Piper Sandler analysts recently hosted two Tesla-related events to dive deeper into the company’s evolving strategies in both its energy storage and autonomous driving sectors.
The first event was a visit to Tesla’s new “Megapack” facility in Lathrop, California, where the analysts gained insights into Tesla’s growing stationary battery business, a key component of its energy division.
The second was a webinar with Elias Martinez, the creator of a community tracker that monitors real-world data from Tesla’s full self-driving (FSD) software-equipped vehicles.
In a Sunday note to clients, Piper Sandler highlighted 24 key takeaways from these events.
Megapack Facility Visit Takeaways
1) Piper Sandler notes that Chinese companies are ramping up competition in the stationary battery market, but demand remains strong globally.
2) By 2030, the market will need approximately 2 terawatt-hours of batteries, a 20-fold increase from 2023 levels.
3) As battery technology matures, hardware could become a commodity and Tesla (NASDAQ:TSLA) won’t be able to compete “solely on price,” the investment bank stated.
4) To win contracts, Tesla leverages its full ecosystem, including software and inverters, rather than focusing on offering the lowest prices.
5) Chinese competitors are largely absent from the U.S. market, partly because these are long-term assets requiring ongoing service.
6) Geopolitical factors and the location of factories pose challenges for Chinese suppliers in the U.S. market.
7) A Megapack can weigh over 80,000 pounds, making shipping costly and highlighting the importance of local production.
8) The new facility in Shanghai, expected to be online in 2025, will help Tesla compete more effectively in the Asian market.
9) Tesla Energy operates on a project basis, leading to fluctuations in quarterly results, which makes long-term forecasting challenging.
10) Tesla currently imports lithium iron phosphate (LFP) cells and did not comment on potential in-house production using CATL machines.
11) Tesla’s strategy focuses on localizing or in-sourcing production to prepare for various potential market scenarios.
12) Tesla Energy’s long-term gross margin target aligns with other segments at approximately 20%.
FSD Community Tracker Webinar Takeaways
1) The FSD Community Tracker aims to assess how quickly Tesla's FSD software is improving in real-world conditions.
2) Over the last six months, 107 users have submitted data using six different input methods.
3) Data submissions tend to increase in the one to two months following the release of new FSD software versions.
4) Participants in the tracker are generally diligent, level-headed, and objective, using FSD regularly.
5) However, biased outliers can be identified and removed from the data, Piper Sandler analysts point out.
6) The latest FSD version (v12.5.x) can travel 220-251 miles between critical disengagements, marking an improvement from previous versions.
7) It's challenging to use these absolute numbers to draw direct comparisons between Tesla's FSD and competitors like Waymo.
8) Determining the exact number of disengagement-free miles required for robo-taxis is also difficult.
9) Rather than seeking an exact number, observing the improvement trend is more useful for understanding FSD’s progress.
9) Although v12.5.x has improved, its performance has regressed slightly since its initial release, potentially due to Tesla preparing it for third-generation hardware.
10) Disengagement trends show that FSD v12.5.x has "certainly improved" compared to previous versions.
11) Yet, the performance of that version is still worse since its original release, analysts highlight.
12) This could be because Tesla is preparing v12.5.x for use on 3rd-gen hardware.
Piper analysts reiterated an Overweight rating on Tesla with a price target of $300, urging investors to own TSLA stock ahead of the upcoming robo-taxi event in October.