TSLA - Tesla Motors

[gary17]

I think Tesla is a new industry of its own and should not be valued against gasoline based vehicle companies...  The production, marketing, maintenance are all different..... Similar to when iPhone came out and took market shares from blackberry...  Yes, they are phones, but new technology makes the own one irrelevant.

[rpadebet]

What would you value it against? Or what is your reasonable estimate of value and how do you arrive at it for this sort of company?

[jschembs]

Hearing the "new paradigm/the Model S is a game changer/Elon is <insert your preferred deity>" arguments for owning TSLA stock are really frightening.

[ERICOPOLY]

I read the conference call for Q2.  Musk says that they cannot build cars any quicker right now because their suppliers can't supply them with enough parts.  Apparently their suppliers never tooled up because they didn't believe Tesla would sell this many cars.

[rkbabang]

I read the conference call for Q2.  Musk says that they cannot build cars any quicker right now because their suppliers can't supply them with enough parts.  Apparently their suppliers never tooled up because they didn't believe Tesla would sell this many cars.

 

"One challenge to mass market electric vehicles: selling half a million cars will require more batteries than the entire laptop industry, Musk says. So we’ll need more battery factories."

 

http://www.technologyreview.com/view/517981/musk-35000-200-mile-ev-no-miracles-required/

 

[rpadebet]

Hearing the "new paradigm/the Model S is a game changer/Elon is <insert your preferred deity>" arguments for owning TSLA stock are really frightening.

 

I agree. I love the product though and really appreciate what the company is trying to do. The cars look amazing. The Ipad'ish Console should have been done a few years ago. We have to give them credit for not only having a brave vision but having the courage to act on it.

 

But I just think it is wrong to place such a premium valuation on their stock so early in the company's life. What if the company isn't able to execute perfectly as expected right now? What if something goes wrong and the stock tanks back to earth? Most of the current investors, who are potential consumers might get so badly burnt that they might turn away from the company altogether severely hurting the brand. The media which is right now singing praises and helping in pumping the stock might turnaround on a dime and help in dumping it. That could cause sales reductions, employee retention issues, financial issues for the business and last but not the least, the world might lose/ at least delay an amazing product/technology. That scenario saddens me.

 

 

[ERICOPOLY]

Charging in five minutes. 

 

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

 

[ERICOPOLY]

Batteries already less than 25% of the cost of the Model S:

 

By most estimates, the battery for the Model S that I drove should cost between $42,500 and $55,250, or half the cost of the car. But Straubel indicated that it is already much lower. “They’re way less than half, actually,” he says. “Less than a quarter in most cases.” Straubel says more can be done to lower batter costs. He’s working with cell and materials suppliers to increase energy density more, and he’s changing the shape of the cells in ways that make manufacturing them easier.

 

http://www.technologyreview.com/news/516961/how-tesla-is-driving-electric-car-innovation/

[DCG]

What would you value it against? Or what is your reasonable estimate of value and how do you arrive at it for this sort of company?

 

Seems the the current valuation (which is around 70% higher than Fiat/Chrysler) is pretty extreme.

[jeffmori7]

Batteries already less than 25% of the cost of the Model S:

 

By most estimates, the battery for the Model S that I drove should cost between $42,500 and $55,250, or half the cost of the car. But Straubel indicated that it is already much lower. “They’re way less than half, actually,” he says. “Less than a quarter in most cases.” Straubel says more can be done to lower batter costs. He’s working with cell and materials suppliers to increase energy density more, and he’s changing the shape of the cells in ways that make manufacturing them easier.

 

http://www.technologyreview.com/news/516961/how-tesla-is-driving-electric-car-innovation/

 

Thanks for sharing Eric. So how is your car after a few days of testing it? So far so good?

[turar]

By most estimates, the battery for the Model S that I drove should cost between $42,500 and $55,250, or half the cost of the car. But Straubel indicated that it is already much lower. “They’re way less than half, actually,” he says. “Less than a quarter in most cases.”

 

How would battery costs work out for a $30K car? That would require a smaller battery. If we assume that Model S batteries can be had for $25-30K in costs, how much less battery can you put in a "$30K total" car to get a reasonable range and allow for a profitable car?

