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Cern Basher

@CernBasher

Mar 21

Q1 2025 Tesla All-Hands Meeting

Highlights from Elon's comments:

- have produced over 7 million vehicles globally.
- will surpass 10 million next year.
- at times there are rocky times, a little bit of stormy weather.
- but the future is bright.
- Tesla remains the company of choice for people to work for.
- lots of opportunity for upward mobility.
- Tesla's work related injury rate has declined over time.
- where does AI and robots fit into the sustainability picture?
- it's about sustainable abundance for all.
- what does an amazing future look like?
- it sounds impossible.
- the future we are headed for is one where you can literally have anything you want.
- what is key to that is robotics and AI.
- enable the production of goods and services with no limit.
- combined with sustainable energy, can also maintain a great environment.
- what other future would you want? Also, Space travel - let's not forget that!
- Model Y became the best-selling vehicle on earth for two years in a row and will be again this year.
- Cybertruck became the best selling electric pick-up truck, instantly.
- Cybertruck achieved 5-star safety.
- if you read the news it feels like armagedon.
- if you don't like our product, you don't need to burn it down - that's psycho.
- on track to complete the Semi factory - will make millions of the Tesla Semi - will also have the ability to go autonomous down the road.
- the future is autonomous.
- five years from now, autonomous Teslas will be everywhere - regulatory globally.
- almost the entire fleet - which will surpass 10 million vehicles next year - is capable of autonomy.
- an autonomous car could have the usefulness that's 5x to 10x a regular car.
- with a software update, we could turn 10 million cars into the usefulness of 50 to 100 million overnight.
- "what I'm saying is hang on to your stock."
- shout out to Tesla service team - they sell the cars long-term.
- Superchargers: great for trips - "the car's battery will last longer than your bladder."
- The Megapack and Powerwall team is knocking it out of the park.
- Megapack can more than double the total power output of a given grid and excellent for stablizing the grid.
- Long-term more than 90% of all power on earth will be solar + batteries.
- Cell manufacturing - we're making the most efficient cell in the world - lowest cost per kWh.
- built the first Optimus on the production line in Fremont.
- Cortex 1 - used for AI training. Over 50,000 active GPUs - soon to be 100,000 GPUs - making it top five in the world.
- Have Dojo 1 active now - handling 5% to 10% of the training load. Dojo 2 - will be 10x better than Dojo 1. Optimistic about Dojo - "have a real shot at a breakthrough."
- have the cars doing useful work for the first time with no one in them - driving from end of line and park themselves in Frement and now in Austin.
- Tesla self-driving will be 10x better than human drivers.
- Optimus is going into production this year - the new 22 DOF hand is now in production.
- "most sophisticated humanoid robot on earth"
- "our robot has a real brain"
- "Tesla is the leader in real-world AI - what we learned from the cars we transferred to the bot."
- Tesla is the only company that can make intelligent humanoid robots at scale.
- "Optimus will be the biggest product of all time by far - nothing will be even close - I think it will be 10x bigger than any other product ever made."
- the Cybercab production line looks like a high speed consumer electronics line - moving so fast that people can't get close to it - cars coming off the line in 5 seconds.
- we need even bigger casting machines - 50,000 tons - "how big can a casting machine be - what are the limits of physics? - let's find out!"
- hope make about 5,000 Optimus (parts for 10k to 12k) this year.
- 50,000 Optimus in 2026.
- available outside of Tesla in second half of 2026.
- offering Optimus first to Tesla employees.
- our goal is to make great products/services that people love, and then service those products.
- profit is the difference in value between the output versus the input.
- we're by far the most innovative company in the car industry.
- the stock market is a very strange thing - Tesla stock goes up and goes down - based on peoples' perception of the future - very emotional.
- the future of Tesla is incredibly bright.
- An employee asked: is a robot going to steal my job? Elon: people will manage a flock of robots. Same will be true for self-driving cars - people will manage a fleet of cars.
- interesting opportunity to make an electric VTOL jet - "maybe at some point we'll do that."
- Hyperloop - vacuum tunnels - high speed autonomous pods from city center to city center.
- ideas are the easy part - execution is the hard part.
- future new mission statement: "it's all about sustainable abundance."
- Master Plan 3 + abundance for all = Master Plan 4
- Optimus production in Fremont + an even bigger production line in Austin. "We'll be making tens of millions of robots a year - serious volume - maybe one hundred million robots a year."
- "one thing is for sure - the future is going to be very interesting."

