00:00Hey everybody, Rob Maurer here, and because we are now one week out from Tesla's Q4 earnings report, Say Technologies has opened up the ability to ask and vote for questions for Tesla's Q4 call

00:09So, we'll take a look at that and some of the things I'm wondering about heading into the report next week

00:12We also have new price targets on Tesla, including a new street-high price, reductions in Europe, and some news from competitors

00:20Tesla stock did finish in the green today, up 0.7 percent to $854.45, but it did trail the broader market

00:26The S&P 500, Dow Jones, and Nasdaq all outpaced the Nasdaq, finishing up nearly two percent

00:32While we're on the stock, let's go through the price targets here

00:34So, we saw price target increases today on Tesla from..

00:37Oppenheimer and Deutsche Bank

00:38We'll start with Oppenheimer, which has set a new street-high price target of $1,036 on Tesla, up from their previous price target of $486

00:46So, a huge increase here, more than a doubling

00:50Nothing too crazy in the note that we need to spend a ton of time on; it was focused on Tesla's opportunity with Full Self-Driving, with Oppenheimer writing, quote, "While we continue to have misgivings about risks related to Tesla not incorporating LiDAR into its vehicles yet, we believe the learning cycles enabled by having over 1 million vehicles on the road is an extraordinary advantage

01:08We continue to believe best practices in vehicle safety point to 6 million test miles being..." It is necessary to validate Level Four plus Level Five advanced driver assistance systems assuming twelve thousand miles driven per year per car

01:21Tesla's Shadow Mode data collection can reach that threshold in about six months, years faster than competitors

01:27This dynamic, plus equity market multiple appreciation, drives our price target increase to $1,036

01:32 End quote

01:38 So, at the end, when they talk about the multiple Oppenheimer is assigning for their price target, an 85 times multiple on 2025 earnings per share, which they forecast to be about $15

01:43That earnings per share number is derived from revenue of $112 billion in 2025, which is currently, as far as their model goes, they've got $106 billion of that

01:51Coming from automotive, 2 billion from energy, which is shockingly low, extremely shockingly low, and the rest coming from services

01:58I focus on energy there because Tesla's revenue run rate right now for energy is essentially 2 billion

02:04In Q3, Tesla energy sales were about 580 million dollars, so that's about 2.3 billion annualized already from Q3

02:10And over the course of 2020, even with the impacts of the pandemic, Tesla should be within 10% of 2 billion in total

02:17So, very odd to see that forecast for automotive, which is 106 billion dollars

02:22That's probably around 3 million vehicles if you take an average selling price of 35,000 dollars

02:27That's where you end up

02:28So maybe I guess somewhere between two and a half to three million

02:30Oppenheimer doesn't

02:32They show their unit forecast, like many other analysts do—at least not in this note

02:36As for Georgia Bank and Emanuel Rosner, they have increased their price target on Tesla from $705 before, now up to $890

02:42Again, nothing too earth-shattering here

02:45They've raised their 2021 forecast for deliveries from 800,000 now to 825,000

02:50 As for their longer-term forecast, this is interesting because, very similarly to Oppenheimer, they have increased the multiple they are assigning to their 2025 earnings forecast as well

02:59Remember, Oppenheimer was using that 85 times earnings number, while Deutsche Bank is using a 60 times earnings number for 2025

03:05So, even though Deutsche Bank actually has a lower price target at the end of the

03:11Their earnings forecast for 2025 is higher; they're just assigning a lower multiple—60x versus Oppenheimer's 85x

03:16So, in terms of their models, it's a relatively small difference, basically that would boil down to Oppenheimer being more bullish on market sentiment around Tesla in 2025 than what Deutsche Bank would be

03:29It's a relatively minor difference in opinions, but it ends up having a pretty big impact on their price targets

03:33That's just one of the reasons I think price targets in general are overemphasized

03:36 All right, moving on from analyst notes, I want to talk about questions for Tesla's Q4 call

03:41As I said, Say Technologies opened this up today, so as always, when we talk about this, if you want to, you can go..

03:48Submit questions

03:48You can vote on questions, but you do have to link your brokerage account, obviously

03:51Up to you if that's something you feel comfortable doing or not

03:53I also know that a lot of people in Europe are not able to link their brokerages yet, but if you are able to and you want to participate, I'll put some links down in the description

04:01 Before we get to the questions that I have, I wanted to discuss the thought process that goes into it

04:05For me, I try to focus on what is most important for Tesla, and right now, obviously, that is batteries and autonomy

04:11Because of the importance of those topics, I would expect Tesla to give us some information on that right off the start

04:16I'd expect them to..

