Tesla sales climb but miss expectations

[NismoNVT]

Tesla is keenly aware that they need to have a moderately priced EV on the market, and soon. Moderately priced like around $30k. So far, Elon has been kind of tight lipped about having a car like that in their lineup, citing that the profit margin wouldn't be big enough.

However, a couple of days ago he announced that they will be introducing a new model that has about half of the manufacturing cost of a Model 3 or Model Y and will be extremely efficient to produce with regards to how much factory space and labor along with some commonality of major components. So you know he has been working on a solution for a long time and is getting ready to spring and once again, stun the market. Although I hope it is more tangible than the long delayed Cybertruck.

So for example if this new model is available as of January of 2024 as are EV's from Toyota, Ford, GM, Nissan, Honda, Hyundai and Kia, all selling for about $30k we'll have to see which ones are the top sellers, are the best performers and the most reliable. But smart money says the best vehicle is going to come from the manufacturer who has more than 10 years experience making EV's, has almost unlimited capital and the best engineering staff. I guess we'll find out soon enough.

60% of vehicle costs are in the battery
30% margin
40% to run the company.

There biggest cost is the battery, thats what they need to reduce costs in. While Tesla has a proven engineering advantage, their tech advantage in terms of reducing battery costs achieving 30k cars is not happening anytime soon.

 

[JeffKeryk]

60% of vehicle costs are in the battery
30% margin
40% to run the company.

There biggest cost is the battery, thats what they need to reduce costs in. While Tesla has a proven engineering advantage, their tech advantage in terms of reducing battery costs achieving 30k cars is not happening anytime soon.

My crystal ball is no better than anyone else's. But Tesla is working on battery tech (and cost reduction), and they have the capital to do it.
To build a $25K car with Tesla's margin requirements makes such battery cost reductions a requirement.
The converse is true as well; how will the big boys compete?

 

[GON]

My crystal ball is no better than anyone else's. But Tesla is working on battery tech (and cost reduction), and they have the capital to do it.
To build a $25K car with Tesla's margin requirements makes such battery cost reductions a requirement.
The converse is true as well; how will the big boys compete?

Jeff, how has Tesla's merger with Solar City helped or hurt Tesla's business plans?

 

[DwightFrye]

If Elon says that they are close to being able to manufacture a new model that will cost roughly half of what it costs to manufacture the Model 3 and Model Y I will assume that he means the cost will include everything,all parts, battery, labor, the whole enchilada.

When ? "Anytime soon" to me means around the beginning of 2024. That's pretty soon. If he means by 2025 he'd better put more effort into it as by then we will undoubtedly see competition in that price category. But other than the semi and Cybertruck Elon has shown that Tesla is capable of doing things much faster than anyone has ever imagined and I'll take him at his word that he's not blowing smoke.

 

[JeffKeryk]

If Elon says that they are close to being able to manufacture a new model that will cost roughly half of what it costs to manufacture the Model 3 and Model Y I will assume that he means the cost will include everything,all parts, battery, labor, the whole enchilada.

When ? "Anytime soon" to me means around the beginning of 2024. That's pretty soon. If he means by 2025 he'd better put more effort into it as by then we will undoubtedly see competition in that price category. But other than the semi and Cybertruck Elon has shown that Tesla is capable of doing things much faster than anyone has ever imagined and I'll take him at his word that he's not blowing smoke.

The question is, where is Tesla gonna build the car? Giga Shanghai has been working on the project (my understanding) but geo-political conditions throw a money wrench into that. Fremont (not likely) is maxed, even though they talk about more expansion (Roadster 2). Austin continues to ramp the Y and is trying to complere the Cybertruk line. Berlin? Doubt it. But it will be a well tuned, automated line that cranks out them puppies like hotcakes.

 

[NismoNVT]

If Elon says that they are close to being able to manufacture a new model that will cost roughly half of what it costs to manufacture the Model 3 and Model Y I will assume that he means the cost will include everything,all parts, battery, labor, the whole enchilada.

When ? "Anytime soon" to me means around the beginning of 2024. That's pretty soon. If he means by 2025 he'd better put more effort into it as by then we will undoubtedly see competition in that price category. But other than the semi and Cybertruck Elon has shown that Tesla is capable of doing things much faster than anyone has ever imagined and I'll take him at his word that he's not blowing smoke.