https://x.com/CernBasher/status/1877860811579777346

https://x.com/CernBasher/status/1877860811579777346

https://x.com/CernBasher/status/1770135297692487926

https://x.com/CernBasher/status/1770135297692487926

Read 5 tweets

Cern Basher

@CernBasher

Mar 15

Tesla - Next Five Year Growth
On March 1st Elon said that a "1,000% gain (in profit) for Tesla in 5 years is possible."
And on the Q4 2024 earnings call he said that 2026 would be "epic" and 2027 & 2028 looks "ridiculous."
So I set out to put numbers "to paper" and find out what epic and ridiculous might mean for Tesla's financials.

Let's see if we can answer these questions...
continued...

First, let's take a look at Nvidia - which is the first example of an "AI compounder."

Five years ago it was a Gaming company, but now it's an AI infrastructure company, with Data Center revenue 37x'ing over the last five years. Total revenue 12.7x'd.
Operating income 24.3x'd.
The market cap 19.3x'd - all in just five years!
And the astounding thing: you could have purchased Nvidia stock five years ago for about 2x Q4 2024 annualized earnings!
Of course, it's only with the benefit of hindsight, that we can see how incredibly cheap Nvidia was five years ago.

What if Tesla, which is also on a path to becoming an AI compounder with real-world AI services like Robotaxi and Optimus, is similarly cheap now?

Instead of hindsight, can we have foresight?

continued...

Jensen has talked about how Physical AI (self-driving cars and general robotics) is the future of AI --> this is exactly where Tesla is focused.
If Nvidia could produce the kind of results that they did, what can Tesla do riding the same wave?

continued...

Read 14 tweets

Cern Basher

@CernBasher

Sep 4, 2024

A Message to Tesla Investors
Recently, I received this reply to one of my posts:

"I don't think I can mentally or emotionally deal with it anymore. Maybe foolishly waiting for 10/10 to make a move, though at this point I'm sick of predictions and missed timelines."

As someone who's been an investment advisor for 30 years, I recognize this sentiment as a tell - a sign that this person might not fully grasp the true nature of investing.

So, here are ten things Tesla (all) investors need to hear:

1) Most of the time stock price fluctuations are just noise. The stock just marks time. In the 3,568 trading days since Tesla's IPO, 2,893 of those days or 81% of the time the stock bounced around between -4% and +4%.

2) Most of the big gains, even for long-term investors, can come over a relatively short period of time.
3) Because most of the big gains come quickly, this leads many people to falsely believe that trading a stock is the road to riches.

4) But trading isn't investing - these are two completely different activities. Farmers don't harvest their crops every day, so investors shouldn't seek short-term gains. Over the last year, the average Tesla share has only been held for a mere 23 days!
5) Investing isn't easy - if it was, everyone would be rich. It’s as much a mental and emotional challenge as it is a financial one, and many people are simply not prepared for it.

6) Investors in all the successful companies could have said "I'm sick of predictions and missed timelines." Every successful company has faced predictions that didn’t pan out and timelines that slipped. For companies like Tesla, breaking new ground means facing setbacks. But setbacks and missed timelines do not equate to a lack of progress.

7) We are our own worst enemy when it comes to investing - our instincts tell us to do something, when we really should do absolutely nothing.

8) We want to take action to relieve the pain that we feel - if you touch a flame, remove your hand - that's simple! With investing, if you lose money, then you want to sell "the dogs" (no disrespect to dogs!) But it's very likely that the timing of that action coincides with a low-point in the stock - so most people end up buying high and selling low. This a recipe for financial pain and often leads to abandoning investing.

9) The news media and most financial market observers (including many here on X) are all working against us - they all focus obsessively on the daily price movements. They offer a narrative for everything, but it changes so often that it's difficult to know what to believe.

10) Every successful company has similar periods of big drawdowns and weak returns. Such periods are opportunities - gifts - for investors.

