Tesla Talk

Anyone here going to the Tesla meetup at Powerscourt tomorrow (Sunday 16th)?

Will be up that way tomorrow and might try and drop by...

Tesla earnings report and call last night for Q1 2023. Several questions asked about the price drops and the effect it has on their margins/profit.

In Q1 2022 their operating margin was 19%. Its down to 11% now in Q1 2023, which is likely to go down further in Q2. For reference Toyota,VW are at ~7-8%.

So, I dont think Tesla have alot of room to further reduce prices (or at least by the amounts they did in Jan).

In true Elon style he tried to dress it up by saying that they could sell the cars for zero profit and make money on the services (supercharging, autonomy, service). He is still banking on all hardware v3 cars being fully autonomous and the cars instantly being worth multiples of what they are today once FSD is proven! If only you could take an "Elon promise" to the bank!

Musk confirming on shareholder call they intend to continue cutting prices aggressively. Higher volume, lower margin is the model.

Supposedly ‘significant room to reduce prices further’ as it stands.

Given they’re already selling the 4WD Model Y, excluding grants, for c.€40k in the US, really do wonder how cheap they’re going to get and how any other car manufacturer will be able to compete.

From Bloomberg. Unlikely to ever definitively say ‘we will cut prices soon’ as that would just kill sales I guess.

“Elon Musk signaled Tesla Inc. will continue to cut prices to stoke demand for its electric vehicles, even at the expense of its industry-leading profit margins.

Musk argued he has good reasons for doing so, saying Wednesday that Tesla can financially withstand price cuts

Chief Financial Officer Zachary Kirkhorn said on the conference call that margin shrinkage hasn’t crimped Tesla’s capital expenditure programs to ramp-up output over the next couple of years.

“We have a lot of space before that becomes something we have to revisit,” he said.”

Musk still maintained that Tesla has more demand that production - something disproven many times over at this stage.

Inventories are rising fast, and prices are dropping hard - the very opposite behavior of a business where demand is outstripping supply. Come on.

TSLA down 9.9% as I type.

well that was another key point on the call - Musk said they are ‘unique in the auto industry’ in that they can go to zero margins on the cars and then up sell software like FSD, or acceleration, in future and make their money that way.

lots of analysts raised their virtual hand immediately on the call to question this 😂. He didn’t respond, but they’ve responded today in the market.

he’s really just a relentless lying charlatan at this stage. car margins will be lower than a number of key competitors in Q2. I can’t believe the SEC don’t take him to task more about his fiduciary duty to not lie to his shareholders. So much of what he says ends up being patently disproven in the months afterwards, but by then the news cycle had moved on.

one analyst made an interesting point - that people aren’t buy a Tesla because they are looking for an EV, they’re buying a Tesla because they want ‘A Tesla’, and also said that another issue is that the biggest competitor worldwide to the model 3 is the model Y, which seems to be borne out in the sales numbers.

Exactly

M3P is the best value car in Ireland imo, €53,000 for a 500bhp, Ferrari rivalling 0-100km/h acceleration, it looks well and has great range

The thing is you can use that performance too, I once took a hothatch up the Conor pass in Kerry and around the ring in my youth and even back then it cost me €100 in petrol, the thing was doing 8mpg under hard acceleration up those hills. An M3P on the night electricity rate would probably cost €15 on fuel :)

I dont think it matters what tech they use like Lidar, FSD is not gonna happen, t's like a cure for cancer, always a few years off, they can't even get a racecar to go around a track anywhere close to a human driver, never mind the open road. Things like wet patches, rain, snow, ice, stones on road, the car is hopeless dealing with things or brains process instantly

Looks like Tesla are now raising the price on some of their models! https://www.reuters.com/business/autos-transportation/tesla-hikes-us-prices-2023-04-21/ Feels like the price of a Tesla varies like the price of Tomatoes from week to week! After the stock price crash yesterday, they might be under pressure from shareholders to maintain their profit margins, who knows what Elon will do next. 😅

What shocked me is the price of the new Ioniq 6 in comparison with Tesla. Nice car, but €49k for 151ps and 429km on wltp. Basic cloth seats, plenty of hard plastics and not even an auto mirror..

Whatever about the S, it’s hard to describe X buyers as diehards/holdouts considering the X doesn’t have a direct competitor elsewhere in Tesla. Yes the MY could theoretically seat 7 people but not in Europe AFAIK and not if those people value their legs. Also the rear seats in 7 seat CUV category apparently don’t have any specific safety tests in NCAP or equivalent so it’s debatable how safe that row is seats really is.

I think this is the key point - for the Irish person spending far far north of €100-120k on a family car, it’s very hard to spend that money on something like the X. Warranty and depreciation are the two biggest factors for family car buyers.

saving up to €1000 per year on fuelling a €120k car isn’t really a concern!

I marked a few carzone ads for X’s ages ago (since the start of covid) and they just don’t seem to sell at all in the 2nd hand market too, even though they haven’t been sold here for a few years really.

the only person buying an X new or second hands is a committed, knowledgable Tesla guy.

edit: according to some analyst reports yesterday, indeed the S/X price cut is to encourage people who already bought a car, to follow through and take delivery - they have been holding off delivery in the hope of a price cut

Apparently not. They don’t include those in US inventory numbers. It’s literally parked cars. People knew if there was another price cut, that cars that were ordered but undelivered would have the price cut retrospectively added.

meanwhile, see graph below, US inventory is now higher than ever before and the price cuts are having almost no effect as Tesla continue to produce far more cars than they can sell.

It’s really simple - they have a demand problem.

We know they don’t advertise etc etc, but it’s hard to see how else they can drive new demand from new buyers. So many Y buyers were switching from the 3 too, there’s a lot of cannibilisation.

You can see the drops on the dates the three main price cuts happened, but they obviously can’t keep cutting prices forever. They’ll also have storage costs for this many cars which Tesla traditionally has never needed.

it’s the same story worldwide, and even European inventory is now rising as Berlin has fully ramped up.

If (a big ‘if’) Tesla have indeed got a m2 up their sleeve, now is the time to at least announce it.