If they cant seem to produce the $35k Model 3 or $39 Model Y in volume quantities, why do we believe Tesla will be able to roll out an even lower cost product within 2 years without any delays? Again not saying Tesla wont eventually launch a lower cost model, I just dont see Tesla being able to reduce battery costs that quickly.

 

[JeffKeryk]

Jeff, how has Tesla's merger with Solar City helped or hurt Tesla's business plans?

Way over my head... Maybe I can do some reading.

 

[javacontour]

Which begs the question, what's arong with Ford? Does the market have no confidence?
And what about their margins? One would think, with their storied history, they would know how to make a decent return on operations.
It is believed that Ford is now losing money on every Mach-E they sell. Bloomberg article.

Just gut feeling, the real answer for both is a valuation somewhere in the middle.
Of course Ford has higher legacy costs and sells through a dealer network they are locked into.

It would be interesting to see what a spin-off brand that is not bound by selling through dealers would do for any auto maker.

Tesla certainly has a charismatic front-man and that doesn't hurt.

Personally, I think the numbers for Tesla are unsustainable, but are probably better than Ford's future. But Ford probably shouldn't trade as low as it does.

What I find hard to swallow is that EVs are what 1-3% of the market, but Tesla has a valuation that is more than Ford and GM combined.

That's some faith in what the future holds for Tesla.

Time will tell if it is well placed.

 

[GON]

The question is, where is Tesla gonna build the car? Giga Shanghai has been working on the project (my understanding) but geo-political conditions throw a money wrench into that. Fremont (not likely) is maxed, even though they talk about more expansion (Roadster 2). Austin continues to ramp the Y and is trying to complere the Cybertruk line. Berlin? Doubt it. But it will be a well tuned, automated line that cranks out them puppies like hotcakes.

Read an article (no idea if accurate whatsoever) that Rivian is on its last leg. If possibly accurate, that could free up a plant, except that plant is in a state that is not friendly to right to work.

 

[JeffKeryk]

Read an article (no idea if accurate whatsoever) that Rivian is on its last leg. If possibly accurate, that could free up a plant, except that plant is in a state that is not friendly to right to work.

Lost $1.7B last qtr, laid off 800 workers, had a big recall. That's the life of a startup.

 

[CKN]

Have seen quite a few Rivian pickups where I live.

 

[JeffKeryk]

Have seen quite a few Rivian pickups where I live.

Me too. Only 1 or 2 Lucid Airs. Lotsa Taycans. And the Model 3 is the new Corolla.

 

[NISMO_JUNKY]

If Elon says that they are close to being able to manufacture a new model that will cost roughly half of what it costs to manufacture the Model 3 and Model Y I will assume that he means the cost will include everything,all parts, battery, labor, the whole enchilada.

When ? "Anytime soon" to me means around the beginning of 2024. That's pretty soon. If he means by 2025 he'd better put more effort into it as by then we will undoubtedly see competition in that price category. But other than the semi and Cybertruck Elon has shown that Tesla is capable of doing things much faster than anyone has ever imagined and I'll take him at his word that he's not blowing smoke.

The way he speaks/thinks I would say he isn't blowing smoke either, but inhaling it! Dude is more annoying to watch than Trump and that speaks volumes. Both are drama queens!

 

[NismoNVT]

Read an article (no idea if accurate whatsoever) that Rivian is on its last leg. If possibly accurate, that could free up a plant, except that plant is in a state that is not friendly to right to work.

Boutique EV makers like Rivian are going through production "hell", while simultaneously trying to navigate their future. The margins on the Rivian products are next to nothing/loss making. Rivian's idea of appealing to the up market lifestyle enthusiast is great, but most of their ideas are very complex in execution. I would say think of them as Tesla at the point where they were producing cars not as a car company, but an engineering experiment from folks who come from outside the industry.

On the other hand its also perplexing as to how boutique car companies like Rivian, and Lucid are going map out there future. They dont have cheaper products to sell in volume. Their higher priced competition is being outsold by Tesla, who even themselves have to deal with softening demand in that territory.

 

[GON]

NNVT,

Your post brings up many thoughts, appreciate it. One thing, although Rivian appears to have lost well over two thirds its market cap, Rivian is still valued at 30 billion dollars. I have no idea how RIVN gets to that market cap, but 30 BIL is nothing to sneeze at. In comparison, global automaker Stellantis has a market cap of 42 Billion.

