Of course, you're bullish you're bullish on Tesla in the long term in the here
and the now cut production focus, is that the demand to meet it?
Well, you're absolutely right. You know where our focus is over the
five year forecast. You know, tussles are top position in
our CAC You ETF, but so in terms of, you know, this production goal, you know,
they did mention I think if you go back to 2020, they are still on track over a
number of years to meet their 50 percent compound annual growth rate.
I think that the fears of margin and demand troubles are pretty overblown.
You know, our research, we've used REITs law to forecast Tesla's gross margins
over time. And basically for every cumulative
doubling in production, you get a corresponding reduction in price.
We also know that they're unveiling a new vehicle platform, which is should be
roughly half the cost of the Model 3 and why I think that could be a custom built
autonomous vehicle that's going to help margins.
It's going to give a huge bump to margins in the long term because I think
autonomous platforms could have really attractive margin structures and
recurring revenue associated with them. And then, you know, the last thing I'll
add is like the main story here is that these are growing.
Right. So even ISE as a category grew 60
percent year over year while gas powered cars were down like 7 percent.
So that's where Tesla is. I'd be worried about traditional autos,
if anything. Are you worried in any way about the
impact of Elon Musk himself on demand for Tesla's going forward?
Is in any way that being shown up and the demand erosion?
Yeah. You want Musk has always been a pretty
controversial figure. You know, I'd say at a minimum.
What do we have to go by? It's really Tesla's results against a
Tesla alone in the fourth quarter, we know grew sales by 40 percent year over
year, while in that same quarter, global auto sales were down roughly 8.
So that's what we have to go off of. You know, he's a he's a cult figure.
I think he's really the person to drive the company towards reaching that full
self driving goal where you can actually launch an autonomous ride held platform,
you know, so we're happy that he's committed to Tesla and sticking on for
that touch.
I want to bring some more information space for our audience about what you
were talking about in the shareholder deck.
Tesla's talking about its next generation vehicle platform under
development. Additional details to be shared at the
Investor Day, March the 1st, 2023. I think that's what you were saying
about you suspect that that is some form of fully autonomous vehicle for the
future. I want it back and bring it back to the
here now again, because a lot of what Tesla hinted at was the problems of 2024
will largely China related. It basically talks about the production
issues largely being centred on the Shanghai plant.
You look at margins where they came and you look around the narrative on ASP
average selling price. We went to our audience, okay.
And we said, did those price cuts in North America, Europe, China push you to
consider buying a Tesla? These are the results pretty clear,
although I would point out they changed over the course of the day, you know,
with a good number of ballots cast, I suppose.
Yes. Test is global price cuts have tempted
at least our audience to buy. Affordability is Tesla too expensive
right now for a consumer? You know, I think so.
First of all, I'm glad you showed that chart.
One of the things that we learned is that since the price cuts lead, times
have actually extended a bit. So we do not you know, we are already
getting sort of initial indications of demand here.
We also know that the price cuts made more vehicles eligible for tax credits.
Of course, we don't actually model tax credits in our analysis.
We think these are the solution longer term compared to gas powered cars,
regardless of regulation. So, you know, I again, I think really
that that's the picture here, that electric vehicles are taking share.
Tesla is the market leader. They just invested an additional
capacity there at a single digit low percentage
points of total auto sales. So I think there's still Tesla is an
evil is again, still single digit percentage of total auto sales as well.
So I think that there's room to grow in both those.
We've got a lot of questions on Twitter for you from our audience as well.
Most of them are related to Tess's energy business.
What did we learn about the energy business going forward?
Will it be more of a store? Yeah, so they did highlight the energy
business recently and again, with that factory expansion.
They talked how they've seen some good growth in our business overall, like our
our model is mostly focused on vehicles. We think that they should while Tesla
Energy does offer a really interesting proposition to consumers and actually
we've done some work to show that energy storage combined with bitcoin mining can
offer a great proposition to even use make more use of renewable sources.
But you know, that aside, what should you focus on for Tesla?
In our opinion, it's electric vehicles and autonomy.
Those are the two main stories here that I'd watch over the next five years.
Yeah. Really quickly.
Gene Munster of Lute points out that they guided to around one point eight
million vehicles full twenty three, which if you track a 50 percent compound
annual growth rate doesn't make any sense.
Based on last year's number. Do you see what I'm saying?
Yeah. So last year, year over year, yes.
It does fall short of that 50 percent. But if you go back to 2020,
you'd still be coming in over that, you know, a few year period
with a 50 percent growth rate. So I think that's what they meant in
their press release. Of course, I'm sure a lot of people will
harp on that figure. But again, I think longer term, the
story is electric vehicles are here to stay.
And I'd be really worried if I was Ford or the other traditional auto
manufacturers where the majority of their installed base and the vehicles
that they sell are gas powered cars, which we see declining.
That's not going away. Run, by the way.
They don't have a great autonomous solution either.
They killed that project. So I think that's where the concern
should be focused here on the traditional auto market.
Actually, the other question from our audience for you is what does Elon Musk
have to say on March 1st at the Investor Day to convince source of that future
that goes beyond Tesla just being a car company?
Well, like I said, I mean, I'm excited to hear more about the autonomous
vehicle. They had said that they would mass
produce a purpose still autonomous car in 20 24.
We think that this could totally change Tesla's business model.
You know, our price target for 20 twenty split adjusted is around fifteen hundred
dollars per share. I think over 60 percent of Tesla's
enterprise value could be attributable to that autonomous ride held platform.
I think we'll have attractive software like margins.
It'll become a recurring revenue stream as opposed to a one off vehicle sales
that we see today. It's going to totally change the game
and they're way ahead. And we see that they have nearly a
billion miles driven in full self-driving data.
They have millions of cars on the road collecting data.
That's much more than competitor.