We've got to talk about Tesla Investor Day and the new preview out by Barclays This preview just out. we got to go through what their opinion is of Master Plan Three and I Think that's really important to do because the Tesla event the investor Day event actually occurs after the market closes. I Mean that's no surprise. It's no surprise that all the juicy stuff will occur after the market closes.

Uh, in fact, I can give you the schedule of what we're looking at for Investor Day at least I think I can I have that here somewhere? Uh, but anyway, most of the activities and most of the actual announcements we expect to occur in the second half of the day. Here we go: 11 A.M Today is event check-in. All of these times are Central Standard Time 11 A.M is event check-in Uh, there will be factory tours and Plaid Demo Rides. Doesn't particularly say that there'll be any kind of demo rides for the Cyber truck, but maybe there will be.

Who knows? It says Plaid Demo Rides. Uh, that will go from 11AM to 2 45 p.m and I believe Tesla's starting to live stream at 1pm. But I don't actually expect anything to really occur until the keynote which the keynote address is set for 3. P.M Central time.

That's 1pm California time the keynote literally starts the moment the market closes. Uh, so kind of interesting. Q A will be from 4 30 to 5 30 p.m and then there will be a meet and greet between 5 30 to 7. P.M Uh, Seven? Yeah.

7 P.M So 90 minutes Anyway, So what does Barclay say for the investor Day Preview Well let's take a look at that right and now. So their preview reminds you that I have timed the expiration of my flash sale for today. Yeah, sometimes there are more coupons on the channel, but you know what? the price trends up over time. So if you want to guarantee the best truck price and if you ever think you need a price adjustment because you didn't get the best price, just email me Kevin.com But if you want to get guaranteed the best price guaranteed, uh, you buy today because if the prices go up over the time, you want to lock in that lifetime access.

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That's what's nice about that. every Saturday is it's a smaller group course. Member Livestream, though, is the perfect size group because we have plenty of time to answer questions, everyone's questions, uh, mostly everyone's questions, and do fun, fundamental analysis together. We do this right after the morning.

Public live streams anyway. Investor: Day Preview: Master Plan 3 Grand Scale Okay, great, let's look at some of the comments here. So as a reminder, Master Plan One was number one. Build A Sports car.

Number two: Use that money to build an affordable car. Number three, Use that money to build an even more affordable car and while doing the above, provide a zero emission electric power generation option. Okay, so that has somewhat been achieved. A lot of these plans have been quote never fully uh, realized or have never fully materialized.

But it's okay to sort of like you make a plan and as long as you can Trend in that direction, you're doing pretty dang well, right? So Master Plan on, uh, pretty great. Master Plan 2 was created Stunning solar roofs and those really haven't scaled terribly well With integrated battery storage. those are doing pretty decently. Those are ramping pretty well as well as the mega packs.

Fantastic. In fact, a lot of Tesla Bulls are saying. You know we got to start realizing the potential 50 margin. that uh, that uh that.

all of a sudden you end up having with um uh with with mega packs and you start putting that into Tesla uh uh, you know forecast for for stock pricing. oh Everything Changes Everything Changes when you start putting Mega packs into the Tesla analysis now I Personally don't like putting in mega packs into the Tesla analysis because I see it as the icing on the cake, right? I Wanna I Want to ideally try to stay somewhat conservative with my projections and I say somewhat conservative because I think they're already. you know they're already on the more bullish side, right? We know that if Tesla can manufacture 4 000 vehicle or Sorry 4 million vehicles in 2025 at an average selling price of 40, seven thousand dollars I align uh with with a lot of the industry on this average selling price and if anything, my number of vehicles produced is probably on the lower side for 2025. But anyway, uh, if I use this with only about a 10 take rate on FSD uh on uh on the number of vehicles and then only 10 of those, uh, that money being realized in 2025.

so it's uh, basically the point of that uh is to say Hey you know we're going to take the number of hold on. Let me make sure I have this right. Uh, we have the number of vehicles four million Vehicles We're gonna assume a 10 take rate. Okay, I actually have it at 10 take rate.

