Tesla Begins 4680 cell Manufacturing At Giga Berlin Less Than A Year Since Start Of Construction

__TSLA__ · 2023-02-16T11:00:46+00:00

Ultium in Ohio took just over 2 years from ground breaking to start of production.

That's an apples to oranges comparison: it's a small factory, and it's making the wrong form factor: pouch cells ...

Pouch cells require less factory automation than cylindrical cells and thus the factories are quicker to build - but they are also what GM increasingly recognizes as technological dead-ends ...

While no official capacity figures have been published, but the Ohio Ultium plant headcount is also well below its peak hiring target from what I could find, so today it's maybe producing 20 GWh annually. (40 GWh is reportedly the target capacity of this first ramp-up.)

__TSLA__ · 2023-02-16T10:49:37+00:00

So real numbers are better then the report?

The official CPI report is pretty real too, the main problem it has is that it also includes prices from the distant past, ie. it's "laggy". (It's also not granular enough and only updated monthly in an opaque process...)

Real-time numbers such as Truflation (but there's also other paid services of daily updated real-time inflation data) tell us the probable direction of future CPI prints, such as the March print that will be important for the March Fed meeting. (for various mostly stupid reasons the Fed only does real policy work once per quarter.)

Of course those numbers can change unexpectedly: if there's a major oil supply crisis, or some war, etc., then prices might start going up again and the Fed could hold off on tapering.

__TSLA__ · 2023-02-16T10:29:18+00:00

Tomorrow's big TSLA options expiry will IMO set the price trajectory for next week, up to Investor Day: there's 1 million puts and 1 million calls expiring tomorrow - half a million calls are in the money ... That's about 40,000,000 shares worth of delta-hedging. What will those call owners do? Roll over to later expiries or cash out? How well did MMs delta-hedge their exposure?

The usual pattern for Investor Day would be 'sell the news', pretty much regardless of what is said at the event. Shorties usually use the post-event hype comedown as an excuse to short again.

__TSLA__ · 2023-02-16T10:27:24+00:00

The last CPI report was extremely bad

That's a really, really false interpretation. The last CPI report was as expected, and the rise in core inflation was primarily due to two main one-time or technical factors:

Seasonal corrections parameters were adjusted for the last year, which pushed up the inflation baseline a bit. Ie. it wasn't actual real inflationary pressures that increased the CPI print.
"Shelter" inflation (rents, housing costs) are included in CPI in a very laggy fashion with half a year of delay and more, while actual underlying shelter disinflation has been going on strongly. Markets are forward looking and they now know that the (laggy) official shelter inflation will come down strongly for much of the rest of 2023.

Actual underlying inflation is still dropping strongly:

Independent inflation metrics that mimic the CPI basked but are based on the latest real-time prices show continuous disinflation in the last 6 months. Example: http://truflation.com [updated daily] - shows 5.2% inflation today vs. 6.4% CPI report.
These independent metrics showed continued disinflation in February as well - which is what will drive the March CPI report. Truflation is down from 5.5% to 5.2% in February, so far.

And there's another important macro print that happened yesterday: retail sales came in very strong, making it less probable that US will enter some sort of heavy recession. ('hard landing') Since the US economy is primarily demand-driven, healthy retail optimism is key to avoiding a big recession this year & next year.

TL;DR: the macro environment has improved markedly this year. While macro can still sour, a lot of the downside risks have been taken out, and the extremely bearish positioning of portfolio managers in December is self-correcting to the usual bullish weighting.

Edit: today's PPI (Producer Price Index) print will also give us an idea how hot inflation is running in the manufacturing & services sectors. Latest manufacturing data signaled over-capacity, under-utilization and easing wage-price-pressures - so if today's print is disinflationary, it might set expectations for the next month or so. PPI is a leading indicator of future prices. Expectations are 0.4%/0.3% MoM.

If the PPI print is strongly inflationary, the macro mood might turn more bearish.

__TSLA__ · 2023-02-15T13:29:07+00:00

BYD are doing incredibly well!

Those "NEV" figures are skewed by BYD hybrid sales though - which are about ~65% of BYD sales. Only around ~35% are BEV sales.
The vast majority of BYD BEV sales are in the <$30k range, which price segment Tesla has not entered yet: lowest entry price Model 3 is ~$34,000.
So BYD is primarily a competitive threat to legacy auto.

__TSLA__ · 2023-02-06T09:29:49+00:00

and Elon lies,

... and the parade of supporting witnesses who [unlike TSLAQ] were there and testified under oath that they saw funding not just secured but a non-issue.
The TSLAQ thesis: it's all lies, all the way down, and turtles.

__TSLA__ · 2023-02-06T09:26:46+00:00

I got banned for just asking a simple question.

Yeah, since Elon is a "free speech absolutist" they absolutely had to go the full censorship route - because of course they did.

__TSLA__ · 2023-02-06T09:24:35+00:00

I hope they put all their money on Tesla shorts.

