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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.

danielccc | 15 februari 2013

The Q4 report and Q1 guidance could really, massively go either way.

Key figures are sales, production, and ASP. I think the range thing fades away. CNN was more effective than Musk's blog posts. In any case the range thing will change the mind of nobody.

It will be more about the numberes and expected profitability. Sales and production above all.

jk2014 | 15 februari 2013

Range affects potential consumer purchases, and consumer purchases are what make the bottom line.

Bubba2000 | 15 februari 2013

Brian H: Thanks for the info on the VIN. Even a conservative 600 Model S/week amounts to 30,000 cars. If ASP drops to $80K, that would amount to $4B in sales and gross profit of $1B at gross margins of 25%. Admin + R&D will amount to $500M, especially with GIII. They will need the extra $500M just to tool for the Model X, inventory and service debt.

What is your estimate of the reservations? Estimated cancelation rate? The company got to move from the initial upper middle class adopters to regular upper middle class adopters and wealthier. At least with Model S+X. It is possible, but the SC network has to be deployed.

Ultimately, the price of Model S/X have to come down the cost curve to stimulate demand as well.

Brian H | 15 februari 2013

Cancellations are really hard to figure or analyse just now; the big "price change" shuffle around year-end produced a lot of juggling by reservers, etc. And those counting on later delivery caught short by the speed up, those with overlapping leases, etc. So there were duplicate reservations being trimmed, and replacement reservations being placed, etc. (Much less "disincentive" to drop to the back of the line now that it is months long, not years.)

But now that the delivery time is so short, the base rate of cancellations should fall drastically. There's almost no time now between reserve and finalize, so any purchase decisions will be "firm" from the beginning.

It's only 6 days till the s/h call. It is pointless to speculate about trends without waiting, unless you're trying to anticipate the news and "ride" the share price. Dangerous game.

Kleist | 15 februari 2013

Bubba2000 - you are evaluating TM as it was GM. There is an economy of scale, but there is also a cost of scale. If Ford needs $500M to do something a smaller company like TM can do same for let say $50M. I am working for a large company and know about the cost of scale.
- Model X mfg tooling was funded about 6 month ago. TM $50M + $10M from California. It uses the same mfg line as the Model S so no big ticket items are needed
- 2 shifts are needed: 1st shift ( engineers are at work ) will have set up building Model X betas while second shift sustains the Model S production.
- SC network is cheap ( $20k-&40k per SC according to J.B.Straubel). So 100 SC are about $4M and it is paid for out of the advertising budget ( a super bowl clip is ~$5M ). The holdup is not the cost but getting the permits and locations.
- I don't expect the base price for the Model S/X to come down anytime soon, but instead more option packages to please a larger clientele - e.g. console & door pockets for the folks that need their clutter around and a sensor package for folks challenged to park the car. Each package should cost TM no more then $200-$300 in mfg and can be retailed easily for $3k-$5k.
- Gen3 will be a 60kWh battery going 265 miles EPA. There is no big battery improvement in automotive quantities in the next 2 years. So Gen3 improvements has to come from drive train ( motor, inverter) and chassis design ( weight, size, tires etc).
...just my 2 cents

Brian H | 16 februari 2013

Kleist;
That's worth at least 10¢. Thx!

Benz | 16 februari 2013

Gen3 with a 60 kWh battery and going 265 miles EPA. What if they can configure it with a 85 kWh battery?

jk2014 | 16 februari 2013

Kleist--

Great stuff, appreciate it. Look forward to reading future posts...

Brian H | 16 februari 2013

Benz;
Thimk. (IBM motto.) The skateboard is smaller, so fewer cells. Of course when the 10X energy miracle cells come out, the GenIII etc. will be able to go 2000 miles ... but need to be charged with a 1MW cable. By robots.