[Liberty]

How would battery costs work out for a $30K car? That would require a smaller battery. If we assume that Model S batteries can be had for $25-30K in costs, how much less battery can you put in a "$30K total" car to get a reasonable range and allow for a profitable car?

 

The cost per kWh is not fixed, it's going down every year. A smaller/lighter car also needs a smaller battery to have the same driving range.

[turar]

Model S doesn't look like it's a large car already though. How much smaller can you make a car to make it marketable?

 

Also, from earlier in the thread:

 

"One challenge to mass market electric vehicles: selling half a million cars will require more batteries than the entire laptop industry, Musk says. So we’ll need more battery factories."

 

Another way to put it is "we'll need a lot more lithium". Does anyone have access to lithium spot prices?

 

Also, an older article from 2010 discussing batteries: http://www.evworld.com/article.cfm?storyid=1826

[Liberty]

Model S doesn't look like it's a large car already though. How much smaller can you make a car to make it marketable?

 

Model S has a lot more interior space than it might seem because of the two trunks (front and back) and flat floor, but even if you're talking about exterior size, there's definitely room for a smaller car that is closer in size to a BMW 3.

 

Lithium supply should be able to ramp up with demand. I think the salt flats of Bolivia alone hav enough of the stuff to supply the world, and lithium isn't too rare and can be recycled out of old batteries (it's not destroyed by use, unlike oil and gas)..

[turar]

OK, I guess we will wait and see. I have no idea how much different Model S batteries are from a regular, say, laptop batteries, but if my experience is any use, I can get 2 years worth of good work before the batteries cannot be fully charged anymore. Granted, I usually use cheaper laptops.

 

Can Tesla owners rotate out of their batteries easily into newer ones within a reasonable time frame?

[TwoCitiesCapital]

I think Tesla is a new industry of its own and should not be valued against gasoline based vehicle companies...  The production, marketing, maintenance are all different..... Similar to when iPhone came out and took market shares from blackberry...  Yes, they are phones, but new technology makes the own one irrelevant.

Hearing the "new paradigm/the Model S is a game changer/Elon is <insert your preferred deity>" arguments for owning TSLA stock are really frightening.

Made my move today.  Now have a small short position about 2.5%. Call me crazy but the excitement around the company after two earnings beats is incredible considering they still aren't making money off the cars yet (won't be long though). Crazy to think they'd have to grow bigger than Mercedes or BMW while maintaining pricing power and margin in an increasingly competitive landscape without a robust global infrastructure in the next few years for this market cap to be anywhere near reasonable.

 

Will they change the industry?  Most certainly. If you want to put hope and dreams in "change" then go like Obama's Facebook page. When it comes to investing,  all that matters is the money that can be made,  the probability it will be made, and how much you paid to play.

[rpadebet]

I think Tesla is a new industry of its own and should not be valued against gasoline based vehicle companies...  The production, marketing, maintenance are all different..... Similar to when iPhone came out and took market shares from blackberry...  Yes, they are phones, but new technology makes the own one irrelevant.

Hearing the "new paradigm/the Model S is a game changer/Elon is <insert your preferred deity>" arguments for owning TSLA stock are really frightening.

Made my move today.  Now have a small short position about 2.5%. Call me crazy but the excitement around the company after two earnings beats is incredible considering they still aren't making money off the cars yet (won't be long though). Crazy to think they'd have to grow bigger than Mercedes or BMW while maintaining pricing power and margin in an increasingly competitive landscape without a robust global infrastructure in the next few years for this market cap to be anywhere near reasonable.

 

Will they change the industry?  Most certainly. If you want to put hope and dreams in "change" then go like Obama's Facebook page. When it comes to investing,  all that matters is the money that can be made,  the probability it will be made, and how much you paid to play.

 

Shorting these shares is incredibly expensive (short interest is a huge% of float). My broker wouldn't allow me a simple short. How did you go about setting up your position? I was considering using Options to setup a synthetic short (buying Put and Selling OTM calls, 2015 of course).

[ItsAValueTrap]

Lithium supply should be able to ramp up with demand. I think the salt flats of Bolivia alone hav enough of the stuff to supply the world, and lithium isn't too rare and can be recycled out of old batteries (it's not destroyed by use, unlike oil and gas)..

