Wow Tesla blew it out of the park with manufactured vehicles in China 66, 051 manufactured vehicles in China up 18.4 percent from December. Byd still beat Tesla though shipping 150 164 vehicles. But remember, Byd ships a vehicle that is about a half as expensive and only about half of their vehicles are actually fully electric. Uh, you've got a lot of hybrids in there and still a lot of traditional ice.

Vehicles The overall passenger uh vehicle Market in China is sitting at about 1.24 million cars. Uh, produced production is expected to ramp back up in China as about 80 percent according to the economist of Chinese have been exposed to or have caught Covid and folks are expecting to be well back to work. Uh, the current targets for production in at Gago Shanghai at Tesla are somewhere around 20 000 units a week starting in late February or March Lee Otto Xping, Emoters and Neo all had monthly and year-over-year declines uh in in sales uh, and I That might be because Tesla's price cuts are putting substantially heavy pressure on other manufacturers which are not profitable or are barely profitable now. I got a lot of heat when I started talking about this on tick tock on Tick Tock I Made a video talking about how Rivian from a gross profit point of view takes or it costs Rivian 271 bucks to generate 100 bucks of Revenue.

That's disgusting. From a gross profit point of view, that basically means you've got about 1500 bucks being spent to make somewhere around like 580 bucks. Rough math. Okay, it's insane how much money they spent just on a gross profit Point of view: Don't even look at net income because you know Rivian's losing money like crazy.

Tesla On the other hand, right now, when they bring in 100 bucks of revenues, looking at somewhere around twenty dollars of uh, 20 to 25 dollars of gross margin, and maybe around fifteen to Seventeen percent of net. uh, and that depends on how conservative you want to be on the estimates, right? Technically, in the last quarter, we were closer to a gross margin of 25, but we've gotten some heads up warnings that we expect that to compress a little bit. But the point is, Tesla is wildly profitable, while other companies are not Byd bringing down about a buck 40 to the bottom line and their earnings relative to Tesla. As we've said, somewhere around 17 to 20 bucks, it's insane now.

I Got in a little bit of heat on Tick Tock for Rivian because people like, oh well, when Rivien was small and just doing 7 000 vehicles, or when Tesla was small just doing seven thousand Vehicles, they were losing money too. And then what I did is I went back to the 2014 number which roughly aligned Tesla Sold and manufactured around 7 300 vehicles and Rivien did about seven thousand. Six hundred, Seven thousand, Seven hundred in the last quarter. So when you align that, you're like, okay, they're roughly a similar manufacturing stage.

Well, we already know that Rivian's gross from profit margin is an abject failure. Are you looking again at spending 271 bucks per 100 of Revenue gross? I'm not talking Opex here I'm not talking about advertising or SG you know SG uh selling in general, administrative expenses, or research and development? I'm not talking about your Opex I'm talking about gross profit, abject failure. Gross profit. Well, if you look at Tesla back in 2014 when they were manufacturing just as many vehicles as Rivian was, Guess what their gross profit was, then remember Rivian right now.

Negative: 271 per 100 bucks Tesla per 100 bucks. Still bringing 20 bucks to the bottom line in 2014. So I made a follow-up take talk talking about that and guess what the morons in the comments said then oh sure. pick the quarter where that makes sense and I'm like you I picked the quarter where the production aligned relative to the most recent quarter.

For Rivian, it's like some of these people have their heads so far up their own behinds. I Think they're just blind bag holders who don't understand the basic premises of fundamental analysis. People don't get it. I Look, if you are an investor, you should so.

Crystal Clearly be able to divide fundamentals from technicals. and if you don't understand the differences, you should probably not be investing in stocks. Start with something easy like real estate. Even though the irony is probably at least half of you don't actually own real estate.

But that's okay because I think when you watch my channel, eventually you're going to get convinced by real estate. Not for me, it's not like I'm trying to earn a commission off you, but because I think that's actually going to help you substantially catapult your wealth unless of course you already have a net worth of over a million bucks. So with that said, I think smart people realize that Why did Tesla have this horrible price? Uh, a correction last year. Nothing to do with fundamentals or maybe nominally the biggest thing was was the easiest Trend ever to short because Elon was selling like crazy thanks to Twitter and there was no end in sight in terms of how many Tesla shares Elon was going to dump just to fund Twitter.

So the easiest short hour: The Technical: From the technical point of view. once you start the short: Trend Guess what happens the Algos and the institutional hedge funds managing those Algos They come out. not even just the hedge funds. All the institutions they come out and go easy short.

