For the record, I thought I would just try and give an analysis of where I see Tesla
as a company to invest in today, and my thoughts with that.
I am obviously a bull, perhaps a super bull even.
But I reached this level in a pragmatic approach, through thorough analysis.
Now there are people more bullish than me, that can arrive at that confidence without
having to do such indepth analysis.
Some people just believe in Elon so much, they have blind faith into what he does, and
will just invest in Elon either way, and they will be quick to advise you as to never bet
against Elon.
These bulls might get their conviction just because they saw a Space X rocket land, and
figured if Elon can make that happen, then he can probably run a car company alright
too.
And to be honest I can only imagine how astonishing it must be to watch a SpaceX rocket land.
If any of you have seen, then please let me know in the comments, or even if you know
somebody who saw.
Anyway, I just thought I would explore the
angles I see Tesla, and why I also deem it potentially as valuable as some of these hyper
bulls, I just had to arrive their my own way.
And yes, I have faith in Elon and believe he will run Tesla well, but I also like seeing
the progress too, and generally as Tesla investors, the progress is delayed, which can make it
a bit harder to wait, especially when said progress is exciting enough to perhaps double
or triple your net worth.
Yup, patience is certainly required as a Tesla investor, luckily in the meantime you can
listen to Tesla Economist to maintain your enthusiasm through the journey.
Now, I see Tesla as the future.
But it's not binary, as in either Tesla is the future, or it goes under.
There is a lot of in-between potential, and in a lot of industries.
Oh and these industries are some of the biggest in the world.
For my valuation purposes, I mainly focus
on vehicle sales.
Why?
Because that's what Tesla have proven themselves on so far.
They have proven they can make an exceptional car, that is so highly coveted that they are
selling with over 30% gross margin.
And that this was such a difficult process, that no one else is able to make EVs at a
net profit, and thus Tesla can keep their gigantic margins, likely for a very long time,
and also likely even improve on them further.
I know everyone likes to be clever with their definition of what Tesla is, it's an energy
and car company, it's a robotics AI company, etc.
For me, I keep it simple, if I see 99% of the profit come from car sales, I label it
a car company, at least for now.
But it's in a niche still, as it's an EV company.
Until EVs are no longer the niche, and are the establishment.
My safe bet is Tesla is a car company, and despite that p/e ratio being known for being
notoriously highly.
When you factor in Telsa selling a decent number of units, then that p/e ratio also
gets to normal, as an actual car company, rather than valued like some tech AI company
p/e ratio.
Yea, once Tesla hits around 3m units a year, then you will see real economies of scale
kick in.
This is a similar number of sales Mercedes and BMW manage.
The thing, Tesla is aiming to grow to 20 million units a year, so there is still so much vehicle
growth.
I think FSD should be allowed in a couple
of years, at least in the US.
I don't think this will be quite the make or break of the company people think.
But I think it could add an extra 5% on to operating margin, so it will definitely help,
and that's with an adoption rate of about 1 in 3.
But Tesla make so much money with their auto sales, its hard to match that much profit.
If the adoption rate ends up being much higher, then it will do a lot more for the company.
And perhaps it will be with more subscription.
At a rough guess, FSD complete should boost the stock price 50% or so from the car business
valuation.
We are excluding Robotaxis potential there.
I don't really think about the energy side
of the business too much.
I think Tesla's stock price would already be 3 to 5 times what it is today, before this
side of the business starts ramping up to anything serious.
It is pointless ramping energy until Tesla have in-house LFP cells.
It's also bad business using these cells in energy, if Tesla are still battery constrained
with vehicles.
Therefore I think the auto business is going to take precedent from the energy side, and
may not see anything noticeable for probably another 5 years.
The numbers so far are good, I would invest
in this company still even if that's all Tesla was.
It's still more than the company I did invest in initially.
But then we move on to the nutty numbers.
Robotaxis, there's little point including Robotaxis into the other business, as these
numbers get so big, the rest of company is pale in comparison.
I think of Robotaxis like a lottery ticket, and quite a few of our numbers have already
been called.
If it happens then add another 0 on the stock price.
Now you might think, well thats stupid Robotaxis arent going to be a thing, alright, fair enough.
But there were also people back 10 years ago, telling other Tesla investors, that electric
cars wont be the future.
Some people, or investors, just seem to envision futures better than others.
They are determined they are right and it makes so much sense to them, that they invest
into this future coming into fruition.
I am sure there are people investing into Tesla solely because they believe Robotaxis
are going to be huge, just like how we invested in Tesla because we thought EVs were going
to be huge.
So there's your 10 bagger opportunity there potentially, if you can see it.
I could see it with Tesla and EVs, despite how few EVs Tesla actually made at the time,
and the fact they were losing money for so long.
Bots as well, I guess a lottery ticket with an even bigger jackpot, but fewer numbers
called so far.
And seriously, I don't think Robotaxis or Bots are at all priced into the stock, they
are perhaps too hard to believe for many.
But for me it was more than just believing that EVs were the future.
It was also looking at Tesla's financials, it was fairly easy to see that there was a
path to profitability.
Their OPEX was relatively low, their margins were high, it didn't take a genius to work
out, that if Tesla can just ramp to this many more cars, then they will make a profit.
I don't see similar numbers on other financial statements I look at, not from any of the
other BEV OEMs.
This was backed by my belief that there would
be enough demand for EVs.
Having to go against the narrative of the media, with a reasonable amount of my life
savings tied up.
But Tesla has a demand problem, was the rhetoric we would hear.
It was so ingrained back then, it's often brought up again just to be mocked, years
later.
Guys, we made it, and it turned out Tesla did have a demand problem, but it was too
much demand, not too little.
And now we are faced with a supply problem
Teslas are loved and coveted products by everyone,
that sounds like a brilliant company to invested in then.
They made outstanding products and everyone wants one.
Now the next issue is to resolve the supply issue in order for Tesla to deliver to this
demand.
Which is where we are today.
We can do numbers at Tesla selling 3 million vehicles a year, or even 10 million, and they
all spectacular.
Now we just want to know how and when Tesla can reach this next level of production.
We have these new factories, yet they are constrained by battery cells.
But we have a cell factory Tesla are already working on, and we have even seen working.
They are now hopefully just refining it further, and may need a little bit of time, but once
its functioning, it turns Tesla into a serious powerhouse.
Independent of 3rd parties for the component with the biggest bottleneck, the batteries.
Tesla are getting quite far with their second 4680 factory in Berlin too.
They are not messing around.
But this is the stage we are with Tesla.
We can talk about China and what's happening
there, but it's all likely very temporary, and inconsequential when you look at the larger
picture.
It's really just a distraction, as we are waiting for Tesla to push the button to level
up the company to the next stage.
The button being the 4680 line.
So that is my current view on Tesla.
I think the company is very strong, and I can't think of anywhere else I want to be
putting my money right now.
I am expecting a lot of potential turbulence and want to be ready for it.
But Tesla feels very solid an investment, it's been crazy what we have seen happen to
so many stocks as of lately.
Even elements from the almighty FAANG getting hammered too, not to mention the rest of the
EV stocks.
Tesla has held strong relative to everything else, and on top of Twitter and Shanghai fiascos.
I feel like I might be able to go from super bull to plaid bull when I see those 4680 lines
in volume production, and I will probably leverage up when I get something concrete.
Anyway, I know times are difficult right now, so I just wanted to give a more overall view
of where I see Tesla as a company today.