Tesla is Getting CUT OUT & Nio Bankruptcy Warning

electric is right now reporting that

Tesla might lose its 7 500 vehicle tax

credit for uh its model 3 and that's

because uh and not enough of its battery

is apparently manufactured in North

America via free trade that article is

actually right here this is straight

from Electric and they argue here that

basically Tesla has told its employees

that it expects to lose the full 7 500

tax credit on the model 3 because the

batteries come from China since January

some electric makers have been enjoying

a surge in demand thanks to new federal

tax credit program this by the way will

end uh March 31st unless you're in

compliance with uh sort of these uh

these requirements that a certain

percentage of the batteries are

manufactured in North America that could

be Mexico that could be Canada uh it

could be America uh by the way I have I

have a belief in terms of why this is

going on along with some other

commentary on Elon Musk he's been a

little active the last couple days on

Twitter as well but my my belief

regarding what's going on here is uh

it's awfully convenient that this is

happening the last week of the quarter

now you know I'm not trying to put on

tin foil hat here but I'm also trying to

think as I would if I were over at Tesla

uh if the reality is I would love to

argue that Hey look it's not us but

you've only got seven days left to check

out on that coupon code or something

like that right that's basically what

Tesla is able to achieve here hey you

got seven days left if you want that 7

500 credit buy now uh get off your butt

and buy now or uh or sorry you lose the

tax credit so on one hand it helps push

demand for Tesla Model threes and

possibly also other electric vehicle

but the problem is there aren't that

many other electric vehicles that are

available to buy I'll give you a little

anecdote here so my uh one of my family

members is uh super anti-tesla they

refuse to buy a Tesla ever they just

don't want a Tesla uh and so they're

they're super anti-tesla and uh they've

told me hey you know what they're

looking they're in the market for an

electric vehicle uh but ideally a hybrid

is what they're looking for and uh

they're saying they pretty much can't

find one uh they were giving me numbers

like how they were somewhere around 69

or 70 I think it was 68. 68 Toyota

dealerships in California and over the

next year they're expected to get 180

electric vehicle or hybrid RAV4s and I'm

like that's two per in the next batch

for what the next you know six months to

a year uh who knows if that's accurate

what what uh What uh they're being told

you know maybe that's just a way to sort

of sell these uh hybrids but it seems

like uh there is a substantial amount of

more demand for electric vehicles and

yet companies can't produce enough of

them

so with the exception of Tesla which

makes this article especially important

because I I think really what it's doing

is it's trying to yell at the Biden

Administration and say hey your your

guys's requirements are too tough too

soon we don't have enough capacity yet

across the United States to actually be

able to fulfill the demand that people

want so in other words it what would be

brilliant 4D chess move here is uh quote

unquote leak uh that oh no get ready to

tell people you're not getting the 7 500

credit anymore which is the perfect

reason to text message all the people

who have been interested in Tesla's and

ask them hey are you interested in a

Tesla because hey that tax credit goes

away at the end of the month see look

it's in the Press here's the coverage so

it's a fantastic way to get some extra

uh sales uh you know for the end of the

quarter but it's also a way to pressure

the United States it pressures the

government it uh in potentially saying

hey you know you you really

ought to uh loosen the rules on these

requirements because you didn't release

guidance uh for this tax credit coming

into effect uh until basically like

February uh and so thank you for waiving

some of the requirements for the first

quarter but now people are going to be

pissed and they're going to buy less

electric vehicles and after all isn't

your goal uh climate change and making

sure we could minimize the impacts of

climate change and so if that is your

goal then get off your butt and uh

loosen these tax credits for a little

bit of time it's also really convenient

that at the same time uh as as this is

happening with these tax credits Elon

Musk happens to reply to Joe Biden

bragging about green energy so uh Joe

Biden here's the Tweet actually I'll

just show it to you now there we go Joe

Biden writes in my first year in office

we protected more lands and Waters than

any president since JFK we've also made

the largest Investments to fight climate

change ever today we're building on that

momentum by protecting additional

natural wonders well what does Elon

reply to this Elon replies with

um the banks are melting so he's

basically trying to discredit

uh Joe Biden's climate push as as

obviously the president can't walk and

chew gum at the same time because well

