Tesla as an opportunity of investment

Tesla as an opportunity of investment

I belive that all people that are reading this post think that Tesla is a great Car Company, the most advanced, the most innoative and the most oriented at the future.
This is the reason for which I'm evaluating tesla as an opportunity of investment and i would like to discuss with you about this.

jk2014 | February 28, 2014

Perfect example, all the different regional California utilities can throw their capital behind the Solarcity brand or whatever distributed energy company they get the best partnership deal with, and accelerate building out roof top solar for their customers they have now immediately. At the same time they can do a national campaign and move in on other markets around the country. The aggregation of all those revenue streams will dwarf what they are making today.

In looking for the best partner go with, I think utilities should see which distributed energy company scale with the least cost and highest quality. In my option Solarcity is saying to them "who has two thumbs and has those qualities?" And with their thumbs pointing directly at themselves, Solarcity responds for them with "this guy!!"

I hope people caught at the California Commission talk Lyndon Rive stated he just had a meeting with a major European utility recently...

Major, major moves seemingly about to happen soon...

Iowa92x | February 28, 2014

That's good info, thanks jk2014!

Despite all the distribution overhead with centralized plants, electricity is crazy cheap. 8 cents a kWh around here, maybe a little more on peak. Coal and wind, some natural gas is how most of the plants bring the juice in Iowa.

Can distributed come close to 8 cents a kWh? Seems like a stretch.

jk2014 | February 28, 2014


Coal and natural gas are commodities with price fluctuations and will cost more over time because of scarcity and increasing production costs. It won't be 8 cents for long if you stick with majority coal and nat gas. Wind energy is hard to make distributed, although you could have small wind generation on each roof top. Wind, to me, will always be a supplemental source to solar. Not bad, but solar is the best. The sun will always shine and it's free. We are massively under efficient in how we collect it (I think average is 14-16% right now), so a terrific future for innovation. Way better then coal, natural gas, and wind, although wind energy is way under utilized around the world. Solar panels don't have moving parts so they last longer then wind turbines do. Maintenance is minimal on solar, so ultimately it has the most promise out of all methods mentioned.

Bottom line, I think the cost of solar energy will fall as the cost of coal and nat gas will rise over time. And the key here is where the energy industry must go in the future to make money. It is clear to me that direction is solar, even in Iowa where energy is 8 cents/kwh.

Iowa92x | February 28, 2014

I'll lean into Google tonight and research solar. I know little about real world results for a typical residential install. Some of the questions I have are unique to the brutal weather we have here:

-How well do panels hold up to hail and ice?
-What about snow, do they cease to put out unless I mount my roof and wipe the slush?
-How is output in lower light seasons like winter?
-What is the output on a cloudy day?
-Do I need to clean the panels multiple times a year for optimal performance?
-Do the panels degrade over time and lose their ability to generate elec'?
-What is the average lifespan for residential panels in this climate where temps are -20 to 110?

SolarCity doesn't do business here, so likely I'd have to front the cost of oanels, which could be $10k's. Difficult to swallow when our gas and wind generated electricity (massive wind farms here) is $.08.

jk2014 | February 28, 2014

I'd say what makes economic sense, do that first. I think, in the end, Solarcity or a competitor will eventually come to you...

Bubba2000 | February 28, 2014

With distributed storage, an homeowner of a business could have solar panels installed on the roof. During the day, excess solar power would be stored, especially in homes. Use it during the night. Utility power only for back up in case of dark cloudy days. Solar panel cost have fallen steeply and are now close to being competitive with coal power from utilities, depending on the location. Efficiencies are going up. Add a 25 KW-hr storage and the homeowner can get off the grid... at $100/KW-hr it may make sense.

There are places in the world like India, Africa, etc where there no grid or it is rickety dating to the days of the British Empire! A small solar panel with a small battery may be enough to light up a hut or shack with a few 10 W LEDs, a couple of ceiling fans, TV/Laptop, and a small refrigerator. Makes a big difference.

Utilities may use storage to cut their peak loads and place the storage close to point of use.

All this cuts distribution losses.

Bubba2000 | February 28, 2014
These countries can not add any more coals fired plants. They do not have significant gas reserves. Their electrical grid is poor with huge losses. Nuke takes too long and hi initial cost... environmental risks.