The reason I did a 10 take rate rather than the current take rate of 20 or the potential forecast to take rate of 30 or 40 percent by 2025 is because they did come out with a monthly option to pay monthly for this. so I don't think it'll all translate down to uh cash flow. Although a lot of people will sign up for full self-driving as part of their uh amortization for their loan which basically means Tesla's paying for getting the money up front. So I think I'm actually very conservative.

Bottom line: I think I'm very conservative on a 10 take rate here. 25 margin. We know that Tesla's probably going to go to about a 20 gross margin. Their goal is 30.

I'm just gonna go with about a 25 margin here and I'm mostly going to leave Uh Energy and Services out of this. I'll have a little bit in here for uh leases Services Energy I have about uh one percent over here and I have margin of energy of only 18. Some people think you could massively 10x these numbers. You could probably have a margin of fifty percent here and maybe 10.

uh, you know, um, 10x the energy Revenue I'm just gonna call that icing on the cake as well as a higher take rate for FSC That's just icing on the cake for me. So in my opinion, as long as Tesla's growing earnings per share in excess of 30 and we take a PEG ratio of one, you know at that level of about 1.6 percent. Well, PEG ratio of about 1.6 percent would drive us to about a 500 reasonable price target for Tesla by 2025.. the present value for Tesla is about 210 dollars per share, which gets you about a compounded annual rate of return of about 34.

That's pretty substantial. Now, that's not a guarantee, right? Still, pretty substantial. Not a guarantee, of course, But it's great. It's fantastic.

So uh, that sort of gives you just a catch up on this. So what does Barclays tell us here? Well, they talk about Master Plan Two again. You know, coming out with full self-driving being much more capable, 10x safer than manual learning. So what is this next? Master Plan 3 likely to reveal? Well, Barclays believes that their Generation 3 platform is going to be what we get revealed and it will be the basis for the quote-unquote Model Two.

Now, this is really interesting because I Personally don't think there's going to be an announced model too, unless it's specifically for the Chinese market. I Actually think the Model 3 is the Model 2. I Think the Model 3 is what Tesla wants to reduce its cost in by about 50. And if they can reduce their cost on the Model 3 by 50, then that's fantastic because right now, you're running at a margin of your running at a cost of about thirty two thousand.

Two hundred and fifty dollars for the car. If they could reduce that to about sixteen thousand five hundred bucks, and they wanna operate at a margin of twenty five percent, Well, now all of a sudden, you've got a car that probably could sell uh, for about. Let's see if I divide it that car at actually even a thirty percent margin. if 16 000 represents seventy percent.

There we go: you get a car that costs only about twenty three thousand dollars. So in other words, if they can reduce the cost of the Model three today by fifty percent, they could sell the Model three for twenty five thousand dollars and actually make more profit. Phenomenal. So I actually personally think the Model 3 is the next model too.

but Arc Invest thinks they're going to announce a new model too today. Uh, or some kind of new model vehicle today. Uh, Barclays thinks that they're going to announce the basis for the model too, especially given that Tesla right now is primarily positioned for the luxury Market Uh, and they say that in order for Tesla to actually achieve that 20 million volume number that they're trying to achieve by the end of the decade or at some point in the future, then they need to have some kind of 25 000 vehicle again. My take is that's already the Model 3 and just reducing the cost there.

Now they have a different opinion. They base that opinion on Elon Musk suggesting that the Uh vehicle will be smaller than the Model 3 Model Y platform and it will shortly exceed the production uh of all of our other vehicles combined. I Think they mean surely here? Surely here. But but anyway, uh Elon Musk apply implied in the Q3 earnings call that Tesla will aim for a 50 Cost of Goods Sold reduction and uh Barclays Here is suggesting they think they're going to see somewhat similar of an investor day today like what we saw at battery.

Day Battery day is basically where they showed like pictures of of the batteries uh, the 4680 cells and how they're able to increase the efficiency of these batteries while reducing costs. Now I'm a little skeptical about how great some of these things are because the battery is bigger, right? Like of course, a battery cell that's larger has five times more energy or six times potentially more power. It's a bigger cell. Yeah, you know it's kind of like going from a C battery to a D battery.

so I'm a little skeptical there. But I do think they'll get some kind of marginal improvements like you know, maybe 16. More efficiency or whatever we want to see is today going to be a realistic path to potentially lower cost of production. Are we going to see more Giga castings? Can we do the whole you know? Can we do the front, the back, and the bottom? not just those in Giga Uh, you know via Giga castings.

