TSLA - Tesla Motors

[Liberty]

Suing the US Air Force  8)

 

http://www.bloomberg.com/news/2014-04-26/musk-s-spacex-to-sue-u-s-air-force-over-launch-monopoly.html

[Liberty]

http://www.reuters.com/article/2014/05/01/us-spacex-unitedlaunchalliance-idUSKBN0DH2G420140501

 

(Reuters) - A U.S. Court of Federal Claims judge issued an injunction late Wednesday prohibiting a joint venture between Lockheed Martin Corp and Boeing from proceeding with plans to buy Russian-made rocket engines used to send U.S. Air Force satellites into space.

 

Space Exploration Technologies, the privately held company known as SpaceX, won the temporary injunction against the U.S. government and contractors Boeing and Lockheed operating as United Launch Alliance.

 

The U.S. Air Force and United Launch Alliance are prohibited "from making any purchases from or payment of money to NPO Energomash", Federal Claims Court Judge Susan Braden wrote in the order.

[Grenville]

Liberty, thanks for the update! I know it isn't directly related to Tesla the stock.

[Liberty]

Liberty, thanks for the update! I know it isn't directly related to Tesla the stock.

 

I apologize about that, I've been kind of using this thread as the general Elon Musk repository since I know that nobody is really discussing buying Tesla anymore and the shorts aren't very verbose either. Maybe I should create another thread for that on the general board, though.

[Grenville]

I'm fine with it here since there isn't a lot on the board about space_x and I do think it adds to the understanding of Elon Musk.

[Liberty]

http://files.shareholder.com/downloads/ABEA-4CW8X0/3152651436x0x752463/4d500edc-fd71-4b5b-8b60-542f73d9c64e/Q1'14%20Shareholder%20Letter%20final.pdf

 

• Record Q1 Model S production of 7,535 vehicles

• Delivered 6,457 Model S vehicles, slightly exceeding guidance

• Net income of $17M and $0.12 EPS (non-GAAP), loss of $50M and $(0.40) EPS (GAAP)

• Expansion in Asia starts with first deliveries into China

• $2.3B raised in convertible notes offerings

• Significant Gigafactory and capacity expansion progress

• On track for more than 35,000 deliveries in 2014

 

There's a letter to shareholders at the link above.

[sleepydragon]

they boost about china is a huge market for them. I think that's overrated.

They say they have 4000 orders. But so far, they only delivered 15 cars. 8 in Beijing, 7 in Shanghai. A friend was one of the 15 people (he's in the picture of tsla shareholder letter). I suspect the 15 cars is all they have delivered in China.They couldn't deliver more cars because there's just no place to charge the cars. They are having problems getting permits to build charging stations in the city. Unlike in US, Chinese doesn't have a house or garage where they can charge their cars so you have to build charging stations. But they recently fired their sales team and the new sales team have no local experience in dealing with the local government.

 

and now competitors like bmw is catching up.

[ERICOPOLY]

they boost about china is a huge market for them. I think that's overrated.

They say they have 4000 orders. But so far, they only delivered 15 cars. 8 in Beijing, 7 in Shanghai. A friend was one of the 15 people (he's in the picture of tsla shareholder letter). I suspect the 15 cars is all they have delivered in China.They couldn't deliver more cars because there's just no place to charge the cars. They are having problems getting permits to build charging stations in the city. Unlike in US, Chinese doesn't have a house or garage where they can charge their cars so you have to build charging stations. But they recently fired their sales team and the new sales team have no local experience in dealing with the local government.

 

and now competitors like bmw is catching up.

 

You think charging is the reason why only 15 cars were delivered?  Has BYD also only sold 15?  It just doesn't seem like the reason to me.

 

This article suggests that the market is not being held down at just 15 vehicles due to lack of charging, as BYD has sold 6,000 of one of it's models in 2014:

 

http://www.evworld.com/news.cfm?rssid=32657

 

 

[sleepydragon]

"Tesla has cited the lack of charging facilities as the reason behind its decision to hold delivery to these customers on a later date. The two charging stations in Beijing and Shanghai each have six charging posts powered by solar panels provided by Chinese solar equipment maker Hanergy."

 

 

http://www.reuters.com/article/2014/04/22/us-autoshow-china-tesla-motors-idUSBREA3L0TN20140422

 

[sleepydragon]

I think it's much simpler setup to charge a BYD. I remember seeing a picture where a BYD employee drove around china and charge the car at local resturants. also BYD car is dual mode. so you don't have to charge it. the gas engine will charge the battery.

