Antonio Linares

Lower Margins Are Good For Tesla.

Name: Lower Margins Are Good For Tesla.
Uploaded: 2025-10-23T15:25:13Z
Description: In this conversation, Antonio Linares discusses Tesla's Q3 2025 numbers, emphasizing the importance of understanding the company's efficiency and cash flow dynamics. He argues that lower margins can be beneficial for maximizing value to customers and shareholder returns. The discussion also touches

10/23/2025, 3:25:13 PM

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Economic Summary

Tesla (TSLA) reached a cyclical high in operating cash flow divided by CapEx, delivering record free cash flow (~$3.99B) despite materially higher interest rates versus 2022, indicating a marked improvement in capital efficiency.
Higher interest rates (roughly 4% now vs ~0% in 2022) have made cars less affordable; while US credit expiries pulled some demand forward, global deliveries grew strongly (Greater China, APAC, Europe, North America grew ~33%, 29%, 25%, 28%), showing geographically broad demand.
Tesla deliberately trades percentage margins for higher absolute dollar free cash flow per share, making it harder for competitors to replicate; management expects a sizable rise in CapEx in 2026 to fund physical AI (Optimus, RoboTaxi), creating a temporary cyclical dip in cash/CAPEX metrics but long-term optionality.

Bullish

Tesla has become materially more efficient, producing record free cash flow (~$3.99B).
Broad-based delivery growth across Greater China, APAC, Europe, and North America.
Lower percentage margins but higher absolute free cash flow per share (value creation).
Autonomy metrics rising (millions of FSD/FSDN miles) and energy storage gross profit improving.
Company is highly leverageable to interest-rate declines, boosting affordability and upside.
Physical AI roadmap (Optimus, RoboTaxi) and data scale create a durable moat.

Bearish

Investors worry lower margins, causing a stock pullback (stock down ~4%).
Management expects much higher CapEx in 2026, which will reduce cash/CAPEX ratios.
US demand may be pulled forward by credit expiries, masking future weakness.

Bullish tickers

TSLA

Bearish tickers

TSLA

Bullish

Material efficiency gains with record free cash flow (~$3.99B), broad delivery growth across regions, rising autonomy miles and energy storage margins, and a long-term physical AI moat via Optimus and RoboTaxi.

Bearish

Market concerned about compressed percentage margins and near-term optics; stock dipped ~4% on margin focus and risks from US credit expiries and planned higher 2026 CapEx.

RIVN

Bullish

Mentioned as a distant competitor at scale but still materially behind Tesla on physical AI and data scale.

People mentioned

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