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Tesla: Bad News Is Good News

May 05, 2021 10:34 AM ETTesla, Inc. (TSLA)475 Comments
Nick Sanscartier profile picture
Nick Sanscartier


  • When contextualised, the Q1 delivery figure was a remarkable feat that signals Tesla's trajectory for the remainder of the year.
  • Gross margins are indeed expanding, economies of scale underway and just getting started.
  • Tesla on track to deliver almost double consensus deliveries for 2022.
  • Europe is a red herring. Tesla's "shortcoming" will be resolved permanently once German production commences; meanwhile, they have already reclaimed Europe EV market share for 2021.

SpaceX Falcon-9 Rocket And Crew Dragon Capsule Launches From Cape Canaveral Sending Astronauts To The International Space Station
Photo by Saul Martinez/Getty Images News via Getty Images
The best part about investing in Tesla (NASDAQ:TSLA) is that I'm always happy. When the price surges I feel vindicated; when it pulls back, I take advantage of the sale and add to my position. How have I developed such a level of

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Nick Sanscartier profile picture
I believe we are amidst one of the largest transformative eras of humankind, stemming from disruptive changes to energy, transportation, health care, manufacturing and the workforce - to name a few. I'm interested in organizations that will contribute to our most positive and productive trajectory forward.

Analyst’s Disclosure: I am/we are long TSLA. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Comments (416)

SenoritaSicario profile picture
Here's some great news from Elon's $TWTR. His Muskness has canceled the Model S Plaid Plus. Musk had promised fans the tri-motor, Plaid Plus version of their new Model S would give drivers 1,100 horsepower, 520 miles of range on a fully charged battery, and acceleration from 0 to 60 mph in less than two seconds.

On Sunday, Musk wrote on Twitter...Never mind. No need, Plain Old Plaid is good enough for you. 0 to 60mph in under 2 secs. Quickest production car ever made of any kind. Has to be felt to be believed. Feel the earth move under your feet.

Plain Plaid will cost around $119,900 and feature a 390-mile range battery, with 1,020 horsepower and acceleration from 0 to 60 miles per hour in two seconds. depending on some tweaks. Tweaks include removing radar sensors and lumbar support from the front passenger seats.

The TechNo Kings said there were more challenges than expected in developing the Plaid Model S or the Paladium program. It took quite a bit of development to ensure that the battery of the new S and X is safe. Good to know the batteries will be safe. Now what about making FSD safe?
Davewmart profile picture
@SenoritaSicario I'll turn out my pockets and see if I have any 4680 batteries he can stick in the Plaid........

Mass production of those is working as well as full self driving.
Nick Sanscartier profile picture
@SenoritaSicario major diminishing returns on range beyond 400 miles + major diminishing returns on acceleration below 0-60 <2s = little incentive to market a higher performance version - especially with the upcoming roadster which would lead to cannibalization of the Plaid+ anyways. Seems performance on the Plaid when production model was tested was better than anticipated.

The additional battery capacity originally for the Plaid+ will have a lot more utility in their core models. This was just an optimisation exercise.
GROND profile picture
So this must be fantastic news. Hacker group Anonymous threatening Musk:


Watch your Tesla software Elon!
SenoritaSicario profile picture
@GROND Elon don't care about software he's into hardware and $CUM rockets to the moon. His prime concern is the care and maintenance of Grimes.
JRP3 profile picture
@GROND Members of Anonymous have said they are not involved in that video. Plus that video is full of misinformation. Not a good look.
@SenoritaSicario Wow, you spend a lot of time thinking about Elon... In a creepy way. Still, 400+ miles, 0-60 in under 2 secs... shaping up for 1mill car year for TSLA... but yeah, Grimes and Space exploration. How dare he?
This article is about to flop… watch the share fall down down down down down down
@dmzporter OMG, like a broken record. Tesla sold every available unit on the East coast, and probably in the country, last quarter... So where is your evidence for the eminent collapse?
Stephen143 profile picture
tsla does not make money selling cars. the only reason they squeaked out profits was thru sale of EV credits and sale of bitcoin crypto.I will definitely bookmark your blog
JRP3 profile picture
GROND profile picture
There is an interesting resemblance of Tesla‘s chart and this classic stock bubble chart:


Fasten your seatbelts if Tesla hits 570...
JRP3 profile picture
@GROND It hit 560, so?
GROND profile picture

The chart looks really nasty now. 420 next.
JRP3 profile picture
@GROND You must be looking at a different chart.
SenoritaSicario profile picture
Here's some good news that bad news for $TSLA and the TechNoKing. You asked for it you got it Toyota.

