TSLA - Tesla Motors

[Palantir]

We need a new stock to have very detailed, mindless flame wars over. I feel Tesla Motors presents a great opportunity in that regard. This is a fast growing tech stock, and I think this is going to be basically like the next Apple or something.

[Edward]

Let the flame wars begin!  ;D

 

This is a small luxury auto manufacturer. It has one plant in the US with an annual capacity of 400K units, of which they are using 20K. They have some intellectual property but nothing too fancy. Electric cars are not very complicated to build as opposed to good engines and transmissions which are. The company isn't profitable - currently about break even.

 

All this is supposedly worth 12B$, god knows how. My guess - Elon Musk must be it. If he leaves for any reason this company loses 90% of its valuation overnight.

 

Regarding the Apple comparisons. An auto manufacturer has years of lead time to get a car into the market, and growth can never be huge because of the capital costs. Also, they have intentions to grow in the sub 40K$ car market, which is populated by some serious competitors (GM, Renault-Nissan). This doesn't bode well for future profitability.

 

At this price, this company is priced for absolute perfection at least 10 years into the future.

 

 

[ERICOPOLY]

There is pretty much no hope for expansion.

 

1)  Most cities in America have a vast supercharger network.  Thus, there is nothing holding back adoption.

2)  They have saturated Europe.

3)  They have saturated Asia.

 

And yet they are only breaking even!

 

They are toast.  No way to make a profit going forward given that there is no growth left.

[Aberhound]

I am trying to understand what moat Tesla will have in 2014 onwards. The stock is currently overvalued but what valuation will apply in 2014 and onwards?

 

In 2014 when Tesla supercharger stations cover 80% of Canada and US major routes with free charging what will competing electric car companies offer? Does Tesla allow other electric cars to use their supercharger stations or is that even possible?

 

http://www.teslamotors.com/supercharge

 

Has anyone every used a Municipal owned charging station and had a good experience? Public sector services usually can't compete. Are there other private sector charging stations that are any good?

 

Once the $40,000 sedan is available won't the lifetime cost of the car be much less than gas and diesel vehicles? Lifetime cost is hard to determine because presumably Tesla will have a better battery in ten years when replacement is required and we don't know if Tesla will charge a high or a low price for the replacement. Electric cars should last much longer than gas and diesel cars. Is SolarCity going to offer free home charging for Tesla vehicles?

 

No one has ever succeeded in launching a new volume car manufacturer due to the economies of scale and government regulatory obstacles. Presumably high volume production begins with the $40,000 price level car. I haven't seen Tesla's plans for building the high volume plants. The current plants don't seem suited for high volume production. I note that Ford's plants in Brazil are far more efficient than their US plants due to greater flexibility. Does Tesla have a plan for more efficient high volume production? When the expensive high volume plants are built won't there be dilution especially considering that the bond bubble probably will not last long enough to finance them (but if they succeed Tesla will have a good moat).

 

Telsa's sales model without dealers is radically different. Saturn's similar one price policy was popular.

 

Tesla's maintenance packages are different with lots of fixed price options up to 100,000 miles. Currently dealers make much of their money on warranty servicing. Will Tesla capture that profit? Electric cars require much less maintenance so the fixed price options might be extremely profitable. Will they adopt a cheap razor and expensive razor blades sales model?

 

Too much speculation is required for me. I watch with interest there is the possibility that Tesla can develop a good long term moat similar to how Geico beats the traditional insurers who are stuck with the independent agent model. I don't see how the existing car companies can switch to Tesla's new methods.

 

The insider trading stats should include a section to report holdings by Congress and workers who are exempt from insider trading rules. I bet Tesla's stock price will set records for volatility because they are so dependent on government regulatory policy. It will be interesting to see if their stock goes up with democrat administrations and down with republican administrations. Maybe they should build their next plant in a Republican state.

[ERICOPOLY]

In 2014 when Tesla supercharger stations cover 80% of Canada and US major routes with free charging what will competing electric car companies offer? Does Tesla allow other electric cars to use their supercharger stations or is that even possible?

 

Only the Model S by Tesla can use the supercharger network.

 

Not even the Tesla Roadster can use the superchargers.

