Valorantt Valorant Player With Extra Info
Alright we have had a few major news events
occur with Tesla, but I still would like to
get through further analysis of this very
informative earnings call.
I feel like it was a treasure trove of information,
so don’t want to miss any of it.
We are only up to the shareholder questions.
IRA
We are asked about Tesla meeting the thresholds
for the inflation reduction act, and Elon
says they do expect to meet all the requirements.
Tesla seem happy about the act, in that it
will a significant boost to accelerating the
mission.
Along with scaling the battery supply chain
in the United States.
The treasury will publish detailed guidance
before the end of the year, until then it
is difficult to fully determine the eligibility
criteria, but they believe that Tesla is very
well positioned to capture a significant share
of that, for solar storage and of course electric
vehicles.
I am also starting to think that this has
less to do with climate change, and more to
do with the US become independent in energy
and transport, relying on fewer nations to
support their needs.
It is likely an extension of more semi conductor
fabs being built in the US, two big ones are
the Samsung one in Austin and TSMC one in
Arizona.
But yes, we also seem to think that it is
a big deal to Tesla too, and think that there’s
a chance Tesla might even receive the lion’s
share of that.
Of course some people are saying that Ford
or GM will actually overtake Tesla by 2025
or 2026.
These people I assume aren’t great at simple
arithmetic.
This is the Tesla enrichment act.
I keep bringing the tax credits and subsidies
up whenever it’s relevant, as it makes a huge
difference, especially when Tesla are talking
about ramping up to 1000 GWh a year.
Now it sounds like Tesla will hit that level
of production in the US, when the IRA is still
in effect, unless it has already cost too
much prior.
If Tesla are getting $35 per kWh of cell and
battery manufactured in the US then the subsidies
for the cells alone would equate to $35 billion
a year, pure profit.
If Tesla was able to get the cost of their
new platform down to half the cost of a Model
3, it might be somewhere around $15,000, given
that they were selling the SR+ for just $38,000
last year, if that was still 25% margin, then
it was under $28,500 to build.
If this new low cost vehicle has a 40 kWh
battery, then we are talking another $7,500
off the price with the tax credit.
Tesla could sell them for $10,000 and still
profit $2,500, or 25% margin without any other
add-ons.
I think this is going over people’s heard.
SIDE NOTE
A quick side note, what if Tesla are confident
in their 4680 cells, and feel like they could
ramp up very quickly soon, once sorted.
And can perhaps hit half way to this 1000
GWh/yr target by 2025 or something.
Well that would be enough cells for 10 million
of these low cost cars.
Tesla can have as much demand as they want
for these cars, again by adjusting pricing
to create demand.
They could even software limit them to 200
miles of range, and sell them for $32,500
which is $25,000 to the consumer after incentives.
Remember it’s also close to $15,000 equivalent
for an ICE car after insurance and fuel saving.
Not even mentioning depreciation.
This is all possible going by what Elon has
said.
Of course he also said 1000 GWh/yr and I am
just talking about half that.
Then of course Tesla may not even sell them
and might keep them all as Robotaxis, or some
people think they might sell them for about
$100,000, so you can run your own Robotaxi
fleet.
Am I getting to far ahead of myself?
Well so what, what if it’s not until 2027,
it’s still insane.
Tesla’s FSD is going to work, Elon says he
is 100% sure Robotaxis will be a thing.
We can see plenty of people testing FSD Beta,
and the progress being made there.
We are seeing all the right steps in place
for this to happen.
4680s DBE is going to mean they can ramp cells
to this sort of level of production.
Why is this so hard for some people to believe.
If you say I am getting ahead of myself on
all of this, and it wont happen as early as
I expect.
Well all I am doing is repeating back what
we have been told.
4680s are already about one year late, but
I am even more excited about them now, than
after Battery Day.
I can wait, I am prepared to be patient, all
I need to do is research whether or not it
will happen or not.
And all the research I do, and the most credible
people I hear and talk to, all agree this
is going to happen.