Oh okay. going into recession? What should we do? Oh, okay, y'all let's go buy. Uh, Costco and McDonald's which are you know, like McDonald's is an abject joke as well to be investing in, but it's performed a lot better year over year than Tesla. Why? Because oh yo technicals say let's go in a recession from growth to Staples and then eventually we'll go.

It's very simple. Okay, it's so that way when they answer the phone to their complaining customers about us going into a recession, the pension fund managers, the hedge fund managers, the institutions, the banks, the Morgan Stanleys whatever able to go. Ah, don't worry, we're going into a recession. We have moved from Growth to Staples because obviously you still have to buy toothpaste in a recession, right? Oh yeah, that makes sense.

It's so dumb it is so dumb in the short term. the kind of technical movements that you get in the stock market. The good news is, in the long term, the fundamentals tend to shine through. much.

kind of like we just heard two. Nearly two years later after the April of 2021 fatal crash in Texas where two dudes launched a Model S on a small roadway, hit a turn, took the turn too fast, car drives into a tree, burst into flames. What happens after it bursts into flames? The dude in the front climbs to the back because the car catches fire in the front. Who knows what happened if he was injured or whatever.

Couldn't get out. Both of them died, which is terrible. Turns out the guy was drunk while he was driving and I don't mean like you had a beer like eight hours ago, the guy tested twice the legal limit. That's that's deep.

Okay, that's really drunk. I Mean look, this is not to at all justify like no, nobody should ever drink after having alcohol, right? Uh, but let's just be real. I Would venture to say 80 of adult drivers who are not Mormons or who don't otherwise, just not drink, have probably had a beer or a glass of wine at a dinner somewhere and then have driven at some point thereafter. Okay, but this guy was.

This was much more. It's twice the legal limit you're talking about. Like probably six to nine shots of alcohol for a dude. Okay, to be twice the legal limit I mean you are plaster to be twice the legal limit.

You probably couldn't even walk at all if you wanted to. Uh, okay, maybe even not that extreme. But but it's it's gonna. you're gonna have a hangover the next day.

Let's put it this way. anyway. so anyway, the guy's drunk drives into the tree you think burst in the Flames they die. The big media story that comes out around it is Tesla crashes into train, bursts into flames.

No one is in the driver's seat must have been the guy showing off autopilot And because the guy showed off autopilot and autopilot failed. Clearly these poor people died thanks to Elon Musk's Autopilot. That was literally the news story. Two years ago, you had scumbags like the LA Times say Where are The Regulators Why are cars allowed to drive themselves with nobody in the passenger seat which I just said a lot of things.

So let's unpackage that for a moment. I Had an hour and a half long interview with the editorial Board of the Los Angeles times when I ran for governor and guess what, all it was was a 90-minute opportunity to find any opportunity to write a hit piece on me so they could prop Gavin Newsom up on the pedestal. there was a zero abject interest and actually understanding the perspectives that I was sharing. Scumbags don't like that.

It's rude and it's wrong. It's not what consumers and voters in California deserved, but that's the mainstream media for you. They got to keep stroking the guy in charge so that way they get invited to his press conferences. It's ridiculous.

Okay, the LA Times allegation out of the way. Let's go back to what they wrote. So what did they wrote or what? What are the mainstream media right? Oh, where are The Regulators Where are The Regulators Tesla crashes into tree people dying in Flames Where are The Regulators Oh wait, what comes out now? Oh wow, uh, no. self-driving uh or any autopilot features were actually enabled.

The car crashed without any automated or Adas support systems activated. Finally, we find that out two years later. but that's after the story already broke. That's sad.

But not only is that sad, you have no one. Well, with the exception of some folks on Twitter doing doing uh, you know, God's work so to speak. Uh, you have nobody. Uh, no, no mainstream media admitting, uh, the disgustingness of their headlines suggesting that without any conclusion.

Oh okay. well because the guy was found in the back, it must have been Autopilot. Even though that's not how autopilot works like you have to, you have to somehow be able to engage the steering wheel to actually be able to function on autopilot. Mainstream media doesn't want to take the L for it because it's embarrassing.

Anyway, here you go. NTSB Reports Uh. In a report released Wednesday showed evidence indicated that the driver of the Tesla Model S hadn't engaged any of the Adas features before crashing in. Houston In April of 2021, two cars occupants died.

Initially, a local Constable said he believed the model S had operated without anyone in the driver's seat when he crashed into a tree. But that was also very quickly dispelled because the fire department realized wait a minute, the steering wheel is damaged, implying the person wasn't wearing a seat belt. true with the seat belt. Uh, but anyway.

uh, they the damage on the steering wheel implied that when the impact happened, the person probably hit their head on the steering wheel, which is pretty crappy. Uh, but uh. but anyway, here's just another sort of um, finally, after two years, finally some relief and justification showing that Tesla once again was not at fault, but that that doesn't make for a good media story. Uh, Anyway, now it's worth looking just briefly since we've gotten over some of the anger around Tesla and the mainstream media.

