Shocking Tesla Explosion | WARNING.

another day another fun story about

Tesla and that's what we're going to

talk about today not just are we going

to talk about the fun story and The

Intercept leaked footage on Tesla but

we're also going to talk production

numbers because there's a big change and

I don't know why my accent is changing

but I do know that it's another day

which means you need another reminder to

check out the programs on building your

wealth down below because nobody else

does the fundamental analysis live

streams that we do on YouTube at least

nobody that I know anyway let's get

started with the video so the first fun

story of the day regarding Tesla has to

do with the following surveillance

footage obtained by The Intercept of a

Tesla abruptly stopping on the Bay

Bridge resulting in an eight vehicle

crash that injured nine people including

a two-year-old child just hours after

Elon Musk announced the new Full

self-driving wide release for the beta

there's the Tesla you can actually see

that lane change and then the first rear

end and then then the second one stops

and then a pile up occurs right here

we'll go ahead and play that again just

so you can see it here it looks like we

get the Tesla coming in lane change

right here and all of a sudden a

Slowdown

uh and and a stop here and then of

course uh a pile of wreckage thereafter

which quite interesting you could see

the driver is is clearly not

incapacitated because well he's getting

out of the vehicle this is a 77 year old

uh driver who indicated that he had the

vehicle set to full self-driving we

don't actually have any kind of data

dump from Tesla yet on whether or not

that was true but let's talk about

Phantom breaking because I can finally

say I have Tesla full self-driving and I

too have experienced the Tesla breaking

at odd times especially in uh like near

edges I've noticed like when you're near

sort of a curb to a plaza or maybe like

a wall or a boundary and usually if

you're paying attention what you do is a

Tesla driver is you hit the gas you're

supposed to be paying attention at least

and anytime I've seen this happen I've

reacted before the Tesla has slowed down

any more than like two or three miles an

hour it's not like it Slams on the

brakes it's usually just it it's more of

like a Tesla foot off the gas thing that

happens and then the regen breaking kind

of slows you down and that's the moment

where you're supposed to hit the gas and

kind of accelerate which clearly doesn't

happen in this video so there are two

potential scenarios here in my opinion

uh number one either full self-driving

wasn't active and I don't know maybe the

guy made a mistake here clearly okay

that's that would be scenario number one

if autopilot was active and this

accident occurred obviously we're gonna

get the crazy fud stories all over about

how unsafe it is and how the government

needs to regulate these vehicles despite

the fact that Teslas are some of the

safest vehicles on the road even as

measured by The Institute for Highway

Safety which you know generally

government bodies and government

Associated bodies aren't too fond of

Teslas anyway yeah Teslas are still

ranking in some of the highest safety

levels in the world for crash tests on

top of that you have a four-time fewer

accident rate for vehicles with

autopilot enabled but you do get people

with autopilot on and autopilot

sometimes does some funny things and you

got to pay attention I just pulled out

of a super charging spot enabled

autopilot and it may have you know kind

of cut the corner a little sharp and

ridden over the curb and I'm like damn I

should have known better you know like

I'm not blaming the car it's it's a beta

it's it's not perfect right now I'm not

just trying to fully defend Tesla here I

think Phantom breaking is really weird I

I don't know why it happens I think uh

the Algos obviously still have learning

to do and this is why they're on a Beta

release but I also realized that the

Tesla can do some funny things and so

I'm ready uh to to accelerate when it

does those funny things so that clearly

did not happen in this case instead the

driver allowed the vehicle to come to a

complete stop which is insane in my

opinion I I have driven a Tesla and

driven autopilot in Tesla since uh

2017 and I've never let the vehicle on

essentially a Motorway you know 55 mile

an hour Motorway here I've never let the

vehicle just come to a complete

stop it's just a little odd Lane change

and just completes I I don't know

personally I don't get it uh but

whatever so that's the Tesla fudge story

that's getting a lot of views right now

Tesla haters are having a field day

about it but at the same time we're

getting news that finally Tesla might

actually be looking at increasing

production the way I projected Tesla

wood in 2022. unfortunately I made the

projections in about April of 2022 and I

suggested and indicated that Tesla's

probably going to figure out their

manufacturing model with Berlin and

Texas and then unlock what we call copy

and paste now that overly simplifies

what Tesla would actually do but

basically the copy and paste idea is you

take all of the experience you have of

