While Tesla has officially announced the event, there will be a new battery Factory built in Shanghai This increases a Tesla's exposure to China This is something that I found that Tesla should do for quite a while. I've been promoting this I even went on a Yahoo finance interview and promoted Build More In China. I've tweeted at Elon Musk Build More in China and one of the reasons I've been a big promo proponent of building More in China is because I believe that the Chinese Communist party wants more capitalism and they want to incentivize manufacturing just as Apple and other companies are trying to leave. China I Think China is trying to make up for their coveted lockdowns, their saber rattling, and some of the extremeness of what we've seen in China.

And now they're trying to make good and they're willing to basically shower companies with money if they just agree to increase production in China. And so I think that Tesla is building the new battery Factory in Shanghai is exactly what Tesla should be doing. It will be a lot easier to build than in a place like Germany Berlin's gigafactory. I think it will be.

It will create substantially higher margins for Tesla Tesla will now manufacture its mega pack large-scale energy unit in that new facility. That's great because we're going to talk about margins in just a moment. We're going to do some price uh, stock price, uh, projections as well to see how this new announcement potentially affects the stock. So this mega pack, uh announcement, uh is going to be an add-on to the factory that a Tesla already has for electric vehicles in Shanghai Which is nice because that means the utility grids will already be in place.

We expect production to begin in the third quarter of this year for Uh, the facility or I should say the development of the facility will begin in the third quarter of this year and production should begin in the second quarter. Uh So around April of 2024 April to Mayish Junish Tesla is Uh is is Uh. Also, this announcement from Tesla comes right after Airbus announced plans to double its production capacity for its A320 narrow body chat and this new manufacturing project uh really gives sort of a some clarity over hey companies are still willing to manufacture in China even after the whole spy balloon disaster and everything. Now the mega pack is awesome because it's really a massive battery that helps stabilize grits.

Think about this in California when we have Uh Peak loads during the summer times when everybody's running their air conditioning. We do not have really sophisticated peaker plants because a lot of the technology is still based on the 70s because California refuses enhancing the efficiency of peaker plants because they're like if it's not 100 green then politically we refuse to let you make your Peak your plants more efficient. That makes our energy grid somewhat unstable in California and in other states of the country you see this as well. A mega pack can actually provide enough stored power for 3 600 homes for an hour, and they can instantaneously take over some excess loads.

And and these are very good for grid stability because the last thing we want are grids that are vulnerable to collapse. There's actually a mega pack facility in Oxnard California which is very close to where I live. The new mega pack facility will initially produce around 10 000 megapacks per year. Now that's pretty incredible because uh, you know, mega pack is a kind of a little bit on the Privacy side.

Uh, Mega Packs right now have about a two year wait time, which is crazy. Uh and uh, these Mega packs. They start at somewhere around 1.5 million dollars for a single mega pack. In some cases now larger Mega packs have been increased in price to about two and a half million dollars.

So I think the easiest thing to do is probably just go with about a two million dollar price per megapack. So think about that for a moment. Two or ten thousand potential megapacks at two million dollars a unit is potentially 20 billion dollars of Revenue. Now we're going to do some numbers on that to see what once that facility is fully ramped what that could mean for the task? A stock price, but this is incredible I mean this is a massive announcement Here China Uh, keep in mind is is a massive market for Tesla especially since Tesla is growing in its EV uh sales whereas Byd actually shrunk last month in its sales uh of of electric vehicles.

Now when you combine plug-in hybrids, Byd is still doing pretty well. But when you look at just Electric Vehicles and you break out the growth of electric vehicles, I'll show you the chart right here. Let's go ahead and throw this up on screen so you can see it. There you go.

take a look at this. This right here is obviously the sponsor for the video 69 off. You can now use Buy Now Pay later for the programs of building your wealthy lifetime access. Best Price guaranteed.

Learn everything I Know about fundamental analysis whether it's in real estate business LLCs Liability insurances real estate Building Wealth In any way possible, keep that in mind and get that best price by going to Meet Kevin.com At Meet Kevin.com you can also see my affiliate links and my actively managed ETF as well as other information. So what do we have here? We have Byd Electric vehicle sales declining 19.6 percent in the fourth quarter of 2022 versus a 4.3 percent growth fourth quarter to first quarter for Tesla The this is Uh brought to you on Twitter here by Berlin Energy and the China Eevee post that is the source for this I Have not uh further verified this information, but it seems consistent with the sales of the companies. now. What we have to also consider uh is of course how this numbers wise fits in in a spreadsheet.

We're going to do that in just a moment, but keep this in mind: Tesla Shanghai produced almost 711 000 Vehicles last year. That is a massive amount of cars. We expect that to roll up to about 1 million vehicles per year. So China is a very, very important market for Elon Musk Tesla receives about 22 percent of all of its sales from China.

so do not count out China And just the other day, actually, yesterday we posted a video talking about how you can actually get very good exposure to China and the growth of China uh via stocks. Uh, like Starbucks Nvidia AMD Tesla to a lesser except now Nvidia and AMD because of the chips bands. some of the advanced chip bands they're still selling chips to China Uh, okay, now uh. let's go ahead and look at a spreadsheet and try to understand what 20 billion dollars could actually look like.

And first, in order to do that, we have to understand the margins that we're looking at. We're going to have to do a little bit of predicting here because we expect the margins to improve. But if we go ahead and throw up on screen now this, this is the last earnings report for Tesla What we're going to see here is that uh, the energy generation sales have grown to about Let's go ahead and highlight that in sort of a light lime green color. Here, energy sales have grown to about 1.3 billion dollars and energy generation costs are sitting at about 1.1 billion dollars.

