's where it get's interesting: When the first automatic or "self-driving" elevators came to market they were safer than ones operated by humans. But many people refused to ride them for fear of their lives. It took some time for people to get used to the automatic elevator, now we get in them without even thinking about it. Autonomous cars will be the same way.

 

[CyberGus]

There's a problem with this autonomy math.

Elon has correctly pointed out that vehicles are underutilized. Most of the time, they are sitting in your driveway or sitting in a parking lot, accomplishing nothing.

Conversely, an autonomous vehicle would be in-service almost always (except for charging/maintenance). It will be 10x more utilized, and thus worth 10x as much! Woo hoo!

Except, if these vehicles are utilized 10x more, then we need 10x less of them. So while there may be a market for them, it won't be the size of the current vehicle sales market (unless they get totaled 10x faster lol)

 

[hemiarch]

There's a problem with this autonomy math.

Elon has correctly pointed out that vehicles are underutilized. Most of the time, they are sitting in your driveway or sitting in a parking lot, accomplishing nothing.

Conversely, an autonomous vehicle would be in-service almost always (except for charging/maintenance). It will be 10x more utilized, and thus worth 10x as much! Woo hoo!

Except, if these vehicles are utilized 10x more, then we need 10x less of them. So while there may be a market for them, it won't be the size of the current vehicle sales market (unless they get totaled 10x faster lol)

Valid point

 

[CyberGus]

Valid point

I have periodic moments of lucidity

 

[HaulingAss]

There's a problem with this autonomy math.

Elon has correctly pointed out that vehicles are underutilized. Most of the time, they are sitting in your driveway or sitting in a parking lot, accomplishing nothing.

Conversely, an autonomous vehicle would be in-service almost always (except for charging/maintenance). It will be 10x more utilized, and thus worth 10x as much! Woo hoo!

Except, if these vehicles are utilized 10x more, then we need 10x less of them. So while there may be a market for them, it won't be the size of the current vehicle sales market (unless they get totaled 10x faster lol)

That's generally true, but I think the number Elon has used is 5X the utilization. And no one can perfectly predict the details of exactly how this will unfold. But another factor when transportation becomes radically cheaper and more convenient is that people will become more mobile. And people in economically challenged countries will see the biggest increase in mobility. Some travel will migrate from buses to cars.

Why do you think fewer cars needed is a bad thing? Think of all the parking lots and garages that will be liberated! The money will be freed up so more people can afford humanoid robots! This is going to take a long time to fully mature, but humanity is at the start of some very interesting times. We just need to avoid destroying ourselves if we hope to get there!

 

[hemiarch]

That's generally true, but I think the number Elon has used is 5X the utilization. And no one can perfectly predict the details of exactly how this will unfold. But another factor when transportation becomes radically cheaper and more convenient is that people will become more mobile. And people in economically challenged countries will see the biggest increase in mobility. Some travel will migrate from buses to cars.

Why do you think fewer cars needed is a bad thing? Think of all the parking lots and garages that will be liberated! The money will be freed up so more people can afford humanoid robots! This is going to take a long time to fully mature, but humanity is at the start of some very interesting times. We just need to avoid destroying ourselves if we hope to get there!

I don’t think it’s bad. Pretty sure Gus doesn’t either. I think he’s just saying that this is something investors don’t necessarily see clearly and estimate value taking into account.

 

[HaulingAss]

I don’t think it’s bad. Pretty sure Gus doesn’t either. I think he’s just saying that this is something investors don’t necessarily see clearly and estimate value taking into account.

I think Gus was trying to say fewer cars needed (with autonomy) was a problem for Tesla's profitability or auto sales going forward (correct me if I'm wrong Gus). As an investor, I don't see it being a problem for a very long time, for a number of reasons:

1) There are approximately 89 million light vehicles sold annually and around 1.5 billion in active service. Even if the number of required vehicles declined by 4/5ths, we would still need 300 million self-driving vehicles. And it would take many years to replace 300 million vehicles with self driving vehicles.

2) New car sales declining by 4/5ths assumes all self-driving vehicles were put into robotaxi service. Many people with enough means would not do that, they would buy self-driving cars for their exclusive use, or mostly for their exclusive use (they might just rent the car out enough to pay for itself).