Please tell us again how many $TSLA sleds did Elon hustle for the entire year of 2020? How many is he promising to sell for Doggy Doo Coins this year? Anyone? Anyone?

The monetary figures are in Yen to give all you double e and Reddy KiloWatt
types a chance to use your math skills doing conversions into the currency of your choice.

Toyota Motor Corp. managed to navigate the pandemic and related economic fallout for fiscal 2020, boosting its net profit by 10.3% from the previous year to ¥2.25 trillion.

The firm projects that about 80% of new car sales by 2030 will be electric vehicles, including hybrids.

For the current fiscal year through March 2022, Toyota projects the following:

Sales of ¥30 trillion, up 10.2%
Operating profit of ¥2.5 trillion, up 13.8%
Net profit of ¥2.3 trillion, up 2.4%
For fiscal 2020, the world’s largest automaker beat its forecast of securing ¥2.2 trillion in operating profit, ending up with more than four times its initial projection of ¥500 billion.

The firm posted sales of ¥27.21 trillion.

In April this year, Toyota posted unit sales of 982,912 in March — a record for a single month — up 44.2% compared with the same month last year, thanks to strong performance in China and North America.
Anybody can bandy about Toyota's number or VW's numbers or GM's.

When you do this it shows a missing of the point.

It isnt about how many cars the legacies will sell this year, it's about how many they will sell in 4 or 5 year's time.

2 things we know about new technologies:
1. They get better
2. They get cheaper

BEVs have a dozen new technologies in them. They have gotten cheaper and better over the past years. You can see this with the current M3/Y or the Mach E. The path for them to continue their technological progression together with a lower cost is clear to everyone.

By 2025 at the very latest, BEV will be better than ICE in every meaningful metric.

Remember 20 years ago when a new 40" flat screen was $4,000? Now you can buy a much better TV for $100. This is how tech and pricing works.

What happened back then? People who would otherwise have upgraded their old CRT TV decided to wait a year or 2 until flat screens came down in price. The writing was on the wall. Old style TVs became stranded assets, nobody wanted them. The used TV market was flooded.

All of you are reading this on your smart phone, none of you are using a Nokia flip.

Cars are no different. So when people talk about Toyota or VW's 10,000,000 auto sales, they are not looking at the future.

The Mach E by all reports is a great car, it seems to be a close competitor to the MY in most aspects of the car.

But Ford is targeting 50,000 units for the year. Why not 400,000? It's because they know where their profits reside? They cannot yet build a Mach E at a profit. The MY production and sales for this year is expected, even by the bears to be 400 or 500,000 cars.

Ford, GM, Toyota are not able to produce in volume and at a profit, nor will they be able to within the next some years. They have huge debts, which are not an issue today but when people start delaying their next vehicle purchases, they will not be able to service their debt.

That is why when people say "the OEMS sell 10 or 20 x Tesla's volumes", it is not a thoughtful argument.
SenoritaSicario profile picture
@Keto4me You're right anybody can bandy about Toyota numbers or even $VW so why are you bandying about $F and $GM ?

Please look into the future for us and tell us when FSD will be rolled out. In the interim here's a status report from the NTSB.

Also let us know where you can get a much better 40" flatscreen TV for US$100. Rent to own maybe?

Autopilot Was Engaged In Fatal SoCal Tesla Wreck Earlier This Month, Authorities Reveal

A Tesla that was involved in a fatal crash in Southern California last week was operating on Autopilot at the time, it has been revealed. The crash is still is under investigation by the National Highway Traffic Safety Administration, a report from ABC noted on Friday.

The crash, which took place on May 5 in Fontana, killed the 35 year old driver after his Model 3 hit an overturned semi on the freeway. A second person was seriously injured after the Model 3 hit him, while he was trying to help the driver of the overturned semi.

On Thursday of this week, the California Highway Patrol announced that the car was operating on Autopilot, which has been no stranger to controversy involving fatal Tesla wrecks. This wreck marks at least the fourth death in the U.S. involving Autopilot.