 

They simply aren't capable of receiving that much electrical current -- so as they are currently designed, it's impossible for the competing electric cars (all of them) to charge as quickly as a Model S can recharge at a supercharger station.

 

They are also planning on upgrading the supercharger stations to feed even more current to the Model S (the Model S is designed to handle more current than superchargers presently provide).

 

 

[ERICOPOLY]

Incidentally, SolarCity sells a battery backup system for homes to their residential consumers.

 

The batteries they sell are made by Tesla.

 

I wonder how much they cost:

 

http://www.solarcity.com/residential/energy-storage.aspx

 

 

[plato1976]

sorry I may be retarded in reading the subtle implication in English;

but 2&3 ? Eur and Asia already saturated ?

 

There is pretty much no hope for expansion.

 

1)  Most cities in America have a vast supercharger network.  Thus, there is nothing holding back adoption.

2)  They have saturated Europe.

3)  They have saturated Asia.

 

And yet they are only breaking even!

 

They are toast.  No way to make a profit going forward given that there is no growth left.

[ERICOPOLY]

sorry I may be retarded in reading the subtle implication in English;

but 2&3 ? Eur and Asia already saturated ?

 

There is pretty much no hope for expansion.

 

1)  Most cities in America have a vast supercharger network.  Thus, there is nothing holding back adoption.

2)  They have saturated Europe.

3)  They have saturated Asia.

 

And yet they are only breaking even!

 

They are toast.  No way to make a profit going forward given that there is no growth left.

 

They have sold zero, zilch, nada in Europe and Asia thus far. 

 

(I was trying to be as sarcastic as possible in the original post. ).

 

Supercharger stations only cost $250,000 to build.  They just sold a ton of stock to the public.  They can build this network!

 

[ZenaidaMacroura]

sorry I may be retarded in reading the subtle implication in English;

but 2&3 ? Eur and Asia already saturated ?

 

There is pretty much no hope for expansion.

 

1)  Most cities in America have a vast supercharger network.  Thus, there is nothing holding back adoption.

2)  They have saturated Europe.

3)  They have saturated Asia.

 

And yet they are only breaking even!

 

They are toast.  No way to make a profit going forward given that there is no growth left.

Sarcasm, as in they have not saurated europe and asia at all.

[ERICOPOLY]

The issue is that you almost never drive more than 200 miles in a day.  Only on road trips.  But day in day out, dropping off kids, going to your job, those days you never do more than even 100 miles.

 

So you plug in your car and almost never go to the gas station.  Always a full "tank" in the morning"

 

Road trip?  Either own a second car (gasoline or diesel) or rent one.

 

And no visits for oil changes and no need to have the vehicle serviced.  It's kind of a hassle having multiple cars and keeping up with the oil changes and service visits.

 

The Model S is also the fastest of the sports sedans (faster than BMW M5 to 100 mph) and has incredible storage capacity (due to not having an engine in the front, there is a second trunk in the front).  And faster than Porche Carrera 4s to 60mps.  And that's a little wimpy car with no seating capacity and no trunk space.  The Model S can haul 7 people around (two kids in the rear facing third row seats).

 

 

 

[ERICOPOLY]

Their strategy is good.  First release the Model S where the competition is at similar price points, and where your customers have multiple car garages.  Meanwhile, expand your supercharger network.  Later, release the mass market model at 1/2 price when the superchargers network is far more expansive and your target audience has fewer stalls in the garage.

 

I'm a little disappointed in the government.  They did the space program, the internet program, and they spend trillions on the military to defend our supply of cheap gasoline.  But why not stimulate the economy by using government money to build out the supercharger network under the "if we build it, they will come" mantra.  Meanwhile, the supercharger station produce solar electricity -- if they don't come, the electricity can be sold wholesale and the costs will be recovered.  So it's zero risk to the taxpayer -- stimulus package that would actually pay for itself even in the event of total and complete failure.  Now that would be refreshing for a change.  Meanwhile, if it succeeds in jumpstarting electric vehicle industry, we can scale back on military spending.

 

[deadspace]

Incidentally, SolarCity sells a battery backup system for homes to their residential consumers.

 

The batteries they sell are made by Tesla.