And like I say even if its two years later
than when Elon says, then we are almost splitting
hairs.
As in people saying, no Lee you are so wrong,
the stock price wont 6x in 2 years, probably
more like 4 years.
Either way, I am still just as excited, and
its a great return.
Ok perhaps that wasnt a quick side note after
all, moving on.
1000 GWH
Elon responds saying we are basically going
to go pedal to the metal as fast as humanly
possible to get to a 1000 GWh a year in the
US.
Now why doesn’t this surprise me?
What have I been saying lately, especially
with where the US dollar is now, it makes
importing components even lower cost, and
more profitable.
Tesla will focus on the US, as it is going
to be an incredibly profitable market for
them, FSD works best there, it’s a US brand,
their home turf, they want to take market
share before the Chinese, best supercharge
infrastructure, and of course the government
incentives.
A kWh manufactured and sold in the US, is
worth potentially twice as much as anywhere
else in the world.
Elon also says the global recession may be
a lot softer in the US too.
Remember the saying, when the US sneezes,
the rest of the world catches a cold, well
it still holds true, nothing changed, and
we are seeing first hand just how powerful
the US dollar still is, and America is once
again the richest nation by far.
Then Elon reminds us again that this will
be vertically integrated, which a lot of people
condition with lower cost, of which it will
be, but Tesla’s costs are already so low,
I think now the main benefit of the full vertical
integration is that Tesla are able to operate
autonomously.
On similar lines as to what I just mentioned
about the US, are we really sure the government
and Tesla aren’t working together, or did
Elon just make sure Tesla were in the place
at the right time.
America really is moving to further independence.
Perhaps this is part of the subsidies, to
remove more dependence on oil too.
I know everyone likes to think China are going
to be the global super power, but I would
never doubt what the US capable of.
Only a few decades China was still an agrarian
society.
Also if you want to compare markets in the
US, if Tesla are hitting this 1000 GWh a year
run rate by around the same time GM and Ford’s
cell and battery factories are complete, then
excluding Tesla’s other suppliers, then they
have about 75% market share of batteries.
But if Tesla are making these smaller vehicles
with a smaller battery size, then legacy on
average probably use about twice as a large
battery, giving Tesla closer to 85% market
share of domestic EVs, there will be other
EVs too, but Tesla could very well maintain
about 65%, remember Tesla will be the only
EVs that are also AVs too, at least that the
public can purchase.
Now admittedly, I am not counting any of that
1000 GWh as energy supply, which I am still
unsure about, as Tesla would use LFP cells
for that, and we will talk more about what
Elon said about LFP in another video.
We will also try and place a value on 1000
GWh a year in a later video.
BACKLOG
Elon is then asked about future backlog, and
in particular China.
Elon replies saying that China is experiencing
a sort of recession, due to the property market.
He is a little coy about answering China specifics,
but now we know why, and they were intending
on dropping prices.
By the way, I also need to tell you all that
those who did tell me that the price only
dropped to ¥299,000 were actually correct,
and it wasn’t 288,000.
Tesla only dropped the price of the Model
Y, just below the subsidies, which is actually
only a 5% price drop, but it means 8.5% lower
prices for consumers.
So I actually though it was about twice as
bad as it was, and that $250 million loss
in gross profit a quarter, is probably less
than $150 million.
But also remember, this includes extra sales
as well, so the gross profit will actually
be higher than before Tesla ramped up.
We can look into that when we start to make
some estimates for Q4.
Elon also mentions European recession driven
by energy.
Something that Tesla could also eventually
benefit from, once they step up the energy
business.
Tesla appears to be in the right place for
everything that is happening in the world
and can benefit on such a tremendous scale,
as long as they start getting some good production
numbers.
But that’s the thing about exponentials, you
wont see them coming, suddenly they will be
enormous.
Elon also says North America is in pretty
good health, which is another reason, in addition
to the inflation reduction act, I keep saying
how Tesla is going to thrive in the US.
Although he does mention the high interest
rates, but also agrees with my view that the
FED will likely bring them down again.