It's worth looking a little bit at the fundamentals because yes, Tesla has officially broke 200 or now. One of the things that is fascinating is myself and the team. just a few days ago when we were in the race for uh, you know to see if we could hit 200 before the expiration of the coupon code for the programs on building your wealth uh which? which Um, uh, you know, we just hit 200. But anyway, we were talking about this belief that we have that once Tesla breaks 200.

Uh, it would probably rip past 200 and in pre-market right now, it's sitting at 208. I Think today will be the test to see now that we have officially closed past 200 yesterday at 20129, Will we rip past 200? Uh, that is just a belief that we have as it's bounced basically straight up off of this Fibonacci curve. Uh, and so we'll keep an eye on it. In the past Tesla used to have these like 27 to 30ish day runs of uh, the stock market being open.

What does that put us at Now One two three four, five, six, seven, eight, nine, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22. hey, based on uh, old school history, we should have at least another five days. Which is interesting because you've got CPI coming up next week. But anyway, let's look at some Fundies for a moment.

So going back to Fundies: I haven't really changed anything here. I'm taking about a 10 take rate on FSD which is extremely low, but I'm doing that on purpose. Uh, on the 10 take rate on FSD for 15K because there is the monthly software as a service option where basically you can pay a monthly fee for FSD and so I'm lowering the cash that goes into Tesla basically right out of the gate for Uh 2025.. my 2025 projection is a million Vehicles fewer than what Kathy Wood is projecting although she's got some pretty, uh, pretty ambitious targets.

Let's just say there's no shade on Kathy Okay, I love Kathy I think she's a brilliant marketer? Uh, but but I think some of the numbers are too ambitious, but that's okay. Maybe I'm just being a little bit more conservative and that's okay. Everybody can have a different point of view. Revenue per vehicle I'm at about 47 000.

I think she's right around 46 000 so we're pretty close on that. But anyway I put in about a 10 from FSD I Don't put in any revenue for Insurance semis Tesla Bot Auto taxis or or you know, self-driving taxis I Don't put anything in for that I do put in about 10 for services which mostly gets costed out because the margin's very low on Services although it's finally going positive uh and uh for for energy I Just put in basically one percent of total sales uh represented by about energy which could end up being low if I go with like a terribly low margin of 80 which we should not be at a 20 gross profit margin in 2025. We should realistically be back at 25. so we'll change that number in a moment.

But if we leave it at 80 percent, uh, you're looking at a future price Target based on a PEG ratio of 1.67 at 30 percent assumed EPS growth. So if you think EPS is growing at 30 in 2025, six seven, eight then then and then you assign a 1.6 Peg Very, very traditional, very normal. you should be at at least 400 bucks uh in 2025.. Now if I change this margin to Uh 75, so a 25 gross margin, you can see that quickly jumps to 511.

Uh, so somewhere between 400 and 511 by 2025 seems very reasonable. But one of the downsides though is that the present value has been skyrocketing. That is the ironic downside of the price going up is that your rate of return now on Tesla from what I've been previously making these videos is, has dropped almost in half. Uh, it's dropped almost in half because the price is so much higher now.

Now, don't get me wrong, it's still a phenomenal number. even in in the, uh, worse, worse. ER case scenario: I don't think that's a word. Uh, but even if at the 399 price target for 2025, you're looking at uh, somewhere around a 24 compounded annual rate of return.

Now keep in mind, while I think what I'm talking about is financial and some people may see some of this as advice. I want to be very clear: I I'm not giving you personal advice. Okay, I think I provide great advice on the channel, but I'm not providing personalized advice I am a financial advisor. but that's a very important difference is I'm not providing anyone anyone I don't do it.

Personalized advice: I Don't look at what the heck is going on in your world and your portfolio and go. You should rebalance this to this. Okay, that should be obvious. Okay, uh, but anyway, some people don't recognize that.

that's obvious. So anyway, uh, but I think this is this is still very, very good. This is where the worst case scenario number here: 24 year over year. Uh, but however, uh, Tesla's going to get to the point where where this is going to start looking less attractive, right? Let's say this gets to 350 this year, right? So say Tesla runs to 350 this year.

All of a sudden, in your more worst case scenario, you're only looking at a four percent compounded annual rate of return at that point, It makes sense to just dump everything and go all in on house hack for me, not personalized Financial Advice Just saying. Now if if I go with a a different margin and I go a little bit, let me go more ambitious here. Okay, let me go 30 to see opportunity cost fomo wise what you would then potentially miss out on go back to a 30 gross margin. potentially.

