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Buy the course. You won't regret it and you'll get lifetime access to the new content and live streams. Link down below. Got a question: email us staff at me Kevin.com Hey everyone Me: Kevin here So as usual there is some classic Tesla drama going on and in this video I'd like to clear up give you a quick New Year's Eve update Since we are expecting Tesla to release their delivery numbers for Q4 soon January 2nd is when the expectation is before the Market opens for these numbers to come out.

Now we are going to then know 2023 deliveries in total, which is great. We're expecting those to be over 1.8 million, but the real question is going to be what is Tesla going to project for deliveries in 2024 during Tesla's earnings calls tentatively slated for about 2:30 p.m. on January 24th mark your calendar. So the drama has to do with this Troy Teslike, who regularly posts production and delivery estimates on X has now suggested by running this poll, what should the delivery Target for Tesla 2024 be And the options he gave were 2 million deliveries or 2.1 million deliveries And initially you might think why is that a big deal Kevin Well, it's a big deal because originally Tesla was growing at the 50% growth clip I believe Tesla's probably more likely to grow closer to 30% However, 2 million Vehicles divided by 1.8 delivered in 2023 is only an 11.1% growth rate.

That's a really big problem because you've already got a little bit of an elevated PEG ratio for Tesla. In fact, right now, if we look at the consensus estimate for 2024, EPS at Tesla, we're looking at nearly $4 $389 Okay, $4 or $248 on the share price $389 Divide those two. We have a forward price to earnings ratio, not trailing forward of about 64 on Tesla. Right now, 64 divided by 30% EPS Growth is actually not that bad.

That's a 2.1 Peg which is still less than Apple and some of the other major companies that are knocking on the door of three pegs as they're considered safety yet. AI adjacent place. Okay, what does Wall Street actually think EPS growth will be over the next four or five years? Well, Wall Street thinks EPS growth, not vehicle delivery growth. These are different.

will be 26.2% going into the end of 2024, 37.3% 34.8% 33% going forward. So if you add that together and divide it by four, you get an average expected DPS growth rate of 33% So the Market's already pricing in a about 1.9 to 2.1 PEG ratio. But can we actually get that kind of earnings per share growth if deliveries are only going to grow 11% Maybe. But you would need a lot of margin expansion and so a lot of folks are scratching their head going.

Why does Troy think Tesla is going to have such a low projection I Mean if they wanted to grow deliveries at 30% 1.8 * 1.3 you'd be trying to deliver around 2.3 to maybe 2.4 million. Vehicles Ideally Tesla says we think we can do 2.5 million vehicles and now we get back to an over 30% growth Target But targeting vehicle growth of under 30% Not great. Now this led to kind of a freak out on Twitter Here's somebody who says why so modest in terms of goals and Troy is saying I think there are only two realistic options I Don't think 2.2 million is possible considering Tesla is demand limited for all models in all regions except the Cyber truck which is production limited. So in other words, he thinks there's a lid to demand.

And why would there be a limit to demand if Elon told us there's infinite demand for Teslas and the only problem is interest rates? Well, Troy believes if it were true that the only problem were interest rates, then why did vehicle sales go from 13.7 million into 2022 to 15.4 million in 2023? huh? Well, that's interesting that that's a really interesting argument. Let's let's pause here for a moment. so a respected analyst on Tesla Deliveries is arguing Tesla might only grow deliveries by 11% because there's not enough demand. And to show that there's not enough demand.

we are going to look at China and say look in China Interest rates are low, yet demand is low. And to also show that demand is low, we're going to say that Vehicles Deliveries in America grew in 2023 compared to 2022. yet Tesla had to cut prices. Okay, so we have to take these two things independently first: I Think it's easy to argue that China doesn't represent America, especially since China is probably more in a deflationary style depression than anything else, especially after the destruction of real estate uh, wealth in in China and the fact that their youth unemployment rate is in excess of like 24% It's so bad that they stopped reporting the number.

Not that I believe China's numbers. Anyway, Okay, so let's forget China for a moment. let's go to this Us number. This is what really interests me.

If it were true, Total Car Sales in the US would not increase from 13.7 million to 15.4 million. Hm. Well, let's look at the stats. Let's look at where the source is where Troy is coming up with this data.

So this is the report that Troy refers to and on this page I added the line here. On this page, you could see here that in 2023, we expect sales since today is technically New Year's Eve and the day is not over yet. we expect sales to increase because so far they already have and we should end the year higher than in 2022. So I drew this little red line here of increasing sales since the pandemic.