The information was so important, the CHP felt, that they shared it despite the ongoing investigation, stating: “While the CHP does not normally comment on ongoing investigations, the Department recognizes the high level of interest centered around crashes involving Tesla vehicles. We felt this information provides an opportunity to remind the public that driving is a complex task that requires a driver’s full attention.”

Just days prior, the CHP arrested yet another Tesla driver who it said was in the back seat of his vehicle while it barreled down Interstate 80 near Oakland. Autopilot or Full Self Driving were assumed to be operating.

There is also an ongoing NHTSA investigation involving a fatal Tesla wreck that took place in Houston weeks ago. The NTSB has issued a preliminary report in that case, finding that a similar vehicle could have engaged Traffic Aware Cruise Control, but not Autosteer, at the point where the crash took place.

The NTSB concluded by stating that the investigation was ongoing and that it was working with Harris County Texas Precinct 4:

The NTSB continues to collect data to analyze the crash dynamics, postmortem toxicology test results, seat belt use, occupant egress, and electric vehicle fires. All aspects of the crash remain under investigation as the NTSB determines the probable cause, with the intent of issuing safety recommendations to prevent similar crashes. The NTSB is working alongside the Harris County Texas Precinct 4 Constable’s Office, which is conducting a separate, parallel investigation.

Recall, it was Mark Herman, Harris County Constable Precinct 4, who was most skeptical of Elon Musk's comments absolving Autopilot of liability last month, telling Reuters that the police served search warrants on Tesla to secure data from the Model S.

Responding to Musk at the time, Herman said: "If he is tweeting that out, if he has already pulled the data, he hasn't told us that. We will eagerly wait for that data."

“We have witness statements from people that said they left to test drive the vehicle without a driver and to show the friend how it can drive itself,” Herman said according to the Reuters report.
>2 things we know about new technologies:1. They get better
2. They get cheaper>

They can become less durable, irreparable, dated, outlawed, disappointing and obsolete.
Can also start that way.
SenoritaSicario profile picture
@WillLong Thank you for the insight in my line of work I have encountered many men of a certain age who regale me with the size of their database and their collection of tools. Please tell us why size and quantity of one's collection of personal attributes are of any interest to others or why it should lend credence to illogical statements and hyperbole.

In closing most people are grateful they are not encumbered with many tools, for the majority of us one is sufficient.
" why it should lend credence to illogical statements and hyperbole. "
Tesla has the largest 5year CAGR at their scale than has ever been seen before. If your gut reaction to this is that it is illogical and hyberbole, you might want to stick to mutual funds instead of doing your own analysis. If it is not obvious for anyone, then they don't pay close enough attention to the basic fundamental metrics of growth stocks.

"Please tell us why size and quantity of one's collection of personal attributes"Do you really think a database is a listing of personal attributes? Not just a bloomberg terminal, or a database of stock prices, buy any database?
sambo314 profile picture
tsla does not make money selling cars. the only reason they squeaked out profits was thru sale of EV credits and sale of bitcoin crypto. we are more likely to see $500 before 1400. either way i trade options both ways
Andreas Hopf profile picture

Tesla is not about profits but ever more stock options for Elon Musk and Kimbal Musk.

Selling stock and bonds and doling out stock options are the company's core businesses.
@Andreas Hopf
"Selling stock and bonds and doling out stock options are the company's core businesses."I'd like to see your valuation model that backs this up.
All those pre-orders for the cyber truck will melt away like a tootsie pop when people realize that they really don’t need such a ridiculous impractical vehicle, considering probably most of the pre-orders came from people who have never driven anything bigger than a Prius. Oh, but it’s electric! They want one.
Nick Sanscartier profile picture
@bull_rider your perception of impracticality must be based on aesthetics. In the realm of pickup trucks, on a per dollar basis, Cybertruck exceeds the competition. The design is not intended to be divisive it is a matter of optimisation and cost reduction. Fewer parts, smaller line, more durability. Here is a rundown of the CapEx estimates vs F-150 for retooling by automotive consultant Sandy Munro (who used to work for Ford...): insideevs.com/...