If you believe other investors could benefit from this message, I encourage you to share it and add your thoughts.

Below are links to some of my previous posts with more detailed insights.

https://x.com/CernBasher/status/1830339120461140163

A multi-part post on Tesla's stock performance since the Jun 29, 2010 IPO...

https://x.com/CernBasher/status/1830339120461140163

https://x.com/CernBasher/status/1831028299813818785

A discussion about paper-handed Tesla investors...

https://x.com/CernBasher/status/1831028299813818785

Read 4 tweets

Cern Basher

@CernBasher

Sep 1, 2024

Tesla Stock Since the IPO
Some things you probably didn't know:

IPO HODLER: If you would have invested just $100 in Tesla stock at the market close on the day that Tesla first started trading (June 29, 2010) and held until now, your $100 would now be worth $13,443.

Note: This excludes the 40% gain on IPO day, but realistic since most people can't get IPO shares.

$10,000 invested would be worth $1.3 million.

$1 million invested would be worth $134 million.
COMPOUNDING CAPITAL: The average annual return since Tesla's IPO has been 41% per year - albeit, a bit lumpy. This would be improved to 46.6% per year had you been lucky enough to get shares at the IPO price (and had the fortitude to hold on to them).
BEST TRADER: If you could have invested in Tesla stock for just the 35 best days you would have captured all of the stock's gains over the 14-year period.

That's less than 0.01% of the 3,568 trading days since Tesla's June 29, 2010 IPO!
ONLY POSITIVE: If you could have invested in Tesla's stock for only the positive days (1,883 days or 52.8% of the total trading days) you could have turned $100 into $20 sextillion (ignoring the fact that every trade you made would materially move the stock).

continued...

Let's compare Tesla's stock to Nvidia's over the same time period.

The distribution of daily returns looks very similar.
But, Nvidia's annual return is quite a bit higher, averaging 61.5% per year for 14.2 years.
Both companies' stocks are more volatile than the S&P 500 Index. This makes sense, as the index is made up of 500 different companies - and on any given day some go up and some go down, smoothing things out a bit -- diversification at work!
continued...

Tesla and Nvidia's stocks have more action in the tails - they are more likely to have bigger up and down days than the S&P 500 Index.
And Tesla has had more extreme days than Nvidia has. For example, Tesla has seen 49 days with returns above 10% and 28 days losing more than -10%, while Nvidia has only seen 19 days with returns above 10% and 7 days losing more than -10%.
Tesla's best day was May 9, 2013 - the stock rose 24.4%. Interestingly, it was the day the company announced the first quarterly profit in its then 10-year history.
Nvidia's best day was Nov 11, 2016 - the stock rose 29.8%.
The previous evening, NVIDIA had told investors revenue climbed 54% year over year, to $2.0 billion, and translated to 104% growth in adjusted earnings per share, to $0.94. By comparison, analysts' consensus estimates had predicted NVIDIA would turn in quarterly revenue of just $1.7 billion, and earnings of only $0.69 per share - so it was party time for NVDA stock!

Side note: Last week, Nvidia reported its first $30 billion revenue quarter.

continued...

Read 5 tweets

Cern Basher

@CernBasher

Jun 23, 2024

How Important is Q2 for Tesla?

Operationally speaking - every quarter is critical - as the company builds upon the work done each quarter, but...

Financially speaking - it's not very important - a single quarter is not important as it only accounts for a tiny percentage (perhaps 0.25% to 0.5%) of a company's total future discounted expected earnings.

I'll explain...

Let's say we have a company that we expect will grow its earnings by 20% per year over the next 20 years - and this company will cease to exist in year 21. And let's say that we discount those earnings by 12% per year (because alternatively we could buy a stock index fund and expect to earn that type of return).
Then the present value of the earnings in the first year is only 2.8% of the value of the total earnings over the full 20 years - even though this company will disappear in year 21.

Now let's assume that the company will continue to produce earnings beyond 20 years - so for simplicity's sake we'll assign a P/E multiple of 15 to year 20 earnings and discount those back to the present.
Now, the present value of the earnings in the first year is only 1.3% of the value of the total future earnings, with the vast majority of the value (54.4%) for year 21 and beyond.