he's he's old uh that's somewhat of the

attack here from Elon Musk now don't get

me wrong big fan of Elon Musk uh but uh

and it's a great opportunity to poke at

the president but then again everybody

pokes at the president so that's no

surprise but uh the reality is hey wait

a minute

you know the government can have a green

energy policy at the same time as

working to resolve a banking crisis

that's why we have a a government so

they can do multiple things at a time

now do they do those things uh well

probably not but I believe they they at

least try try the best that they can so

uh as dysfunctional as the government

can be but anyway

uh at the same time as all of this is

happening uh I don't know why but the

drama again is circulating about Elon

Musk having taken a picture and I want

to talk about Tesla margins as well

really quick but uh first I just quickly

want to hit it uh it's circulating again

this this drama that uh Elon Musk took a

photo uh with uh with basically what's

deemed to be one of the uh potentially

largest uh propagandists is what she's

being called in Russian media here is

the photo of her taking a selfie with

Elon Musk at uh the um uh the soccer

game uh the World Cup uh and uh it's

really remarkable because it it seems as

if Elon doesn't even know with whom he's

taking a picture and so a lot of a

controversy was circulating around why

is it possible that one of the top

anchors for Russia and and potentially

Putin's government can just walk up and

take a picture with Elon shouldn't

shouldn't Elon with potentially the

largest Fleet of private satellites on

Earth be a little bit more either

careful or protected or or should those

around him be screened better who knows

those are just ideas I I think that's

really just the media professing their

love for Elon uh so then we gotta hit

margins because there's been a lot of

talk about these as well specifically

what's going on with uh with China so

now there was an interesting op-ed

yesterday in Bloomberg and it talked

specifically about how Tesla is really

setting off this price War and the price

War in China is is expected to at least

potentially lead to a lot of

bankruptcies uh and so people are a

little concerned about that and because

well people don't want car companies to

go bankrupt they want more car companies

uh as a choice but anyway uh what are we

getting uh Neo the CFO uh of Neo told

Bloomberg quote we need to go through

this price War at the beginning of the

year and then we expect the industry to

go through some profound consolidation

it's almost consensus that China now has

too many automakers now that's

interesting because this is exactly what

happened back when the Model T was very

popular with Ford back in the early

1900s you ended up having dozens of

different automakers and basically all

of them went bankrupt in fact there have

only been two American car companies not

to go bankrupt Tesla is one of them so

uh Neo is basically alluding to what

happened in the early 1900s as

potentially happening again now uh of

course Neo and xbang and byd think

they'll be able to withstand some of the

additional price Cuts coming and the

competition coming to the Euro to the

Chinese market but I find it fascinating

that you've got uh basically Tesla

Leading The Way of these price cuts to

where now you have other companies

worried suggesting

um we think a lot of car companies are

going to go bankrupt it's not ideal for

Consumer choice but it is capitalism

that is what happens after all you tend

to get consolidation during rough times

during times of stress and again that

that tends to be a good thing for

capitalism because you want the best

quality company needs to survive even

though that may come at the expense of

joblessness for some although they'll

find work somewhere else or or the loss

of choice for the consumer now I think

the big a joy over at Tesla is the

ability to maintain these large margins

and these margins that Tesla has

unfortunately are going to shrink in the

in the case that we do end up seeing

that tax credit disappear which we

probably will see that tax credit of uh

7 500 at least have to 37.50 again I

think it'll make a great push for uh end

of the quarter sales so I actually think

it's a phenomenal thing in the short

term for Tesla and I think it'll dial up

enough pressure on the White House and

the IRS and Treasury Department to

actually probably revise or loosen their

guidance again mostly because the

country wants more electric vehicles to

be bought not less the point of the

inflation reduction act isn't to punish

companies it's to get them in in tune

and actually start using locally

produced batteries but how do you do

that when there aren't enough batteries

in fairness there just aren't enough yet

in in uh America while at the same time

you have a supply a glut of batteries in

China and that's something that that is

freaking out especially the Commodities

people the Commodities people are are

losing it over lithium prices plummeting

now look they're still way above uh

where where we were pre-pandemic but I

think it's very interesting because you

