Tesla is the story

[johnpico]

Since I published my article on Tesla last month, the stock has increased by over $90 per share.

[B]The Missing Calculation in Valuing Tesla Stock [/B]

If you have not read about it, Tesla topped the U.S. luxury automotive sales for the first time last year with 484,351 registrations, beating its closest rivals by six figures.

On top of that, in exchange for a $7.5 Billion subsidy, Tesla . . . "has agreed to make at least 7,500 chargers available for all EVs by the end of 2024 and to distribute those chargers across the United States.

Tesla will place at least 3,500 new and existing 250 kW Superchargers along highway corridors and Level 2 Destination Charging at locations like hotels and restaurants in urban and rural areas, the White House said.

EV drivers will be able to access Tesla's charging stations through an app or the company's website.

Tesla has also committed to double its full nationwide network of Superchargers, which are manufactured in Buffalo, New York." https://www.foxbusiness.com/politics...ite-house-says

One thing none of the articles are mentioning is that Tesla can charge non-Tesla drivers more for charging their vehicles than Tesla customers. That would be another profit center for Tesla that the traditional manufacturers will not have.

Read my article and see why Tesla cannot be compared to the traditional car companies and why GM and Ford might find themselves short of cash by the end of the year.

[steve_biegler]

So let me get this straight.

The government (us) gives Tesla 1 million dollars each for 7500 chargers so they can sell more cars and use the chargers for a profit center? And probably write off the chargers as an expense?

[Deniset]

"One thing none of the articles are mentioning is that Tesla can charge non-Tesla drivers more for charging their vehicles than Tesla customers. That would be another profit center for Tesla that the traditional manufacturers will not have."

Our local news made it clear that non-Tesla owners will need to subscribe to a special app they can pay for charging and locate charging stations through. (They may also be able to use their own credit card to purchase the charge but could be subject to additional fees.)

Regardless, Tesla's people are thinking well beyond mandates and regulation deadlines. They're thinking about "building their house before they live in it"!
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"So let me get this straight.

The government (us) give Tesla 1 million dollars each for 7500 chargers so they can sell more cars and use the chargers for a profit center? And probably write off the chargers as an expense? "

Looks as if he is showing 1 "B"illion each.

[steve_biegler]

7500 X 1,000,000,000.00 = 7,500,000,000,000.00 OR 7.5 Trillion dollars. Lots of dollars to keep track of.......Or Not.

[steve_biegler]

Mr. Pico

Just read your article and I think you you may have forgotten one aspect. Dealers BUY all their inventory and usually pay a captive ( Chrysler Credit, GMAC, Ford motor credit or whatever all those are called now) interest while the units are un sold. So there are Billions of dollars that the car companies are charging interest on that Tesla will not be able to do. In todays market with inventory in short supply it's not a big deal but when the market reverts back to what we had before.....and it will.....Tesla is going to have a new set of troubles. Lack of cash flow is a very ugly thing.

[johnpico]

Wow, Steve Biegler.

There are so many issues connected with your comment, it would take a day to address them all. Below, however, are a few thoughts.

Insofar as flooring is concerned, it is not the factories that are charging the dealers billions of dollars in interest.

Factory captives have a small percentage of the flooring. Ally alone has more flooring than GM Financial. Plus, almost every major bank from Bank of America, to Comerica, to Fifth Third, to Bank of Hawaii all have a piece of the flooring market.

I guess what I am saying is that monies derived from flooring will not help Ford and GM much when they run short of cash.

• Ford Motor annual net income for 2022 was $-1.981B, a 111.04% decline from 2021
• General Motors annual net income for 2022 was $8.915B, a 9.37% decline from 2021.
• Tesla annual net income for 2022 was $12.583B, a 127.79% increase from 2021.

Source: Macrotrends.net

With respect to Tesla financing and flooring, while it does not have its own bank, it has agreements with several banks for “Tesla Financing,” which emulates many of the functions of the factory finance companies.

In addition, Tesla collects fees from selling credits to other car companies. There are 11 states* that will require a certain percentage of cars to be zero emission vehicles, or the automakers to purchase credits from a company like Tesla which has exceeded the target.

*California, Colorado, Connecticut, Maine, Maryland, Massachusetts, New York, New Jersey, Oregon, Rhode Island and Vermont.

In Q4-2022 financials, Tesla Carbon Credit sales reach record $1.78 billion.

According to said Daniel Ives, a technology analyst with Wedbush Securities. “They’re not going to stay at 80-90% share of the EV market, but they can keep growing even with much lower market share,”

Ives goes on to say: “We’re looking at north of 3 million to 4 million vehicles annually as we go into 2025-26, with 40% of that growth coming from China. We believe now they are on the trajectory that even without [the EV] credits they’ll still be profitable.” Source: Chris Isidore, CNN Business, February 1, 2021.