3) Tesla only has 2% market share of all light vehicles globally. Even if the total number of vehicles sold each each year declined dramatically, there would still be plenty of years for Tesla to increase sales by 50% for a number of years. Personally, I think Tesla will not care when their auto growth is over, they will be more focused on licensing AI driving tech to others and the more profitable and pressing problem of continuing to ramp energy storage and humanoid robots (both of which should have even higher margins).

4) Tesla's Nevada factory and production lines to build electric Semi-trucks will be cranking them out next year and they will soon be autonomous. There are approximately 25-30 million diesel trucks to replace and while autonomy might reduce that need to only 20 million, that will be a huge growth market for Tesla for years to come. Autonomy does not increase the utilization of semi-trucks the same way robotaxis reduce the need for cars because trucks are already more fully utilized.

Considering that no one else is anywhere near Tesla in autonomy, the potential autonomous profits available to Tesla over the next 15 years are stupendous. The decline in the total number of vehicles needed globally is a forcing function for this transition, not a net negative.

From my perspective, TSLA as an investment, even at the current p/e of 300 or so, offers the best long-term risk/reward ratio I've ever seen in my nearly 40 years of actively investing. Yes, we will have volatility (it's not out of the question for it to decline to $250 or less over the next 12 months), but that doesn't trouble me at all. That's just how the market works when it comes to valuing speculative growth. Depending upon how this unfolds, it's also possible you will never be able to buy TSLA for under $400 again. If I was trying to build a TSLA position I would hope it goes as low as possible in my wildest dreams and build a position by constantly cost-averaging new buys as it dropped, accelerating my position building the lower it went. I would probably save some dry powder for when it looked like it may have bottomed and go in heavy. But only with money I didn't need for at least 5 years.

I'm all about finding safe places to put my money and cash is far riskier than TSLA shares in the long-term because cash is not a tangible asset, and it's not productive. Gold is only one of the two (a tangible asset but not productive). TSLA is both. Volatility is not risk unless you need a short-term investment. Most people are investing for retirement (or perhaps hoping that by investing well they can take an earlier retirement or quit their job and start their own business). It's very rare to find a company with this many high-margin, high growth opportunities and diverse sources of revenue. That makes Tesla more like a high-growth mini-mutual fund (basket of several stocks). Long-term they will likely do better than the market even if only one of their three or four big irons in the fire succeeds in an outsized manner. That's what de-risks a long-term investment in Tesla. I think at least three of four will be outsized successes. And I don't think Elon is done with new initiatives, it's just that right now he has his plate full with some very good ones, there could be new initiatives several years down the road. If I've learned anything about the way Elon thinks it's that the sky is NOT the limit. That's the kind of thinking I want to invest in.

 

[hemiarch]

I think Gus was trying to say fewer cars needed (with autonomy) was a problem for Tesla's profitability or auto sales going forward (correct me if I'm wrong Gus). As an investor, I don't see it being a problem for a very long time, for a number of reasons:

1) There are approximately 89 million light vehicles sold annually and around 1.5 billion in active service. Even if the number of required vehicles declined by 4/5ths, we would still need 300 million self-driving vehicles. And it would take many years to replace 300 million vehicles with self driving vehicles.

2) New car sales declining by 4/5ths assumes all self-driving vehicles were put into robotaxi service. Many people with enough means would not do that, they would buy self-driving cars for their exclusive use, or mostly for their exclusive use (they might just rent the car out enough to pay for itself).

3) Tesla only has 2% market share of all light vehicles globally. Even if the total number of vehicles sold each each year declined dramatically, there would still be plenty of years for Tesla to increase sales by 50% for a number of years. Personally, I think Tesla will not care when their auto growth is over, they will be more focused on licensing AI driving tech to others and the more profitable and pressing problem of continuing to ramp energy storage and humanoid robots (both of which should have even higher margins).

4) Tesla's Nevada factory and production lines to build electric Semi-trucks will be cranking them out next year and they will soon be autonomous. There are approximately 25-30 million diesel trucks to replace and while autonomy might reduce that need to only 20 million, that will be a huge growth market for Tesla for years to come. Autonomy does not increase the utilization of semi-trucks the same way robotaxis reduce the need for cars because trucks are already more fully utilized.

Considering that no one else is anywhere near Tesla in autonomy, the potential autonomous profits available to Tesla over the next 15 years are stupendous. The decline in the total number of vehicles needed globally is a forcing function for this transition, not a net negative.

