ERICOPOLY Posted June 1, 2013 Share Posted June 1, 2013 No cost advantage in buying from Panasonic? Hmm... does Panasonic have a monopoly in batteries, or is the battery a commodity? What pricing power does Panasonic have? My understanding is that a battery is a commodity and prices will come down. You can make your own, but isn't it more important to make the best car, since they are selling cars and not batteries? Tesla makes the best car. Best electric car, but also the best car of any variety. The absolute best. Someone will come along and sell them a cheaper battery if Panasonic rips them off. Maybe they'll begin making batteries themselves -- but why not let somebody else make the battery to their specs? Link to comment Share on other sites More sharing options...
ERICOPOLY Posted June 1, 2013 Share Posted June 1, 2013 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? I like Elon Musk's argument. He basically stated that if the dealers add value (as they claim) then "obviously" Tesla does not have an unfair economic advantage in selling direct. Imagine making Amazon.com illegal because they sell direct to consumers without a brick and mortar store. Link to comment Share on other sites More sharing options...
plato1976 Posted June 1, 2013 Share Posted June 1, 2013 txlaw, I cannot make a judgement if TSLA is overvalued. But I think the puzzle is more about FIAT being way undervalued. /plato1976 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. Link to comment Share on other sites More sharing options...
deadspace Posted June 2, 2013 Share Posted June 2, 2013 No cost advantage in buying from Panasonic? Hmm... does Panasonic have a monopoly in batteries, or is the battery a commodity? What pricing power does Panasonic have? My understanding is that a battery is a commodity and prices will come down. You can make your own, but isn't it more important to make the best car, since they are selling cars and not batteries? Tesla makes the best car. Best electric car, but also the best car of any variety. The absolute best. Someone will come along and sell them a cheaper battery if Panasonic rips them off. Maybe they'll begin making batteries themselves -- but why not let somebody else make the battery to their specs? Well you might be right. I just don't know. And i think the jury is still out on this subject As of now lithium ion batteries are not all the same - there are dramatic differences in terms of time to charge and discharge and number of charging cycles a battery can sustain. Obviously if you need to get a new battery at 60,000 km thats not as good a value as a battery that will outlast the car. With the best battery being at such a high price relative to the car you can see price advantages going to producers of both battery and car especially in cars that are priced at the lower end of the spectrum. It may not matter to the $100,000 car crowd but in the mass market this may be a major differentiator. But maybe battery production becomes simpler and commoditized to the point where all batteries are the same - they certainly don't seem to be a major differentiator in the world of smart phones .... time will tell.... Link to comment Share on other sites More sharing options...
PlanMaestro Posted June 2, 2013 Share Posted June 2, 2013 What is the base rate probability for a new high performance automaker? Can anyone name a success story? I really don't know ... but the ones that come to mind show that a lot of things can go wrong even without the need to build a charger network. http://en.wikipedia.org/wiki/1948_Tucker_Sedan http://en.wikipedia.org/wiki/DeLorean_DMC-12 And even if it endures, what is the probability that shareholders will earn a decent ROI? Lots of shares coming. Link to comment Share on other sites More sharing options...
ERICOPOLY Posted June 2, 2013 Share Posted June 2, 2013 What is the base rate probability for a new high performance automaker? Can anyone name a success story? I really don't know ... but the ones that come to mind show that a lot of things can go wrong even without the need to build a charger network. http://en.wikipedia.org/wiki/1948_Tucker_Sedan http://en.wikipedia.org/wiki/DeLorean_DMC-12 And even if it endures, what is the probability that shareholders will earn a decent ROI? Lots of shares coming. The first DeLorean rolled off the production line in January 1981, and production was halted in late 1982. Approximately 9,000 were made. (source Wikipedia) The Model S is vastly more successful than this. (EDIT: besides, the DeLorean was a 2 door coupe, and it wasn't reviewed as hands down the best car ever made by Consumer Reports.). That's really the crazy thing. You can put 5 adults in the Tesla, plus 2 more kids in the optional 3rd row seats. This still leaves you with that trunk in the front. And yet the Model S Performance is faster off the line than a Porche Carrera 4S. This is subjective, but I've always found the DeLorean to be very ugly. And no paint options -- only in stainless steel. Some people only buy black cars, some only white. Few would only want stainless. Link to comment Share on other sites More sharing options...
PlanMaestro Posted June 2, 2013 Share Posted June 2, 2013 So I guess that this is the time that the base rate will not win. Link to comment Share on other sites More sharing options...