 

I wonder how much they cost:

 

http://www.solarcity.com/residential/energy-storage.aspx

 

Tesla does not make batteries -  these are from panasonic.  It continues to come up in arguments as a feature of Tesla's "vertical integration" which is just not true

 

Look at BYD  they own the Lithium mine and control the entire chain of production of their batteries- now thats vertical integration. 

[treasurehunt]

 

Tesla does not make batteries -  these are from panasonic.  It continues to come up in arguments as a feature of Tesla's "vertical integration" which is just not true

 

Look at BYD  they own the Lithium mine and control the entire chain of production of their batteries- now thats vertical integration.

 

I understand that Tesla makes each battery pack using some 8000 individual lithium ion batteries from Panasonic. The technological advantage is in the making of the battery pack, not each individual battery in the pack. Based on what I have read, Tesla has patented technology in the manufacture of the battery pack, but I have no idea how difficult this is to reproduce for others.

[Uccmal]

Their strategy is good.  First release the Model S where the competition is at similar price points, and where your customers have multiple car garages.  Meanwhile, expand your supercharger network.  Later, release the mass market model at 1/2 price when the superchargers network is far more expansive and your target audience has fewer stalls in the garage.

 

I'm a little disappointed in the government.  They did the space program, the internet program, and they spend trillions on the military to defend our supply of cheap gasoline.  But why not stimulate the economy by using government money to build out the supercharger network under the "if we build it, they will come" mantra.  Meanwhile, the supercharger station produce solar electricity -- if they don't come, the electricity can be sold wholesale and the costs will be recovered.  So it's zero risk to the taxpayer -- stimulus package that would actually pay for itself even in the event of total and complete failure.  Now that would be refreshing for a change.  Meanwhile, if it succeeds in jumpstarting electric vehicle industry, we can scale back on military spending.

 

 

Ericopoly for President!  Oh, if only.  The problem is that the oil industry is very powerful and has financed the campaigns of many of your elected officials.  However, the balance of power is shifting rapidly.  Of course the XOMs of the world can easily change course and they will. 

 

I think Tesla is really onto something.  Whether or not the stock is fairly valued is impossible to say.  I am reminded that Auto companies are not great investments.  One would probably be better off getting in on the ground floor of the dealership network.

[stahleyp]

Their strategy is good.  First release the Model S where the competition is at similar price points, and where your customers have multiple car garages.  Meanwhile, expand your supercharger network.  Later, release the mass market model at 1/2 price when the superchargers network is far more expansive and your target audience has fewer stalls in the garage.

 

I'm a little disappointed in the government.  They did the space program, the internet program, and they spend trillions on the military to defend our supply of cheap gasoline.  But why not stimulate the economy by using government money to build out the supercharger network under the "if we build it, they will come" mantra.  Meanwhile, the supercharger station produce solar electricity -- if they don't come, the electricity can be sold wholesale and the costs will be recovered.  So it's zero risk to the taxpayer -- stimulus package that would actually pay for itself even in the event of total and complete failure.  Now that would be refreshing for a change.  Meanwhile, if it succeeds in jumpstarting electric vehicle industry, we can scale back on military spending.

 

 

Ericopoly for President!  Oh, if only.  The problem is that the oil industry is very powerful and has financed the campaigns of many of your elected officials.  However, the balance of power is shifting rapidly.  Of course the XOMs of the world can easily change course and they will. 

 

I think Tesla is really onto something.  Whether or not the stock is fairly valued is impossible to say.  I am reminded that Auto companies are not great investments.  One would probably be better off getting in on the ground floor of the dealership network.

 

He's got my vote.  :)

[ERICOPOLY]

Incidentally, SolarCity sells a battery backup system for homes to their residential consumers.

 

The batteries they sell are made by Tesla.

 

I wonder how much they cost:

 

http://www.solarcity.com/residential/energy-storage.aspx

-

 

Tesla does not make batteries -  these are from panasonic.  It continues to come up in arguments as a feature of Tesla's "vertical integration" which is just not true

 

Look at BYD  they own the Lithium mine and control the entire chain of production of their batteries- now thats vertical integration.

 

BYD does not make the picks and shovels used to mine the lithium.  Nobody is vertically integrated.

 

Tesla makes:

Battery packs

Vehicles

Superchargers

Direct sales of cars to consumers (no dealer network)

 

They are vertically integrated.

