This is Serious | Tesla Stock.

hey the treasury just extended the

inflation reduction x 7 500 tax credit

through April 18th looks like it might

actually wear off after that but that's

actually good news for Tesla gives you

another two and a half weeks of pumping

out those 7 500 credits and that

expiration probably motivated a lot of

q1 sales here at the end of March so

we'll see what happens but uh let's get

into some of the other news we gotta

attack Elon Musk we're gonna talk yeah

some fud unfortunately but we're also

going to talk what potential is going on

with China now this I am actually very

excited about so let's start with the

good news and then we'll get into some

of the bad news including some sentiment

fun not so great let's talk about this

because as you know I'm a huge Tesla

shareholder uh I haven't actively

managed uh ETF it's it's one of our

largest positions big fan of that you

can learn more by going to beat

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it's all at be kevin.com and even though

I'm a licensed financial advisor I can't

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like a contract and we're doing personal

financial advice but in general I like

to provide Financial insight and

commentary and what do we have here so

Elon Musk plans trip to meet Premiere

now I want you to know this before we

read exactly what's Happening Here

the Chinese Premiere just gave a speech

two days ago I read the entire speech

well the transcribed version of it

because I don't read Chinese but anyway

uh well like Mandarin but anyway

um

the Chinese Premiere echoed a lot of

what Xi Jinping talked about and what

they did is they talked about how they

want to encourage entrepreneurs to come

to China how they actually use Tesla as

an example in Chinese propaganda media

they media they regularly actually use

China or Tesla as an example of a a

winner somebody who came to China and

blew up because they came to China China

wants more of that because they realize

their economy isn't reopening as fast as

they'd like and the best way to

encourage growth in GDP is to encourage

more manufacturing something they're

good at keep in mind China has gone from

manufacturing Barbie dolls to

manufacturing really Advanced things and

doing it better than the rest of the

world not only Advanced cars Advanced

phones like assembling the iPhone but

also chip making but think about this

China according to a piece a phenomenal

piece in foreign affairs magazine they I

mean this was like a 25-page report that

I read on China and what was so

phenomenal was the foreign affairs

talked about how China got into the

solar panel industry after 2010

and the Chinese government accelerated

the solar panel industry so much that

now most solar panels in the world are a

manufactured in China and B the best

solar panels and the most efficient

solar panels are in China So Gone are

the days of Chinese manufacturing being

the cheap crap it's actually starting to

get really good and in some cases better

and in XI jinping's speech he made it

very clear that they want to promote the

c word

not communism

capitalism that's insane now what was

crazy about the speech and if you read

it I'm just going to give you the summer

here what was crazy about the speech

which the premiere just echoed two days

ago is they make this argument about how

great capitalism is for their society

but don't worry we're still going to

have socialism so they're like common

Prosperity is still really important oh

but capitalism is so great common

Prosperity it was really an interesting

duality so what do you think about that

in in regards to China I want you to

think about what this meeting between

Elon Musk and the premiere could be

about it could actually be about

something that I predicted in April of

2022. now I was way too early about it

so I was not ahead of the curve on this

one but maybe maybe Elon Musk are

listening to my to my uh my my

converting

converting of them that they need to

copy and paste factories in China that's

my opinion though I don't know but I

actually think copy and pasting Tesla

factories in China could be a really

good idea whether it's for Mega packs

which has been rumored whether it's with

battery Partnerships although we're

probably going to have a Tesla battery

partnership in America with catl so that

way they're American-made batteries but

maybe where those tax credits don't uh

aren't necessarily uh uh impacted that

is the inflation reduction Act tax

credits which require certain

percentages of cars and batteries to be

made in North America which is why we

have Giga Northeast Mexico

uh and and uh and we have Partnerships

between obviously Canada Mexico and

America to make sure that Americans can

still get their tax credits via the

inflation reduction act uh it's

important to consider that a lot of

Tesla products could be made in China

and I find this quite fascinating

despite worries about Chinese American

relationships called sino-american Elon

Musk plans to visit China in early April

to meet with Premier uh or the premier

uh as reported by Reuters who cited two

sources with direct knowledge of the

trip Tesla's second biggest Market this

is via Zero Hedge by the way Tesla's

second biggest market after the US is

China where the company operates a

massive factory in Shanghai the precise

timing of the visit hinges on the

premier's availability however musk's

previous visit in China occurred in

early 2020 when he hosted an event at

the Shanghai Factory one year earlier uh

he we met with others uh during uh well

the same Premiere uh who wasn't the

premiere yet during which Chinese

officials praised the billionaire for

investments into the country this is the

same thing that that has been happening

and it's actually phenomenal now I will

say

something we talked about yesterday in

the course member live stream this is

what we do we regularly talk about

fundamental analysis and ideas that

course members have in the course member

livestream give you a quick rundown on

some issue that came up with Tesla is

the possibility that in 2024

individuals won't actually get their tax

credit for cars as a rebate

on their tax return a year later but

that car sellers now specifically quoted

as dealers which we're not sure how that

will apply to Tesla since Tesla doesn't

have a dealership model but that could

potentially have some cash flow

implications for Tesla think about this

if Tesla sells about you know say 1.2

million United States vehicles they

could have a cash flow impact of about

nine billion dollars because right now

if somebody buys a Tesla you buy a Tesla

right now buy Tesla right now here in

March of 23 you don't actually get your

tax credit of seventy five hundred

dollars uh until April of

2024 when you go file your taxes right

unless you file quarterly and you do the

accounting to try to adjust for that

earlier and then you pay a little less

