Deepwater AM’s Munster on Tesla Earnings

I want to start off by talking aboutpotential new models out of Tesla, because that was the headline that a lotof the media came away with early next year, maybe late this year.We could see new models, but detail very, very vague.Let me see. Executives really danced around themultiple questions on that, on the analyst call.And eventually Elon Musk himself just shut shut it all down.So what are you expecting in terms of cheaper, newer models?So I guess to start out some context, the timing piece is important.I want to highlight that they have.

Talked last six months been between somegrowth curves there in this EV winter right now, and they've talked about theimportance of this next generation platform.This is three months ago. And so the talk of them on the calltoday, just moving that timeframe up by nine months is reaffirming to thoseTesla investors that in fact we're going to re accelerate growth earlier thanwhat had been expected, call it three quarters early.So that's one piece of it. The second is this unanswered componentto it, which is what is actually going on with there.Like what are these cars going to look.

Like?And as you said, they shut it down. But there was just this sliver ofinformation that Elon gave. He said that when he was talking aboutthe robotaxi and the question came up on the call, is this related to the robotaxi? And he said, I'm not going to answerquestions. I've said what I'm going to say and waittill August 8th to hear more. And so based on that, you can readbetween the lines. They're probably going to talk about theRobotaxi as this next gen car and August 8th.It's hard to believe that they think.

That they can get that car out andapproved within a year. But this is Tesla and they make big,bold predictions. Yet to give a bit of context aroundthat. It took four years for the Cybertruck togo from announcement to actual delivery, but Tesla says it's not going to need anew factory to do this. Does that give you any clues?It does. I mean, I think that they can build thiscar. They can get this car to market from inthe next year. I think that that's very possible.That's different than in 2019 when he.

Talked about a million robotaxis on theroad at the end of the year. They had basically very limitedproduction at that time. And so I think that the that dynamic isdifferent. The piece that doesn't quite sit wellwith me, it's just there's the side of building the technology and there's theside of getting approval. They did mention that a few states havemade that approval and they expect more to come.But to me, that's probably the biggest bottleneck.So I think that the manufacturer knows that their existing facility doesincrease the probability.

Let me kind of cut to the chase.And my bottom line here is they're not going to get a car.They're not going to get a robotaxi out in a year, but they probably do in twoyears. And if they do that in two years, Ithink the shares go higher. How much demand, though, do you thinkthere would be for an autonomous self-driving car?Well, I think there'll be a lot of demand.I think that not only will they be demand, I suspect that for for safetyreasons that other carmakers are going to be required to have autonomy.And to put it into perspective, just.

Some quick numbers, at least related tothe US, is that 42,000 people lost their lives in 2023 from auto accidents.That's up from 37,000 in 2013. So over the past decade that hassurprisingly increased. Of course, the reason is people aredistracted. So I think that the the opportunityaround just making cars safer is a one big piece to this.The second is what's the market for people essentially moving around formuch cheaper? Imagine using Lyft or Uber at a 50%reduction in their current price. And I think that that's very appealing.And Ilan talked on the call about 7 to.

10 million vehicles being autonomous.And I think you can kind of throw those out the window.Who knows what the number is. But if they solve for autonomy, thiswill be a true breakthrough, a kind of a once in a hundred years breakthrough interms of how people move. What do you think about the pricing ofthat as well? Because it seems like it'd be a moreexpensive vehicle, but at the same time we've seen a really slack EV market andTesla pushing through price cuts to try and regain market share or gain furthermarket share. So two topics when it comes to pricing.One is just the current pricing.

Environment.And surprisingly, ASP is despite what we've seen in those headline price cuts.Average selling prices in the March quarter was flat.It was actually up 1% from the December quarter.And the Cybertruck kind of played in that higher trim model Y, but so is PShave been surprisingly stable given the overall environment when it comes to theprice of FSD. They've recently lowered that and sothey're, you know, making this available if you buy it upfront for a third lessgoing from around 12,000 and $9,000 if you buy it upfront.And so that is there are definitely some.

Moving parts around autonomy and howpeople are buying it, whether it's upfront or through subscription.The simple takeaway is this is that when you put all this together and thinkabout a robotaxi that has autonomy, the average price of that vehicleautonomously will be much less 20, 30% less than the average price of a new cartoday, which at least in the US is kind of around $45,000.So I think pricing of these vehicles is going down and I think thatprofitability can actually increase at the same time given the potential aroundcharging more for FSD long term. Jane, one of the other things that Teslatalked about on this call was this idea.

Of unboxed manufacturing and how thatwould revolutionize sitcom production. What does that mean to you?What is it? So if you think about the concept of howcars have been made, it's traditionally a manufacturing line.And essentially what unbox means is that you are building these cars in thesemodules in the manufacturing facility. And so people kind of come to the carand add different parts to it. So it's just a it's a different way.It's like flipping the whole manufacturing process.I'm sure Henry Ford is not feeling good about this concept, but it has thepotential to meaningfully reduce the.

Cost of building a car.And I think that Elon has talked over the years about being one of thecompetitive advantages of Tesla is building the machine that makes themachine focusing on the factory piece. You don't hear about other carmakerstalking about this, but that is what is relevant to this whole unboxed approach.It's just a new paradigm in terms of manufacturing that can dramaticallylower the cost, very similar to what the assembly line did 130 years ago.We've got a chart here that shows short interest in Tesla stock.Been here before, haven't we? That's now at its highest in two and ahalf years.

And then today we saw the stock going upmore than 12% after hours. Do you feel like the scene is set herefor a another big battle between the shorts and the true believers of Tesla?And what's your price outlook? It's going to be an exciting two years,I would say, if you're an investor or if you're just a bystander watching thiscompany progress, because one or two things is going to happen.This company is going to flourish or this company is just going to be yetanother automaker. And it is a very similar setup to whatwas going on in 2016, 2017 when they were trying to break through with Modelthree production.

So this is not a bet the company onAutonomy and the ROBOTAXI, but I would describe this as them being all in onthat. And so to put it in the most basic levelis that this comes down to, for investors almost a religious question.Do you believe that the future is autonomous, if you think thatelectrification and autonomy is the future?Tesla by far is in the best position to capitalize on that.If you think that that future is further off ten years, 20 years off, then thestock's not going to do anything and it is going to be really difficult to getthose investors who are in those.

Different camps to really think straightabout what the other side is. So this is going to be a polarizingcompany, undoubtedly a polarizing stock for the next few years.

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