But can we do bigger vehicles like maybe Vans like Sprinter vans. Can we cast together Sprinter vans from Tesla and then have full self-driving Sprint advance I Love the Sprinter van. By the way, I think Tesla needs to get in that market. There really is no Mommy car for Tesla.

By the way, if you have two kids, best case scenario, you have a five seat model X or model Y and then you actually have some trunk space. But if you have any more than two kids or you have the seven seed option for the model of or even the six seat option for the model X or Y, you're screwed. Your trunk space goes down to zero. You ain't putting a stroller in as soon as you you have a third kid, you're screwed.

There is no three child mommy. Tesla car you need. You need to go to a minivan. and personally I think that sucks.

Don't get me wrong, I'm not trying to offend minivan folks. We own a minivan and it's the most functional car we have. Uh, you know when we gotta take uh, the in-laws the kids, me and Lauren we got two kids to the airport and have all our luggage. The minivan works but as soon as we have one other kid we're screwed and we have to have a sprinter van which I'm really excited about.

Lauren's like I don't know man I don't want to drop my kids off at a sprinter van I'm like this is why we need a mommy car anyway. like that's not a minivan. but anyway, they talk here about cost reductions coming uh, to batteries, potentially increasing scale, vertical integration, structural improvements, structural castings, manufacturing improvements, and trying to reduce manufacturing floor space by 50 for their third gen platform. Now, it's worth noting that they are looking at, uh, potentially announcing today the Mexico Gigafactory.

that would be about three hours from a giga. Texas The Mexico Gigafactory is expected to see about one billion dollars of Capex Investments soon and up to 10 billion dollars of Capex Investments over time. We actually actually also just got this update here that in addition to potentially announcing an actual gigafactory in Northeast Mexico Now there's an update just now coming in that Tesla is considering opening an electric battery vehicle or an electric battery plant. I'm sorry, not a vehicle plant in Central Mexico So not just a Gigafactory in Northeast Mexico Where remember in California we're paying like 20 bucks an hour for workers and taxes you're paying like 15 bucks an hour for workers in Northeast Mexico You're paying like 3.40 per hour for labor in Northeast Mexico Some people are like oh my God that's exploitation But Realize, like capitalism that brings more work to those areas drives wages up in those areas.

So it's actually helps those areas get wages up. Uh, but anyway, the United Auto Workers Union by the way, in the United States is like punching the air right now. they're like damn you good. Elon Musk Going to Mexico is the Inflation Reduction Act uh, which is important for capitalizing on that 7 500 vehicle tax credit which you have over here and Barclays mentioned as well.

Uh, it means that Tesla has to Source its battery materials from North America and then assemble the stuff in North America well look low and Below low and behold new Tesla Nuevo Leon Plant could create up to 6 000 jobs battery plan in central Mexico Fantastic! So again, Lower costs for Tesla you help increase wages in Mexico you have a substantially lower cost of doing business and you meet the benefit of the inflation reduction act. Now, maybe that wasn't the political intention. Maybe the political intention was to have Tesla manufacturing stuff here, but instead they're now doing it in Mexico because they can. But hey, that's the politicians problems.

and that's exactly why the United Auto Workers Union is like punch in the air. Anyway, here's an example of what Barclays thinks for forecasts: current Uh Model 3 Looking at a cost of goods sold at about twenty seven thousand nine hundred dollars minus the battery excluding the battery, The Model 2 low-cost vehicle could have a cost of about sixteen thousand Five hundred dollars. Boom baby! That's exactly what I've been talking about for weeks on this channel that in order to have a twenty five thousand dollar vehicle I Mean it's not hard to do the math. You got to be sitting at somewhere around sixteen thousand dollars for cogs now.

Barclays Actually thinks they're going to announce something like this today? Uh, now what they do think though, is images of the model too. Probably not going to happen. So they think it's unlikely that there'll be images of the model too, because they don't want to cannibalize current sales. And that's again why I Think it's more likely that project Highland is the model too.

