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Is Tesla A Game Changer?

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  • hpmctorquehpmctorque Posts: 4,310
    Sorry, but I don't know where Tesla sources the gear selector.
  • Mr_ShiftrightMr_Shiftright CaliforniaPosts: 45,669
    Tesla may end up a successful company indeed, but not just making expensive electric cars. That, to my perhaps limited vision, is a dead end road.

    In any event, Tesla is going to have to "make a move" somewhere...either downscale or sideways into hybrids, or more diversification.

    Look what Amazon did to stay alive. Now they sell toilet paper.

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  • hpmctorquehpmctorque Posts: 4,310
    True, adaptability is a key ingredient for success. Amazon is a good analogy.
  • hpmctorquehpmctorque Posts: 4,310
    edited August 2013
    Is scaling to mass market status easier said than done for Tesla, given the financial, technical, distribution and competitive challenges? Or, is Musk and his team likely to pull it off, and eventually join the ranks of major automotive manufacturers. Read on...

    (Bloomberg) --"Tesla Motors Inc. CEO Elon Musk said the electric-car maker intends to add factories in Europe and Asia, anticipating volume gains from a planned mass-market battery car.

    The company this year plans to make at least 21,000 of its $70,000 Model S premium sedans at its Fremont, Calif., plant, and double that in 2014.

    While the factory has capacity to produce as many as 500,000 vehicles a year, the addition of a smaller electric car priced about half that of Model S will require additional plants, Musk said.

    'We'll try to locate those close to where people are, close to where the customers are, to minimize the logistics costs of getting the car to them,' the Tesla co-founder said in an interview with Bloomberg Television. 'I think long term you can see Tesla establishing factories in Europe, in other parts of the U.S. and in Asia.'

    Tesla, named for inventor Nikola Tesla, has been an automotive phenomenon this year, with its shares surging more than fourfold and its market value exceeding some established carmakers such as Fiat S.p.A., the majority owner of Chrysler Group.

    Tesla expansion

    Musk provided no details on how much or when Tesla would invest in more factories.

    The company has opened a small facility in Tilburg, Netherlands, where it's assembling Model S components shipped from California to Europe, for cars it has begun selling there.

    While Tesla's next vehicle, the Model X electric SUV, goes into production at Fremont late next year, the timing of the smaller, lower-priced vehicle, isn't firm.

    'Certainly, within five years we'll have our mass-market electric car available,' Musk told Bloomberg. 'We'll start seeing hundreds of thousands of electric cars going to market every year.'

    Musk, in previous interviews, has said the lower-priced car would arrive in about three or four years.

    Trademark application

    The company this month filed an application with the U.S. Patent and Trademark office to use the name Model E for an automobile.

    Shanna Hendriks, a Tesla spokeswoman, declined to comment on whether that's intended for the still-unnamed mass-market electric car."

    Your thoughts?
  • Mr_ShiftrightMr_Shiftright CaliforniaPosts: 45,669
    edited August 2013
    Well it speaks to the ambitions of a brilliant man, but when I actually analyze these statements, after the intoxication has worn off, I still have to wonder where the profits come from to fuel all this---if the business plan is to keep jacking up the stock price with this hype, and make the money that way, then I do fear for the future. This all sounds like a mighty ferocious burn rate of capital--and this to be replenished by profits from 21,000 heavily subsidized cars?

    Also, I'm still not "getting" how he plans to produce an entry-level car without reducing the range of it, given that the number and type of batteries are a major production cost, nor how he plans to fund a major marketing campaign against increasingly efficient plug-in hybrids.

    If plug-in hybrids could double their EV range in the next few years, Tesla is toast IMO.

    OHHHH----"MODEL E"....no, no, in the name of all that is holy, don't use that name! (E= Edsel, once championed by Ford as the "E CAR")

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  • fintailfintail Posts: 34,186
    I wonder how many Model S actually cost the 70K used by the media in nearly every blurb. A loaded model can easily shoot past 100K. Maybe they are trying to lessen the bad taste of someone receiving a subsidy to buy something so expensive?
  • Mr_ShiftrightMr_Shiftright CaliforniaPosts: 45,669
    Well the media is lazy about things like that.

    Tesla has been silently raising the cost of options on the S, so the price is creeping up as we speak.

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  • steverstever Viva Las CrucesPosts: 41,607
    Seems like too many people want to build a $100 million dollar company. But lots of those outfits could still make as much profit as a $100 million dollar company just by focusing on their niche. And $1 million in year in profit sounds a lot better when your company gross is "just" $10 million instead of $100 million.

    I'm sure Musk wants the number to be $100 Billion though.

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  • hpmctorquehpmctorque Posts: 4,310
    Well, keeping the stock on a boil, then issuing new shares at inflated prices to finance expansion, then resetting and doing it again, is one way to do it. One could argue that he did that to pay off the federal loan. It's all legal, and it works as long as enough people keep believing in Musk's magic touch.

    Notice that hardly a day goes by without an important announcement, always very positive. Some are warranted, but there seems to be a good dose of PR too.

