but I see no reason to think they’ll just utterly fail at scaling production at those factories
Oh they’ll scale just fine.
It’s just that nobody will buy all those cars. They are already not selling them all, and we are about to enter the biggest recession of many of our lifetimes
Teslas are generally the most popular car in whatever segment they’re in. And their automotive gross margins are at 25+%, so they’ve got room to cut prices if demand lightens a bit.
Add to this that a big tax credit is about to hit for EVs in the US and it’s hard for me to see why demand would all-of-a-sudden fall off a cliff.
Worth noting 11 months later that @Bernhard was more right than I expected. Tesla did in fact cut prices a bunch (eating into gross margins), and yet didn’t manage to hit 50% growth this year. (The year isn’t over yet, but I think we can go ahead and call it.)
$TSLA bulls should reduce their expectations that $TSLA volumes can grow at +50% per year. I am at +37% vol growth in 2023 and +37% growth in 2024. WS is at +37% in 2023 and +22% in 2024.
And apparently @MartinViecha head of $TSLA IR recently advised investors that TSLA “is now in an intermediate low-growth period,” at a recent Deutsche Bank auto conference with institutional investors. 35-40% volume growth still translates to 35-40% EPS growth, which justifies a 60x-70x 2024 P/E ($240-$280 PT) at a normal megacap growth 2024 PEG of 1.7x.
What I said specifically is that we’re between two major growth waves: the first driven by 3/Y platform since 2017 and the next one that will be driven by the next gen vehicle.
It’s just that nobody will buy all those cars. They are already not selling them all, and we are about to enter the biggest recession of many of our lifetimes.
I do think we will be in a mild recession unless the Fed does a soft landing, but the economy is actually okay. So this recession will be much milder than previous recessions.
Oh they’ll scale just fine.
It’s just that nobody will buy all those cars. They are already not selling them all, and we are about to enter the biggest recession of many of our lifetimes
Why would this be true?
Teslas are generally the most popular car in whatever segment they’re in. And their automotive gross margins are at 25+%, so they’ve got room to cut prices if demand lightens a bit.
Add to this that a big tax credit is about to hit for EVs in the US and it’s hard for me to see why demand would all-of-a-sudden fall off a cliff.
Worth noting 11 months later that @Bernhard was more right than I expected. Tesla did in fact cut prices a bunch (eating into gross margins), and yet didn’t manage to hit 50% growth this year. (The year isn’t over yet, but I think we can go ahead and call it.)
Good summary in this tweet from Gary Black:
And this reply from Martin Viecha:
I do think we will be in a mild recession unless the Fed does a soft landing, but the economy is actually okay. So this recession will be much milder than previous recessions.