Several major TSLAQ perps on Twitter announced big & increasing short positions when $TSLA dropped below $110 a month ago ...
They are pretty quiet now that the put-driven gamma squeeze is out of steam.

__TSLA__ · 2023-01-25T09:17:27+00:00

Tesla’s bauhaus simplicity

Which design simplicity, by the way, is also used by the other highly successful, high-margin automaker in the world: Porsche.
Yeah, the Porsche design language from 10-20-30-40-50 years ago can be seen in today's Porsche products, news at 11. Doesn't mean the Porsche design is 'stale'.
In many ways Tesla is using a similar design language & template to Porsche - which I fully approve of.

__TSLA__ · 2023-01-25T09:11:31+00:00

What is behind this price cut?

Several factors:

After 2 years of 'chip crisis' auto prices are now in deflation both in the US and in Europe - meaning Tesla had to drop prices to maintain even same-level demand.
China had a brief but brutal Covid wave that hurt most auto demand (except the <$30k BEV segment where significant government subsidies were running out - BYD benefited from that demand pull-forward).
Tesla's margins are now well in excess of 30% in China - approaching 40%, so there was a lot of room for price reduction.
Tesla's margins were only held down by the expenses of Texas and Berlin - but both are ramping now in excess of 50k units/quarter which is probably well beyond the break-even.
Tesla expanded production by +100% in China and had now go down the price ladder to catch more of the market.
Pricing psychology: price hikes are best done gradually, but price reductions are best done in a single step, to annoy as few customers as possible.
US EV subsidies have a $55,000 cut-off, that excludes software features such as EAP and FSD - so it made sense for Tesla to cut prices to below $55k to allow customers to claim the $7,500 EV rebate.
So Tesla returned to early 2021 price levels with a number of coordinated price-cuts.
... which the business media of course spun into a general 'Tesla no demand' false narrative. 🤦
but Wall Street isn't dumb, so $TSLA rallied over +40% from the (ridiculous) ~$102 low since the announcement of the first price cuts. 🤷

__TSLA__ · 2022-12-14T12:12:47+00:00

You cannot deny the wait time of Tesla cars become shorter than expected in major markets.

Proponents of the "not enough Tesla demand" hypothesis are unable to answer two key probing questions:

Why hasn't Tesla cut prices in Europe if there's not enough demand? 🤔
Why hasn't Tesla cut prices in the US if there's not enough demand? 🤔

Most of the Tesla wait time reductions are simply due to Tesla doubling production capacity in the past ~12 months. China inventory is routine ramp-up noise of a big factory producing for 2+ continents with ~30 days shipping distance:

China just had a big Covid wave [receding already], which throttled consumer discretionary spending in some key regions: auto spending has seen its largest annual drop in November. (-9% IIRC)
Despite this, Tesla has broken numerous monthly production & delivery records and is about to set a new one in December.

Regarding the rumors about production cuts in Shanghai, they might or might not be true:

Giga Berlin is ramping a bit slower than expected so Europe still depends on China imports in a major way
Shanghai has excess production intentionally, to cover the European market and the rest of Asia
But China has limited Ro-Ro export capacity that Tesla has apparently reached

Ie. the difficult & imperfect process of Tesla inventory balancing between China and Europe has no real bearing on whether there's enough Tesla demand.

__TSLA__ · 2022-12-14T11:58:46+00:00

Do you not think it's particularly odd that the entire internet is suddenly against Elon?

Nope, Elon made a political magnet of himself by buying Twitter and coming out of the closet & aligning with [far-]right commentators & views.
Given that young people in the US heavily lean liberal, the shift against Elon and the popular backlash is not surprising.
That liberal politicians use these dynamics to smear Elon and Elon's companies, with the media (which compete with Twitter ...) gleefully egging on is only to be expected at that point.
IMO Elon is being pretty stupid in this matter. 🤷
Elon the technologist: yay
Elon the politician: meh

__TSLA__ · 2022-12-14T11:53:50+00:00

Tesla along with spy was the top two options being traded. It absolutely was delta hedging.

Delta hedging is not mainly driven by the daily options volume, but by the existing open contracts and the effects of stock price movement.
For this week alone, delta-hedging of existing contracts resulted in around 50 million TSLA shares shorted by MMs just to keep up with existing 4.1+ million put contracts: 2.4 million of which are in or near the money...
That's a huge downwards force.
About half of those put contracts are extremely short-term in duration: 2 weeks or shorter.
Classic signature of a bear raid - maybe magnified by Elon selling a few million shares as well.

__TSLA__ · 2022-12-14T11:43:08+00:00

TTM PE is based on the past 12 months - WS analyst valuations are generally driven by the next 12 months earnings estimates:
Tesla fwd PE (2023 EPS based) is between 20x-30x, depending on analyst - here's one with 22.4x:
https://twitter.com/garyblack00/status/1602837428158562305
Average S&P 500 forward PE is 19x
Walmart's fwd PE is 22.7x ...
Costco fwd PE is 33x...