    If the X and the E are as good, adjusted for price, as the S is purported to be, then I'd become a solid Tesla fan. I might even buy an E. Also, if the E is really good no one would make the connection with the Edsel. Only a tiny percentage of car buyers even remember the Edsel.
  • albanytimalbanytim Posts: 18
    edited August 2013
    "S", "E", "X"
    Good marketing strategy.
  • hpmctorquehpmctorque Posts: 4,310
    edited August 2013
    Good catch!
  • nvbankernvbanker Posts: 7,285
    The ROE is much better if the E isn't so high.....
  • Mr_ShiftrightMr_Shiftright CaliforniaPosts: 45,669
    yes but would you buy an E with a 75 mile effective range? If the answer is "yes", then why didn't you buy a Leaf?

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  • bwiabwia Boston Posts: 1,289
    What a difference a year makes

    While some are still sitting on the fence waiting for Tesla's stock to tank a la Facebook they have missed an opportunity to make serious money. The stock price was $29.41 on August 24, 2012, today it is $161.84. If my math is right, that is a 450% increase in one year.
  • Mr_ShiftrightMr_Shiftright CaliforniaPosts: 45,669
    Hindsight is always 20/20. And...you could have climbed on board Apple when it was at its high at 702 in October 2012 and sold it at 385 in April 2013.

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  • hpmctorquehpmctorque Posts: 4,310
    So true about 20/20. You can only make your decisions with the information available at the time. For example, the possibility that Tesla could become an auto manufacturer and also an energy company, with its charging stations, is clearer now than it was, say, a couple of years ago. But, could it become a GM plus an Exxon Mobil in the next 20 years? Very, very doubtful, given that the possibilities are clear to very capable competitors too. That said, a few astute investors saw the potential for Tesla shares, and have or will profit handsomely. Others will lose because, sooner or later, the stock price will suffer a strong correction.

    There's clearly brilliance associated with Tesla, in terms of the design, product, the business execution, and the marketing. We'll only know in hindsight whether or not Tesla stock is in a bubble phase.
  • Mr_ShiftrightMr_Shiftright CaliforniaPosts: 45,669
    That's so true. A stock like Tesla, build on clouds, could drop 50 points in a day, easily.

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  • bwiabwia Boston Posts: 1,289
    edited August 2013
    Getting Tesla From Here to There

    In this 8/24/2013 NY Times article, a reporter posed this question to a Tesla Manhattan Assistant Sales Manager--

    Yes, I’d love to buy a Tesla. But:
    a. I live in New York City and park in a public garage;
    b. drive on weekends to a house in rural upstate New York, far from any current or planned Tesla charging station;
    c. can afford only one car;
    d. occasionally make longer car trips far beyond the Tesla range; and
    e. the base Tesla S costs $71,000 before rebates.

    How would you respond to these objections? Read the full article to get the sales manager's response at: http://www.nytimes.com/2013/08/24/business/wondering-if-tesla-can-get-there-from- - - -here.html?adxnnl=1&ref=automobiles&adxnnlx=1377371253-5Pv6NSP2dC0ENDy7p6fHGA

    And a final quote "...Before the first-quarter results, people were betting Tesla wouldn’t last the year. Now the question is, These guys are for real, but how big can they be? There’s been a seismic change. The auto industry hasn’t seen anything this disruptive since the dawn of the Japanese manufacturers.”
  • Mr_ShiftrightMr_Shiftright CaliforniaPosts: 45,669
    edited August 2013
    "There’s been a seismic change. The auto industry hasn’t seen anything this disruptive since the dawn of the Japanese manufacturers.”

    That is a textbook case of Wall St. stockbroker puffery IMO, with little reflection upon actual automotive history. This is not what the NY Times said, it's what Morgan Stanley said.

    it is this very kind of published hyperbole that is going to hurt Tesla.

    Let's unpack this a bit:

    1. "With a charging station installed in my barn"...

    Zoning? Building permit? Contractor? Cost of equipment?

    2. "Mr. Berkley said that if I adhered to 55 miles per hour on the highway, I was likely to get 230 miles.

    Hot day? AC on? Very cold day? Heat on? Right-lane driving with trucks for 230 miles? Really?

    3. "Mr. Berkley showed me a map of the country with current and planned high-speed charging stations, where Tesla owners can recharge the battery in 30 to 40 minutes at no cost. "

    Note the term "planned" charging stations. There are now less than 20 in the USA. Also note the term "no cost", which is not true, since the charging system necessary to receive a quick charge like this is a $2,000 option. On top of the $10,000 extra batteries the salesman just recommended.

    4. "He estimated that every $1 of electricity is the equivalent of $5 in gas".

    NOTE: Yes if you're paying .07 per Kwh. if you're paying .12, like me, it's more like $4 a gallon.

    So let's come back to reality and take a hard look.

    Impressive car? Yes. Actual cost to the shopper in this article---probably close to $100K with the options and 220v charging station installed in his barn.

    Will he make it to work and back on one "fill"?---maybe,, maybe not.