in that's pretty rare uh for most people

they're not actually going to see that

money until April of 2024

and the beauty for Tesla is Tesla gets

let's say the car sells for 50k Tesla

gets the full 50k right away whereas the

user doesn't get their 7 500 rebate

until April of 2024. so that creates a

lag time for users Now by moving that

credit up over here what you actually do

is you and you motivate the buyer to buy

a vehicle sooner which is good because

that could lead to more sales however

now it puts the onus on Tesla to

actually recoup that 7 500 which means

Tesla would only be getting uh 42 500

and they would be getting an asset of a

of basically a payable a payable of 7

500 now it's possible that Tesla could

negotiate with the US government and say

look I can't wait a year for this money

because on 1.2 million vehicles that

might be something like nine billion

dollars that kills our cash flow okay

Tesla had free cash flow of like 1.2

billion dollars I think it was last

quarter quarter okay that's like

per year this is like two years of

current free cash flow that would suck

now Tesla could open a line of credit

but then they'd be paying interest on

that 7 500 for 1.2 million vehicles for

a year and obviously it wouldn't be

lumpy or it wouldn't all happen at once

it would be spread out over the year so

maybe it wouldn't be 9 billion for the

full year maybe they'd sell more

Vehicles because of this and maybe it's

also possible that the government helps

sort of provide these rebates earlier

like I said quarterly for corporations

so maybe it wouldn't be that big of a

cash flow impact but it is something

that I personally think bottom line

Tesla will probably end up figuring out

but something that'll actually end up

being net positive for the consumer so

I'm not too terribly worried about that

I think what's more interesting is

actually the sentiment change that's

occurring in Tesla I notice a lot of

Tesla bulls and and I really consider

myself more bullish on Tesla now than I

have uh in the past which is crazy

because I I feel like I'm I'm already

pretty bullish on the company but I'm

also willing to address fud right a lot

I feel like there are a lot of folks who

Could See No Evil with Tesla and it's

just no no no no no there's no evil with

us no no there are problems at Tesla too

but one of the interesting things that

I'm noticing is a sentiment change I'm

noticing a sentiment change amongst a

lot of retail and this is totally

anecdotal but it's a totally anecdotal

sentiment change that I'm noticing on

people who are like leaders of Tesla

owner clubs or previous like massive

Tesla Bulls who all of a sudden are like

less enthused about Tesla like people

who have described themselves as an 11

out of 10 on the Tesla bull scale are

like I'm still a Tesla bull man but but

I'm like an 8 out of 10 right now on

Tesla and I'm thinking to myself are are

you scarred because the stock went down

like is this is this dare I say emotion

that we're seeing of course people are

always going to get emotional there's no

question of that but I do see a

sentiment change that I think is

actually some somewhat unjustified for

Tesla but it's something that I think is

worth pointing out because it is if you

see people around you a little bit more

bearish on Tesla where Tesla is probably

firing on the cylinders of manufacturing

better than ever before even though

their gross margins are expected to take

a hit here uh in q1 I I think it's

really interesting that uh that

sentiment is changing in a way that

implies that Tesla might have a little

less retail support than it used to have

so I think that's something to pay

attention to it's anecdotal so pay

attention to it in your area and see

what you're seeing but personally I

think probably the biggest reason for

that would be the stock went down I

think it's emotion that's playing

through now I do want to talk about what

the financial times just said in two

different areas about Tesla uh and uh

these These are potentially not the best

uh stories but I think they're worth

addressing so I want to to address those

of course right before I do I want to

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so now we gotta look at a financial

times pieces here the first piece is

this one it says Tesla cars lose value

faster than rival models after price

cuts and they basically say look after

Tesla cut its prices test Tesla used

vehicles have suffered substantially

more depreciation than other vehicles

for example

uh they say here in contrast to a model

3's predicted decline in value of 46

percent a pole star bought in January

would be worth about 35 percent less so

they suggest there's a steeper

depreciation in Tesla models potentially

making them more expensive to finance or

lease in the future specifically leasing

since leasing factors and depreciation

whereas financing doesn't since that

depreciation is on you whereas leasing

is on the the lease or the lessor uh the

company that actually owns the car still

and uh it's it's just a it's a it's a

piece that really I think what it's

trying to do is suggests that look

because Tesla cut its prices so

aggressively they're probably getting a

hit a little bit harder on depreciation

curves I think that could end up being

temporary but it's something to pay

attention to because total cost of

ownership for the vehicles could go up

because of that and then a second fud

story that came out was this piece

Tesla's price War in China backfires as

byd sales Surge and really what they're

doing is they're talking about Tesla

having cut prices leading byd to also

lower some prices at dealerships and all

of a sudden byd sales are growing 80

percent year over year now what they do

not do in this article which I think is

unfair they do not separate out the

growth of byd's plug-in hybrid and

battery sales they actually lump those

together suggesting that their sales

increased 40 percent year over year from

34 last year while Tesla China only grew

7.8 percent year over year in China now

I think that's a little unfair because

you're really comparing this plug-in

hybrid world you're lumping these two

together and comparing those growth

rates to Tesla and I think that's a

little disingenuous those should be

divided out so I'm not so terribly

worried about that so with that said

look I think Tesla is still a phenomenal

play I think the valuation is fantastic

I do have some concerns about a

sentiment but in terms of fundamentals I

think Tesla is in a phenomenal position

and I'm not terribly concerned about the

future of Tesla if anything I'm super

excited about Tesla and I hope you're

excited about Tesla as well because yeah

they're always going to be some fun

stories but I think Tesla can do some

great things in China and actually help

China's GDP explode thanks for watching

thank you

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