[ERICOPOLY]

I think it's much simpler setup to charge a BYD. I remember seeing a picture where a BYD employee drove around china and charge the car at local resturants.

 

 

It is no more difficult than that to charge a Model S.  You just plug it in.  Unless the BYD has a robotic arm doing it for you, then they are they same.

[sleepydragon]

"Tesla has cited the lack of charging facilities as the reason behind its decision to hold delivery to these customers on a later date. The two charging stations in Beijing and Shanghai each have six charging posts powered by solar panels provided by Chinese solar equipment maker Hanergy."

 

 

http://www.reuters.com/article/2014/04/22/us-autoshow-china-tesla-motors-idUSBREA3L0TN20140422

 

sorry, posted the wrong link. here is the right one:

http://news.xinhuanet.com/english/china/2014-04/24/c_133284928.htm

 

[ERICOPOLY]

"Tesla has cited the lack of charging facilities as the reason behind its decision to hold delivery to these customers on a later date. The two charging stations in Beijing and Shanghai each have six charging posts powered by solar panels provided by Chinese solar equipment maker Hanergy."

 

 

http://www.reuters.com/article/2014/04/22/us-autoshow-china-tesla-motors-idUSBREA3L0TN20140422

 

Keep in mind that Tesla is being sued for not delivering the cars (being sued by Chinese that are tired of waiting for the car).  They are suing for faster delivery.

 

I suspect this is a BS reason that Tesla is giving here.  They are supply constrained right now -- can't make the cars fast enough.  They do not have service centers -- what happens if the car breaks down for a customer?  That's more of the story rather than a lack of charging infrastructure.  You can charge a Tesla if you can charge a BYD car.

 

 

 

[jeffmori7]

An interesting point of view, speculating a bit on the gigafactory purpose and the value of a 8-years old Tesla:

 

http://insideevs.com/tesla-giga-factory-protects-aging-tesla-model-s/

[Liberty]

Hilarious:

 

http://theoatmeal.com/comics/tesla_model_s

 

http://theoatmeal.com/comics/tesla_model_s2

[Liberty]

Are Tesla's Plans for a Giant Battery Factory Realistic?

 

The Electric-Car Company Hopes the Plant Drives Down Prices. Here's How the Experts View It.

 

http://online.wsj.com/news/articles/SB10001424052702303647204579546060181430456?mod=WSJ_qtoverview_wsjlatest&mg=reno64-wsj

 

All these experts made me go  ::)

 

I've been following Tesla since 2006, and every single step of the way experts have cogently explained why the company couldn't do what it said it would do and was bound to fail soon. These guys might know their narrow fields very well, but they don't know much about buildings products and companies. If Steve Jobs had told them his plans in 2006, they'd have explained why he should slow down an take fewer chances and be more like RIM and Nokia... Another way to put it: Who's more an expert on making this kind of stuff happen, Elon Musk or these R&D guys?

 

Best to file this and look at it again in a few years when Musk is breaking ground on his second gigafactory and has over-delivered on the 30% cost improvement...

 

Speaking of gigafactories, Musk says the world will need hundreds of them:

 

http://www.bloomberg.com/news/2014-05-14/musk-sees-need-for-hundreds-of-battery-gigafactories-.html

 

Which makes sense if you do the math.

[rkbabang]

Are Tesla's Plans for a Giant Battery Factory Realistic?

 

The Electric-Car Company Hopes the Plant Drives Down Prices. Here's How the Experts View It.

 

http://online.wsj.com/news/articles/SB10001424052702303647204579546060181430456?mod=WSJ_qtoverview_wsjlatest&mg=reno64-wsj

 

All these experts made me go  ::)

 

I've been following Tesla since 2006, and every single step of the way experts have cogently explained why the company couldn't do what it said it would do and was bound to fail soon. These guys might know their narrow fields very well, but they don't know much about buildings products and companies. If Steve Jobs had told them his plans in 2006, they'd have explained why he should slow down an take fewer chances and be more like RIM and Nokia... Another way to put it: Who's more an expert on making this kind of stuff happen, Elon Musk or these R&D guys?

 

Best to file this and look at it again in a few years when Musk is breaking ground on his second gigafactory and has over-delivered on the 30% cost improvement...

 

Speaking of gigafactories, Musk says the world will need hundreds of them:

 

http://www.bloomberg.com/news/2014-05-14/musk-sees-need-for-hundreds-of-battery-gigafactories-.html

 

Which makes sense if you do the math.