know even the New York Times is talking

about these falling prices and

potentially the supply got so take a

look at this here this was just uh from

a couple days ago here lithium the

common ingredient in almost all electric

batteries has become so precious that

it's often called white gold but

something surprising has happened

recently the metals price is falling

helping make electric vehicles more

affordable since January lithium prices

have dropped nearly 20 according to

Benchmark materials via the New York

Times here even a sales of electric

vehicles have soared Cobalt another

important battery metal has fallen by

more than half copper essential to

electric motors and batteries has

slipped 18 percent now of course these

are down off of Highs but instead what

it does is it actually helps sort of

rebuild some of the margin that you're

seeing at companies uh as as you can see

here as uh essentially the commodity

prices seem to almost align with the cut

and prices of Tesla's 3 and the Y by the

way it's worth noting the model Y which

I think is the best vehicle for Tesla uh

that anybody could buy for Tesla I

actually don't own a model y I just say

that having owned model X and S I think

they're overpriced and then having been

in a model 3 and why I think what for a

little bit more why would you not get

the size of the y That's not to back on

the three uh but it's just to say that

marginally I think there's an advantage

to the why over the others now uh if you

look at the delivery options which I

think is pretty interesting if you look

at the delivery options right now for or

Teslas you can see the model Y is

sitting at an April to June delivery so

you have to wait at least two weeks for

the model y but potentially as long as

uh two and a half months from model y

performance uh you're you're at a march

to April uh guideline as much as you are

with uh with the model three you're

sitting in March to April as well uh

looks like they've updated their website

as well new model 3 and why Vehicles

qualify for the electric vehicle tax

credit this is in effect before an

update to Federal guidance which

Treasury and IRS intend to issue no

later than March 31st so it looks here

like this to me this is just political

pressure being put on by Tesla and it's

brilliant if I were Tesla I would be

doing the same thing don't don't like

absolutely I think they're doing the

right thing it's it's a brilliant

leverage tool to remind people about

Tesla's uh essentially their version of

a coupon expiring you know

uh for electric vehicles a major

roadblock is cost exactly and this New

York Times article I mean you know the

White House is reading the New York

Times this just helps Tesla as well uh

following price of EV is or lithium is

going to help promote uh EV sales uh

price could fall potentially much

further because demand for the metal has

not risen as some as people expected by

the way I will say that's one of the

reasons I personally don't invest in

Commodities is Commodities are very

heavily based on speculation of what

could happen that's my opinion okay I'm

not trying to offend the commodity Buffs

I think Commodities are extremely

important I just think the price of

Commodities is usually so highly

speculated on that it's very difficult

to actually get a commodity at a sort of

a value price or or a fair price so to

speak mostly because you you tend to buy

into these run-up hype cycles of

Commodities and then they crash when as

as demand starts waiting and people get

fearful

anyway uh some analysts suggest this was

caused by slowing growth of the electric

vehicles in Europe and China after

subsidies expired but other industry

experts say the drop suggested that new

mines and processing plants were solving

lithium problems sooner than many

analysts had thought possible that's

another thing what Commodities are very

expensive what happens you have to think

from a capitalistic point of view what

happens when a commodity gets really

expensive guess what we end up inventing

a new technology to end up extracting

and refining that material faster and

better and at higher quantities than we

had ever thought possible before I mean

I remember being a child uh and thinking

well I still am but I I remember

thinking about oh no we're going to run

out of oil by the time I'm 55 because I

remember being a little five and

six-year-old oh no no more oil you know

or it probably sounded more like

oil

but anyway uh you know uh I remember

that being a fear as I was growing up

even in first and second grade you know

being seven and eight oh no we're gonna

run out of oil and you know what

happened in the 2000s uh oh wow look at

all this cool fracking technology we got

oh wow the US is actually turning into a

major oil producer in the 2010s oh wow

the ability of us fracking doubled

between 2008 and 2019 and and I'll put

double wow look at that the same thing

just happens over and over again with

commodities uh I mean and you don't you

don't have to actually really be an

investor in Commodities to see that

happen you just have to be a student of

history but anyway even after falling so

