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Comments
"And what would I do with the time spent on oil changes, coolant and transmission flushes, etc.?"
You'd worry about the degradation of your battery pack and how you're going to pay for that.
Aside from a flip-phone, can you thing of any technology that will depreciate more rapidly than an old generation EV? What's a 5 year old Nissan Leaf going to be worth?
In a world that subsidizes toy cars for the top few (aka the Model S), Tesla indeed has room to grow. Whether or not it justifies the stock price is another matter - but the markets are a casino anyway, so maybe it fits.
Produce a model with less bugs for half the price, and then we'll see.
"This will allow us to achieve a major reduction in the cost of our battery packs and accelerate the pace of battery innovation," the Tesla shareholder letter said. "Working in partnership with our suppliers, we plan to integrate precursor material, cell, module and pack production into one facility."
Tesla Gigafactory May Turn Out More Affordable Electric Vehicles
I like all the future talk for investors. "will", "we plan", "may turn out".
It's going to boil down to the same old argument we had way back when ---the day an EV can do EXACTLY what a similarly priced gasoline car can do, in terms of performance, range and comfort, THEN it will be ready to COMPETE with gas cars---not dominate them, but just have a place in the race, so to speak.
But take away the tax credits and take away the cheap KwH, and level the playing field.
Tesla's latest results provide a strong argument for removing the incentives. Not some time in the future, but in 2014. A reporter asked an financial analyst what effect removing the incentives would have on Tesla's gross margins, and he responded that gross margins would be 25% instead of 28%. Given that, it seems to me there's little justification for tax incentives, subsidized KwH, privileged access to HOV lanes, and prime parking spots at reduced prices. Those of us who don't drive EVs pay and are inconvenienced for these special privileges.
Used Leafs may be transportation bargains for limited range driving, then. I wouldn't want one, but it may be a good solution for someone who just drives locally. Not so the Model S, though, since used ones have actually appreciated, from what I've read. It's hard to believe that the demand is that strong. My guess is that the sample wasn't representative. Let's see what happens to 2013 model S prices with some miles on them in the next few months.
I did read that. Makes some sense since there is a waiting list, but also most of the used ones that are selling for "more than new" are in fact higher optioned models that sold for over $100K new, so those in fact are not selling for "more than new". Nonetheless, all used car prices are driven by the supply and demand equation.
What would be interesting to know is why those people with high-option cars sold them after one year, since there is no new model to buy as a replacement.
Great question! Related to that, it would be interesting to know whether the proportion of Model S cars sold or for sale is proportionately higher, lower, or about the same as that of other luxury cars in the same general price range.
Why the hang-up with range limitation. The Model S has a range of 265+ miles on a single charge. In addition, Tesla has demonstrated the effectiveness of battery swapping technology as well as fast charging stations. If the same aversion was applied to the Smart Phone no one would buy it. No one minds charging their smart phones every night.
If your phone dies, you can keep driving until you find a plug-in. If the car runs out of juice, will the power port even be able to charge your phone so you can call for a tow?
If the cars don't work out, Tesla should still be viable as a battery company. That may wind up being its main business in fact. (qz.com)
I have posed the Tesla as a viable alternative to a number of well-to-do friends, with as straight a poker face as I could muster, and each and every one voiced a concern for range anxiety. A Tesla is, in reality, a Lexus 460 with a 10 gallon gas tank that needs to be "gassed up" every single night. The Lexus can deliver 24 mpg, (22 gallon gas tank) very quiet ride, outstanding reliability, 0-60 in 5.8 seconds, and a price tag $20K under a high option Tesla.
Yeah, but nobody notices the bland Lexus, while friends and neighbors are wowed by the Model S. I know because my friend's S gets comments and questions everywhere he goes. After a party at my house everyone wanted to check out my friend's car. One guest, who drives a Lexus ES350, was so impressed he bought Tesla stock the next morning. He still owns it and, of course, has a big paper profit.
Getting noticed isn't my thing, but it makes a lot of people who spend 70-100 large feel good. And let's face it, admiration, approval and the desire to stand out and look cool is one of the main reasons people buy luxury cars instead of one of the many excellent mass market cars that are on the market. To the individual with deep pockets, the $20,000 difference you mentioned may be a bargain. It's like,"hey, look at me; look at what I can afford; notice how smart and environmentally conscious I am?"