Favguy | 16 februari 2013

Tesla Motors are still very US focused right now. Almost nobody here in the UK even knows what a Model S is just yet, they havn't even scratched the surface of the surface. Just wait until the cars get to Europe, UK, Japan etc. There will be almost no range anxiety whatsoever. The much smaller size of our countries and culture mean almost no one ever drives more than 250 miles a day except delivery drivers! Any more than that and it's on to trains and planes. Multihundred mile car journeys per day just don't happen like in the states, and even if they do, free filling at superchargers when our gas is over $9 to a US gallon, Tesla will clean up.

My take on things would be to buy all the stock you possibly can now whilst it's in a dip thanks to our NYT friend. Then watch it carefully until sometime after the earnings are out when the short squeeze happens. If you time it right, you can resell all your stock when the squeeze happens, then rebuy with all the proceeds you've just made a day or two later when it settles back down to a sustainable figure, now settle down for the long haul... Ten or twelve years down the road... sell up and enjoy your very comfortable retirement ;) Well thats my plan anyway!

kkiri7 | 19 februari 2013

@TeslaLover,
I am long TSLA and have recommended it before.
Do read this recent article (link below) - Dr. Allen may not be right, but he does bring up points to consider if you are not a very experienced investor.
Here's a quote from his article:
"we come up with a market cap for Tesla as a U.S. car manufacturer of $17.5 million. That's quite a bit lower than the $4.4 billion current market cap value.
In fact, Tesla's current market value is 250 times higher than it would be if it were being valued as a car manufacturer rather than an idea whose time is about to come."

I do not agree with his using Ford or GM as a comparison since, at the least, Tesla should be compared with high-end, specialist manufacturers... and of course there are some who think TSLA is the next Apple.

http://seekingalpha.com/article/1201271-how-to-play-the-tesla-motors-ear...

Tesla Lover | 19 februari 2013

thanks kkiri !!

Bubba2000 | 19 februari 2013

http://www.thestreet.com/story/11844916/1/tesla-triumphs-but-questions-r...

This article points to the possibility of a hi level of cancellations or deferment. If reservations are 12,000, how is it possible for deliveries to have been accelerated to 30 day? Even if the production rated doubled to 800/week.

Whity Whiteman | 19 februari 2013

They are producing the parts for the S since 9 months...stamping etc... I think, there are parts in this factory for thousands of cars. If they fixed their problems (quality issues)...they now can straight push the cars out.

Could this be the reason?

jk2014 | 19 februari 2013

How long will the squeeze last?

Whity Whiteman | 19 februari 2013

3 weeks? More or less... 20 mio shares needs to get buyed

jk2014 | 19 februari 2013

My overall assessment for a future stock appreciation explosion : Tesla needs to start promoting the genIII to the general public right now. If awaress gets to the level where I think it can, reservation nunbers will be of historic proportions! Show how much money is being saved by real Tesla owners right now. The thousands of miles traveled for free or extremely low cost. Don't worry about the brown outs of summer because its solar power... Drive on. Maintence? Longevity? Not much to replace parts and batteries have shown modest increases in range over time thus far for some owners. Dont be captive to dishonest mechanics ever gain, just pull the logs on their ass. MS might be a car for the 1% , but its only a preview of what is to come for the rest of us... The savings will be well worth the required adjustment in driving behavior. Hell yeah, the vast majority of middle America car owners would start charging at night and slow down if it means they don't have to be a slave to the gas station and its ever fluctuating fuel prices. Not to mention the wifi updates that improve the car, the amazing control you get from having instant torque, the impeccable safety ratings, and zero emissions contributing to the stink of your garage to name a few...

There is no comparison to the value proposition of genIII for the average citizen. This is the promise Tesla's market cap will reflect now and until it happens... America will be be waiting, cash in hand.

Bubba2000 | 19 februari 2013

If the earnings tomorrow are good, and the reservations have not evaporated, then the shorts will try to exit at the same time. Significant close above $40/s and, they will have to cover within a few days (3-5). With 25% of the shares short as of the end last month, they will have a hard time covering since a lot of the shares like the insiders's shares are locked.

I think the CNBC test boosted the stock, but the real proof are tomorrow's numbers.

jk2014 | 19 februari 2013

The guidance will play the biggest part tomorrow I think. If they set up a surprise big year end goal, all bets are off... Reservation numbers will become an issue for q3 earnings call I'm feeling. Not too much now...

