TSLA - Tesla Motors

[ERICOPOLY]

So GM is a one-legged company in an ass-kicking contest.

 

Here's GM's first all electric car since they crushed the EV1 over a decade ago:

 

http://www.autoguide.com/auto-news/wp-content/uploads/2012/11/2014-chevrolet-spark-ev1.jpg

 

$26,685 MSRP, 82 miles of driving range. I doubt it'll compete very well with Tesla's upcoming Model 3...

 

The key part of that article is the bit about the coming improvements in the speed of charging (a full charge in 10 minutes) and the advantage Tesla has from controlling the battery cooling, the charger, etc....  you sort of have to be vertically integrated to get it right because they all must work together:

 

http://www.technologyreview.com/news/516876/forget-battery-swapping-tesla-aims-to-charge-electric-cars-in-five-minutes/

 

 

So Tesla vehicles will charge quickly and GM cars won't.  One legged man in a ass kicking contest.

[ERICOPOLY]

One thing about shorting an incredibly successful disruptive company, is the stock price tends to get disruptive too.

 

Tesla X to devour premium SUV market: Morgan Stanley report

 

The value of Tesla stock, thus, should be about $320, well above its current $250, making Tesla "our top pick in US autos."

 

http://www.latimes.com/business/autos/la-fi-hy-tesla-x-to-devour-suv-market-20140807-story.html

 

[ERICOPOLY]

Back in early 2013 I wrote on this board that while I didn't know how to value the company, I wouldn't dare short it either.  I think it was about $30 or so.

 

Thing is, I knew the Model S was going to do for autos what pantyhose did for women's apparel.  Remember the story about Peter Lynch buying a pantyhose stock?  Dammit!  I should have done something about it versus merely warning people not to short it.

[Palantir]

You still have time you know....I suspect a number of forum members will be justifying a Model 3 purchase in a few years.

[ERICOPOLY]

You still have time you know....I suspect a number of forum members will be justifying a Model 3 purchase in a few years.

 

I can't do it now because it's up 700%.

 

But it's going to be fun to watch the big one-legged automakers get their asses kicked in this ass-kicking contest.

 

[tombgrt]

Back in early 2013 I wrote on this board that while I didn't know how to value the company, I wouldn't dare short it either.  I think it was about $30 or so.

 

Thing is, I knew the Model S was going to do for autos what pantyhose did for women's apparel.  Remember the story about Peter Lynch buying a pantyhose stock?  Dammit!  I should have done something about it versus merely warning people not to short it.

 

I remember those posts, definitely not simply hindsight bias. Purely based on what they could even produce in 2020, the market cap is ridiculously high right now. Based on the current year's 35,000 cars, it's almost $1M/car. But I know that thinking is somewhat flawed. Anyway, it's more likely than not that you get to buy TSLA somewhere in the next few years at a much cheaper valuation. Don't beat yourself up, in terms of technology, 2013 is ancient history. So much happened since then and the market noticed.

 

What price would you be willing to pay now? I feel like there are too many potential scenario's for after 2020 and recent successes might be clouding my judgement. On the other hand, at say a $10b valuation today this stock could be a home run in 10 years. Who knows!

[ERICOPOLY]

I see, that's why then went with "Model 3":

 

http://www.latimes.com/business/autos/la-fi-hy-tesla-model-3-20140716-story.html

 

Ford has the rights to "E".  Otherwise...

Tesla Motors CEO Elon Musk once thought the electric car company’s lineup would spell out SEX. There would be the Model S sedan, the upcoming Model X sport-utility vehicle and later, the Model E, a smaller, less expensive vehicle for the masses.

 

Stymied by Ford Motor Co. – it has the rights to E – Musk is now going for Model 3 for the third car, he told the British automotive news website Auto Express.

 

 

[ERICOPOLY]

Their battery production facilities which enable knock-on scenarios.  I'm looking forward to having Tesla battery packs in RVs.  That would be unbelievably cool -- how about a huge Tesla battery pack in an RV!  No noisy generator to run.  So much fun.  We went house-boating on Lake Powell for a week this summer -- it was super-annoying to run the generator 7 hours a day and used up 25% of our fuel (thereby reducing our range).  Boats like that are the kind of thing where it would be nice to leave the marina with a fully charged 85 kWh battery pack.

[ERICOPOLY]

What price would you be willing to pay now? I feel like there are too many potential scenario's for after 2020 and recent successes might be clouding my judgement. On the other hand, at say a $10b valuation today this stock could be a home run in 10 years. Who knows!

 

I still can't say if TSLA stock is incredibly expensive or not even today.  I mean, I don't personally have $30b lying under the mattress... yet... so I do respect the market cap.

 

A long-established company like BAC is much easier for me to value because I don't have to think as much about the future value of the growth.  I can justify today's price by looking at present earnings.