Now you could be at a future value of 623 right? And so you're you're compounded anywhere. in return would then be 21, so my expectation would have to be greater than that for investing in something else which I think could be reasonable, especially since that is that is probably a little bit more hopium. Maybe you're closer to that 25 level. It's about a 13 annual compounded rate of return for about three years.

So anyway, depending on how you play the numbers uh, should in my opinion, guide your your investing thesis and your plans for the for the company and for your Investments Obviously I think that fundamentals are the most important thing when it comes to investing. uh and uh, let me give you another a brief brief example. Okay, when it comes to growth rates because this is very important. Uh, some folks asked me yesterday, they're like heaven.

You know. End Face had these great numbers why did it sell down and I I think people? don't? you know objectively really. look at the fundamentals. I think generally people on the internet, uh, look at the headlines and then when they look at the headlines, they what make a conclusion based on those and don't actually pull up the financials.

So I was asking and this is this is valuable for Tesla as well. Okay, so I was asked yesterday. hey, what's going on with End Face So I tweeted this, uh, you just follow me totally for free at Realme Kevin Over here right? Why is End Face plummeting after great earnings with a quadruple beat? Top Line Bottom Line: Margin and guidance. That's quad beat.

Okay, simple. Well I Wrote: after hours trading is often low liquidity and undereducated training. Headline reading, not fundamentals. That's because after hours end phase was up like 10 percent.

But what did End Face close at yesterday? Well, End Face closed like down four percent yesterday. So why is after Hours so different from when the market is actually open? Oh wow, surprise surprise because you actually have people with, you know Big Boy Money. uh, making decisions based often on fundamentals, but not always. Uh, could be based on technicals, right? But anyway, here are the problems.

What the fundies show: You have a company whose growth rate used to be thirty percent. a quarter, twenty percent, a quarter, Fourteen percent a quarter. and you ended with 724 million dollars of Revenue in the fourth quarter of Uh 2022.. the projected revenue is expected to be 720 for the first quarter.

That's the midpoint, could be higher, could be a little lower. Well, that represents a negative growth rate quarter over quarter. And we understand there's a massive seasonal difference between going from Q4 to Q1, but especially in the Solar world. But at the same time your costs are going up by somewhere around 1500 basis points and you're expecting a lower gross profit.

So all of a sudden you have a company that's growing like crazy, not growing like crazy anymore and this is where if you go back to the Tesla fundies and you look over here and you go well. If if the growth rate, it falls from 30 on earnings per share and let's say that growth rate just uh I don't know. Let's say it goes down to 10. Okay, well, 10 times 1.67 means you should only be trading for about a 16.7 times P E ratio, which that brings your your price that you're You're able to pay for the company to 170 bucks.

Which means you should sell it today, right? But nobody actually believes that Tesla's only going to grow at 10 on an earnings per share basis for the rest of the decade. That'd be crazy if you believe that do Not invest in Tesla right? So that that's the point of having some form of stable PEG ratio 1.67 which then you adjust based on EPS to find out what kind of multiple you should be using for the company. You know the reason you have companies like Ford and GM selling for these incredibly low multiples is because their growth is like nothing or negative or because the CEO of Ford is a complete idiot. Well, maybe I shouldn't say he's a completely idiot.

Well, let's just put it this way: I tweeted the other day and again another reason you should follow me at Realme Kevin on Twitter doesn't cost you anything. Follow me over there. Uh, but I tweeted the other day this, uh, this clip of a Ford CEO Jim Farley on the earnings call and I was so blown away because he's bragging about how they're going to make lots of money going forward. That's that's what he was bragging about.

How are we going to make lots of money going forward? Uh, in, uh in basically, uh, automotive and he's asked by an analyst, hey, do you think you could get to a 20 gross margin which is Tesla's worst case scenario, by the way, right? In other words, an analyst is going to forward and going yo. Do you think you could make it to Tesla's worst case scenario? And the CEO has the following to say about getting to the worst case scenario. Basically, he starts off by saying, well, no, Basically, not on the car because we're still figuring out the manufacturing process. Even though we've been manufacturing for over 100 years, we can't figure out how to make an electric vehicle profitable.

and we probably won't be profitable on electric vehicles until 2026. But here is where we can make real money. Okay, this was just embarrassing, even the way he said it. Okay, ready for this.

Listen to this. Not our batteries, not the EV platforms, but our new, fully updatable electric architecture Because what we've learned on Pro is we can make real money on software. Did you hear that we can make real money on software? I Mean first of all, it sounds extremely creepy the way he said it. Uh, but but it's because they're sucking.