I do agree a $100 refundable deposit is not super sticky, but I was at a Tesla dealership yesterday and the rep said they now have way more than a million pre-orders. Even if the conversion rate is a conservative 10-15% we're talking well over 100K in just initial demand.
@Millcroft Research the funny thing about the mere $100 refundable deposit that naysayers say is meaningless is that.
1. Why would you lend a massive company $100 for no reason other than to buy one? Do you tell people you have a reservation knowing you're going to look stupid later on? Or do you keep it secret and get your money back?
2. Tesla went low and refundable because naysayers said that the Model 3 non-refundable £1000 deposit was unreasonable.
Go naysayers! Right every time! Yeah right.
Captain Crook profile picture
Had Elon really been tough and the TESLA economy been good enough, GigaBerlin should have been put in a mothball situation and Tesla should have started building a new Giga in Ukraina or preferably Belarus (there they really could get a good deal). Delay GigaBerlin 2-3 years and then let them produce the semi and the CT. The next time Tesla wanted something in Germany, they would get it asap after doing this.
SenoritaSicario profile picture
If bad news is good news this just out of China is simply marvelous. The report comes one day before Musk will host Saturday Night Live. Gotta wonder if the TechNoKing will do a skit involving trees and truck attacking innocent $TSLA sled minding their own business.

Global Times, China's closest major media organization to the state, published a horrifying image of a Tesla vehicle rear-ending a truck in Shaoguan, South China's Guangdong Province on Friday, "killing the electric car's driver on the spot."

Tesla can't catch a break in China. If state media wanted to protect the US car company, they would've ignored the report; instead, they're drumming up bad press for Elon Musk. This follows CCTV broadcaster calling for an investigation last month into Tesla's brake failures following other incidents where the electric cars have plowed into things.

The CCTV commentary "said the regulator could invite third-party testing agencies that both the customer and Tesla can trust to test the vehicles," according to Reuters. At the same time, it has been reported that one of China's largest insurers has temporarily stopped providing services for new Tesla owners after the incident.

Friday's accident is shocking. A video of the crash was posted online - shows the vehicle made no attempts to stop as it slammed into the rear of a moving truck. Global Times said the crash is still under investigation via the Saoguan public security bureau. Tesla officials told China News Service they're waiting on vehicle data - from there - they will determine if Autopilot was engaged.

Tesla's image is deteriorating in China as state media continue to publicize braking failures. The risk here is Musk's Chinese fairy tale could eventually come to an end. In late April, we noted that Chinese state media suggested that the automaker's sales could be "doomed."
GROND profile picture
BossHoggg profile picture
So in Germany Musk will schmooze his way past the labor and environmental problems that are endemic at Tesla plants. Where is the SA article on the following two developments?

Germany's largest and most powerful union IG Metall has set its sights firmly on setting up a works council at Tesla's gigafactory near Berlin, which is scheduled to open later this year, its head Joerg Hofmann said.

Hofmann's comments, coming shortly after a report in Business Insider saying that German authorities are probing possible violations of labour laws at the Gruenheide site, suggest Tesla will have a tough time avoiding organised labour in Europe's top economy.

This on top of the usual extreme turnover in management. Hofmann mentioned that it is difficult to have “meaningful talks” with Tesla “due to numerous leadership changes.”
The author seems to think that Tesla is immune to the semiconductor shortage. If you make 184,000 cars, you will be less impacted than if you make 2.4 million cars. Musk even mentioned that the shortage could be critical going forward.

Mentioning ARK is just a joke. When they were a 2b EFT, they could be nimble and get outsized returns. At 22b, 90+% of their buyers have lost money. It is not short selling that is causing the problem, it is people getting out of the EFT and them not having buyers because they got into crazy positions with many small companies (own 10-15% of the float, all the other institutional investors usually cap at around 5% for this exact reason)
Nick Sanscartier profile picture
@Rheum the TSLA selling in the fund(s) was disproportionate relative to other holdings so this confirms the driver is indeed profit taking and normalising their TSLA position, not fund outflows... although yes indeed there have been these too.
wsattler profile picture
TSLA's sale of cars in Germany in April were down -23.8% YoY vs. BEV's in Germany being up +413.8% YoY in April; TSLA's market share in Germany fell from 14% in April 2020 to 2% in April 2021. It's caused by lack of demand for Teslas.
Tesla tells regulator that full self-driving cars may not be achieved by year-end

Is that good news or bad news?
Not good or bad.