 

The day when people realize that gasoline cars are a huge hassle is not too far off.  People are having a lot of trouble seeing this, and so they think Tesla will be a niche company for too far out on the horizon.  However, I drive my Model S each day and realize how insanely f**** awesome the car is.  The electric drive has so much instant torque that you just bolt off the line in that thing -- it forces the blood into the back of your head.  People are going to need their head examined if they choose a gasoline car over an electric pretty soon here.  I've got three other cars, I need to get them smog tested every two years in California.  That smog requirement is going to happen in all states in 2017 (Federal rule).  It's such a pain in the butt to keep those cars around -- regular oil changes, servicing, etc...  Wasting time each week at the gas station.  They suck!  The 10 minute full charging time goal is going to turn heads as the company incrementally reaches it.

 

Look at the supercharger map today for Europe (click on the "Europe" tab) -- they didn't have a single charger a year ago:

http://www.teslamotors.com/supercharger

move the slider over to 2014-2015 to see the planned locations

 

Okay, so now imagine what that map will look like five years from today as they gather more scale.

 

Tesla is going to own your $10 a gallon gas continent and Putin's going to feel it.

 

You guys hate SUVs because they are gas-guzzlers and your gas prices are high -- wait for the Model X.  You can get out of those cramped little cars.  Oh, and it goes 0-60 MPH in less than 5 seconds.

 

[Palantir]

I think their profits are going to be limited by their manufacturing capacity which might take years to roll out, which will require major capX in the future, and hence lots of opportunity to invest.

[Liberty]

I think their profits are going to be limited by their manufacturing capacity which might take years to roll out, which will require major capX in the future, and hence lots of opportunity to invest.

 

The fremont plant has at least 500k/year capacity (maybe more since they're probably more automated than average).

 

http://www.teslamotors.com/no_NO/forum/forums/tesla-double-its-production-fremont-plant

[Palantir]

500k is not a lot compared to their peers, and remember that a lot of that will be Model 3 which will have lower margins and much higher demand.

[Liberty]

It's a lot compared to the 35k they'll make this year. You have to walk before you run.  Their peers are missing the boat long term.

[ERICOPOLY]

500k is not a lot compared to their peers, and remember that a lot of that will be Model 3 which will have lower margins and much higher demand.

 

Porsche was bought by VW in 2012 for about $22b and still today is barely selling 150,000 cars annually.

 

Tesla's facility can make 500,000 cars a year, or roughly 4x more than Porsche was making back in 2012.  In theory, 500,000 Model S,X,etc... can be made there.  Maybe those are all high-margin cars like the S and the X, and they make the GenIII elsewhere?  Or perhaps they are making 250,000 high-margin cars by 2020, and they are only making 250,000 GenIII cars.  Why after all, would they sacrifice a high-margin slot in the production facility simply because they could build a low-margin car instead?

 

I expect them to be either building or planning to build a new facility by the time 2020 rolls around -- to prepare for their continued success selling low-margin GenIII cars, pickup trucks, 2-seat roadsters, etc....

 

On the other hand, if they are eating somebody else's lunch, perhaps they can purchase their factory on the cheap like they did with their Fremont facility.  Somebody is going to start showing excess capacity, however you are just taking a bite from each major automaker so perhaps nobody will be missing too many sales to justify closing a factory.

 

Oh, but you were talking about peers....  Wait, they have peers?

[Palantir]

^ True, very possible.

[ERICOPOLY]

I think their profits are going to be limited by their manufacturing capacity which might take years to roll out, which will require major capX in the future, and hence lots of opportunity to invest.

 

The fremont plant has at least 500k/year capacity (maybe more since they're probably more automated than average).

 

http://www.teslamotors.com/no_NO/forum/forums/tesla-double-its-production-fremont-plant

 

I wonder how much easier (faster) it is to build an electric car vs such a complicated internal-combustion car.

 

Tesla is doing their own aluminum stamping at the Fremont facility, they also build the motors there.  Were the GM/Toyota guys doing similar work or was it mostly assembly?

 

[Otsog]

Can you sell electricity from your Tesla back to the grid?

[ERICOPOLY]

Can you sell electricity from your Tesla back to the grid?

 

I only wish.  Voids the warranty.  Remember, supercharging is free for life... Free charge, sell back to grid... Repeat.

 

Plus, it would shorten battery life perhaps and might tarnish reputation of battery life for normal vehicle use,

 

But Tesla does supply residential battery packs to Solar City for same usage.

[Palantir]

I wonder if utilities could become good investments if we all start using electric cars....this is also very beneficial for telcos as these are going to be permanently connected to the internet....plus much like the computer boom, could be a huge boom for chipmakers...

[Liberty]

I wonder if utilities could become good investments if we all start using electric cars....this is also very beneficial for telcos as these are going to be permanently connected to the internet....plus much like the computer boom, could be a huge boom for chipmakers...

 

The big LCD screen TV boom of the past 15 year had a much bigger impact on the grid than the electric car transition, mostly because it happened faster and TVs are on during peak time while cars charge at night, and it wasn't that bad. I don't think it'll make too much of a difference on that front, especially as utilities become less profitable because a lot of their most profitable peak time sales get eaten up by solar power (look up what's going on in Australia lately for a preview of what might happen elsewhere).