Your comments reflect the considerations of a value buyer. Buying a luxury car is more of an emotional act than an objective one. A Tesla stirs more emotions than a Lexus, just as a Ferrari buys more excitement than, say, a Camaro SS. Sorry, Chevy; you're pretty good, but not outstanding.
"Yeah, but nobody notices the bland Lexus, while friends and neighbors are wowed by the Model S"
Indeed, that's as big a sales driver as anything right now. It's a fun showy toy car, showy in design and price. And when you can get a tax break for a toy, all the better.
I wouldn't call the reaction to the Tesla "emotional" at all. The car is as dull as a bag of rocks in stirring "passion". It is much more about intellectual interest and sobriety. A Lexus is, as you say, is the reflection of a value buyer---also not an emotional response. Porsches, Corvettes, Ferraris, Camaros--those are all emotional buys.
To me, a Lexus and a Tesla are in the same basic buying arena. WHICH is why I pitched the possibility of a Tesla to the same kind of people who buy Lexi and Cadillacs. I wouldn't pitch a Tesla to a Porsche buyer, although I'm sure there is a few percent overlap of course.
I have no doubt some Porsche people buy Teslas - but not as a replacement, as a new toy. I don't see much evidence of these replacing luxobarges or high end sports cars, rather, supplementing them.
Agreed. The Tesla is not a car for car enthusiasts, just like a Prius is not.
Different kind of enthusiasm. Don't forget that Tesla buyers are also buyers of exotics (and Prii). (link)
I can see tech geek non-car people who buy Prius moving up to a Tesla if finances permit.
It's consumer enthusiasm, it's certainly not driver enthusiasm. I mean, isn't a Tesla sort of a huge iPhone?
How many comments do you see around here where people are talking about their fun commute anyway?
My commute is fun when there is nobody in front of me. Let's see how much I can exceed the dumbed down yellow sign on the off-ramp!
Consumer enthusiasm, exactly.
It was announced that Fisker, under Chinese ownership, will resume production of the Karma in Finland, possibly by the end of this year. It's also considering resuming production in U.S.
In addition, Fisker plans to proceed with plans that were interrupted by the bankruptcy, to introduce a lower priced gas/electric model, the Atlantic.
The U.S. and China will be the primary markets. It looks as though Tesla will get some additional competition.
I wonder if Chinese ownership will hinder it, and if they will try to hide that fact. I can't say I rush to Volvo knowing who controls it.
Given the language and cultural barriers, predicting what the Chinese will do is like looking into a broken crystal ball, in my opinion.
Anecdotally, I briefly came to know a well educated Chinese exec about five years ago, through work. He expressed frustration regarding the factories and distribution networks that Western automakers were building in his country, saying that China must gain control of its domestic auto market in order to reap the rewards of its potential.
I'm not as bullish on China as many are. One reason is that the things that sustain life, the air, water, and much of the soil are dangerously polluted. I heard an expert on air quality (on the PBS Evening News, if I remember correctly) say that breathing the air in Beijing is the equivalent of smoking two packs of cigarettes a day. No wonder so many people wear masks.
Also, the one child per family law, recently relaxed a bit, has created a serious demographic time bomb.
In addition, China is highly dependent on foreign oil. Fracking is not an option, on any scale, because it requires huge amounts of water, and their water table is low where there are shale deposits.
Further, China, along with many other countries, is plagued by corruption that's deeply imbedded in their system. Every country has a certain level of corruption, but China's new leader has cited it as a major problem in his country.
And, oh, you've mentioned that Canada may have a residential real estate bubble. The one developing in China may be much larger.
I'm confident that China will deal with these challenges, in one way or another, but I wouldn't trade the U.S.'s problems with China's.
No doubt China is a house built on shaky ground. I was thinking more of the Chinese owned image hurting Fisker, especially if any quality problems develop. It also might be something Tesla can leverage, with its upstart American image.
I agree about the problems. There are a few reasons many of their mysteriously wealthy jump ship when possible.
Recently the debate regarding Tesla goes beyond whether its cars will disrupt the auto industry. The following is a quote from Morgan Stanley, released today (see Marketwatch)...
"Analysts at Morgan Stanley raised their price target on Tesla Motors Inc. TSLA +6.94% to $320 per share from $153, citing potential for the electric auto-maker to disrupt industries outside of its automotive niche, such as batteries and autonomous vehicles."