That right now creates a margin of a mere 12, which is about half of the Auto's margin. Now what I'd like to do is assume that once Giga Shanghai is fully ramped for megapacks in the new expanded facility I believe that gig of Shanghai could boost help boost these margins to about 20. In other words, nearing the numbers once we get to more of an Econ economies of scale, nearing the numbers of vehicle production. Uh, so that's my belief.

Now let's go jump into how that would look in a spreadsheet. So uh, let's pull up the spreadsheet here. There we go. Keep in mind that this video is being produced with the help of Stream Yard.

You can go to Metcaven.com Stream Yard to learn more about uh, this amazing live streaming software. It's actually all browser-based so you don't even have to download anything. You can get a free trial, test it out for yourself. Go to Kevin.com Stream Yard to learn more.

Phenomenal I use it to record and edit my videos. Uh, in. on some occasions, especially when I'm traveling, take a look at this. So this right here is a projection for 2025 and generally what I've done is I've kept energy Revenue very low and I've personally purposely kept energy Revenue very low because I like using energy Revenue as sort of more of an icing on the cake tool.

But if we go ahead and make if we 10x the potential energy Revenue by 2025, when we think that Mega packs could be fully built out, uh, well actually let's look at the pricing before we do that. But remember, 10 000 megapacks add two million dollars a piece would actually bring us to 20 billion dollars for energy Revenue that does not even include home storage or solar panels. So we're going to have to consider that in just a moment as well. But let's leave this unchanged for just a moment.

Let's leave Tesla vehicle sales margin at 22 for vehicles. Uh, we could actually probably bump that to about 25 by 2025. Let's go to 25 margin by 2025.. Uh, I Actually, on energy had this at 18.

We'll just go ahead and leave that there for a moment, even though right now on energy, they're only at 13. So what do we get? Uh, in this example that we're using here, with these margins, we get a future using a 30 EPS growth rate 1.6 times for the PEG ratio. Uh, we're looking at about a 600 price target for Tesla right? That's what some of these optimistic numbers now we can. We can shave these down in just a moment.

But what I'd like to do is I want to know the difference of if we blow up that energy segment. So even if you think this number should be half as high, even if you think it should be 300, how much does energy affect Tesla stock? Well, let's go over here. So let's go ahead and bump this to 10 by 2025.. Now keep in mind that does not yet assume megapacks are fully ramped.

Even though Mega packs could bring in 20 billion dollars, we still have solar panels. We have a home battery storage right? so this could actually end up being 15. But I'm going to go with 10 right now to be a little bit more conservative because I think it takes time to RAM and let's go ahead and get that cost to about Uh 20. There we go, we'll get a 20 gross margin over here.

and so now we want to see from 607 how does the price change? The price goes up about 30 bucks. so you have about a five percent bonus that you're going to get to Tesla stock because of that kind of energy growth. So I think by 2025, you could see an additional five percent movement in Tesla stock because of this energy announcement which is pretty good. Now if we uh had worse margins on the vehicles, if we went with a Uh 78 cost structure on the vehicles, obviously, you could see that makes much more of a difference here.

That makes about a 70 difference to the price Target here. So vehicle margins will still remain extremely important for Tesla as well as EPS growth rate. That EPS growth rate is going to be very critical I think for a Growth Company using a 1.67 times multiple on thirty percent. Very very reasonable to help you determine evaluation for a company, you'll learn a lot more about how I do these valuations in my stocks and site course link down below.

So this I think is a Big Boon right here. So I'm very very excited about that. Uh, do keep in mind we also have FSD Revenue built in here and uh, we have that uh I think this might be a little bit high right here. uh at a 30 take rate after the fully financed price? I'm gonna go ahead and drop the fully uh purchase.

uh you know the the I'm gonna drop that take rate by 2025 and half. and now this is really going to hit margin because FSD is almost 100 margin. So this is going to drop your price another about 60 bucks over here. so you can see really the big movers here.

I Would probably say you're about a 10 mover for car margins, 10 mover for FSD take rate, and about a five percent mover for energy. So while this energy storage movement is Big much bigger is margin on cars and margins on FSD Now that energy sector could grow substantially and that's a big deal because if that energy sector grows to maybe, uh, you know, if let's let's just go back to it for a moment. Let's do some Giggles here. Let's say we keep that FSD take rate at uh, let's see, let's go up here FSC take rate at 15.

Let's keep the vehicle margin at 22 gross. Let's now go ahead and jump this to 15 on energy right Fully ramping those Mega packs and it brings us back to about 500 bucks. So you have a lot of ways you can get to 500 by 2025 here for Tesla Uh Mega packs FSD the vehicles. This is not just a car company by any means.

and yes, car margin is going to matter as well. but this is a manufacturing company. This is an energy company. This is a battery company.

This is a Solar Company Uh, there's so many. Wonderful. This is an Autonomy company. There's so many wonderful plays that give Tesla pricing power.

Here it's It's absolutely phenomenal. It's a phenomenal stock and there's a reason my allocation to it is is quite high. And I encourage you to take a look at my website meet Kevin.com to learn about the allocations in my actively managed ETF Learn about uh what? I teach uh in the courses on building your wealth and my affiliate links link down below. So this gives me some reaction to what's going on with Tesla So thank you so much for watching this segment on Tesla.