building these new grand gigafactories

Berlin and Austin and you multiply that

around the world we recently heard that

Tesla is considering their expansion

into to North East Mexico just a few

hours away from Giga Texas and could be

the site of a new low-cost a Tesla

vehicle that could be produced by Tesla

especially since the average hourly wage

in Northeast Mexico is only about three

dollars and forty cents per hour now I

know initially a lot of people think oh

my gosh that's terrible Tesla's going to

take advantage of cheap labor when the

reality is if Tesla moves into this

Automotive area where existing Legacy

auto manufacturers like Mercedes BMW 4gm

are already using that labor when Tesla

comes to the area you'll actually

probably see wages increase to the

benefit of locals in that area but

generally people who complain on the

internet don't have economic backgrounds

and they don't like to think that way

but anyway this is a good thing but on

top of that now we have reports that

Tesla is considering not only multiple

different expansions but is also

potentially looking at a new plant in

Indonesia now this is actually

phenomenal Tesla is seeking to is close

to sealing a preliminary deal to set up

a factory in Indonesia now remember a

lot of people are moving they're

manufacturing out of China not only

because of the uh unclear sort of

political regime that you can often have

as we've realized around covet policies

and forced lockdown policies but also

let's be real here labor is cheaper now

in places like Indonesia and India how

Wild is that you think labor is cheap in

China wait until you go to some of these

other countries is actually quite

remarkable and again that is to the

benefit of locals in that country you're

ways raising wages across the world but

anyway uh this this area is great for

key battery materials and the plant

could potentially produce one million

vehicles per year in line with Tesla's

Ambitions really to to exceed their

Global uh capacity in my opinion this by

the way we start getting talks about new

plants Indonesia Mexico or whatever it's

a sign that Tesla's looking past the

near-term flood demand dynamics of of

being in a recession right which has

actually been hurting a lot of people's

wealth right stocks down real estate

falling uh the the disaster of a

depression that's probably happening in

China you've got a huge decline in

wealth across the world and

unfortunately that is that is not just

hitting uh poorer individuals but it's

also hitting wealthier people and

interestingly it might actually be

hurting wealthier people more because

where we're seeing the biggest pay bumps

or in Blue Collar work right now where

you're seeing the most layoffs in White

Collar work pretty wild uh and that

could affect Tesla Demand right now

those We Believe are short-term

catalysts right like for example in

Singapore we have reports that Tesla is

continuing to uh offer discounts five

thousand dollar discounts for people who

trade in an existing ice vehicle uh

which is interesting because I wonder

what Tesla's going to do with a used

inventory which is like in my opinion

catching a falling knife because used

vehicle prices are plummeting also

offering a five thousand dollar credit

to help people cover the cost of the

certificate needed to operate a vehicle

in Singapore they're also now offering

free wall connectors to free uh or to

batteries these are all things that you

know unless input costs really start

plummeting yeah Tesla's margins going to

get squeezed and uh you know Tesla is

thinking about expanding at the same

time which then potentially reduces free

cash flow but it's interesting because

if Tesla really is double and tripling

down on these capacity expansions it

makes you think that Tesla must clearly

have a path for so much demand in the

future or new pricing strategies that

are going to induce that new demand in

the future in order to keep these

factories busy especially if a lower

cost Tesla comes out and that cyber

truck finally comes which who knows when

that's coming although the Giga press

was just delivered to uh Giga Austin

where the Cyber truck is expected to be

built but anyway the discussions include

plans around multiple facilities in the

country serving different functions

across the production and supply chain a

deal hasn't been signed and the

agreement could fall through the people

I said not asking not to be identified

Indonesia has long courted Tesla last

year striking a 5 billion dollar nickel

Supply agreement with the car maker in

an interview in August with Bloomberg

News uh someone an individual here said

that the country wants Tesla to make

electric cars there not just batteries

and is willing to take the time to

convince Mr musk to see Indonesia as

More Than Just A supplier of resources

that's a fancy way of saying we will

give you incentives I don't know what's

with the German accent today I'm sorry

but anyway uh musk Representatives

didn't immediately respond to requests

for comments an Indonesian Factory would

be Tesla's third outside its Home Market

in the U.S joining Shanghai and Berlin

Indonesia offers a gateway to the

southeast's 675 million customers it's a