From my perspective, TSLA as an investment, even at the current p/e of 300 or so, offers the best long-term risk/reward ratio I've ever seen in my nearly 40 years of actively investing. Yes, we will have volatility (it's not out of the question for it to decline to $250 or less over the next 12 months), but that doesn't trouble me at all. That's just how the market works when it comes to valuing speculative growth. Depending upon how this unfolds, it's also possible you will never be able to buy TSLA for under $400 again.

I'm all about finding safe places to put my money and cash is far riskier than TSLA shares in the long-term because cash is not a tangible asset, and it's not productive. Gold is only one of the two (a tangible asset but not productive). TSLA is both. Volatility is not risk unless you need a short-term investment. Most people are investing for retirement (or perhaps hoping that by investing well they can take an earlier retirement or quit their job and start their own business). It's very rare to find a company with this many high-margin, high growth opportunities and diverse sources of revenue. That makes Tesla more like a high-growth mini-mutual fund (basket of several stocks). Long-term they will likely do better than the market even if only one of their three or four big irons in the fire succeeds in an outsized manner. That's what de-risks a long-term investment in Tesla. I think at least three of four will be outsized successes. And I don't think Elon is done with new initiatives, it's just that right now he has his plate full with some very good ones, there could be new initiatives several years down the road. If I've learned anything about the way Elon thinks it's that the sky is NOT the limit. That's the kind of thinking I want to invest in.

I too think the Kool-aid is delicious. You’re amongst friends.

 

[HaulingAss]

I too think the Kool-aid is delicious. You’re amongst friends.

I trust you know "drinking the Kool-aide" is a reference to LSD. I've experimented with that, and what I've been talking about is about as far from hallucinations as you can get. It's critical as an investor to not base your decisions on hallucinations. Personally, I think anyone willing to plunk money down on GM or Ford stock must be hallucinating. I don't know, maybe they could rebuild themselves, but I might need a lot of Kool-Aide to imagine that!

 

[hemiarch]

I trust you know "drinking the Kool-aide" is a reference to LSD. I've experimented with that, and what I've been talking about is about as far from hallucinations as you can get. It's critical as an investor to not base your decisions on hallucinations. Personally, I think anyone willing to plunk money down on GM or Ford stock must be hallucinating. I don't know, maybe they could rebuild themselves, but I might need a lot of Kool-Aide to imagine that.

Not what I meant. More of a Jonestown reference is where I was going with that. Kidding aside, I agree with you. I don’t trade TSLA, I invest in it, and when I zoom out and see the entire forest, it is wildly underpriced today. No reason to “time” anything. I just buy as much as I can when I can.

 

[Pops]

People still have no idea just how many trillions of dollars autonomous driving is worth lol. Not only will robotaxi, robovan, and eventually a cargo robo-carrier completely eclipse individual sales of vehicles, but we will look back on day and laugh that we privately owned them in the first place.

I think you are just expecting an unreasonable timeframe for all of this to transpire.

I really doubt it. In the future it's going to be such a commodity and commonplace that no one company will dominate the market. The auto market is currently bigger than autonomous driving will ever be.

Think about it, in America most home's own one or more vehicles. Assuming autonomous driving takes over that would mean less vehicles are being created. One vehicle could serve dozens of families or more. Less production means less revenue and less profit for companies. It will reduce expenses for customers, and they will spend those savings in other industries.

This race to autonomous driving is a race to the bottom for the automotive industry. It will benefit society as a whole though.

Public transportation is facsimile, and it's so unprofitable that it is subsidized by government.

 

[hemiarch]

I really doubt it. In the future it's going to be such a commodity and commonplace that no one company will dominate the market. The auto market is currently bigger than autonomous driving will ever be.

Think about it, in America most home's own one or more vehicles. Assuming autonomous driving takes over that would mean less vehicles are being created. One vehicle could serve dozens of families or more. Less production means less revenue and less profit for companies. It will reduce expenses for customers, and they will spend those savings in other industries.

This race to autonomous driving is a race to the bottom for the automotive industry. It will benefit society as a whole though.

Disagree. The hardware required to provide the service of transportation will be significantly less and by extension car manufacturing but the service need will remain and as cost decreases, even increase in volume.
the key is finding a way to move on from being blue-bird to being the the school bus driver and the logistics company that sends them to the schools.

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