Brian H | 19 februari 2013

jk;
TM must, and does, pace its marketing to its productive and capital capacity. What you describe leads to classic "overpromise, under-deliver" catastrophe. Even with the tight and exclusive focus on Model S it had, TM got almost racked by a mere 2-month hiccup in its ramp up. Imagine if its production needs and targets were 10X as high!

It is in fact moving at auto industry lightspeed already. If that is exceeded, it will go backwards in time and vanish from view.

jk2014 | 19 februari 2013

There is no precident for Telsa's situation that one could extrapolate from the auto industry with regards to growth. Very different society and world situation, what history could you compare when the first auto came out? The horse and buggy trade? Tesla is more comparable to the history of energy than the car...

I feel to get over the hump of skepticism of general public, ready doesn't see the true value of electric vehicle(of which just happen to be battery powered right now) their has to be a long lead time for educating and selling genIII. Doesn't mean you have to produce it right now, just have to start showing the sense of it all with real number regardless of the market using it right now...

This genIII is for keeps. It's the thing that will need to be remembered when growing pains get magnified even more soon...

Brian H | 19 februari 2013

Yes, it is for keeps. But it doesn't appear out of thin air. Several production lines, and 'tech support', must be ready to roll before they start a-braggin'. Managing THAT ramp-up will require a far more mature company in many respects.

Tomorrow afternoon is going to be fascinating.

jk2014 | 19 februari 2013

Brian -- do you know when the 10-K will be available? Before the call by chance?

Bubba2000 | 19 februari 2013

In order for GenIII to be practical and affordable, we need a significant advance in battery technology. The energy density will have to double a significant lower cost/KW-hr. Not sure when that will happen.

In the meantime, besides installing more SC, Tesla could improve Model S+X. Software to condition the battery remotely and warm/cool the car using energy directly from the charger. GPS could upgraded to give route solutions showing where the car can be charged, expected queue time, etc. In the next iteration, the car could be made lighter using stronger Al alloys, etc. Sell 50,000 cars/year and it is a nice business with good cash flow tile Gen III kicks in.

danielccc | 19 februari 2013

I think, given the time required for the Gen III, Tesla should consider a "Model S compact" (with a better name of course). Same S platform but shorter, lighter, no optional third row, a little narrower, topping out at perhaps 65kWh.

This car would be aimed a bit lower than the standard S, but from being lighter would maintain high performance. I see it as being better adapted to overseas markets, especially Europe, where cars are more expensive and large cars are not so practical. Would also appeal in some parts of the US.

The design could be done to achieve maximum parts commonality with the S, including doors, front fenders, front and rear lights, bucket seats, drive train, computers, and software.

Which reminds me, it doesn't make sense that the 40kWh Model S is not sold in Europe, where distances are shorter and people drive less.

Superliner | 19 februari 2013

@ danielccc

Next time on the road "look around you" MOST people don't drive "high performance" cars. IMHO too much emphasis is placed on sheer performance when in reality most families drive rather ordinary cars Taurus, Camry, Maxima, Altima, Malibu, Fusion, Accord, and the list goes on and on. None are "High Performance" cars yet Camry and Taurus have both been #1 sellers in the U.S. at one time or another.

Gen III MUST be affordable with "near" ICE like capability or it will just be another high priced BEV "STILL" on the bleeding edge of Joe Car Buyer. I don't care if the car goes 0-60 in a heartbeat, Yes it's nice "I guess" but if that were what everyone is looking for then surely Camry would NEVER be as popular as it was or is.

Gen III CANNOT be a "subcompact" It must be a family sized car that is usable to get the kids to school, grocery shop, seat at least 5 and have some cargo capacity. The most popular car has NEVER been the fastest from 0-60, It's always been a functional practical car.

Gen III must be such that for the first time some families and individuals could consider it their "only" or primary car in their stable. If Tesla wants thousands of BEV's on the road then they need to make Gen III practical and leave the 0-60 stuff to the $70k super cars as most don't need it and can't afford to pay a premium to get it.