much lithium prices remained so high

that Mining and processing the metal is

usually unprofitable the metal uniquely

suited for Batteries because of its

ability to store energy costs five to

eight thousand dollars per ton to

produce it to produce it sells for 10

times that amount uh so this is where

Elon Musk has regularly come on and said

uh you know come on to interviews or

earnings calls and said hey if you want

to print money get into lithium given

those fat margins investors and banks

are eager to invest in or lend against

mining or processing facilities you

can't have project profit margins that

are 10x what it costs to extract this is

true it's going to comprise at some

point because more people are going to

enter the industry completely agree but

others including members of the Biden

admin are less confident the supply of

lithium has to increase 42-fold by 2050

the support of transition to clean

energy we have to find additional

sources of Supply you know but what's

interesting is there's this argument

that there's not enough yet you know

Elon regularly says there's plenty of

lithium it's everywhere it's just a

matter of extracting it oh how

convenient look at this there's plenty

of lithium in the world but it was not

considered very valuable until sales of

EVS began to take off in the last few

years the mining is not what's driving

the cost it's available it's the

availability of processing facilities so

need more of those most refiners are in

China and few managers and Engineers

outside the country know how to build

processing plants so see now it's a

knowledge Gap but but I mean that'll

fail I mean we've got chat GPT how to

build a lithium processing facility

supplies of lithium and other critical

materials are national security issue

last year the uh Administration

established the mineral security

partnership a group that includes the EU

and 12 industrialized nations to locate

mining opportunities and finance them

the energy department is Doling Out 3

billion in Grants to create a domestic

battery supply chain in addition to the

inflation reduction act which Biden

signed into law last year provides tax

credits for battery production

fascinating what do we got over here we

got uh people uh what look like uh

digging for Cobalt which is also not so

ideal because of uh child labor concerns

uh in in parts of Africa but uh anyway

here uh American Battery Technology

attributed the recent decline in lithium

prices to Temporary factors like us oh

oh that's not good

um hold on a shark if you could still

hear me

um

turn on office

idiot

sorry I'll be right back it appears you

can still hear me you just can't see me

uh anyway so what else here there was a

time when people believed electric

vehicles would grow very rapidly then

the reality of how fast they were

actually growing caught up

um

expects lithium prices to fluctuate all

right whatever so these Investments

could turn out to be money losers if

lithium prices fall yeah you know that's

the other thing is is so many people end

up flocking into these commodity

projects that at some point will end up

with a glut of production I'm really not

concerned about running out of lithium I

I really think it's nonsense and it's

all fear-mongering mostly because of my

belief of what happened with oil but

also what you tend to see with other

Commodities that tend to be very

important

so there are also other batteries that

are you know end up being developed I

mean there are uh I want to say uh a

sulfide carbide batteries being produced

uh obviously solid state batteries could

potentially not use lithium so they're

they're various ways to get around these

uh lithium iron phosphate batteries that

are manufactured in China right now

mostly China specifically in partnership

with catl that uh that that uh oh how

convenient look at this uh that helps

Supply and Tesla's vehicles but uh or

other manufacturing process but look at

this China's a lithium uh iron phosphate

battery cathode material capacity glut

will surface in 23 to 24 question mark

question mark and you got a little

picture here the catl batteries China

has been the most aggressive in the

world oh it's behind a paywall what a

bummer but anyway there's been a regular

talk about uh this this glut of of

Supply specifically over at uh at catl

uh mostly because EV demand has slowed

down in China and now fortunately uh

there's a lot of competition and and uh

Tesla's vehicle registrations from an

insurance point of view are doing

phenomenally fantastic growth year over

year so far into uh the first quarter

here of uh 2023. uh but uh yeah let's

take a look at this here let's see

lithium and nickel miners are taking on

additional costs to produce more refined

products the race to obtain battery

material has intensified market dynamics

have changed however heightened

competition is coming as prices for the

raw materials weaken amid concerns that

supply shortages could actually give way

to gluts lithium has fallen obviously

it's still trading higher than where it

was pre-pandemic and pre uh you know a

lot of the uh the EV rushes