Your point that Rivian is essentially a boutique EV maker is well received. With only one worldwide plant, RIVN likely would have to make a flawless product 24x7, without meaningful competition to sustain as an automaker. I suspect if RIVN manufactured an EV that was a worldwide nitch, heavy demand, and no competition- the story for RIVN might be different. So, they only way forward I speculate is for RIVN to be merged with another automaker. But who would want RIVN, and why? Maybe a Chinese firm to get a foothold into the North American pickup market? Beats me.

For TSLA, I have no idea what their end game may be. But I sense Elon has a plan to achieve some type of critical mass, where he can collect (command) some kind of monthly fee from many TSLA owners, similar to how Jeffrey collects a prime monthly fee from many AMZN users.

Fascinating.

 

[NismoNVT]

NNVT,

Your post brings up many thoughts, appreciate it. One thing, although Rivian appears to have lost well over two thirds its market cap, Rivian is still valued at 30 billion dollars. I have no idea how RIVN gets to that market cap, but 30 BIL is nothing to sneeze at. In comparison, global automaker Stellantis has a market cap of 42 Billion.

Your point that Rivian is essentially a boutique EV maker is well received. With only one worldwide plant, RIVN likely would have to make a flawless product 24x7, without meaningful competition to sustain as an automaker. I suspect in RIVN manufactured a EV that was a worldwide nitch, heavy demand, and no competition- the story for RIVN might be different. So, they only way forward I speculate is for RIVN to be merged with another automaker. But who would want RIVN, and why? Maybe a Chinese firm to get a foothold into the North American pickup market? Beats me.

For TSLA, I have no idea what their end game may be. But I sense Elon has a plan to achieve some type of critical mass, where he can collect (command) some kind of monthly fee from many TSLA owners, similar to how Jeffrey collects a prime monthly fee from many AMZN users.

Fascinating.

Rivian has been experimenting on the commercial fleet side of things, which makes some sense, especially with a desire for last mile delivery services growing. I do think that their platform if simplified might be one of their positive pivots but at the same time, commercial fleets tend to require larger discounts so not all peaches and creme.

I dont think Rivian or any other EV boutique maker is prime candidate for a merger; they either put up or get sent packing as any other startup. Lordstown (smh) was the only exception but so many *** moments.

Tesla's end game was establishing itself as valid competition amongst the status quo. I think they have done that, and any other additional plans for increased revenue is just the cherry on top. FSD is sort of what you are alluding to, but it seems subscription based features are a not a thing in their present guise. Even Tesla's FSD take rate is not that high (different from autopilot which is standard Level 2 ADAS), and most other OEMs offering a step in that direction is met with great resistance (bmw heated seats, Toyota Remote start).

 

[JeffKeryk]

Ford invested $500M in Rivian in April 2019. The two companies announced plans to develop electric trucks together. Those plans never came to fruition, but Ford kept its investment in place.

That investment is worth like $10B today. I would not be surprised if Ford scooped up Rivian if things get too tight...

 

[alarmguy]

Ford invested $500M in Rivian in April 2019. The two companies announced plans to develop electric trucks together. Those plans never came to fruition, but Ford kept its investment in place.

That investment is worth like $10B today. I would not be surprised if Ford scooped up Rivian if things get too tight...

It never ceases to amaze me how bad corporate decisions in board rooms are made everyday, that cost billions of dollars in loses, some companies cant get out of their own way and it never seems to change ... and why my comments, like when it comes to GM ... maybe, after decades Charle Brown will finally kick that football before Lucy pulls it away...
but I just dont know, how these people can run corporations into the ground, but then again, look at what we do as voters. (no politics)

 

[GON]

It never ceases to amaze me how bad corporate decisions in board rooms are made everyday, that cost billions of dollars in loses, some companies cant get out of their own way and it never seems to change ... and why my comments, like when it comes to GM ... maybe, after decades Charle Brown will finally kick that football before Lucy pulls it away...
but I just dont know, how these people can run corporations into the ground, but then again, look at what we do as voters. (no politics)

AG,

The Ford family has owned the Detroit Lions since OOA 1963. I have not researched it but heard someone say the Lions have been the very worst performing team in the history of the NFL. It is mind blowing if one connects the dots. The apple doesn't fall far from the tree.

 

[Snagglefoot]

Today is an interesting day, numerically. Tesla’s 52 week high is 414.50. Today, it’s price is $207.32 as I write this. It’s almost exactly half of what it’s high was this year. Do doo, Do doo. The Twilight Zone.