What's really interesting to note, though, is that this is actually substantially lower than anything that we've seen in the last decade. Look at this in 2013. Uh, vehicle sales? over here. You can kind of see.

Ah, you're You're roughly aligned there with 2013, right? The gray bar is vehicle sales. So since 2013, what you've actually seen is vehicle sales have been higher every single year before the pandemic. For about seven years: 1, 2, 3, 4, 5, 67. the pandemic slowed sales down substantially, and we're really just on this uptrend again since the pandemic.

So that might mean there's more to Troy's argument here than just saying. Look, interest rates went up, but Car Sales went up. So interest rates clearly don't affect car demand. That's Troy's argument.

I'm going to respond to that and say I think that's wrong Troy I Think interest rates absolutely affect car demand. Car sales are only going up because they're coming out of a covid hole. In fact, the long-term Trend here is still we. We're still below the long-term Trend Since 2016, there's still a gap over here.

We're still trying to get back to trend lines of where we were, and if you draw it from 2016, that's a downtrend. If you draw the numbers from 2012, we probably have an uptrend. Gap Point is, there's something else going on here. What I decided to do is go to the same report that Troy used this year at the same point in time last year and I wanted to see what they said in last Year's report to see if they could give me a reason why car sales are going up even though interest rates are going up.

Like what is the big thing driving this increase in vehicle production and sales? Ah, interesting. take a look at this from their report last year. Although there will remain challenges with the semiconductor shortage and other supply chain issues, we are not expecting them to be R entirely resolved until 2024. The problem is easing.

Thus, inventory is expected to generally continue Rising throughout 2023 as automakers increase their plant capacity. If there is a mild recession, the actual timing could be thrown off. However, based on the current Outlook and forecast production for the US market, we project that inventory will be 2 million units by March 2.1 by the end of Q2 and roughly flat through October. Point of this is there are going to be more Vehicles available for sale by vehicle type.

We see output Rising 4 5% for cars and trucks 11.1% So in other words, output is rising. And this was for the 2023 forecast, which now all of a sudden it makes sense. Ah, we have below Trend sales. What caused those below Trend sales, semiconductor shortages, production shortages Factory slowdowns and shutdowns and cutbacks.

Now we're just trying to get back to Trend So I don't think we can simply argue that oh well. Interest: R went up. Therefore, Us Sales Uh, went up And because interest rates went up and Tesla sales didn't maybe benefit as much without price? Cuts Tesla Somehow won't benefit from lower interest rates? No, No, no, no, no, no, no, no way too much going on here in my opinion. Let me give you a bottom line here in my opinion: I Actually think Troy is basing his opinion on these low delivery estimates way too much on the fact that interest rates won't help.

Tesla I Completely disagree I Think interest rates 110% will drive Tesla's growth in vehicle deliveries in vehicle production and the expansion of new gigafactories and the return to Limitless demand at various different prices I 100% Believe that now I could be wrong now I'm off obviously also invested in Tesla So maybe I'm biased. but the core argument that I saw scrolling through like 100 different tweet replies from Troy Here The core argument was that again, says it in different, says it multiple times. It's like oh, look, they've been demand limited. They've had to offer free supercharging, They've had to offer credits I Think Troy Completely misses the argument that interest rates are the reason for this.

Interest rates are the reasons for Price cuts and incentives and his argument is no interest rates have no effect. see Car Sales went up everywhere else. No, no, no, no that's wrong. That's that's his argument.

Completely disagree with that. So anyway, that's my take. Let me know what you think in the comments down below: I Wanted to just throw in my hat in this discussion and argue that I actually don't agree with Troy here and I like Troy's estimates. but I think he's basing his estimates on wrong information.

Now we'll see. Maybe he will end up being perfectly correct and in that case maybe then we have a problem. But if I see a production estimate from Tesla of two or 2.1 I'm going to be like what just to be exceptionally clear. Yes, it would be very bad if Tesla had a target of Just 2 to 2.1 million vehicles.

I will be very very very disappointed I Don't expect it, but if it happens it's bad. Why not advertise these things that you told us here I Feel like nobody else knows about this? We we'll try a little advertising and see how it goes. Congratulations man, you have done so much. People love you people look up to you Kevin P there financial analyst and YouTuber meet Kevin Always great to get your take even though I'm a licensed financial adviser, real estate brok and becoming a stock broker.

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