but uh these lower commodity prices are

fantastic thing now uh Kathy Woods said

on CNBC yesterday or maybe it was the

day before yesterday that she believes

it was the commodity price cuts that are

actually what are leading to Tesla's uh

essential price Cuts I don't think

that's true just yet I actually think

that uh Tesla and their margins are

likely to get hit uh before those

lithium prices or commodity prices come

through now Tesla generally doesn't

hedge that much against its commodity

prices however some of its items are

entered into contract so you could end

up uh and we're not exactly sure which

ones but some of them for example you

might just buy regularly like cop or you

might just pay spot for it anytime you

need it uh and something else like

lithium you might pay contract for now

if you do a lithium in a contract you

might end up having higher prices for

longer and that could hit Tesla's

margins for a little bit so I do worry

that if we hop into the margins for

Tesla and projections for Tesla we could

end up seeing their margins uh suffer

for at least the first uh one to two

quarters of 20 23 here and now uh I

think that if we look at 2023 and the

projections at least they're give a

Tesla and their last earnings call gave

us a little bit of a heads up that we

could approach 20 percent as a gross

margin uh well before we end up hitting

30 percent again that's going to hit

some of the numbers for Tesla and I do

believe that the market is not fully

pricing that in so I think there's a

chance that could create a little bit of

a buying opportunity but uh we'll we'll

end up seeing now uh then then uh you've

got some articles here also talking

about this sort of expansion here of uh

additional planned lithium output or

capacity all of this really contributing

to the idea that we're going to see uh

continued gluts of lithium now uh it's

also interesting that it looks like byd

according to Bloomberg is a quote

capable of carrying out another round of

cuts it looks like Bloomberg's actually

citing a few analysts from Morgan

Stanley who wrote on March 9th that the

price war that was initiated by Tesla

might come on faster and more severely

than expected as we expect a market

reshuffle they suggest that Neo xping

and Lee Auto have strong enough balance

sheets to stay self-financed for at

least 18 months but that the price war

is coming

uh well okay so we'll see but uh this

this idea that uh many of these uh uh

competing companies will end up going

bankrupt I actually think will lead to a

large consolidation in the electric

vehicle industry and you'll end up

coming out of this recession uh much

stronger as a company that survives it's

not going to be everybody right but

let's say hopefully knock on wood

someone like Tesla and byd survives

they'll have killed off a lot of the

other competition or they'll certainly

during the recession have slowed a lot

of the competition like even GM and Ford

they don't even expect to be profitable

well certainly forward we we haven't

gotten disclosed financials from GM on

this but we don't expect Ford to be

profitable on electric vehicles until

2026. Toyota doesn't expect to introduce

fully electric vehicles or a larger line

because they've got some already but uh

in more mass scale and more lines they

don't actually expect to introduce

electric vehicles broadly until 2026

it's kind of wild but anyway this gives

us some insight into

Tesla which uh which is pretty useful

now some people say like oh but aren't

Lee and uh X being backed by CCP the CCP

like Neil well I mean if you look at a

company like Neo yeah they they there's

uh there's a local government that uh

owns some of Neo so of course there's

this incentive to prop up potentially

these local uh businesses and it's not

to say that uh China won't prop up those

local businesses but I think this

argument that China wants to somehow

punish Tesla because it's American is

actually quite nonsensical because if

you read Chinese news which you know is

mostly propaganda but then again a lot

of our uh uh you know

news is probably uh uh propaganda as

well but anyway if you read into uh some

of the uh Chinese news like the uh South

morning China Post that's one that I

like to read uh you actually find so

many call compliments for Tesla from

China and I think the reason that you do

is specifically because China wants to

promote the idea that Manufacturing in

China is a good thing that you shouldn't

go to Taiwan that you should end up

staying in uh China because we helped

the most productive facility for China

come into existence Giga Shanghai and so

yes there's a price war and that is

going to extend but

oh that's an interesting sound I'm

getting a little ad here on the South

China Morning Post uh but anyway uh they

argue here electric cars one of the few

fast-growing sectors will be less of a

growth driver for auto sales in China

this year because of shrinking fiscal

Revenue making it difficult for the

government to extend subsidies on

purchases new EVS will be less

supportive of sales growth this year and

there's been no indication that there

will be a renewal of cash subsidies so