It's insane and sure. Mr Steve Look, you know what? I appreciate you Mr Steve Mr Steve Here says and look, look, we love Steve he's a course member Steve and I We're gonna have great beer together one day. Uh, when my plane is back to Flying because it's going under a war, it's under a warranty upgrade right now. we're gonna do great stuff.

Uh, Steve Here says GM is securing the battery supplies needed Tesla's liking that. That's fantastic and so is Ford Ford is also securing the supplies that they need to be able to make the vehicles that they need for the year. Ford Said exactly the same thing that does not make them profitable though on: EVS GM won't segment out their EVs and their EV profitability because they're not profitable so you can secure the supply chains all you want. uh I'd rather I'd Support your argument in saying that EV Supply chains are probably going to have more of an issue, right? But uh, that doesn't mean you're actually going to be profitable.

And this idea that Ford's manufacturing quality is better than Tesla I mean this is like an age-old argument. Uh, Tesla has panel gaps and stuff like that. Let's talk about Ford's manufacturing though. But you know what? Rather than me make an argument, uh, about Ford's manufacturing potential and quality or whatever.

Let's just look at what Ford's CEO said about their quality here. Okay, uh, so uh, let's see here. Okay here we go. The real future profitability on Uh EVS is basically what they call second: Cycle Products This basically means we suck at manufacturing EVs and once we figure out what we're doing wrong, then we'll be able to finally be profitable.

Maybe keep in mind and you can just Google This Nobody expects Ford to be profitable on EVS until 2026.. that's three years from now. Potentially three and a half years from now if you look at the end of the year or would be like 3.75 But anyway, we didn't know when we designed our first electric vehicles that we had basically wiring for our cars that was one mile or 1.6 kilometers longer than it needed to be. We didn't know that it's 75 pounds heavier than it needed to be.

We didn't know that We under invested in braking technology. Oh, that sounds fantastic. So look I get it. Manufacturing is an iterative process, but you're taking an old dog and you're trying to teach them new tricks.

Uh, look, don't get me wrong, some of the old school Fords were great. uh uh, I should I wish I could find that anecdote. Maybe I could find it really quick. There was an anecdote yesterday and I realized it's an anecdote.

so it's not. uh, it's you know? Certainly not something that we could say is is a is a fact right now. But let's look at four recalls. There was this dealer who yesterday on Twitter was uh, complaining about Ford's quality and again I realized this is an anecdote.

Okay, I hate it when people do that in politics and they don't flag that, it's an anecdote where they're like, oh well, this is how it is because so and So says so. It's like, well, it's an anecdote. Okay, it's an antidote, but it's just something to pay attention to. So uh, a car dealership guy.

great guy. You should follow him. uh oh I don't know why I'm not following him there we go. I followed him.

but anyway, car dealership guy great guy. uh hey, he follows me. uh anyway, so uh, he here he writes Ford dealer unhappy with Ford in 2012 Ford had 1.1 million recalls in 2022 Ford had 9.8 million recalls Ford should only have one goal to build the best quality car in the world. Word of mouth would sell it, not rebates and not advertising in my entire career.

The quality can't be any worse and we are told it is now being addressed. Why wasn't it addressed 10 years ago and he talks about the stat we just talked about blah blah blah I don't know I don't know Again, like you know I don't want to come across as cherry picking I don't think the car dealership guy is like abjectly like, you know, only for Tesla He writes some pretty neat things as well. about uh about like carvana. He pays a lot of attention to what's going on with Carvana.

uh, car auctions and session. We'll talk about this a little bit more later. Uh, so I I think he's worth the follow-up Um, you know I'm trying to I'm trying to get him to do an interview so we could get a face reveal, but but he thinks that uh, face reveal would end up hurting his ability to have people actually want to follow him. Um, so I I don't know I Love the self-deprecating humor, but uh, uh, you know.

Anyway, so that is my thesis. My thesis on uh Tesla no Steve I'm sorry I'm sorry okay Steve's like haha I just got wrecked. No, No. I'm sorry Steve Okay, okay, like again, it's an anecdote.

Maybe that's not actually what's happening I don't know, right? It's just something we want to pay attention to. Uh, and and I guess the way I look at it is the frustration that I see by the CEO in the earnings call. kind of reiterates a little bit of some of the issues that they have here, right? Uh, and and this this, uh, this idea that uh, you know they won't. They don't even expect themselves to be profitable I think in the long term, that's more important I think ultimately, companies will probably get to the bottom of their quality issues, but who knows, maybe not Anyway, Uh, that's my take on Tesla.