In other words, the model 3 is the model 2. it's just the new model 3. It's just a cheaper version that you could sell at a lower price. Uh, you know, Project Highland vehicles in Camo have been spotted.

you know, covers over the front back as far as the model too. We don't expect Tesla to show a vehicle at investor day as this could risk cannibalizing the current demand. And lastly, we assume the model 2 will be a different model than the 3y platform. I Personally disagree with that, but we'll see.

we'll see. I'm willing to be raw I Don't mind being wrong I do think if there's a model 2, it's gonna be China I think the model 3 is the smallest thing you could sell in America and and I really took that to heart when I talked to Brett Whitton from Arc Invest, type that into YouTube meet Kevin Ark invest I Just interviewed Brett in person at Santa Monica Beautiful by the way. it's a little chilly but it's beautiful. Uh, Okay, so we talked about that plant already.

Manufacturing will be a central theme of investor day. We expect Tesla to point to key aspects of the Austin gigafactory as the basis for Tesla's manufacturing. Key question here is around other manufacturing expansion. Are we going to expand Fremont Shanghai Austin Berlin Currently at 2 million units a year? how are we going to scale that to four five six? How is that going to uh scale? You know, Here you go our estimates of Tesla deliveries.

They actually think that uh oh uh gosh, that's quite disappointing. But anyway, the annual delivery estimates here for 2025 are are a very, very slow ramp. by Barclays Here look at this. this is like a trashy ramp.

I Mean they're basically saying we're going to be at about 1. 8 for 2023 barely grow in 24 barely grow. I mean we're growing at like 10 to 15 over here like this would be pretty embarrassing if this. If it takes until 2030 to get to 5.5 million Vehicles we shall see.

Uh. Anyway, they think the Model 2 would end up having the lowest margins at around 21. with the S's and X's like the Plaid sitting around 32 percent. Maybe the Roadster in cyber truck up here in high margins as well.

And notice they left off this uh, the semio over here. These are some of the current uh, production uh, capacity numbers for Tesla or or some projections that they have uh, 4680 progress the larger of when questions from investor for brand new models. Uh, well. maybe we'll be talking about today.

longer dated initiatives. Uh, potentially. hey, Maybe we'll hear a little bit about Lithium miners. Maybe we'll hear a little bit about uh, the uh, the software Sac or even the Uh robot? The robot not only Robo taxi.

but what about the robot? Uh, they do say they don't expect much on in terms of financial targets. Maybe that's actually a good thing because if like, Wall Street doesn't actually think that Tesla's going to be able to scale at this level. Maybe that means the price targets are way too low for Tesla right now. Uh, so you know they do talk about Tesla having a margin Edge over Legacy automakers.

Obviously, we already know that we know that Tesla's lead in creating software-defined Vehicles is an opportunity. Key differentiating factor. Of course, we know that uh, Tesla EV Supply chains. Maybe we'll hear a little bit about that.

Uh, we acknowledge the near-term questions of further price cuts and margin normalization from lofty levels previously. Uh, that said, the underlying fundamentals combined with a valuation that appear far more reasonable compared to a historic pricing. So even though Barclays is kind of skeptical on some of the forecasts of numbers produced uh, you know we. You know they actually see Tesla's reasonably value today.

Those who remain bullish see further upside, but have pointed out that Tesla's 2030 volume opportunity is likely above our 5.5 million units more like 7 to 10 million units. and Tesla might lean into this with its significant cost. Advantage So in other words, Barclays is actually already saying like, yeah, our forecasts might be a little on the low side for Tesla's production. Uh, yeah, I think Anyway, kind of interesting.

and it's almost as interesting as recognizing that hey, Tesla is now opening up their superchargers uh, to other individuals. I'm really curious to see how that charging is going to, uh, lead to congestion because it's going to take a while to actually see a lack of congestion. I think because Tesla's going to take billions of dollars from the government and build more Chargers But the congestion thing bothers me. although I don't even charge with the superchargers because I don't go anywhere.

but where I do go is to course member live streams to provide more value to course members every single day. and you should join that using the course member flash sale today in honor of investor day. This is going to be the best price guaranteed going forward because the price will be going up after today.