All I need it to get to work, the bank, the grocery store, the school, out to dinner, and once in awhile a weekend getaway! I'll take RANGE over face stretching performance any day and if the sales figures carry any weight ... so will lot's of others.

Superliner | 19 februari 2013

Sorry for the previous post "a bit off topic" to say the least My Bad. should have been posted elsewhere. But hey! I did snap up some more TSLA stock when it dipped on friday though!! And I'm looking long .. very long.

danielccc | 19 februari 2013

Superliner, I get what you are saying. The point is that Gen III needs cheaper batteries than now available, certainly at least from Tesla's current vendor, Panasonic.

Also, Gen III is a 20X move in volume, to get to 400K cars per year.

So no Gen III on the roads till 2016 at the earliest.

My "S compact" is not that car. It's not even compact, much less subcompact. It's just a slightly smaller S that would do better internationally, where American "family sized" cars are considered huge and impractical on city streets, and where per cap income is somewhat lower, while duties etc, make cars more expensive.

It would be high performance because it would still be an S, just a variant of the S.

Tesla Lover | 20 februari 2013

Daniel:

I think that your idea of a model s variant is really good, but looking at the european market it's better develop a smallest car, with the design of a model s and the dimension of a ford fiesta. obviously it have to maintain the power and the benefits of a electric engine, something like a 50/60 kw. A car like that is the Renault zoe (search it on google). you know, a car that can buy a boy of 22 years old like me...

talking about the stock market.... +6 % yesterday !!! today is the day, the 40$ resistence will be tested again and probably broken if the balance will be good, i'm waiting...

Benz | 20 februari 2013

@ Superliner

"But hey! I did snap up some more TSLA stock when it dipped on friday though!! And I'm looking long .. very long."

That's the way to do it.

Tesla Lover | 20 februari 2013

This is the assortment that tesla must have to cover the EV market (exeption for the mini-van)
Link:
http://www.renault-ze.com

Benz | 20 februari 2013

Tesla Motors (TSLA) cracks $40 for the first time ever in premarket trading, moving up 1.2%.

jackhub | 20 februari 2013

According to a 13G filing with the SEC on Feb. 14, 2013, Fidelity Investments has a 15% (14.99) stake in Tesla.

kkiri7 | 20 februari 2013

@jackhub,

Interestingly, in their 'Equity Rating Score", Fidelity rates TSLA as "very bearish" with a score of 0.6 on a scale of 10.
Despite this, several of us have each accumulated about 1% of the 3 mo. avg share volume - yes, guilty as charged - we are rabid fans and "addicts" of the Tesla narcotic.
Fidelity states:
"The Equity Summary Score is an accuracy-weighted sentiment derived from the ratings of independent research providers on Fidelity.com. It uses the past relative accuracy of the providers in determining the emphasis placed on any individual opinion."

Today's Q4 report was great. Trading was nearly 3 times the 3mo. average.
I would continue to buy on the dips - the next few quarterly reports may quite possibly lead to superb returns.

Bubba2000 | 20 februari 2013

Looks like management got the priorities right. They want to focus on quality and operational efficiency. With time they will tighten the tolerances of the presses, jigs, machine tools, welding robots, painting, etc. Even assembly that is done by hand with tools could be optimized using automated tools and training. Less labor/car and less rework of cars with defects.

Components bought from outside suppliers can be negotiated down in price. Or use alternate suppliers. I heard about the tires from Czech Republic. Hopefully, they will be able to get tires from close by US suppliers. Anyway, I am not a fan of those performance wheels or tires. Too many pot holes here that ruin them.

I looked at the youtube video on megafactories of Tesla compared to Porsche, Lexus, etc. Model S seems much simpler to manufacture and needs less labor compared to say Porsche 911 series or even Lexus SUV. The ICE engines are very complex and heavy, plus they need complex transmission, supports, etc.

Benz | 20 februari 2013

Profits in Q1 are highly likely. Very good news.