 

+1

 

I don't put much stock in such self proclaimed "experts".  If they knew how to run & grow a company successfully, they'd be running and growing a company.  If they knew which companies to invest in they'd be Billionaire investors.

 

So let's look at who these so-called experts consist of.  Two professors (LOL), a former chief exec of a failed battery company, and a former Toyota exec who admits "We didn't anticipate Prius would sell like it did".  Yep, Musk should take the advise of this crew.

 

[Liberty]

So let's look at who these so-called experts consist of.  Two professors (LOL), a former chief exec of a failed battery company, and a former Toyota exec who admits "We didn't anticipate Prius would sell like it did".  Yep, Musk should take the advise of this crew.

 

The Toyota guy is particularly telling, IMO. Toyota had an unexpected win, but instead of being ambitious about it, they approached it as "oh, nice, we found a new small niche. let's do everything to keep it segmented away". Even with that attitude, it's the #1-2 best selling model in Japan and sells well in the US. What would it be if they handled it better?

 

A more entrepreneurial spirit running that project would have switched the batteries from NiMH to lithium-ion long ago, added the plug-in capability by default and made an all-electric version, been more aggressive about weight reduction (aluminum, etc) and made the styling appealing to more people (don't need to look strange to have a low coefficient of drag, look at the Model S); something like a less upscale Lexus IS plug-in would've sold well.

 

I think Musk and the RMI guys are right about this. Traditional car makers can't compete in EVs because they have such a huge investment in old technologies (steel stamping, huge supply chains for gas engines and transmissions, etc), aren't nimble enough, and to sell EVs properly means pointing out the problems with the rest of their lineups (which is why Musk wants nothing to do with third party dealerships).

[Guest longinvestor]

So let's look at who these so-called experts consist of.  Two professors (LOL), a former chief exec of a failed battery company, and a former Toyota exec who admits "We didn't anticipate Prius would sell like it did".  Yep, Musk should take the advise of this crew.

 

The Toyota guy is particularly telling, IMO. Toyota had an unexpected win, but instead of being ambitious about it, they approached it as "oh, nice, we found a new small niche. let's do everything to keep it segmented away". Even with that attitude, it's the #1-2 best selling model in Japan and sells well in the US. What would it be if they handled it better?

 

A more entrepreneurial spirit running that project would have switched the batteries from NiMH to lithium-ion long ago, added the plug-in capability by default and made an all-electric version, been more aggressive about weight reduction (aluminum, etc) and made the styling appealing to more people (don't need to look strange to have a low coefficient of drag, look at the Model S); something like a less upscale Lexus IS plug-in would've sold well.

 

I think Musk and the RMI guys are right about this. Traditional car makers can't compete in EVs because they have such a huge investment in old technologies (steel stamping, huge supply chains for gas engines and transmissions, etc), aren't nimble enough, and to sell EVs properly means pointing out the problems with the rest of their lineups (which is why Musk wants nothing to do with third party dealerships).

 

When it comes to Toyota, I wouldn't be so dismissive. It was a quite long time ago, but in the early 80's, luxury car makers (BMW, Mercedes in particular) laughed at Toyota as word emerged of their planned entry into this segment. We know what happened in the 90's. And oh, btw, Prius was launched in 1996. They've been #1 since, not a bad niche for them to let it be "segmented away".

 

Tesla's long haul success will be tested as price point for EV drops, likely very dramatically. Payload, Luxury, style etc. notwithstanding. Well, we'll find out, won't we.

 

 

 

 

[ERICOPOLY]

Tesla's long haul success will be tested as price point for EV drops, likely very dramatically. Payload, Luxury, style etc. notwithstanding. Well, we'll find out, won't we.

 

BMW can still sell gasoline powered cars at a premium despite there being many cheap models to choose from on the market. 

 

So far, BMW has managed to survive on quality and luxury.  It has been documented that Tesla received the highest rating on their cars from various sources.

 

Or you can look at the continued success of Porsche despite the many cheaper discount performance cars.  Like a Toyota Supra back in the 80s.

[Liberty]

When it comes to Toyota, I wouldn't be so dismissive. It was a quite long time ago, but in the early 80's, luxury car makers (BMW, Mercedes in particular) laughed at Toyota as word emerged of their planned entry into this segment. We know what happened in the 90's. And oh, btw, Prius was launched in 1996. They've been #1 since, not a bad niche for them to let it be "segmented away".