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  • bwiabwia Boston Posts: 1,289
    edited August 2013
    This is not what the NY Times said, it's what Morgan Stanley said

    Point well taken and thanks for the deconstruction although I don't quite agree with your rebuttal. I was a bit intellectually lazy and omitted that important information as I thought the [...] preceding the quote would suffice to indicate that something was skipped.

    The article made a compelling point though. In the event of a power failure you'd be up the creek without a paddle.

    By the way, I'd like to share this YouTube video that explains why Apple, The Wright Brothers, and Dr. Martin Luther King succeeded while others who had more capital, more scholars and equally gifted orators had failed or were not as persuasive. http://youtu.be/mqZyg2XAmDk
  • Mr_ShiftrightMr_Shiftright CaliforniaPosts: 45,669
    If Mr. Sinek is correct (and I'm not so sure he has that circle of his quite right), then what is the WHY of Tesla? it's certainly not equivalent to the first powered flight or to the effect of MLK on the world.

    At best, it is a better mousetrap.

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  • fintailfintail Posts: 34,186
    " And I’d be willing to bet that early Teslas will be valuable collector’s items."

    Yeah, the electronics should age really well in 30 or 40 years. Good luck with that.

    At least the [non-permissible content removed] (and worked in "wealth management", shocking!) looking sales manager didn't try the story of the time you'll save not being at a gas station, and valuing that at $100/hr against the running costs, like Tesla itself tried when their creative math scheme came out a while back.
  • Mr_ShiftrightMr_Shiftright CaliforniaPosts: 45,669
    I found some interesting "side glances" about Tesla.

    I'm NOT trying to diss the car by posting these things, only showing a bigger picture than the current media hype.

    NHTSA disputes Tesla's advertising:

    ""The agency's 5-Star Safety Ratings program is designed to provide consumers with information about the crash protection," NHTSA said in a statement. "NHTSA does not rate vehicles beyond 5 stars and does not rank or order vehicles within the star ratings."

    Tesla Employee Reviews:

    http://www.indeed.com/cmp/Tesla-Motors/reviews

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  • fintailfintail Posts: 34,186
    edited August 2013
    I like Tesla, the S is a remarkable car, but I am skeptical about a few things too, namely the hype and the coddling given to what is still a toymaker for the very affluent and rich alike. Their recent numbers apparently not adhering to GAAP is amusing too.

    The employee stuff sounds typical for startups, and really, many companies in the US overall now, as workers seem to be valued less over time.
  • Mr_ShiftrightMr_Shiftright CaliforniaPosts: 45,669
    NHTSA's main gripe with Tesla was for them touting that they had the "world's safest car" when, in fact, NHTSA does not crash-test luxury cars. I'm sure BMW and MB found this annoying as well.

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  • bwiabwia Boston Posts: 1,289
    edited August 2013
    Their recent numbers apparently not adhering to GAAP is amusing too.

    Your concern is understandable but no need to panic, as Tesla explained its alternative financial reporting approach in its letter to shareholders.
    "Here Are The Four Items In Tesla’s Second Quarter Earnings That Turned A $30.5M Loss Into A $26.2M Profit"
    http://www.ibtimes.com/here-are-four-items-teslas-second-quarter-earnings-turned- - -305m-loss-262m-profit-1377617

    GAAP is one those nebulous and contentious accounting concepts. There generally is agreement on most accounting measuring and reporting issues but Revenue Recognition is not one of them, that is why, this a big FASB project under review for massive change. Stay tuned.
  • hpmctorquehpmctorque Posts: 4,310
    edited August 2013
    Tesla continues to make impressive gains, since in June it sold more cars in California than Buick, Cadillac, Chrysler, Fiat, Jaguar, Land Rover, Lincoln, Mitsubishi, Porsche, and Volvo. It'll be interesting to see what happens in the second half of this year. Will the declining price of gas, if it continues, affect the appeal of the Model S? I'd guess only modestly.

    I think an article on the company from the investment newsletter "Seeking Alpha" (see MarketWatch) sums up the company and the stock well by saying "Tesla is a great company with a world-class product and very pricey shares."
  • Mr_ShiftrightMr_Shiftright CaliforniaPosts: 45,669
    Well the people who sold Tesla stock short got stung but, by god, there are still a lot of people selling short--so I would not say investor confidence is all that high.

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  • bwiabwia Boston Posts: 1,289
    Well the people who sold Tesla stock short got stung

    As they should be for taking such a contrarian position. Perhaps they are not aware that Tesla is only utilizing only 20% of its facilities and has the physical plant capacity to produce in excess of 500,000 vehicles.

    Tesla's strategy is clear.
    1. Demonstrate the feasibility of a long range EV (the Roadster)
    2. Develop a high performance sedan for early adopters, good enough to compete with BMW, Audi and MB (the Model S)
    3. Produce a less expensive mass market EV vehicle (the Model E)

    They have proven the technology is flawless, and given the strong demand for the EV, the only major hurdle left is to build more fast charging stations to saturate the market. And if there are enterprising individuals or companies out there, they should get into the business of developing solar and wind power driven charging stations. (Oil companies are you listening?)
  • fintailfintail Posts: 34,186
    Time to set a 40-50K MSRP limit for subsidies on the cars, then.
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