One also has to remember that Tesla only builds vehicles for people and areas that want EVs.

Other the other hand, manufactures have to supply all of their dealers and cannot build separate inventories for 50 different markets.

How many EVs does one suppose will be sold in states with weather and roads like Alaska, Montana, Wyoming, North Dakota, Minnesota, etc.?

Can anyone afford to even build charging stations on all the highways in those states?

California is requiring all new buildings to be all electric and to have charging stations at each parking stall.

At the same time, California has rolling blackouts every year because their grid cannot sustain the drain on its power source just for current air conditioners.

Two months ago California’s Governor asked EV owners not to charge their vehicles on weekends because of the drain on their power supply. What does he suppose is going to happen at evenings when everyone plugs in their vehicles?

I think the EV fad is insane and Toyota has it right. Don’t build them. Automotive News headlined that “Koji Sato will change Toyota's pace on EVs, but should he?” I would venture to say we will know the answer to that question by new car showing in September of this year.

My prediction is (with the raise in interest rates, the rising default on auto loans and the disdain for EVs among the public), that for the first time in years, there will be a substantial amount of dealers out of trust by September and there will also be a large inventory of unsold EVs.

The EV backlash is coming already. See: Cheyenne’s newspaper “The Hill,” wherein the reporter Lauren Sforza, on 1/16/2023, wrote: “Wyoming lawmakers propose ban on electric vehicle sales”

People are figuring out that the claim for clean air is bogus. Mining for Lithium, copper, cobalt and other materials necessary to make batteries cause more pollution than mining for coal. The pollution caused by building one battery is more than what driving one internal combustion engine (ICE) vehicle for one full year.

On top of that, the U.S. will be ceding its national security to China, who controls 80% of all the materials needed to mobile America via EVs.

See, for example: https://www.instituteforenergyresearch.org/renewable/china-dominates-the-global-lithium-battery-market/

“China has only 1 percent of the world’s cobalt reserves, but it dominates in the processing of raw cobalt. The Democratic Republic of Congo (DRC) is the source of over two-thirds of global cobalt production, but China has over 80 percent control of the cobalt refining industry, where raw material is turned into commercial-grade cobalt metal. Furthermore, China owns eight of the 14 largest cobalt mines in the Democratic Republic of Congo and they account for about half of the country’s output. An American company once owned the largest DRC mine, but sold it in 2016 to China Molybdenum.”

A more scary consequence is that our government is trying to go all electric. Can anyone picture Patton waiting for his Jeep to get charged before turning on a dime to go rescue the soldiers at the Battle of the Bulge?

I once was a critic of Musk. I did not think his projects would survive. I even predicted Tesla would not make it. I was wrong.

On the other hand, in September of 2007, in an Automotive News article by Amy Wilson and Donna Harris, I predicted Ford would eliminate Mercury, and I was right. (I took a lot of heat at the time for my comment that “The only difference between a Mercury franchise and the Titanic is that the Titanic had a band.”)

I could again be wrong about Tesla, but based upon what I seen now, I have to believe that the press, the factories and the government are overestimating the Domestics, overestimating consumer demand and underestimating Tesla.

When I think of Musk, I am reminded of Jack Kennedy’s, remarks to the Nobel Prize winners, attending a dinner honoring them at the White House.

“I think this is the most extraordinary collection of talent, of human knowledge, that has ever been gathered together at the White House, with the possible exception of when Thomas Jefferson dined alone.”

Musk could be the modern Jefferson and I believe it prudent not to bet against him.

As far as the future is concerned, I believe we have not yet developed the fuel that will be used to power our vehicles and ships this century.

A good start, however, was made at the Lawrence Livermore Labs where the scientists announced that after 70-years it achieved fusion ignition — creating more energy from fusion reactions than the energy used to start the process,

DOE Secretary Jennifer M. Granholm announced that “It's the first time it has ever been done in a laboratory anywhere in the world.

Hailed by government officials as a watershed moment for fusion energy, the results are a “proof of concept” that a thermonuclear fusion reaction — the same reaction that powers the sun and stars — can be reproduced in the laboratory and result in a net energy gain, opening doors to a new scientific understanding of fusion and technological advancements in national defense and energy production, speakers said.

Source: https://www.llnl.gov/news/shot-ages-...fic-feats-21st

This answer does not address all of the issues, but that is all I have time for discussing right now. Wish I had more time.

[Deniset]

John, since you may have a foot in both camps, so to speak; with regard to out-of-trust issues: What is your opinion of the Lenders' viability forecast?

I find the references you have given for the automotive outlook very interesting. These topics are definitely trending especially with the most current lending institution collapse concerns.