I just wanted to discuss where I see things are with Tesla at the moment.
As expected Plaid Delivery day had minimal affect on the stock price, actually I don't think it went
down for once. Unlike how most Tesla events tend to unfold. And the stock price seems to be out of
the 500s which gives us a bit more breathing room. These slight adjustments aren't overly important.
These small events have minimal overall impact on the stock price. For the stock price to move
then Tesla need to really prove that they are capable of delivering some of their promises.
But its manufacturing, it takes time, you can only make cars so fast.
It's not like trying to get people to sign up to Facebook, the process is much slower. But no,
we need an event that really makes an impact to that stock price, and takes it to it's next cycle,
where it might trade between $1500 and $2000 stock price. Well everyone is hoping for FSD,
and we now even have an AI day, where we may get some more information on FSD.
Not to mention new releases expected very soon. But what if Tesla suddenly announce,
FSD is now complete. What does that even mean? It's already better than a human now, if you
measure it by fewer accidents. How much safer does it have to become to be considered level 5?
My point is, I don't think Tesla announcing that FSD is now level 5 feature complete
will have a major impact on stock price. I think it just goes over people's heads too much.
Then there will be all the regulation to get through. This might take some time
too. In other words, I am not sure it's going to be FSD that get's the stock moving any time
soon. And I know there are some people who expect robo-taxis even next year.
I can't really see that happening this first half of the decade at least. Whilst I don't
want to dismiss the entire idea, I don't want to bet on that occurring with my investment.
In other words, I dont add too much value on to Tesla's stock price, for robotaxis. It's
more like a lottery ticket. Therefore, for all of you wondering, when will the stock price recover,
or go u p, or move again. Well there isn't anything on the near horizon really. It could
be quite a flat year. Q2 will likely be another record quarter, which is amazing, possibly up 20%
from Q1, which is a big jump. And if its a good earnings then maybe we might be seeing 700 again.
But we are still floating around the same price brackets. It wont send the stock to the moon.
We want to move into the next cycle, where we can feel really happy because the stock price
has doubled again. That's what really matters, all this 10% up and down stuff, is just noise.
What are the next events that will make the stock take off again?
Now supposedly we should get a model 2 reveal at the end of the year,
I have a feeling that will be delayed, possibly the entire model 2 project all together.
But even if it was unveiled, I still dont think it would be a major factor on the stock price.
If they did however, announce the factory and start building the model 2 factory. Then that
will no doubt display a bit more conviction and confidence into the model 2 project. Which would
likely move the stock up a bit for a while, but its not going to really send it to the next level.
Either way, I don't think Model 2 will be the catalyst we are looking for or at least not
until once Model 2s are coming off the production line, that will definitely give the stock a boost,
but it's likely we will encounter events before then that allow the stock price to enter its next
cycle. Events more like if Tesla can demonstrate that they can scale Texas and Berlin, and reach a
capacity of around perhaps 50,000 units a quarter for each by Q2 next year. Then that should be a
good enough indication that these new factories should be capable of reaching a run rate of over
a million units a year before the end of the year. That would take Tesla to a run rate of around 2
million units a year by the end of next year, or for ease of understanding, let's say 500,000 units
in Q4 2022. Also remember the majority of these units are now Model Y, and most of them are using
4680s and structural packs, with die castings. So the profit margins will be much higher.
Along with the new S and X back with even higher margins. Once these numbers start getting out,
and more projections are done for more ramping up, then it becomes easier to project Tesla's future,
and thus assign a higher stock price. As important as these 2 factories are,
they are also going to be the proof of the 4680 batteries. We are going to witness just how fast
Tesla can ramp up their 4680 battery production with these 2 facilities and their own purpose
built 4680 factories. This really is the most important part of the company in my opinion.
It sounds like Tesla is starting with 50 GWh a year of batteries. I believe that the
new Model Ys will be much lighter weight than the existing. And what would make more sense,
to increase range and performance, or reduce the required batteries and increase margin.
I would say most likely the latter. For Germany and Texas Model Ys,
the range and performance will likely be similar to Fremont and Shanghai,
but there will be a weight difference, due to all the manufacturing advancements like casting molds
and structural batteries. What I am saying is that I think the Long Range model Ys might be fine with
just 70 kWh batteries from Berlin and Texas, compared to 82 kWh from Fremont and Shanghai.