There's only several dollars worth of lithium in a car battery.  There's a few pounds of lithium in a battery and lithium carbonate is somewhere around $5000-7000/ton depending on grade (might be $7000-$8000 now for battery-grade lithium).

 

The expensive part is refining the lithium carbonate into lithium and making the battery.

 

Lithium stocks like SQM, Rockwood, etc. might have some information on current lithium carbonate prices.  I don't think that there is a liquid spot market for lithium carbonate.

[turar]

There's only several dollars worth of lithium in a car battery.  There's a few pounds of lithium in a battery and lithium carbonate is somewhere around $5000-7000/ton depending on grade (might be $7000-$8000 now for battery-grade lithium).

 

The expensive part is refining the lithium carbonate into lithium and making the battery.

 

Lithium stocks like SQM, Rockwood, etc. might have some information on current lithium carbonate prices.  I don't think that there is a liquid spot market for lithium carbonate.

 

I'm confused -- what makes the battery so expensive then, if there's "only several dollars of lithium" in it? It can't just be the cost of manufacturing. I was assuming that raw materials is the key cost in the battery. Is there some literature I can read about this?

[Liberty]

I'm confused -- what makes the battery so expensive then, if there's "only several dollars of lithium" in it? It can't just be the cost of manufacturing. I was assuming that raw materials is the key cost in the battery. Is there some literature I can read about this?

 

I'm not expert on this, but I think it's just the complexity of the manufacturing. Kind of like making a CPU. The raw materials aren't expensive, but the R&D you need to do first and then the big fab that you need to build with advanced machinery makes it expensive.

 

The good news is that today's complex manufacturing is tomorrow's commodity process. Making a CD was probably a complex manufacturing process in the 1970s or whatever, but now they're dirt cheap (well, we've moved to DVDs and blu-rays, but even those are pretty cheap).

[ERICOPOLY]

Batteries already less than 25% of the cost of the Model S:

 

By most estimates, the battery for the Model S that I drove should cost between $42,500 and $55,250, or half the cost of the car. But Straubel indicated that it is already much lower. “They’re way less than half, actually,” he says. “Less than a quarter in most cases.” Straubel says more can be done to lower batter costs. He’s working with cell and materials suppliers to increase energy density more, and he’s changing the shape of the cells in ways that make manufacturing them easier.

 

http://www.technologyreview.com/news/516961/how-tesla-is-driving-electric-car-innovation/

 

Thanks for sharing Eric. So how is your car after a few days of testing it? So far so good?

 

I don't have any complaints about the car.  I think the tires won't last long though.  It's fun just getting up to 30mph in a 30mph zone -- it's virtually silent, and it takes 1.7 seconds to reach 30.

 

Normally a performance car starts off slow and then the turbos kick in -- this car is the opposite.  The fastest part is right at the beginning.

 

The voice commands are interesting.  You can say "navigate to McDonalds" and it will pull them all up on the Google map -- then you just touch the one you want and it routes you.  Or you can say "play Trip Like I Do" and it will find the song on Slacker internet radio.

 

So I find it a bit of a novelty still.  Soon all cars will need to have that.

[TwoCitiesCapital]

I think Tesla is a new industry of its own and should not be valued against gasoline based vehicle companies...  The production, marketing, maintenance are all different..... Similar to when iPhone came out and took market shares from blackberry...  Yes, they are phones, but new technology makes the own one irrelevant.

Hearing the "new paradigm/the Model S is a game changer/Elon is <insert your preferred deity>" arguments for owning TSLA stock are really frightening.

Made my move today.  Now have a small short position about 2.5%. Call me crazy but the excitement around the company after two earnings beats is incredible considering they still aren't making money off the cars yet (won't be long though). Crazy to think they'd have to grow bigger than Mercedes or BMW while maintaining pricing power and margin in an increasingly competitive landscape without a robust global infrastructure in the next few years for this market cap to be anywhere near reasonable.

 

Will they change the industry?  Most certainly. If you want to put hope and dreams in "change" then go like Obama's Facebook page. When it comes to investing,  all that matters is the money that can be made,  the probability it will be made, and how much you paid to play.