Drokos Posted June 2, 2013 Share Posted June 2, 2013 I'd be more interested to run some long-term top down estimates. Tesla has a huge advantages in that it has no pension and debt overhang(at least not the the extent of most automakers. Just comparing Tesla's current valuation to the market cap of the other auto companies is a mistake IMO. If you look at the total enterprise value of the industry, it seems to be at least $500b. Of course a lot could still change, but I dont think that in a bull case it would be unreasonable to think Tesla would could get 10% of the market in 10 years. ~$50b company. I personally think the bull case chance is fairly high, if its 50/50 a 5-bagger or a 0, that's still a decent play. Of course that is overly simplistic back of the envelope number, and assumes Tesla has the same margins and valuation as the rest of the industry. I don't have a position or much knowledge to add, that was just my quick take away. Link to comment Share on other sites More sharing options...
PlanMaestro Posted June 2, 2013 Share Posted June 2, 2013 I dont think that in a bull case it would be unreasonable to think Tesla would could get 10% of the market in 10 years. ~$50b company. I personally think the bull case chance is fairly high, if its 50/50 a 5-bagger or a 0, that's still a decent play. It took Toyota 35 years to reach the 10% milestone in the US with a truly disruptive product technology (the unibody) and the greatest innovative leap in manufacturing practices (Toyota Production System) since Henry Ford. Link to comment Share on other sites More sharing options...
Guest valueInv Posted June 2, 2013 Share Posted June 2, 2013 I dont think that in a bull case it would be unreasonable to think Tesla would could get 10% of the market in 10 years. ~$50b company. I personally think the bull case chance is fairly high, if its 50/50 a 5-bagger or a 0, that's still a decent play. It took Toyota 35 years to reach the 10% milestone in the US with a truly disruptive product technology (the unibody) and the greatest innovative leap in manufacturing practices (Toyota Production System) since Henry Ford. Yeah, but Toyota started at a very different place and time compared to Tesla. Link to comment Share on other sites More sharing options...
PlanMaestro Posted June 2, 2013 Share Posted June 2, 2013 Yeah, but Toyota started at a very different place and time compared to Tesla. Yes, you are right. I should have said that they were a successful and profitable mass producer in Japan, that could bankroll for years the capex, R&D, and marketing expenses necessary for that new American market. Also they were competing against an uncompetitive high cost labor force, not like the current restructured "Detroit" producers. Link to comment Share on other sites More sharing options...
Guest bengrahamofthenorth Posted June 2, 2013 Share Posted June 2, 2013 I'm just intrigued by the possible network effects from the recharging stations. There could be a nice first mover advantage for Tesla by deploying a massive number of supercharger stations. Also, for all the doubters of electrics going main stream just imagine how incredible battery ranges and recharging times will be in 5 or 10 years from now. I'm starting to see the tipping point and wonder when the big car companies will actually start making compelling long range EV models. Having EV cars and solar will really help solve some big problems for mankind. I have no position in Tesla although I am long Fiat. Link to comment Share on other sites More sharing options...
shalab Posted June 2, 2013 Share Posted June 2, 2013 'm just intrigued by the possible network effects from the recharging stations. Bingo - you nailed it on the head. Link to comment Share on other sites More sharing options...
PlanMaestro Posted June 2, 2013 Share Posted June 2, 2013 There could be a nice first mover advantage for Tesla by deploying a massive number of supercharger stations. You cannot have it both ways. Either the superchargers cost only $250K each and anyone can build it … even Tesla. Or it's prohibitively expensive that it becomes a barrier to entry, that Tesla cannot afford it. Also it's not like there is a layer of software developers in need of standards, so network economies are not apparent here. When the viability of EVs become apparent, as it most probably will, that charging part of the business will have thin margins like any petrol station. Maybe more so if cheap distributed solar fragments the industry. People are talking here as if this was a software business like Microsoft or Apple where things scale over night. Saying the kind of things that VCs and Ron Johnson like to say. And I'm still waiting for that base probability. Link to comment Share on other sites More sharing options...
ERICOPOLY Posted June 2, 2013 Share Posted June 2, 2013 And I'm still waiting for that base probability. You might consider stiffing us on the tip and post a bad review on Yelp. Link to comment Share on other sites More sharing options...
PlanMaestro Posted June 2, 2013 Share Posted June 2, 2013 You might consider stiffing us on the tip and post a bad review on Yelp. Well, if Eric likes the car that must count for something. Link to comment Share on other sites More sharing options...