tough market for Global automakers given

affordable cars usually priced below 20

000 making up the bulk of sales and this

is the thing where you've got a fight

between Tesla and byd right now right

byd look i i people get mad at me when I

say this but it's just it's just the

truth okay byd brings

1.45 of their revenue down to net okay

think about that you make a hundred

dollars of Revenue at byd how much do

you bring down to the net

1.45 how much does Tesla bring down to

the net without U.S electric vehicle

credits they bring

fourteen dollars and fifty cents to the

bottom one that's 10x byd it's

remarkable it's absolutely remarkable

now of course a lot of talk about byd in

fact let's go ahead and take a look at

this Bloomberg opinion piece you can get

these at bloomberg.com by the way in

case you're wondering where they're from

just bloomberg.com all electric vehicles

are not the same nor other companies

that make them the favorite pair these

days is Tesla versus byd so let's

actually compare a little bit let's

start with the basics in December byd

sold 235 000 vehicles in China of those

basically half of them were plug-in

hybrids and the rest were battery

electric vehicles hybrids by the way

very expensive right low margin you've

got two basically power trains going

into the vehicle it's pricey it's

expensive and this is probably why their

margin just isn't that great which going

into a recessionary Time

now wonderful uh byd sold over 900 000

of each type of vehicle in 2022 Tesla

made a 55k in China last month with a

total of 700k for the year essentially

they compete in what uh investors would

call product segment a slice of what the

company does here's the thing hybrids

and byds run on fundamentally different

Technologies and powertrains the cost of

the car manufacturing and owning it

changes as does the choice between

efficiency raise and performance hybrids

can be as much as half the price as well

but that's where the problem comes right

think about that hybrids more expensive

to maintain than all electric vehicles

yes hybrids might be half the price but

that also means a disastrous margin

story for byd which all you have to do

is go to the investor relations page of

byd and you'll see it very simple this

is public information

the merits of One Versus the other offer

an entirely or is another an entirely

separate debate many critics say plugins

aren't even Green Tea Green cards

they're more like a wolf in sheep's

clothing however then you do have Toyota

that absolutely loves hybrids and

basically they make this argument that

hey well hybrid is still better than no

electricity usage at all right

now you also have very different

business models between byd and Tesla

goes on uh to say this opinion article

byd started out as a battery company

that now makes cars which is the

opposite about Elon Musk and byd has a

firm grip on their supply chain and has

moved more towards a vertically

integrated supply chain much like Tesla

like securing heaps of raw materials

Elon Musk does talk about owning lithium

mines but Tesla is still reliant on its

long and deep network of suppliers in

China now so far this doesn't sound like

the best piece for Tesla versus buid but

there's an interesting point here they

argue that byd is basically going from

less expensive cars to more expensive

and Tesla is going for more expensive to

less expensive right you're seeing price

raises of byd price cuts at Tesla the

margins are terribly different we've

already talked about that and that you

could actually see margin compression on

both sides right realistically Tesla's

margin could come down and byds could

grow maybe to depends how the recession

goes but here's an interesting piece

that I really like I'll hide my self for

it so you can see this full paragraph

here

Tesla seems to have taken advantage of

the weakness in prices for some raw

materials this is good and components

that have been Sky High in recent months

in China it does not have Supply locked

up the way bydu does now that might

sound like a weakness but it could

actually be a positive thing why could

it be a positive well if Tesla doesn't

have Supply locked away what does it

mean it means that Tesla if a market

price is for components and commodities

comes down potentially and and these

specific products aren't locked away

because we know some of them are locked

away it means Market or Tesla can take

advantage of market prices today rather

than waiting for contracts to roll off

every six months or whatever meaning

there's a lag in when they'll actually

be able to pass through lower costs to

lower prices

if they don't have Supply locked away

they're actually taking away or taking

advantage of these lowering prices you

could actually see margin preserve the

Tesla now maybe that's just hopium but

it's an interesting comment

lowering vehicle prices potentially

indicates an intent to tap the rising

demand for electric vehicles tapped

below 300 000 Yuan and D stock sales are

expected to grow 50 in tier 3 and tier 4

Chinese cities where incomes are lower

now it's important to compare 300 000 to

a U.S level it works out to about forty

four thousand dollars which is basically