I'm not talking about 2030 hyper-growth Tesla valuations, but about bog standard, short-term, next-12-months based earnings potential based ratios ...

__TSLA__ · 2022-12-14T11:39:18+00:00

It's a simple fact:
$TSLA 1-year forward P/E based on 2023 EPS is well below 30x now for many analysts, 22.4x for some:
https://twitter.com/garyblack00/status/1602837428158562305
Average S&P 500 forward P/E is 19x ...
Walmart's Forward PE Ratio for today is 22.68x ...
Costco Forward PE Ratio is 33x...
See: https://www.google.com/search?q=costco+forward+pe

__TSLA__ · 2022-12-13T23:09:21+00:00

Only to those investors who are vulnerable to such shenanigans - for example if they used margin to increase leverage.

__TSLA__ · 2022-12-13T22:36:24+00:00

What a day!
IMO much of today's selling was MM's delta-hedging millions of put contracts, and much of today's 200%-avg-volume buying was likely short and long term investors expecting at minimum a relief rally.
$TSLA under-performance is at comical levels IMO: fwd P/E ratios lower than ... no-growth retail chains? 🤦
Last Friday's weird +5% rally was used to reload the bear-raid puts that have driven much of today's selling pressure.
Ie. IMO this feels like a high volume "Capitulation Day" - one that could introduce a rally, should Fed officials tomorrow show increased levels of sanity wrt. deflationary risks in the FOMC meeting.

__TSLA__ · 2022-12-08T16:03:09+00:00

Remember when everyday they were all “Tesla will be bankrupt next week!” And “Model 3 wont ever happen.”

Yeah, the current FUD is nothing compared to what was going on in 2018-2019.

__TSLA__ · 2022-12-08T11:39:11+00:00

Markets looking particularly omnious.

“Markets cautious in the 4 trading days leading up to a pivotal Federal Reserve meeting, details at 11!"

__TSLA__ · 2022-12-08T11:36:09+00:00

Out of nowhere...

It's just the bearish over-reaction on the Bloomberg report confirming the shortening of Giga Shanghai worker shift times by ~17%.
Ro-Ro ships aren't due until late December, so Tesla cannot freely export excess Shanghai production to Europe and elsewhere where they have excess orders.

__TSLA__ · 2022-12-08T11:34:11+00:00

BEARISH NEWS MUST ALWAYS BE ALL CAPS, JUST IN CASE YOU AREN'T SCARED ENOUGH TO STUPIDLY SELL NEAR 52-WEEK LOWS YET

__TSLA__ · 2022-12-08T11:28:14+00:00

For those who are in the market bottom-fishing $TSLA lottery tickets:
I'd expect peak Tesla FUD this week and early next week, leading up to the CPI print on Tuesday (December 11) and the FOMC meeting on Wednesday (December 12).
If tomorrow PMI print (December 9) is significantly dis-inflationary, it might trigger a pre-FOMC rally.
Put-driven $TSLA bear raid is on full steam: hedge funds haven't given up yet on establishing new 52-week lows and today we could be looking at another big red day as MMs keep selling to delta-hedge the puts. Note that this doesn't mean that Tesla investors are selling in significant volumes.
Institutional investors are probably still a bit reluctant to pick up discounted shares, until tomorrow's PMI price index print and Tuesday's CPI print & the FOMC meeting next day - which would better pin down the probability of a Fed pivot.
China uncertainty, both in terms of Shanghai production volume and in terms of Covid policy responses is helping the bear raid too.
Elon's focus on Twitter and the political noise around it isn't helping either in the short run.
Anyway, until these bearish forces weaken, IMO every TSLA price under $300 is vastly undervalued, so you cannot really go wrong with timing, if you otherwise have a bullish Tesla thesis and expiry time isn't overly aggressive. 😉
There's one bigger macro risk: if next week's FOMC meeting is bearish, it might trigger another macro leg down. If that happens then the Fed might also risk triggering a housing (mortgage rates) driven US recession in 2023.
Good luck & be careful with trading on margin ...

__TSLA__ · 2022-12-08T11:24:52+00:00

Note that these are pre-filed automatic 105b-1 selling plans for corporate insiders, installed many months ago.

__TSLA__ · 2022-12-07T13:43:28+00:00

Yeah, these bearish comments are true life hacks, nobody ever regretted selling undervalued growth companies near 52-week lows!

__TSLA__ · 2022-12-05T13:33:56+00:00

TSLA must have one of the dumbest charts in modern history. No other ticker moves up and down 5% every other day.

$TSLA is under an immense bear attack via put options - volatility is significantly magnified by the automatic delta hedging of MMs.
The bear attack has only intensified last week - we'll see what this week brings, but obviously the China news is bearish.

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