Will Tesla become a new-age energy company in addition to an auto company, or is this mostly hype?
They are doing pretty good as a car company if you like CR:
Tesla Model S Selected Consumer Reports' Best Overall Vehicle (WSJ - free link at time of posting).
Morgan Stanley, the bailed-out speculative bankster institution that it is, probably holds a lot of TSLA, and is shilling.
Morgan Stanley was betting against its own junk mortgages, way back in 2004. So it was selling crap and then betting it would tank....nice, real nice.
However, red herrings aside, I'd be interested to know upon what sober, rational, standard investment tools would one value Tesla stock over $50? I'm obviously in the dark about it.
QUOTE: " On CNBC, Jim Cramer heeded caution on today's Tesla Motors, Inc. (NASDAQ: TSLA) price target hike at Morgan Stanely. He says the doubling of the price target reminds him of QUALCOMM (NASDAQ: QCOM) before the dotcom blow up."
NOTE: Charles Schwab "Equity Rating" for Tesla is currently "F" and that doesn't mean "fine".
It gets more interesting. Now the Tesla/Panasonic tie-up is back in the news with reports of a billion dollar battery production factory. Tesla has space in their existing factory but they are reportedly looking at Reno for a site, which would be closer to lithium ores. (WSJ registration link)
Doubling the stock price seems eminently doable, but I'm not quite willing to play with my own money (note that I passed on APPL at $12.50 and GOOG at $85 too.
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"Doubling the stock price seems eminently doable, but I'm not quite willing to play with my own money (note that I passed on APPL at $12.50 and GOOG at $85 too. "
If we had one $1 for every opportunity we missed we'd be fabulously wealthy.We go with the best information and decision we have at a particular time, and live with the consequences
The issue isn't what we should have done, but what to do now? Tech companies that have the potential to be major disrupters are particularly difficult to evaluate. For this reason analysts' forecasts aren't too significant. However, the arguments they present can be useful for arriving at a decision.
One year ago it would have been much more difficult to predict the demand for the Model S, how Consumers Reports would rate it, plans for additional models, how the company would deal with the range anxiety issue, international distribution, how the much larger automakers would respond, and the "giga" battery manufacturing facility. Now we know more, but Tesla's success, and whether it'll be a disrupter, will ultimately rest with how they execute on their plans and the future demand for its vehicles. Its plans to sell batteries for non-automotive applications is particularly hazy. And, let's not forget that Tesla's distribution system poses a threat to dealers.
Whereas one year ago I didn't give Tesla much chance to become a significant player, now I'm conflicted, as you seem to be. I have more confidence in the company than in the stock, at these levels, because I think a lot of success is already baked into the price of the stock. It hasn't pulled back much or for long because too many people are waiting for just such a pull-back. At some point it's likely to pull back sharply, as Apple and Google, and, recently, Amazon have done.
I'd love to hear what the executives of the leading auto companies discuss in private meetings.
think about the juicy ones you didn't bet on, that tanked. Remember MySpace and Blackberry?
Bottom line, Tesla is losing $3,200 per car, at least. Not a cue for my investment dollars at the present time.
@hpmctorque, good critique. I don't pay much attention to analysts, at least not stock pickers (and certainly not Cramer, lol). Hard SciFi predictions is more my cup of tea. What I like about Tesla is that they have the capital to run for as long as Elon has the stomach to promote it. Lots of tech makes sense early on and is rapidly adopted by the frontier types, but it can take years to hit critical mass with the rest of us.
If charging at Tesla's Supercharger stations is free for the life of each Tesla car, how will these stations be profitable? I understand the expense factors of the business model, and the fact that a network of Superchargers may help Tesla car sales by reducing range anxiety, but can someone help me with the revenue side of the Supercharger business model?
Welcome to the new normal. I was just reading about a condo development in Boston with built-in charging stations. I can't believe this service will be free but it is a step in the right direction. And for those who are yet to a buy a few shares of Tesla's stock--it is not too late.
It's not "free". This is Tesla pixie-dust. You have to buy the supercharger apparatus as an option when you buy the car---$2000 bucks.
That's the rough equivalent of one year's worth of gasoline for the average driver, so after the first year (more or less, depending on the car being compared with the Tesla S, the distance driven, etc.) charging is free.