Brian H | February 28, 2014

Did you see the real estate required by the gigafactory to run on solar and wind? Get the residential model out of your head: industry requires much more and more reliable power than residences. Industry is warning the German government that it has lost patience with dirty and unreliable power, and is looking abroad.

Massive storage for weeks of winter cloud or windlessness etc. is not on. Attempting to rely on diffuse power sources is urinating against the winds of history: more concentrated and controlled has been the driver of advancement from the waterwheel and windmill to now.

(My bet is that will provide distributed and dispatchable and prolific energy at small fractions of the cost well within this decade, and wipe away all these half-baked "solutions".)

66manoj11 | February 28, 2014

Hi happy to join this forum, hope I will learn some thing new!!!

Brian H | March 1, 2014

It's hard to avoid.

jk2014 | March 3, 2014

Tesla has 2.9-3.2bln dollars in cash on hand right now. It's funny that approximately a year and six moths ago they had only about 80mln. Boy, how times have chaged. It just goes to show you how powerful execution on growth potential is, and why the stock price is 250 right now.

I'm feeling with gigafactory site selection and land purchase, we could see the first construction job being the gigantic solar energy farm. That contract is most likely going to solarcity. I think Solarcity is preparing for this since they recently reported a drop in commercial projects projected for Q1. Possibility this drop is to clear the capacity needed for job of this size.

According to the timeline slide of the gigafactory presentation, this construction could potential begin by the end of 2014...

tslafan4life | March 3, 2014

flashback for those who need it...

Bubba2000 | March 3, 2014

From an investment aspect, Tesla should use its limited capital to build the battery gigafactory first, while expanding the Model S, X, E factory. The return on investment on solar and wind farms is low. In places like Texas, wholesale electrical power is dirt cheap during the day, probably around 6 cents/KW-hr or less. In the middle of night, the rates are lower. So, this investment could be addressed later.

Once the gigafactory is up and running, as well as profitable, the risk is low. Tesla could have Solar City to the set-up and then sell the investment security in the open market. With Tesla profitable,the cap rate for such security should be quite low. Tesla would no be saddled with low return investment.

jk2014 | March 3, 2014

Boy Bubba, couldn't be more wrong on energy storage business immediate value.

jk2014 | March 4, 2014

Wouldn't it be funny if Elon got a fire sale deal on area 52 in NV... That would be so, so awesome...

jk2014 | March 4, 2014

Here's a big reason why we might start to become a lease nation... The highest growth loan area are the loans that extend out 84 months. Means people are paying monthly payments for a long time just to have ownership. If Tesla is able to offer its lease hybrid deal for a cheaper monthly payment with minimal/nothing down, then we might see something big here. Seems people are responding to Solarcity lease, could the same attitude apply to future car financing preferences... Elon might be onto something here...

jk2014 | March 4, 2014

Bottom line: it's all about battery cost reduction. Duh, right? I think utilities will jump on as soon as they energy storage being cost effective and integrating effectively into PV system. Solarcity will prove that very, very soon. As soon as they see it happen, they will be fighting each other to be Solarcity partners. Why? Even without subsides, potential solar revenue stream are much larger since each utility would have access to a wider global market that they've never had before. Also, the revenue that was slice off from tax equity, could be translated into the standard revenue cut for partners post ITC world in 2017. If utilities can invest in the solar infrastructure, while at the same time reducing its traditional utility investment/maintenance costs and increase revenues by potentially orders of magnitude, then it becomes a no brainer... Especially with the gigafactory coming online in the next three years.

I'm convinced some bigger utilities are going to jump on this over the next couple years, since Solarcity/tesla are the only player in the game with the cheapest, most compact, highest quality energy storage available.

Maybe more people can see why Solarcity sees it's its lease payment more like a traditional energy payment. Why they say they aggressively raising low cost capital to finance the build out of it "distributed power plants." And as it scales, costs will continue to drop to levels never even thought possible... It's scary how this all might actually be happening soon...

jk2014 | March 4, 2014

Here's a very well written thesis on our energy future, as investors, our ROI in more ways then one...