Which means Tesla could get about 715,000 Model Ys a year from Germany at 50 GWh/yr.
We have heard that Tesla have plans to increase that to 250 GWh a year of battery production.
Elon said "I think it will possibly be the largest battery cell plant in the world. I think it will
be the largest. It will be capable of over 100 GWh per year and possibly over time, it will be going
over 200 to 250 GWh. I m pretty confident that at that point, it will be the largest battery
cell plant in the world." FYI, at 250 GWh a year, we are likely talking over capacity of
3.5 million Model Ys. But that battery factory would obviously be used for other vehicles,
with enough capacity to cater to a Model 2 factory possibly. This is why we must just be patient
right now. Sometimes in investing you just have to sit and wait. There is nothing else to do,
right now, the company really is relying on the progress of these two factories. But just look
at them, Tesla are not messing around. They are already accumulating casting molds for future
vehicles. No time is being wasted. They are even testing out the new Berlin paint shop already too.
This does not look like a company that are messing around. Every minute of the day is being utilized
in order to get these cars off the line as soon and as quick as possible. They are not acting like
a company that can't achieve their missions. They are behaving more motivated than I can imagine.
They can't wait to get cars rolling off this line. Compare this with a company like Nikola,
that couldn't even break ground on building their own factory. Everything Tesla is doing
looks like its on the right path to their mission that they have set out for themselves.
Even if for some reason these factories or 4680s get delayed a further 6 months,
yes it would hurt the stock price, but as long as it eventually came to fruition,
it would be fine in the long run. The fact Tesla can achieve this eventually is enough in reality,
as its such an accomplishment. I know I talk about 4680s a lot, but any evidence of their progression
means a lot of us make a fortune. We will very likely see the progress we are looking for
on these factories and 4680 batteries some time next year, maybe around Q2. As long
as we have enough information to roughly calculate the capacity of Berlin and Texas,
and then how long it will take Tesla to reach it. For example if they each had a
capacity of 1 million units/yr, and Tesla reached capacity by the end of next year,
then by that stage Tesla will be over 3 million/yr run rate. The other major event that can take
Tesla's stock price to a new cycle is the EV tax credit. If it means Tesla can get perhaps
over 50% more gross profit for every vehicle sold in the US, their largest market, then
they might open more factories in the US, and take advantage of these incredibly high profit margins.
Eventually the numbers will come in, and suddenly Tesla's stock price will react. It wont be
difficult math to work out how much more profit Tesla will make with twice the factory capacity.
Although gross profit may be up 50%, it would likely mean net profits are up close to 3-400%.
The earnings per share figure, that Wall Street cares about so much. If the market sees Tesla
with EPS up that much, then it will react, and the stock price should enter another cycle.
It sounds like Tesla will have these tax credit to themselves for sometime,
as GM and Ford don't sound like they are targeting a million annual sales by 2025. Tesla could just
keep making tons and tons of Model Ys. They could get to 5 million in the US. And they
may eventually be down to $30,000 with the tax credit for the consumer. So many consumers will
want one. That would be exceptional value. It may end up being some mid-range version perhaps,
to reach the right price point, with 300 miles of range. But my point is, Tesla can
certainly keep the demand up in the states with that tax credit. Every car will sell.
It likely won't take too long for investors to work out how much more profit Tesla are achieving
with the tax credits, particularly from the Texas facility. Then with the announcement of another
factory in Texas and/or North East US. Then it should give the stock price a serious boost.
If Tesla were selling a million cars in the US, and the tax credit generated an extra $5,000
profit. Then that's $5 billion extra earnings every year before tax. I would have thought
these numbers would take the stock price to the high teens, around $1500 to 1800 stock price.
Of course don't forget these two events are not mutually exclusive. They can both occur together.
Which would mean there's a high possibility we are well over $2,000 stock at that stage. Anyway,
patience is part of the game of investing. But it sounds like Tesla are working hard enough for
all of us and not idly sitting by watching this unfold. But next year will hopefully take Tesla
to the next level. So hang in there as usual, and dont get too bothered about the daily price
fluctuations, as long as these events are still on the cards. Ignore any FUD in the meantime.