The Sunday Drive - 10/27/2024 Edition [#134]
Musings and Meanderings of a Financial Provocateur
👋🏼 Hello friends,
Greetings from Saratoga Springs, NY. Now that my mega-hedonistic 60th birthday Fiesta has concluded, let’s enjoy a leisurely Sunday Drive around the Internet.
🎶 Vibin'
The theme this week is kinda scary… No, not because Halloween is later this week. It’s because the 2024 Election is coming right behind it, and things might just be a little terrifying.
This week I’m vibin’ to Michael Jackson’s classic, Thriller and the short film directed by John Landis. Enjoy.
💭 Quote of the Week
“In life, the challenge is not so much to figure out how best to play the game; the challenge is to figure out what game you’re playing.“
— Kwame Anthony Appiah
📈 Chart of the Week
I’ve long thought that Tesla’s long term strategy wasn’t really to be an auto company, but rather an alternative energy company. I still believe that.
Although the company’s Auto Sales business is eight times the size of its Energy segment, the growth rate of that business implies that it shouldn’t take too many years before it is of equal size.
This past week, Tesla released its Q3 2024 earnings report, showcasing strong results in its energy sector. (Source: Tesla)
The Energy Generation and Storage business deployed 6.9 GWh of energy storage products during the quarter, continuing to grow alongside Tesla's core electric vehicle (EV) operations. This segment includes residential solar and battery products like the Powerwall, as well as large-scale storage solutions such as the Megapack, which is increasingly in demand by utility companies.
The deployment of energy products is becoming more attractive as global decarbonization efforts accelerate and governments push for clean energy solutions. Tesla’s current customers include residential users, commercial businesses, and utility companies, but the company sees future growth in emerging markets and renewable energy partnerships. Integration with EV infrastructure and electrification trends presents another significant opportunity for the energy segment.
The energy segment lags behind in profitability compared to Tesla’s automotive business. However, as production scales, Tesla anticipates improved margins, particularly with increased Gigafactory output and enhanced cost efficiencies. In addition, government incentives like the U.S. Inflation Reduction Act are expected to drive demand for solar and battery storage solutions.
Tesla’s energy business faces growth constraints, particularly with supply chain issues, such as sourcing lithium, and regulatory challenges in certain regions. The company is addressing these issues by diversifying suppliers, ramping up recycling efforts, and engaging regulators to streamline the approval process for energy projects. Tesla’s strategic initiatives aim to resolve these constraints, positioning the company for further expansion in the renewable energy market.
Clean, reliable energy - including nuclear - is vital for our economy to take full advantage of the growth opportunities that artificial intelligence presents in the coming years.
Through its Energy segment, Tesla is a critical player in the evolution of AI-driven productivity for our economy and our society.
🚙 Interesting Drive-By's
💡 This Economic Myth Needs to Go Away
🤔 Tired of Retirement? Try Un-retiring
📈 Why Private Equity is Cutting Multimillion-Dollar Checks to Plumbers
📉 Private Equity is Becoming Hotel California
💰 What’s Top of Mind for Congressional Tax Writers Heading into 2025?
👋🏼 Parting Thought
If you have any cool articles or ideas that might be interesting for future Sunday Drive-by's, please send them along or tweet 'em (X ‘em?) at me.
Please note that the content in The Sunday Drive is intended for informational purposes only, and is in no way intended to be financial, legal, tax, marital, or even cooking advice. Consult your own professionals as needed. The views expressed in The Sunday Drive are mine alone, and are not necessarily the views of Investment Research Partners or Cache Financials.
I hope you have a relaxing weekend and a great week ahead. See you next Sunday...
Your faithful financial provocateur,
-Mike
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