Bubba2000 | March 4, 2014

The biggest cost of fossil, nuclear fuels is on the environment. Unfortunately, the consumers do not see those costs directly. However, it will take a few more years for the cost of solar panels, wind power + electronics & storage to compete with natural gas here in the US,

Bubba2000 | March 4, 2014

This paper discusses the technical and economic aspects of the Li-ion batteries, including the kind that Tesla uses. The biggest costs are the materials, particularly the metals. Cobalt seems to be the most expensive in the current positive electrode. Tesla uses Ni-Co-Al positive electrodes which are expensive, but the could change that. That is why I am reluctant to bet on metals.

It is going to be a challenge to bring down $KW-hr, while increasing KW-hr/kg.

jk2014 | March 4, 2014

@Bubba2000, JB Straubel has stated in his talks in October/November that the pure logistical cost savings of scaling have had a dramatic affect on cost(of which he has kept close to his chest). Add incremental improvement in the chemistry to incremental improvements in power electronics, appears even more dramatic when scaled. I.e. ordering in bulk helps even the smallest improvements make an impact on cost.(less weight, etc..).

Again, the only company in the world right now with the most advanced understanding of commercial application of li-ion batteries at this scale is Tesla. They have the most real time data on automotive/energy storage applications of li-ion batteries in the real world. Given this, there really is not other auto/energy storage expert out there with greater knowledge in this area. So, if JB Straubel says the costs are coming down better then expected making energy storage implementation economically feasible, then I tend to believe him (ref Solarcity Demandlogic press release). And this is happening in the far off future, this is happening this year.

IMO, JB Straubel is the sole authority in commercial li-ion battery tech right now, listen to what he says/presents to obtain your data for modeling.

jk2014 | March 4, 2014

Also, have to consider Tesla is really creating the energy storage industry or rather, I should say, accelerating it. There are other companies but not even close to the scale. What I mean is that more jobs will flow in because it will make money and have a sustainable career cycle. With more jobs, more talent compete for those jobs. More competition means higher education programs start up. Kids going into college will chose it as a major, do research on it, dream about it, try to become the next Elon and JB. Research and development become more wide spread. Bottom line, by Tesla scaling/creating the gigafactory, we should also see a dramatic improvement in battery tech, or more appropriately, energy storage tech. As innovation accelerates, coupled with supply chain maturity, we ought to expect a type of moore's law of efficiency. IMO, I feel JB and Elon expect this and know that future innovation awaits just by the sole act of building the gigafactory. So, energy storage sooner then later is a priority.

tslafan4life | March 4, 2014

can you all believe that tesla is already this high? man this is crazy!

Bubba2000 | March 4, 2014

Tesla claims of 30% cost reduction of $/KW-hr is a combination of huge economies of scale expected with the gigafactory plus changes in chemistry and metallurgy of the positive electrodes. Unless we get disruptive innovation.

When it comes to investing, I am about "trust, but verify".

jk2014 | March 5, 2014

JB Straubel Solarcity DemandLogic press release (5Decemeber2013):
"The economics and scale that Tesla has achieved in the automotive market NOW make stationary energy storage more cost effective and reliable than it has ever been in the past. We expect this market to grow VERY RAPIDLY NOW that we have crossed this economic threshold."

JB Straubel interview with Energybiz (pub. 4March2014)

Why Tesla is the best choice on the market NOW:
"Energy density is one reason our technology is ahead. We can store a lot of energy in a compact space. Smaller is always more cost-efficient. A second reason is overall energy storage per dollar, a world-class capability of ours, which is driven by our focus on building cost-efficient batteries for cars."
"We are investing in the future of new technologies, including improved battery chemistry, better ways to manufacture batteries, improved automation and improved quality." "Control software inside the product lets it charge and discharge at the right time of day so users get a lower demand charge on their electric bills."

Why Tesla energy storage is best for residential, commercial, AND utility market:
"A neat thing about batteries as an energy storage technology is that they are so scalable. They really shine when you want something that scales from the single-family house to the factory."

Why Solarcity:
"With SolarCity, we see an opportunity to partner with a great company to help us with sales and distribution for some of these products." "We help to drive down the cost of batteries for electric vehicles by making more stationary storage, and vice versa."