04:18Talk about how the 4680 battery production is going in a general sense, and then the same thing on the Full Self-Driving beta

04:23So, if we want to ask questions around batteries or around autonomy, I think we have to be a little bit more specific, because questions like "How is 4680 battery production going?" or "How's the Full Self-Driving beta going?" would be really great questions, but hopefully they've already been addressed by the time these get asked

04:37I also try to find questions that either haven't been asked or haven't been asked in a while, something that gives us some new information

04:43For example, one of the questions right now in the top five is, "What is Tesla doing to improve the service experience?" and I think we already know the..

04:49Answer to that: they're trying to build out more service centers, they're trying to really grow the capability as well as the fleet size of mobile service

04:57They've talked about partnering with third-party body shops, they've talked about keeping a stocked supply of parts in a more localized manner, and they've talked about improving initial quality

05:04You may argue that they have not done that or have not done enough of these things, and if people want to use that question slot as an opportunity to raise the fact that, hey, we are not happy with Tesla service overall right now as a whole, I think that's fine

05:18But I don't think we're going to get necessarily any new information from a question like that

05:21So anyway, that's kind of the..

05:23The mindset that I approach this with, my first question is, can you give us a progress update on dry coating of the battery electrode? At Battery Day, Elon said I would not say this is completely in the bag yet, as yields at that time were low

05:34So, like I said, here batteries and autonomy, I think, are the two biggest topics we should be trying to get information on

05:40I think this will give us an opportunity to maybe get more insight beyond what they would give us in their general opening comments

05:45And at the time I submitted this, the number one question was about the current as well as the projected end-of-year and end-of-next-year run rate for battery production

05:52Internally, I actually expected that question to stick around, so this was sort of meant..

05:59To be a tandem to that question, that question has now fallen off

06:00I think it's information we'd all really love to have

06:02I think it's actually a pretty good question, but it is kind of high risk because Tesla could just reiterate what they told us at Battery Day in terms of their goal for 2022

06:10As far as the dry battery electrode, though, that was something that Elon was pretty open about at Battery Day

06:15He said since they acquired Maxwell, they're really on sort of the fourth iteration of the machinery, and he thinks by the time they're in volume production, they'd be on six or seven

06:25He said those revisions were happening every three or four months, so we're now past that point—past Battery Day—where it should be a good time to give us an update

06:33An update on how the next iteration is going and if those yields have improved

06:36Obviously, Tesla was feeling confident enough to talk about it, but Elon said it's not in the bag

06:41I’d just love to see how his thoughts have progressed since Battery Day

06:44As far as autonomy goes, I couldn't think of a great question that I was confident they wouldn't answer in their opening comments

06:49You know, how is the FSD Beta progressing? How are you feeling? I think those are general questions that will get answered, but I think Jason did a good job here

06:56This is one of the top five questions right now

06:58He asks, “Why are you confident Tesla will achieve Level 5 autonomy in 2024, and why is DALL·E not necessary to get there?” It is a bit of a combo question, but generally I think— It's better to steer clear of those, but I think it presents a good opportunity for them to maybe share a little more than they won't get to in their opening comments

07:14So, happy with that question; I'm sure that'll probably make the top five and hopefully cover the bases on autonomy

07:17 The next question I have is on solar—short and sweet

07:20Here, what is currently holding Tesla back from being the market share leader in solar? I think this is interesting because SolarCity used to be the market share leader

07:28Then Tesla was after they acquired SolarCity

07:30But as they have adjusted their business model, they rapidly lost that market share lead

07:36Now that Tesla is again offering the lowest cost solar, they also have the..

07:38Solar roof ramping up

07:41I would love to see Tesla take that market share leadership position back

07:44A couple of people on Twitter noted that this might be a waste of a question because, oh, Tesla's production is constrained, but that's actually not the case, or shouldn't be the case

07:50Because in the past, Tesla was delivering much, much more solar than they are today, even after the SolarCity acquisition

07:56So, over the last 12 months, obviously, there's been a bit of pandemic impact in there, but over the last 12 months, they've delivered 173 megawatts of solar

08:04Tesla back in Q2 of 2017 delivered more than that in a single quarter

08:09So, it's not like they can't do more; they have done more in the past

08:13Yes, a very different business model then, and probably with..