Brian H | 20 februari 2013

The Street and industry seem to keep using lowball production numbers. TM will start to get quantity pricing now, instead of the short-run high prices it's been paying. So volume reduces unit cost.

Kleist | 20 februari 2013

amazing how wall street is a bunch of chicken without head: smear one number over the front page "Tesla loss widens" and everybody runs for cover. I thought the Q4 results were much better then expected.

RNB | 21 februari 2013

I was disappointed in the conference call and the shareholder letter. Maybe it was the emotional let down of not seeing price bump, but overall I felt like the questions were very lightweight. I was hoping for more big picture questions, perhaps they have been answered already. My questions would have focused on the following:

Please talk more about the supercharger network development and the relationship with SCTY, who pays for equipment, is any profit generated, can others pay to use these? How many stations planned, where are you in the process of development, when will nationwide be available?

Factory: Are you expanding into the NUMMI facility more, or are you investigating such? Will model X run on current line or are you outfitting another production line? What time frame would it take to get Gen 3 up running for more cars?

Product development: Please talk about any and all products you are working on such as pick up, coupe, X, gen3, or would you ever do a larger battery pack?

What is your business plan to dominate the earth with electrics, have you had to adapt the plan, do you still see electric cars being more popular?

Are you developing relationships with other manufacturers to outfit more of their vehicles with drivetrains and software?

Justify your current market cap?

I'll take my answers off the air. Thank you.

Tesla Lover | 21 februari 2013

bad day for the stock, very bad day...

my only fault is that i buy 50 stocks at 38 $, while i could wait for a lower price..

danielccc | 21 februari 2013

Tesla Lover, not a bad day at all. Not at all.

Let me start by reiterating what I wrote on the 12th:

"Not sure how long this plays out but below $34.50 it becomes a buy for me. If it keeps falling, get all you can at $28 (unless the reason it's falling is catastrophic). So if it goes to $34 this week and then the earnings release next week goes badly, you can average to $31."

Well, we are just about at $34.50 now. It could go lower but $34 was the average price in December, so this is a clear support level.

This is not a bad day because TSLA is holding above $34.50 with over 3.6 million in volume just 90 minutes after market open. That is far more than the average daily volume.

A lot of sellers, but a lot of buyers right above $34.50. Who are the buyers? Long term investors and I'm pretty sure that shorts who are taking the opportunity to unwind.

My guess here is that the mixed Q4 call allowed hedge funds to kick the stock price down very hard after hours yesterday, with little money. The after hours market is easy to move. This setup the low level for today. So this forces margin buyers to sell, and induces less experienced investors to panic. Hence a lot of stock for sale.

If I am right, short interest will be lower after today. If I am wrong it will be the same or higher. If it's lower, that's a very bullish sign.

What's even better is that TSLA is holding the line above $34.50 with very high volume and in a down market environment that is now in its second day with the S&P down nearly 2%.

It is not a foolish time to buy. Next support level is $28, but that level belongs to a company with unproven manufacturing capacity. I think that the probability of retesting that level is low.

Full disclosure: I am long on the stock. But I'd like to point out that I was not recommending it at $38, as anybody reading this thread can check.

Bubba2000 | 21 februari 2013

RNB - I agree the questions were very superficial. I think the analysts do not understand the big picture strategy needed to generate mass demand and supply for BEV. There are impediments that keep the BEV from hitting mass market as you mentioned:
-Supercharger networks - Very important to reduce range anxiety and can not be just a few in CA and in the Northeast. Want to generate huge demand? Saturate the highways at every 100 miles and add big LED signs to advertise. I am betting that Elon Musk got the message, thanks to Broder of NYT. Yep, he was a blessing in disguise!

- Model X - I think TSLA will have a separate assembly line for Model X. Welding, painting can use the same facilities. However, I suspect that stamping the Model X may need separate presses since it is not practical to exchange the huge dies and stamp in batches; tolerances go off with the changes and need to be adjusted. I think it is a hybrid of combo and separate assembly lines. Still, I would like to know the capex for all this and where the money is coming from? I like the Model X, except the battery is lame for this size car and the Wing Doors suck.