suggesting that we want to simplify the

costs for the model 3 and get to a more

mass Market approach while byd tries to

focus on higher end now that'll be

really interesting because you wonder

how much of a selling pitch is FSD going

to be well with fun stories like the one

we started with I don't know but anybody

who's actually using FSD looks at this

and goes man how could you ever buy a

car again without full self-driving my

wife is somebody who's never wanted a

Tesla but after she saw FSD she's like

wow this kind of makes me want a Tesla I

was a blown away when she said that so

fascinating but it's not the last story

of today we've got a lot of information

in fact take a look at this Tesla

considering a 775 million dollar Texas

Factory expansion now what's crazy about

this is Elon Musk has said previously

and this is great uh that they plan to

open 10 to 12 new factories to increase

production that's what I predicted a

year ago I was just about six months

early in that prediction before Elon

Musk actually said it now that's great

uh in the long term not so great in the

short term if you make predictions too

early uh because you could read allocate

Capital inappropriately but that's okay

everybody ends up making mistakes but

let's get the details of this Factory

expansion take a look at the details

which electric broke down well the

electric hasn't been the most bullish on

Tesla lately I will be telling you but

anyway four projects include Ace almost

700 000 square foot facility called cell

one that would be built outside of the

Austin gigafactory folks this right here

is like a turn on to me okay

construction is expected to start

January 23rd wasting no time let's go I

love that that is what I'm talking about

the project with the next largest

footprint is the Drive Unit 400 almost

20 000 square foot facility construction

is expected to begin Feb six a cathode

facility expected to start production

Jan 30th completing this year most of

these completing within a year actually

Feb 12 2024 Jan 15 2024 December 18-23

and then another smaller sort of cell

test lab really just the size of a house

here completing in about August these

are based on permits right this is

really exciting I mean to me this is a

suggestion that regardless of the

short-term nonsense that's going on with

Tesla Tesla's saying look we are so

confident we are doubling down and we're

going for that copy and paste model

imagine now Tesla goes forward and

within six months you have the Mexico

facility announced the Indonesia

facility announced although maybe those

are the same rumor right like maybe

Tesla's picking between the two

TBD uh and then potentially you have

what it already looks like you have the

permits for this uh Texas expansion

while they're still ramping Giga Texas

oh boy like the numbers for Tesla are

just getting so gorgeous even if margin

Falls this is a company that as long as

it could sell Tesla's cheaper which I

think it can especially as as they are

by far and away three to five years

ahead of the competition and

self-driving nobody's got self-driving

like this I mean you even look at like

some of the Mercedes eqs Drive trains uh

really really great Vehicles powerful

vehicles well-designed vehicles quality

vehicles but you're talking about

nominal amounts of roads that are mapped

nominal access to actual self-driving

technology it's a problem and so this is

where what I like to do is I just look

at hey you know if what what if we

reduce prices and reduce margins at

Tesla and I've done this before I've

done sort of uh these worse worser case

scenarios where maybe we produce 4.2

million Vehicles by 2025. I dropped the

revenue per vehicle by five thousand

dollars on top of dropping the revenue

per vehicle by five thousand dollars I

also dropped the margin to 20 seven

percent down from thirty percent and

then what I do is I include zero percent

for FSD here okay no FSD upgrades I'm

still sitting at a price target of 515

uh in 2025. now I know as soon as people

see a 50p ratio they're like oh my gosh

that's so ridiculous this is calculated

based on at least a 30 growth rate at

Tesla uh and then basically a PEG ratio

of about 1.6 1.7 which is pretty

reasonable basically what you do is 50

divided by the growth rate it's about a

1.67 x PEG ratio that's how you do this

as long as you're growing by 30

1.67 times Peg is totally reasonable now

if that growth rate Falls then obviously

the future p e rate will fall right if

the growth rate for a company goes down

to 20 and you go to a 1.7 or 1.6 times

Peg sure the p e ratio should only be

32. you know the p e ratio right now for

uh for the s p is is 18 which actually

implies about a 10.7 percent growth rate

for all the companies in the S P 500

that's a rip-off we could actually be in

an S P 500 price bubble right now

because I expect EPS to grow

maybe three percent for the s p broadly

maybe we'll see what happens obviously

through this recessionary environment

but anyway these are some of my thoughts

on the latest on Tesla thank you so very

much for watching and we will see you in

the next one and I have I mentioned

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