08:15With the help of suppliers that they are not using today, but I think it's worth hearing Tesla's thoughts about it

08:19It provides them, if nothing else, an opportunity to tell us a little bit more about the progress that's happening in solar, because we did see quite a bit of progress from Q2 to Q3

08:28Anyway, if you like both or either of those questions, I’ll put the link in the description, and I would again encourage people to take a look, not just at the top questions but definitely the most recent questions and some of the questions that maybe didn't have that opportunity to rise to the top right away, because there's still plenty of time

08:44We've seen this change quite a bit during the entire week that we still have leading up to earnings

08:47The last thought I have here is that I think Tesla does a really, really great job of communicating with shareholders

08:51It's awesome that we even have the opportunity as retail investors to have a platform to ask questions, and Tesla gives us a lot of information

08:59I mean, how many other companies can you ask, "Hey, how many units are you going to deliver 10 years from now?" and they respond thoughtfully

09:06It's a pretty rare thing, and I think Tesla shareholders are fortunate for that

09:09 All right, next up today, we have pretty significant price reductions on the Model 3 throughout Europe

09:12It varies by country

09:14We'll take a look here at Germany, for example

09:16Tesla has reduced the price of the Model 3 across the board, depending on the trim level, by $3,000

09:22To 4,000 euros apiece, so in Germany now the lowest price, Standard Range Plus Model 3 starts at 39,990 euros after value-added tax, down from a prior price of 42,990 euros

09:31I think the move here is really just to bring the exchange rates back into balance to where they were six to seven months ago

09:41The US dollar has been weakening relative to the euro, so 3,900 euros today would equate to about 48,400 US dollars

09:46If we go back about six or seven months, 48,400 US dollars at that time was equivalent to about 43,000 euros

09:53The price of the SR Plus before this change, I think the variants in other countries might be a little bit different, but I'm sure Tesla has just as a..

10:03Whole reevaluated how they want their pricing to be set up for maybe the next three to six months across Europe, and made those changes now based on the individual countries' dynamics

10:09Speaking of Germany, Mercedes today announced the details of their upcoming electric vehicle, the Mercedes EQA, which will be Mercedes' entry-level EV, including the 19% value-added tax

10:19The starting price in Germany will be 47,540 euros, which is about 57,500 US dollars without the value-added tax

10:27It starts just below 40,000 euros, which again is right around 48,500 US dollars, and it looks like the EQA will be eligible for 9,000 euros in EV incentives in Germany

10:39As for the range, it's not the best, so they say 302 miles or 486 kilometers

10:45Notoriously, it overstates the range it looks like on the WLTP test cycle

10:48It's going to be about 265 miles, so my guess for EPA is probably below 250 miles of range

10:56That's coming from a relatively sizable battery of 66.5 kilowatt-hours

10:58So, in this price range, it's not going to be the most compelling vehicle as an opening price point

11:07Mercedes, I'm going to guess, it's not all that well appointed

11:08But where it really seems to be lacking is actually in the performance, so the zero to 100 kilometers or 0-62 miles per hour takes 8.9 seconds in the EQA

11:17Now, it's not the end of the world; not every buyer cares about the 0-60 performance

11:23Some couldn't care less, but it's just kind of a shocking number to see for a more expensive electric vehicle

11:28Vehicle these days, I've also read that the peak charging rate is 100 kilowatts, although I have not been able to actually find that on Mercedes' website myself yet

11:34Staying in Germany, but switching over to Volkswagen Group CEO Herbert Diess has now joined Twitter

11:38We actually had talked about this coming a while back, but he came out swinging

11:44He says, quote, "Hello Twitter, I'm here to make an impact with VW Group, especially on political issues and, of course, to get some of your market shares," at Elon Musk

11:51After all, our ID.3 and e-Tron have won the first markets in Europe

11:56Looking forward to productive discussions, unquote

11:58Not totally sure that's what he's going to find on Twitter, but best of luck to Diess here

12:03I'm also not totally sure

12:05It's smart to poke Elon Musk right there, even though I know Tesla and Musk are friendly, but certainly a good way to get attention on the account, which I'm sure was the intent

12:13As for his comment on market share, a few things annoy me more

12:16Let's take a look at European market share

12:18Once Tesla actually has a factory in Europe, until then, that's almost as pointless as comparing the ID3's market share in the U.S

12:25with the market share of the Model 3

12:26Global market share is what matters, and of course, manufacturers are going to prioritize delivering their vehicles as close to the point of production as they can

12:32And for Tesla, that is not Europe, but soon enough, it will be

12:34So, that'll wrap it up for today

12:37As always, thank you for listening

12:39Make sure you're subscribed and sign up for notifications

12:42You can also find me on Twitter at Tesla Podcast, and I'll see you tomorrow for the Thursday, January 21st, episode of Tesla Daily

12:48Thank you.