Yes, this could be VERY bad for Tesla

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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

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