 

EDIT:  Oh whoops,SolarCity builds their supercharger stations, and they buy the photovoltaic components from other suppliers.  I guess that's also evidence that they're not vertically integrated.

[ERICOPOLY]

Oh, they don't make the Michelin Pilot Sport tires that go on the performance plus vehicle.  So they're not vertically integrated.

 

That's another one to bring up.

[ERICOPOLY]

Toyota and Daimler are big Tesla investors:

 

http://www.forbes.com/sites/joannmuller/2013/06/01/what-do-toyota-and-mercedes-see-in-tesla-a-bit-of-themselves/

 

Daimler, for instance, uses a Tesla battery in the electric version of its Smart city car. And its upcoming Mercedes B-class EV, which goes on sale in 2014, will feature a Tesla powertrain. Toyota, meanwhile, gave Tesla a $100 million contract to supply the  electric motor, power electronics, battery, gearbox and software for the new $50,000 RAV4 EV. The SUVs are made alongside Tesla’s Model S sedan in a Fremont, Calif., factory formerly operated by Toyota and General Motors GM -2.17%. Toyota sold the plant to Tesla in 2010 for $42 million.

[shalab]

Having ridden a tesla, don't see a reason to buy another car - you can run circles around others and maintenance is low. These guys can take over the car industry or be the GM of the 21st century. ( anyone who thinks otherwise should read 20th century GM story. )

 

I totally see my kids driving around a tesla when they grow up and it won't be their dad's car :-)

 

 

[deadspace]

Oh, they don't make the Michelin Pilot Sport tires that go on the performance plus vehicle.  So they're not vertically integrated.

 

That's another one to bring up.

 

Except that the battery is 50% of the cost of the car so having cost advantages in battery production actually DOES matter.

[ERICOPOLY]

Oh, they don't make the Michelin Pilot Sport tires that go on the performance plus vehicle.  So they're not vertically integrated.

 

That's another one to bring up.

 

Except that the battery is 50% of the cost of the car so having cost advantages in battery production actually DOES matter.

 

 

Maybe you believe I said somewhere that cost of battery does not matter? 

 

Do you believe Tesla is unable to lower their cost of battery pack?

 

[txlaw]

Toyota and Daimler are big Tesla investors:

 

http://www.forbes.com/sites/joannmuller/2013/06/01/what-do-toyota-and-mercedes-see-in-tesla-a-bit-of-themselves/

 

Daimler, for instance, uses a Tesla battery in the electric version of its Smart city car. And its upcoming Mercedes B-class EV, which goes on sale in 2014, will feature a Tesla powertrain. Toyota, meanwhile, gave Tesla a $100 million contract to supply the  electric motor, power electronics, battery, gearbox and software for the new $50,000 RAV4 EV. The SUVs are made alongside Tesla’s Model S sedan in a Fremont, Calif., factory formerly operated by Toyota and General Motors GM -2.17%. Toyota sold the plant to Tesla in 2010 for $42 million.

 

I like Tesla the company a lot, and I think Musk will be successful with it.  Not only is he building a fantastic brand for EVs that any of the big auto guys would love to have (maybe Tesla is the new BMW or Porsche in terms of brand value?), but he's also doing deals with folks like Toyota and Mercedes (as noted by Eric above) to provide the guts of some of their new releases.

 

Having said all of the above, I find the current market valuation puzzling.  It's weird that Fiat/Chrysler is worth less to the market than Tesla.

[Otsog]

Has anyone been following the legal aspect of tesla's direct selling?

 

Is the pushback they've been getting from some states a material hindrance or just noise?

[deadspace]

Oh, they don't make the Michelin Pilot Sport tires that go on the performance plus vehicle.  So they're not vertically integrated.

 

That's another one to bring up.

 

Except that the battery is 50% of the cost of the car so having cost advantages in battery production actually DOES matter.

 

 

Maybe you believe I said somewhere that cost of battery does not matter? 

 

Do you believe Tesla is unable to lower their cost of battery pack?

 

No I don't - not relative to anyone else who is making electric cars.  There is no cost advantage when you are buying from panasonic

 

[shalab]

 

No I don't - not relative to anyone else who is making electric cars.  There is no cost advantage when you are buying from panasonic

 

It is like saying Microsoft has no advantage because its operating systems ( mostly ) run on intel chips.