The super charger is a $2,000 option with the 60 kwh battery and standard equipment with the 85 kwh battery.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
And once you buy the supercharger and pay for a charging station (a property developer might call it "free", but nothing is free), where does the power come from?
Still waiting for the breaks on toys for the 1% to be cut.
This seems like a creative incentive to increase early adopter Model S sales, but it could be modified or eliminated at any time for future buyers.
It'll be interesting to see how competing automakers react, particularly the luxury brands, if Tesla should gain significant market share. Also, the oil companies. Any predictions?
Yes it could be modified or eliminated and I would bet that Tesla has already planned for that. My guess is that Tesla has a plan where they are monitoring the usage of those quick charging stations and once a certain utilization rate is reached they will modify it for future buyers.
I wouldn't be surprised if Tesla has plans to lease out the quick charging technology to other manufactures so that other electric car owners can use them for a fee.
You can bet next months rent that the other manufactures are keeping an eye on Tesla right now and making some sort of plan. I would bet that in the not to distant future someone will come out with a car that can be had for under $50K (with no tax rebate) that gets 200 miles on a single charge and when they do you will see a lot of electric cars on the road.
As for oil companies? I don't think they can stop it in this political and social climate. Gas powered cars will not be going away anytime soon but cars with alternative power sources will gain.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
Tesla could expand existing stations as demand increases and charge money for the new units - no waiting for an premium socket.
Then the free sockets could start suffering breakdowns, lol.
You mean if their Model X starts selling in significant numbers and they don't lose money on every car like they do now? WELLL.......my answer would be....
Nothing. I think those automakers have all made their bets for or against EVs already. So the ones already committed to EVs will build better ones and those who are against EVs, like Toyota and Honda, will pursue hybrid and hydrogen technology-----and, IMO, will bury all EVs in the next 5-10 years.
Nonetheless, Tesla could do quite well by diversification into battery technology, as there is a much broader demand for new battery tech in many fields that have nothing to do with $100,000 toys, and may find a good place in automotive hybrid technology.
OR...Tesla may switch to hybrids, which sounds like a good idea to me.
my answer would be....
If, ****I F****EVs should prove to be more cost effective and popular than now appears to be the case, it'll pose a big dilemma for the large, established automakers. Tesdisruptive to their business model, and it would be greatly depreciate the value of their plants and equipment.
Sure, Tesla could switch to hybrids, but in that business it would be a minnow startup competing against well entrenched whales. That's now what's causing sleepless nights in Detroit, Tokyo and Europe.
When better EVs are built - in 3, 5, 10 years - will Tesla build them, or will someone else do it?
The first to arrive on a new frontier get shot in the back. But Fisker may have already got that out of the way.
Would be funny to see a reincarnated Karma storm back out of the gates and leave Tesla fighting on all fronts. More sleepless nights.
Well let 'em fight it out. Tesla has plenty of paper-generated capital to burn up. Everyone who bought Tesla stock cheap is now a resident genius and predictor of the future---but we'll see how that pans.....sure, I wish I had bought some but I'm not that kind of gambler. Are you?
"Here's a stock tip--it's a company that loses money on everything they sell, but they have a GREAT future! Are you in?"
If we calculate the stress on infrastructure for massive EV charging, and the inevitable cost per KwH, the dynamics of the EV market could change rapidly.
The question isn't "will there be EV cars in the future?" Of course there will. The question is: "How much room is there in this market and how big can it get?"
Once again, given Tesla's valuation, compared with other automakers and the S&P 500, and the fact that EVs are selling, it's time to end the tax and other incentives. If EVs are as great as Tersla bulls believe, why should they be subsidized? And, while we're at it, for balance, Big Oil's special incentives should also be phased out.
At the very least, vehicles past a certain MSRP should not receive a subsidy - it becomes another piece of defacto trickle down garbage that has relentlessly failed over the past few decades.
Oil will get the perks it pays for, in a two party system beholden to the same special interests, there's not much choice.
Tesla has 4 state bidding for its new battery factory-- AZ, NM, TX and NV. And driving a hard bargain. It'll be interesting to see if Red State conservatives cave into giving massive tax breaks to Tesla (essentially taxpayer subsidy).
Also, this is rather odd timing since we have a good deal of overcapacity in the battery industrial infrastructure already.