- Battery - Batteries improve all the time in small increments. Costs come down in small increments. Does the Model S benefit? Do the newer S and X are expected to have larger capacity battery? Charging time? Elon alluded to this, but was not clear.

Elon Musk and the management know this is the make or break year. They got to squeeze costs, control expenses and capex. The tone of the CC was on cost control. I think they will do it.

Bubba2000 | 21 februari 2013

http://www.bloomberg.com/news/2013-02-20/tesla-loss-wilens-expects-to-be...

This interview with Elon Musk sums up the prospects of the company.

danielccc | 21 februari 2013

Bubba, I think it was a good call. I did not expect the emphasis on cost control, but this is excellent. It indicates a desire for discipline over chaotic expansion. I think Musk was on the level and described the kinds of things that happen in start-ups very well. The one about being forced to fly in tires to keep the line going at one point, or the fact that some of their supply chain did not believe their order quantities.

It's incredibly complex to do what they are doing. It's simple in principle, but there are so many thousands of details to take care of, in a coordinated way, that it amazes me that they have pulled it off to the extent that they have.

kkiri7 | 21 februari 2013

Tesla Lover,

Now is the time to remain calm - hope you read the great comments from danielc3, et al.

As you read in the link I provided recently, there are lots of reasons for the stock to drop, of which the short-covering is a major factor right now.
If you are in for the medium to long term and have cash, you may want to add to your holdings on the dips. This would somewhat mimic the "dollar cost averaging" that mutual funds, etc suggest.
I assume you are buying Tesla for valid reasons. If you think, like some, it is potentially another Apple (AAPL) - which statistically has a low probability - then only put your "play money" into it - about 10% of your total investments. The risk and the potential rewards are high.
TSLA is NOT like buying the entire DOW or NASDAQ, which you can easily do with low-cost ETF's such as DIA or QQQ. You know that long term those will eventually rise (although after the recent economic debacles, the annualized returns have been pathetic for many).
Definitely, do not invest if large losses will cause significant pain financially or emotionally (esp with the spouse !!).

Hope this helps.

Brian H | 21 februari 2013

Exposing the car in public generates its own demand. All TM has to do for the next year or two is try and keep up.

jk2014 | 21 februari 2013

Bottom line: time to show profit. What ever needs to be done, do it. Elon et al sound determined to do just that.

Benz | 21 februari 2013

I think that Brian H has used the right words: "Exposing the car in public generates its own demand. All TM has to do for the next year or two is try and keep up."

Since the conference call I am even more confident that Elon Musk will be successful in turning his vision into reality. He will find a way to reach the targets. The period before 2013 contained many difficult moments. But now things are improving. Up to now Tesla Motors has started to walk, and now they will learn to run, and that's when they will be unstopable.

Tesla Lover | 21 februari 2013

i'm not in panic guys :) just today i did a new order for 30 pieces, i really belive in this company and i feel it can show profits this year, buy and forget it's my strategy now, always checking the news...

Osiris | 21 februari 2013

Yeah. But as a Model S EU Reservation Holder and a shareholder, I like the prospect of seeing Tesla's Profits in the green. But I think the strength of Tesla at this point in time is it's fantastic growth and it's technology plattform. As long as Tesla is financed properly I would rather bet everything on a strong growth in salesand in the product pipeline, but to focus on squeezing profits, by secricficing some of the growth potential.

Freemoont can output some 100.000 cars per year. I'm not intereseted in the profits in the next quarter, I'm intested on how much profit Tesla will make, when they put out 250k units a year. They managed to grow revenue by 500%, I think Tesla can grow to 250k units p.a. before 2016.

Elon is a longtherm thinker. As with the Supercharger-Network, he has a plan to grow the company to a meaningfull size and won't sacrifcies the long therm success of this compnay to short term finacial planning. I will use the drop, to buy more shares, because what I read in the finacial statements it sound even better to me, what I have expected. Go Tesla Go

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