 

Shorting these shares is incredibly expensive (short interest is a huge% of float). My broker wouldn't allow me a simple short. How did you go about setting up your position? I was considering using Options to setup a synthetic short (buying Put and Selling OTM calls, 2015 of course).

 

Short interest is significantly smaller than what it was just 4 or so months ago. Situation might be even better as shares from the new offering slowly circulate into the daily volume. I'm with Scottrade and I simply placed an order for a short sale. As far as I know, they'll charge me the 7.75% annual interest for the margin like they always have. I've never paid anything else on top of that as far as I know.

 

It could just be that it's easier for me because I don't have a large position. I'm only 24 years old and don't have a significant amount saved up. 2.5% of my portfolio amounts to a handful of shares. This is in part why I didn't want to do options; I didn't want exposure to a lot of 100 shares nor did I want to put an expiration on this bet. I'm typically early with my timing and have never made money on options except from selling them.

[rpadebet]

I think Tesla is a new industry of its own and should not be valued against gasoline based vehicle companies...  The production, marketing, maintenance are all different..... Similar to when iPhone came out and took market shares from blackberry...  Yes, they are phones, but new technology makes the own one irrelevant.

Hearing the "new paradigm/the Model S is a game changer/Elon is <insert your preferred deity>" arguments for owning TSLA stock are really frightening.

Made my move today.  Now have a small short position about 2.5%. Call me crazy but the excitement around the company after two earnings beats is incredible considering they still aren't making money off the cars yet (won't be long though). Crazy to think they'd have to grow bigger than Mercedes or BMW while maintaining pricing power and margin in an increasingly competitive landscape without a robust global infrastructure in the next few years for this market cap to be anywhere near reasonable.

 

Will they change the industry?  Most certainly. If you want to put hope and dreams in "change" then go like Obama's Facebook page. When it comes to investing,  all that matters is the money that can be made,  the probability it will be made, and how much you paid to play.

 

Shorting these shares is incredibly expensive (short interest is a huge% of float). My broker wouldn't allow me a simple short. How did you go about setting up your position? I was considering using Options to setup a synthetic short (buying Put and Selling OTM calls, 2015 of course).

 

Short interest is significantly smaller than what it was just 4 or so months ago. Situation might be even better as shares from the new offering slowly circulate into the daily volume. I'm with Scottrade and I simply placed an order for a short sale. As far as I know, they'll charge me the 7.75% annual interest for the margin like they always have. I've never paid anything else on top of that as far as I know.

 

It could just be that it's easier for me because I don't have a large position. I'm only 24 years old and don't have a significant amount saved up. 2.5% of my portfolio amounts to a handful of shares. This is in part why I didn't want to do options; I didn't want exposure to a lot of 100 shares nor did I want to put an expiration on this bet. I'm typically early with my timing and have never made money on options except from selling them.

 

Makes sense.

[thepupil]

I am short via a deep ITM long term put. I prefer to lock in my downside, eliminate tail risk of shorting and have the flexibility to sell an OTM or ATM put against it as an exit strategy to extract premium.

 

Borrow is easy to get now, but I am unsure if that will always be the case; I do not trust Interactive Brokers to be my advocate in locating borrow on what has the possibility to become a difficult to locate stock.  Going up against a master manipulator of the capital markets such as Elon Musk is not to be taken lightly and I would much rather pay $10-$20 extra per share in option premium (and pay out cash for the option rather than receive the proceeds of sale on a short sale). I also think I will make this back eventually via aforementioned put sale.

 

It's important to remember the insanity of 1999, although I was 11 years old then : ) or Volkswagen circa October 2008

 

Ridiculously expensive can always get more ridiculous and I like having the option (pun intended) to just sit on my arse and take the loss rather than worrying about my short position. Of course the high share price does create a bit of a barrier to entry.

[Liberty]

Model S gets 5-star in every category in NHTSA crash tests:

 

http://www.safercar.gov/Vehicle+Shoppers/5-Star+Safety+Ratings/2011-Newer+Vehicles/Vehicle-Detail?vehicleId=7769