The article says nothing.
Mark Bevill profile picture
@Victor72991 The other way to say that " Tesla may achieve self-driving by the end-of-the-year!"
Excellent article !
I am asking myself when or better if the Berlin factory will ever start production. Here my guesses for the delay:
battery production in Grünheide was a back and forth story: first they planned to have a battery production, then they planned to buy the cells in Polen, now they plan again to produce them. I guess it might take years until they have an own cell production, because they underestimated by far the way from a lab cell to mass production. So they tried to get the cells in Polen, but manufacturers already got lots of contracts from VW and others, so Tesla is last in the lane and they did not get a contract for acceptable costs. Now they try to build the production on their own, but I guess this will take until 2023, 24 or maybe never.
They have a production capacity of 250K per quarter, but they sell 180K only. So maybe they simply don't need this factory. Tesla cannot cut prices further, so they cannot sell enough cars to keep this factory running. So they postpone it on and on again because this is better than showing investors huge losses or a giga factory running far below capacity.
Andreas Hopf profile picture

"So maybe they simply don't need this factory."

Tesla needs the factory with battery cell broduction to get the €1 billion EU subsidy (IPCEI programme) efahrer.chip.de/...

Once the money has been grabbed, Tesla could do a Nevada and never use the funds for the build-out, coming up with all sorts of excuses. Peter Altmaier is in love with Elon Musk. He really wants yuuuge battery broduction for Germany, if only as a dumb workbench.
@Mhst "They have a production capacity of 250K per quarter, but they sell 180K only"
They are expected to achieve 250k/Q sometime this year, just haven't got there yet. Probably requires some output from German and Texas factories to get there. Model S & X were shut down for the whole quarter.
Terroir23 profile picture
Electrek‘s take

It looks like Elon wasn’t kidding when he said that Tesla is seeing a “real shift in customer perception.”

Selling out the planned production capacity for the quarter, which is going to reach a new record, while not even being halfway through the quarter, is quite impressive.
@Terroir23 That begs the question of what planned production was and whether parts availability has affected the plan. Of course my experience is that little of anything said by Tesla is true.
gametv profile picture
I agree with some of your points, but you obfuscate the truth in a couple places.

1. Gross margins - You failed to mention that in addition to the $100million in bitcoin profit taking they also recognized $500 million in ZEV credits. Those are going to disappear fairly soon, so you have another big hole to fill there. If the gross profit contribution of the Model S and X is only 200 million a quarter, they are still shy by $300 million when you factor all those factors. I imagine gross margin will creep up a bit.

2. Agree that Europe sales will be better once they can drop price due to the new plant there, but that plant is falling behind schedule due to the resistance of the Germans.

3. You have neglected to mention the massive competition coming to China. There are so many players that are vying for sales there, it is going to really start to hit Tesla hard by 2022. Tesla has basically done very well by having no real direct competition. That is over by 2022 in China and then Europe.

4. ARK invest is getting targeted by short sellers who are beating up all their stocks. I imagine that they will need to sell off alot of Tesla.

5. The Tesla stock price is sitting right at the bottom of an uptrend channel and if it breaks down through that support, watch out below. I am looking for that break to come within one week and the stock to drop 25% in the coming decline.
@gametv I really can't comment on your first 4 points because I haven't done the research (nor do I want to). I'm purely looking at charts/technicals and 100% agree with point 5. Full disclosure, I'm not a TSLA bear. I've also traded upside calls, but this thing is in trouble.
doggydogworld profile picture
@gametv - Once rolling S/X should be 300-400m of gross profit per quarter. A bit more late this year due to pent up demand.

Nobody is gunning at Tesla in China. BYD doesn't have the brand strength. XPeng, Nio, etc. are tiny and the SOEs are going way downmarket. VW Group builds EV factories there, but few actual EVs.
Nick Sanscartier profile picture
@gametv I focused on contrasting Bitcoin profits against S/X production halt as these were the two real gross margin anomalies for the quarter. ZEV has been a "recurring" revenue stream (I understand this will phase out).

Appreciate your feedback and interesting on the technicals. I agree China is probably a bigger risk factor than Europe - mainly on the automation side. Look at how much trouble Huawei had building 5G infrastructure in the Western world, I could see same for Tesla, admittedly. But this will play out in subtle ways rather than some mass shutdown - the difference between automotive and telecom is it is more fragmented so more competition and therefore less geopolitical risk.
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