 

Tesla's long haul success will be tested as price point for EV drops, likely very dramatically. Payload, Luxury, style etc. notwithstanding. Well, we'll find out, won't we.

 

I'm not dismissive. I've been a big fan of the Prius since the early 2000s when it came to North-America. I think it's a good thing that they've been putting the HSD in more models, and how they've inspired many other companies to make hybrids. But I'm saying that they held back their own success by not thinking big enough. I'm saying they could have done much better. 15 years later the Prius is less than 2x the efficiency of the original (though it's bigger, but still) and uses the same battery chemistry. Let's see where Musk is in 15 years (Mars?).

 

And the Prius was launched in 1997 in Japan, not 1996. But it's only with the 2004 refresh that it started selling decently.

[Palantir]

Despite Toyota's success, I still don't believe Lexus has the brand cachet, style, and general appeal the way Merc or BMW does, and I think Tesla is striking at Mercedes and BMW far better than Lexus did. Even recently, a Toyota executive admitted that Lexus was just viewed as another distribution channel.

 

 

I disagree with the second part of your statement. Tesla is not just an EV, it is one of the best cars ever made, and even if the price of an EV drops, it doesn't damage the car's merits, focusing on it being an EV is the wrong way to go IMO.

 

 

As for valuation, I'm just trying to think of the firms it can replace. Mercedes has a 90B MCap, BMW has about 50B, Lexus and Audi are presumably a little smaller. I believe it can grow into one of these firms, and take away market share from them, however, these firms are all in the 30-80B range. In that context, I believe Tesla at 20B is probably no more than moderately undervalued, and may be close to fair value. Car companies just aren't that big.

[VAL9000]

What about the idea that Tesla doesn't really want to be a car company?

 

The real business is to become the defacto battery and charging infrastructure suplier to all other car companies.  The vehicles that Tesla creates today are simply a proof of concept.  Tesla battery is Android, Model S is Nexus, and BMW is Samsung to use a weak analogy.

 

This version of Tesla is much more appealing to me.

 

[Liberty]

I drove the Prius in South Carolina, it was my friend's car, it was a year old and he bought in Atlanta. The year was 1998.

 

Please ask your friend where he got it:

 

https://en.wikipedia.org/wiki/Prius#First_generation_.28XW10.3B_1997.E2.80.932003.29

 

Even the Honda Insight only came to the US in 1999:

 

https://en.wikipedia.org/wiki/Honda_Insight#First_generation_.281999.E2.80.932006.29

[Liberty]

What about the idea that Tesla doesn't really want to be a car company?

 

The real business is to become the defacto battery and charging infrastructure suplier to all other car companies.  The vehicles that Tesla creates today are simply a proof of concept.  Tesla battery is Android, Model S is Nexus, and BMW is Samsung to use a weak analogy.

 

This version of Tesla is much more appealing to me.

 

So be a commodity supplier of batteries and charging stations rather than a differentiated consumer business? Doesn't sound good to me. As good as the Tesla batteries and power electronics are, if you put them in a Camry, you couldn't sell it for 100k and it wouldn't get 99/100 in Consumer Reports... It's not what make people want to buy that car. If Tesla was a drivetrain/charging station supplier, it would have to compete mostly on price. Bad position to be in.

 

If you listen to what Musk has been saying, he got in the business because he believes that transportation needs to be electrified (it's one half of his vision of 'produce clean energy/run things on clean energy' -- SolarCity is the other side of the coin of Tesla, basically). At first he expected other car makers to do it, but when he saw that they weren't willing/able, he decided to do it himself.

 

So I'm sure Musk will do everything he can to catalyze the industry (he already supplies others, and his success is the best catalyst, creating followers), but now that he's making the best cars in the world, I doubt he'll just voluntarily stop doing that to make drivetrains and build charging stations for inferior EVs made by others... Tesla is an incredible brand that was built by taking huge risks, so why give that up or dilute it?

 

I believe that supplying others could be a big business, but they'll never stop making EVs as long as they don't go out of business.

 

Another way to put it: Batteries and charging stations are a competitive advantage for your product if they are better than the competition, but they're still only a small part of the overall product. But that's not where the business is. These things only store and provide energy, and other people can make decent batteries and charging stations. The real business is in the finished products; nobody else can make a Model S, have the whole package at that level of quality. It's like if Apple stopped making iPhones and became a supplier of A7 chips to others. Sure their stuff is better than the competition, but that's not where the real business is...