See below for other illustrations for 15% growth and 10% growth, as well as what happens when the earnings discount rate (interest rates) goes down.

Spoiler Alert: The higher a company's expected earnings growth rate, the lower short-term earnings are as a share of the company's total present value.

Also, if the discount rate goes lower, this further reduces the financial significance of short-term earnings results.

Thus - quarterly earnings reports are far more helpful in determining a company's business progression than they are in determining a company's valuation.

I hope this helps you to put Tesla's short-term earnings results in their proper perspective.

Lower long-term growth means that short term earnings matter more...

Now let's say we have a company that we expect will grow its earnings by 15% per year over the next 20 years - and this company will cease to exist in year 21. Our discount rate is still 12% per year.
Then the present value of the earnings in the first year is goes up to 4.5% of the value of the total earnings over the full 20 years - even though this company will disappear in year 21.

Let's assume that the company will continue to produce earnings beyond 20 years - so for simplicity's sake we'll assign a P/E multiple of 12.5 (lowered from 15 to reflect the lower growth expectations) to year 20 earnings and discount those back to the present.
Now, the present value of the earnings in the first year is 2.6% of the value of the total future earnings, with 41.1% of the value for year 21 and beyond.

And if the growth is low enough, short term earnings really matter...

Now let's say we have a company that we expect will grow its earnings by 10% per year over the next 20 years - and this company will cease to exist in year 21. Our discount rate is still 12% per year.

Then the present value of the earnings in the first year is goes up to 6.7% of the value of the total earnings over the full 20 years - even though this company will disappear in year 21.

Now let's assume that the company will continue to produce earnings beyond 20 years - so for simplicity's sake we'll assign a P/E multiple of 8 (further lowered from 12.5 to reflect even lower growth expectations) to year 20 earnings and discount those back to the present.

The present value of the earnings in the first year is 5.2% of the value of the total future earnings, with 22.4% of the value for year 21 and beyond.

Read 4 tweets

Cern Basher

@CernBasher

May 15, 2024

Robotaxi in the USA - How large does the fleet need to be?

According to the Federal Highway Adminstration, drivers in the USA traveled 3.267 trillion miles over the 12 months ended March 2024.

Testing Limits: What if a robotaxi network eventually becomes the lowest cost of transportation available - so low that everyone decides to ditch their vehicles (both ICE and EV) and just uses transportation as a service?

How many autonomous vehicles would be needed in the USA to travel 3.267 trillion miles per year?

To answer that question we need to figure out how many miles a robotaxi can travel in one year, and in order to determine that, we need to make some assumptions about vehicle utilization - because there are peak and off-peak demand periods.

Using the utilization-based mileage numbers from my robotaxi model, we can see that the number of vehicles needed would range from 25 to 55 million - or just 9% to 20% of the current fleet of about 275 million vehicles in the USA.

Objection: I hear you saying: "But, you dunce, what about rural driving? It's going to take a very, very long time before rural driving is autonomous, if ever!"

Okay, let's exclude all rural miles - which account for about 32% of all miles.

Excluding rural miles, we can see that the number of vehicles needed would range from 17 to 37 million - or just 6% to 14% of the current fleet of about 275 million vehicles in the USA.

Conclusion: this quick analysis shows that robotaxis are an enormous long-term (20-yr) opportunity in the USA, not to mention in the rest of the world.

Note: I understand that not all urban driving will become autonomous - even it's it so much cheaper - I'm just "exploring limits" here.

Now, let's look at what could happen when transportation becomes so cheap that people decide to travel more miles - when price goes down, demand always goes up.

Let's say our 3.267 trillion miles traveled rises to 5 trillion miles.

In that case, we can see that the number of vehicles needed would range from 38 to 84 million - or 14% to 30% of the current fleet of about 275 million vehicles in the USA.
And then if we factor out rural miles again...
...the number of vehicles needed would range from 26 to 57 million - or 10% to 21% of the current fleet of about 275 million vehicles in the USA.

At some point, if the cost per mile gets low enough, then autonomous vehicles will operate in rural areas too.

And, most certainly, it will encroach on short-haul air travel - why fly when you can skip security and take a nap in a robotaxi for a few hours?

Data source: fhwa.dot.gov/policyinformat…

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