that's also helped lead to some form of

a glut in lithium but then also you have

macro factors I mean just the fact that

we're walking into a recession but I

think it's very interesting that when

you look at China from uh sort of a

propaganda point of view what what would

they rather do would they rather slam on

uh on on China or slam on Tesla or

promote Tesla as as basically their love

child

you know their foreign

these come manufacturable with us that's

my take I mean it makes logical sense to

me but then again you know logic doesn't

always enter into uh the equation of uh

of what happens uh in in geopolitics but

I do think that's uh that's uh something

strong to consider

uh see look at this yeah here I found it

there we go so look at this this I think

was interesting

China uh outgoing Premiere vows even

greater business opportunities for

foreign investments analysts say that

attracting more foreign investment

especially from the US and Europe could

help curb decoupling but restoring

positive business sentiment cannot be

done overnight

while acknowledging the external demand

that external demand will be relatively

weak this year Beijing is sending strong

signals that it intends to better

integrate global trade while vowing

China's appeal to foreign investors

vowing to enhance that is leadership has

also set its sight on the comprehensive

Progressive agreement for trans-pacific

partnership a high-end trading

investment pack in line with aphrods

blah blah blah blah National people's

Congress reiterated this okay Fantastic

look at this right here Zhang and this

other person have a directive to

facilitate the launch of landmark

foreign funded projects that's the goal

of China right

and right here it then says call to mind

what happened with Shanghai with the

Tesla gigafactory which which was one of

their major achievements China's major

achievements during their term in

Shanghai or the mayor's term over here

in Shanghai whether more projects like

this will be added or launched to

something we should look forward to so I

find that very interesting you know to

me I think that's a fantastic way of

saying hey we uh we're in a position

where investing in China

is actually a good thing and uh China

wants to keep that investment going of

course we're facing a pretty large macro

recession a banking crisis at the same

time uh you know you've got some uh

multiple worldwide disasters but uh I

think it bodes well for Tesla because if

China is trying to prop everyone up uh

and attract more uh investment if

commodity prices are falling for

whatever reason and it's likely that

other automakers are going to go

bankrupt well that ends up being a boon

for Tesla as a Survivor that is if they

survive anyway we could talk about that

in the courses on building your wealth

link down below changing the pricing

after this live stream all right here's

a piece that was just posted on Ford

Ford's EV business lost two billies in

2022 offset by big profits in Fleet and

Legacy units Ford says Thursday it's

electric vehicle business lost 2.1

billion in 2022 on an opera operating

basis oh good lord the loss was more

than offset by a 10 billion operating

profit between its ice and Fleet

business now that's uh your regular gas

guzzler and then Fleet of course would

be like it's Transit line

uh and and uh commercial Van Lines

so uh Ford said Thursday it's EV

business lost 2.1 billion the Detroit

automaker expects 2023 to unfold along

similar lines

forecasting a 3 billion dollar loss for

its electric vehicle unit adjusted

earnings of about 7 billion for its ice

unit and adjusted earnings of about 6

billion for its Fleet business the

financials are the first look at a unit

uh Prof at unit profitability as Tesla

unveils a new financial report or for

the Tesla as Ford unveils and do

financial reporting structure aim to

give Wall Street a better understanding

of how its EV business is evolving the

reformatted reports follow sweeping

reorganization separating forward into

five businesses Ford blew its

traditional ice engine business Ford E

the electric vehicle business Ford Pro

for commercial and government Ford next

which includes

non-automotive Mobility Solutions and

other future Tech

okay at Ford Credit my gosh we've

essentially refounded Ford this is a

joke

I mean basically what they've done is

they've now separated the money loser

from the profitable business and what's

going to happen is they'll probably just

keep milking the profitable businesses

until those go bankrupt and then the

hope is that they could be profitable on

electric vehicles before they go

bankrupt on their legacy business

because if they go BK on the Legacy

business because everybody goes to EVS

they're going to have a little

oopsie-doopsy problem trying to

transition so the goal is how could you

become profitable on EVS before you go

bankrupt on gas vehicles

and hopefully there's not too big of a

gap because if you go bankrupt first

it's still not profitable on EVS or you

haven't gotten them to scale then you're

going to go bankrupt here too

so I I don't know it's going to be very

interesting