Strategy of Solarcity partnership:
"Our long-term goal is to invent ways to solve storage problems to facilitate a 100 percent renewable grid. That shouldn’t threaten utilities. It’s the logical and future evolution of the grid. Utilities have a key part in this."

Current execution of that strategy:
"Both Tesla and SolarCity have a strong presence here in the PG&E territory, so it’s a good first pilot market for us."

First markets to exploit:
"We are surprisingly close to reaching an economic point that would make reliance on a 100 percent renewable grid compelling or, at least, cheaper. It will take a long time to change out the infrastructure, replacing, upgrading and retiring old assets. The first thing that will happen is the cost will cross the economic threshold where it is cheaper to install renewables and storage than to install new fossil-fuel generation. That’s already happening in island grids and in island nations." ---Hawaii, Australia & Japan through ZEP relationships. California in that mix through PG&E(currently 400+ residential pilot group participants.)

Overall assessment:
JB is the world's authority on commercialized battery tech. Costs are sufficient to start ramping production of energy storage now, then most likely they are. If they are, then Solarcity will be the first company to buy(or lease) and distribute that production to its customers. As solarcity increases customers, so too will the ramp of energy storage production. If Solarcity is able to keep up its 100% compounded growth year over year, it should obtain 1 million customers by 2017 right when the gigafactory comes online to ramp up production to meet that compounding demand. Over that time, there will be improvements in chemistry/form which could improve density, thus reduce the overall weight/size of packs. With reduced size and weight, they can produce more battery packs to meet car pack needs as well as energy storage pack needs. Thus, capacity of the gigafactory could improve dramatically. Instead of the 500k car capacity, it could 600k, 700k.. maybe a lot more. So, we could see an acceleration of energy storage ramping even further in 2018 and beyond. And, if Tesla is the only one in the energy storage industry that can compete on cost AND Solarcity is the #1 distributed energy business in the country, this could get very, very interesting. All I can say, invest wisely now while you can. The writing is on the wall. This is a special opportunity, tremendous appreciation for literally decades. Both, short term gains and long term gains. A bond and stock winner at the same time. Take advantage of the stock price now, then live off the dividends later... Tesla/Solarcity is mind blowing to me...

jk2014 | March 5, 2014

If the average home energy storage pack is about 10-11 kWh, that is roughly 8 energy packs for every one car pack (85kWh). JB Straubel has also said energy storage packs are simpler to make. So, if an energy storage pack is 1/8th of the cost (or less), and the return/kwh is greater than the return/kwh of an auto pack, then ramping up to meet the demand of Solarcity's customer base rises to priority level. Remember more batteries produced, means lower cost. Lower cost means we get GenIII price point down further/soon.

To add, degraded car batteries (probably start in mass around 2023), will be repurposed for home storage which will add to the production ramp with minimal production costs, thus bringing energy price points down even further for Solarcity customers. And if Solarcity is able to bring cost/kwh down for customers, they will get more customers. More customers, more scale. More scale, more reduction of production cost, etc.... a positive reinforcing cycle... see why it's a no brainer to accumulate Tesla/solarcity shares for as long as possible...

tslafan4life | March 5, 2014

The best time to buy is when there are dips. Get ready!

Brian H | March 5, 2014

Here's a true wild card (at 1/10 the cost) that will make the "renewables" part of that redundant and unnecessary, and vastly reduce the need for storage by being totally dispatchable (and distributed) :

elephant in a bottle | May 2, 2014

Any thoughts on this coming Q1 earnings? Brian, Timo, jk, Capzap?
Some news accounts seem to suggest a "flat" Q1 , with NA deliveries "projected" to be lower, but may be re-balanced with increased deliveries from other parts of the world ..

However, in the past , Elon/TM have turned the tables around especially with "anticipated" so-so news like these. Besides, earnings may not be the bigger news this coming Q1 , but rather more exciting Gigafactory news ..

Soldiering on .. hoping we march on $300+ soon!

jk2014 | May 3, 2014

Going to have to be on guidance for price jump. China numbers for Q2, if they will break that out... I think they are at 50% utilization at Fredmont so maybe guidance bump on cars/week and year end total sales. Also, Elon is great at creating anticipation so I think he either give out a date on when the model x will premiere or give out a date on when the gigafactory location will be disclosed...