OracleofCarolina Posted June 2, 2013 Share Posted June 2, 2013 speaking of Tesla..I justed moved to Bellevue, Washington and noticed they have a store in the mall. Link to comment Share on other sites More sharing options...
ERICOPOLY Posted June 2, 2013 Share Posted June 2, 2013 You might consider stiffing us on the tip and post a bad review on Yelp. Well, if Eric likes the car that must count for something. I just keep getting lazier and lazier. I had to take two of our cars in to get serviced and it's just a hassle when you get to three or four cars. In this neighborhood you regularly see Maseratis and Bentleys. It's a very strange neighborhood. But now I see Tesla S cars quite frequently. It has rapidly gained acceptance here as a luxury car, where the hoity toity crowd buys cars like shoes. I have a front row seat to see what the luxury vehicle trend is. Sort of like counting rail cars. Link to comment Share on other sites More sharing options...
PlanMaestro Posted June 2, 2013 Share Posted June 2, 2013 I guess Tesla is worth, at most, only a niche brand valuation then. Link to comment Share on other sites More sharing options...
ERICOPOLY Posted June 2, 2013 Share Posted June 2, 2013 I wouldn't feel comfortable owning the stock, but I like the idea of owning the car. Other ways of making money with less chance of failure (like my BofA shares). Link to comment Share on other sites More sharing options...
ERICOPOLY Posted June 2, 2013 Share Posted June 2, 2013 It looks like they've updated their page with projections for the new supercharger stations at various completion intervals through end of 2015: http://www.teslamotors.com/supercharger Tesla Superchargers represent the most advanced charging technology in the world, capable of charging Model S nearly 20x faster than competing EVs. Our second generation Supercharging technology, available soon at all Supercharger stations, reduces charging time by 30% and provides half a charge in just 20 minutes. Link to comment Share on other sites More sharing options...
PlanMaestro Posted June 2, 2013 Share Posted June 2, 2013 And I wouldn't feel comfortable having a Bank of America checking account, but I like the stock. I wouldn't feel comfortable owning the stock, but I like the idea of owning the car. Other ways of making money with less chance of failure (like my BofA shares). Link to comment Share on other sites More sharing options...
fareastwarriors Posted June 3, 2013 Share Posted June 3, 2013 And I wouldn't feel comfortable having a Bank of America checking account, but I like the stock. I wouldn't feel comfortable owning the stock, but I like the idea of owning the car. Other ways of making money with less chance of failure (like my BofA shares). I own BofA stock and use their many products at the bank (checking/saving/credit card). Both winning proposition for me. Link to comment Share on other sites More sharing options...
One World Trader Posted June 3, 2013 Share Posted June 3, 2013 PlanMaestro - Agreed! Eric - for president! :) Brilliant idea, however I think someone(s) is(are) going to want to get paid before the mainstream switch happens to electric, but it will happen! I am reminded of the famous investor that said to look for businesses that forever change the paradigm in its field! Does anyone remember who this was? For example..the paradigms would be the only way to build bridges and buildings are with brick and mortar or concrete, then came Carnegie steel! The only way to light the streets was with a gas lamp..then came Edison and Tesla with the lightbulb! The only way to rent a movie is to go to blockbuster or movie gallery or something...then came netflix! Now comes Tesla with the electric car..The only way to drive a good car is to use one that runs on gasoline.....I should have known better! I think the question now is can this become widely popular and be highly favored? More immediately for today..can this at least become profitable? I think in terms of its paradigm shifting ability! Link to comment Share on other sites More sharing options...
fareastwarriors Posted June 3, 2013 Share Posted June 3, 2013 The Long Road Ahead for Tesla http://dealbook.nytimes.com/2013/06/03/the-long-road-ahead-for-tesla/ The chief executive of Tesla, Elon Musk, has to sell 540,000 electric vehicles a year. At least that is what may be needed for the automaker to be worth $43 billion, according to a Breakingviews calculator. Reaching that stock market valuation by 2022 is one target in Mr. Musk’s long-term incentive plan. Hitting that and 10 operational targets could, on simplified assumptions, bag him up to $1.8 billion. .... Link to comment Share on other sites More sharing options...
Recommended Posts
Create an account or sign in to comment
You need to be a member in order to leave a comment
Create an account
Sign up for a new account in our community. It's easy!
Register a new accountSign in
Already have an account? Sign in here.
Sign In Now