[Otsog]

Can you sell electricity from your Tesla back to the grid?

 

I only wish.  Voids the warranty.  Remember, supercharging is free for life... Free charge, sell back to grid... Repeat.

 

Plus, it would shorten battery life perhaps and might tarnish reputation of battery life for normal vehicle use,

 

But Tesla does supply residential battery packs to Solar City for same usage.

 

I was thinking you could just make an app that would arbitrage the high demand and low demand periods. The more EVs the more temporary storage the grid has and the less worry there is about intermittent power sources. 

 

Not sure if it would be worth it with conversion loss and wear on the battery though.  I guess they are dealing with that exact issue with Solar City.

[ERICOPOLY]

Can you sell electricity from your Tesla back to the grid?

 

I only wish.  Voids the warranty.  Remember, supercharging is free for life... Free charge, sell back to grid... Repeat.

 

Plus, it would shorten battery life perhaps and might tarnish reputation of battery life for normal vehicle use,

 

But Tesla does supply residential battery packs to Solar City for same usage.

 

I was thinking you could just make an app that would arbitrage the high demand and low demand periods. The more EVs the more temporary storage the grid has and the less worry there is about intermittent power sources. 

 

Not sure if it would be worth it with conversion loss and wear on the battery though.  I guess they are dealing with that exact issue with Solar City.

 

I'm on time of use metering.  I have  my Tesla plugged in, programmed to begin charging at 12 am.  I pay 9 cents per kWh between 12 am and 6 am.  Then I pay about 31 cents between 6 am and 10 am, then it goes to 47 cents between 10 am and 6 pm.

 

So if Tesla didn't have that restriction, I could make a 5 bagger every single day!  You guys would never hear the end of it.

 

BYD doesn't restrict it -- you can run the house off your BYD car.  I really wish Tesla would allow it -- I mean, after buying an 85 kWh battery I feel like I could easily pay it off over 8-10 years if I could run my daytime electricity for just 9 cents per kWh (using the nighttime charge).  Plus, what a great backup generator for power outages.

 

I'll definitely get a battery for my house when the Giga-factory cuts the prices in half.

[Liberty]

 

I was thinking you could just make an app that would arbitrage the high demand and low demand periods. The more EVs the more temporary storage the grid has and the less worry there is about intermittent power sources. 

 

Not sure if it would be worth it with conversion loss and wear on the battery though.  I guess they are dealing with that exact issue with Solar City.

 

Check this out: http://en.m.wikipedia.org/wiki/Vehicle-to-grid

[ERICOPOLY]

 

I was thinking you could just make an app that would arbitrage the high demand and low demand periods. The more EVs the more temporary storage the grid has and the less worry there is about intermittent power sources. 

 

Not sure if it would be worth it with conversion loss and wear on the battery though.  I guess they are dealing with that exact issue with Solar City.

 

Check this out: http://en.m.wikipedia.org/wiki/Vehicle-to-grid

 

 

That says the value to the utilities is "up to" $4,000 per year per car.

 

Well, the value to me is much more than that...

 

I have an 85 kWh battery... I charge it off the grid after midnight at 9 cents per kWh per day and discharge it after 10 am for 47 cents per kWh.

 

So I "could" make a spread of 38 cents per kWh. 

 

85*.38= $32.30.    (I earn a gross profit of $32.30 per day)

$32.30 * 365 = $11,789.50  (I earn a gross profit of $11,789.50 per year).

 

So you see... this demonstrates that I would earn "up to" 3x their estimate.  I could make $11,789.50 per year.

 

So of course I will be buying a Tesla battery for my house once the Gigafactory cuts their prices in half.  I would have a free electricity bill.  My actual bill is more like $6,000 per year -- I doubt they will pay me anything in excess of that.

 

So if my battery costs me $12,000 or $18,000, I'll be paying it off after only 2-3 years.

 

This post also demonstrates just how poorly electricity is priced in California.  It's ridiculous.

 

EDIT:

Actually, the battery may only cost me only $6,000 to $12,000 (forgot to cut the price in half for a battery only 1/2 the size... I don't need 85kWh because it holds twice as much electricity as I can sell before zeroing out my bill).

 

So the payoff time for a Tesla residential gigafactory battery may be only 1-2 years.  That is, until California changes their extortionist rates.

 

The math is sweeter than it looks because this is all un-taxable "imputed" income.  Same logic that can help justify a solar panel installation or a private well.  Utility bills are paid with after-tax dollars, so anything you can do to offset them while skipping taxes on that "income" is much better than it otherwise would seem.

[ERICOPOLY]

GM to perhaps build $30,000 200 mile range EV:

 

http://online.wsj.com/articles/lg-chem-working-on-battery-to-rival-teslas-range-1407776312?mod=WSJ_hp_EditorsPicks