Overall, need a beat on numbers and some surprise guidance... Nothing you didn't know already I'm sure. Just my thoughts on q1...

Brian H | May 3, 2014

There's no "Fred" in Fremont. ;)

jk2014 | May 3, 2014

That's the ULA way to spell it:)

elephant in a bottle | May 8, 2014

here we go again .... shorts are doing the 'grin

elephant in a bottle | May 8, 2014

What a day ! Can we fast forward to August plzzzz ...

jk2014 | May 29, 2014

Hopefully some of us paid attention to JB's symposium talk, because if you listened closely, he said they will produce between 3-4GWh of energy storage this year(2014). Taking the average as a target, 3.5GWs, that will be over 41k 85KWh packs... Well over the 35k target... I know that 41k is produced, not delivered, but this seems like a big undisclosed number that slipped out. Even of they beat expectations and deliver 36k cars, still leaves 5k 85KWh produced.

Now, I believe that 5k is for energy storage, since it was an energy storage symposium JB was the keynote speaker for of which he mentioned the 3-4GWh. That 5k would equate to about 41k RESIDENTIAL ENERGY STORAGE UNITS.

The idea is that they will ramp up about 10-15k residential units by the second half of this year, so the rest might be for the demand logic commercial projects also through Solarcity. Could also be for utility level projects since JB did mention that they can scale up the 400kwh pallets nicely.

All in all, this is indication we'll see the energy storage part of TSLA ramp up in a substantial way in the coming months (outside of and before the gigafactory).

Good opportunity to see how Telsa/ Solarcity partnership will materialize as well as other potential partners/customers in the solar,wind, and utility industry spring to life.

jk2014 | May 29, 2014

I have a clarification... I assume some of that production is for the model x ramp up as well increase in model s prod, but even if they only use 100MWhs it would cover projected residential ramp for this year into next... I think well more then that will be dedicated to energy storage business this year...

JZ13 | May 29, 2014

@jk2014 - don't forget the batteries needed for the Mercedes B class cars.

jk2014 | May 29, 2014

Just read this on twitter:

Looks like tesla is already shipping energy storage to solarcity's Los Angeles offices as I write this...

gdubcobra1 | June 18, 2014

Stock going up. What gives?

Red Sage ca us | June 18, 2014

Well... Last week Elon Musk gave The FINGER to the entire entrenched, immobile, unresponsive, old-fashioned automotive industry and said he would personally foster an entire new electric vehicle industry to supplant it. That was GOOD news -- to everyone but the Naysayers, Bears and Shorts.

aeroscott | June 18, 2014

JK2014, very interesting, I like your thinking.

aeroscott | June 18, 2014

JK2014 just raid your March 5, comment and link . I'm in complete agreement.

jk2014 | April 23, 2015

Update on JB straubel 2014 article:

Solarcity has a functioning micro grid with tesla batteries from residential to utility size right now on an "undisclosed" island location promoting intense interest from military installations among others. Oncor utility in Texas(among a growing number of others) is in negotiations for a utility size energy storage package from Tesla. Walmart, BJ's Whole Sale, and a growing number of schools, government buildings and smaller commercial sites have tesla energy storage with their Solarcity install or are planning to in the near future. Over 400 home storage units are currently in operation along side Solarcity in California and elsewhere. Announcing on April 30th and implemented starting in August/September , Solarcity will roll out thousands more.

Energy storage isn't coming. It's already here... JB straubel wasn't messing around was he?

Bubba2000 | April 25, 2015

I looked at 2014Q1 income statement that shows huge increase in R&D and S&GA related to Model X and GF. This increased should have been capitalized and depreciated starting when the new products ship. Usually a 5 year period. Tesla would have made a nice profit of about $150M, instead of a loss.

If Tesla can flush. Out excess inventory, they should have a nice cash flow.

SamO | September 17, 2017

THE original investment thread! Good times. :-)

Tesla-David | September 17, 2017

Yes it is. Brought my TSLA shares at IPO, and have never looked back or regretted that decision. Best investment ever, excepting maybe GOOG shares also brought at IPO.

Captain_Zap | September 17, 2017
SamO | September 17, 2017

Thanks @CZ. You are right. This one is just fun.

Tropopause | September 17, 2017

Always fun to watch our stock go higher!