TSLA corporate outlook

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DaveinOlyWA said:
there is a reason Tesla does not report sales or its finances the same way other car companies do and its because it would destroy their cash cow of promoting hype
Click to expand...

In my opinion this in unfair. They are carefully balancing loans, investments and income to try to step from rock to rock, build production infrastructure, build charging infrastructure to support and promote the use of the car. Yes, like ANY public entity they do use hype to generate excitement, but to imply there is not a solid business plan is not right. Anyone can study and understand what they are trying to do.

Now whether they will succeed or stumble is another argument. But they have a plausible business case, and to be fair, have so far managed to hit every step as they had described (mostly), with the only exception being time slip. Which BTW is pretty much what you would expect when building from ground up. I mean SOFTWARE slips years, and this is building complex machines and production lines.

Only real issues I see is that:

a) They are over selling potentially the rate of growth and market size,

b) The slip has caused viable alternatives to appear on the horizon, but that would have happened eventually anyway, and

c) The concern that if the powerwall business really rockets and the gigafactory is online it may dwarf the potential for the cars and the company focus may drastically shift. But this one is a very big what if and musing.
 
epirali said:
...Only real issues I see is that:

a) They are over selling potentially the rate of growth and market size,

b) The slip has caused viable alternatives to appear on the horizon, but that would have happened eventually anyway, and

c) The concern that if the powerwall business really rockets and the gigafactory is online it may dwarf the potential for the cars and the company focus may drastically shift. But this one is a very big what if and musing.
Click to expand...
I'll suggest another:

d) Tesla hasn't yet solved service and quality control issues. Multiple "drive unit" replacements? That gets expensive and is a nuisance for customers. Even routine service is very expensive ($600 annual checkup, for what?) and much more than even high-end ICE cars. I thought EVs were supposed to be cheaper to maintain because they had fewer moving parts and reduced complexity. And the service centers are few and far between; unlike with conventional cars you can't just take the car to an independent shop either. This was supposed to be taken care of by the "ranger" program but they've cut way back on that and now charge a LOT for ranger service.

With these service and QC problems, how is Tesla going to cope with their planned 500k annual car production by 2020? It could get ugly...
 
dgpcolorado said:
I'll suggest another:

d) Tesla hasn't yet solved service and quality control issues. Multiple "drive unit" replacements? That gets expensive and is a nuisance for customers. Even routine service is very expensive ($600 annual checkup, for what?) and much more than even high-end ICE cars. I thought EVs were supposed to be cheaper to maintain because they had fewer moving parts and reduced complexity. And the service centers are few and far between; unlike with conventional cars you can't just take the car to an independent shop either. This was supposed to be taken care of by the "ranger" program but they've cut way back on that and now charge a LOT for ranger service.

With these service and QC problems, how is Tesla going to cope with their planned 500k annual car production by 2020? It could get ugly...
Click to expand...

Well imho the current Teslas are high end electric cars. If you are willing to spend for the performance and/or the range (or the name) you are signing up for a high cost car. You are not spending $80K minimum to save money on electricity. That is more Leaf etc.

And the QC problems are probably very much in line with learning, and from what I have seen they have covered the issues and not dumped them on the customer.

But you are right, the Model 3 is a different world and hopefully they are planning on a different dynamic.
 
epirali said:
DaveinOlyWA said:
there is a reason Tesla does not report sales or its finances the same way other car companies do and its because it would destroy their cash cow of promoting hype
Click to expand...

In my opinion this in unfair. They are carefully balancing loans, investments and income to try to step from rock to rock, build production infrastructure, build charging infrastructure to support and promote the use of the car. Yes, like ANY public entity they do use hype to generate excitement, but to imply there is not a solid business plan is not right. Anyone can study and understand what they are trying to do.

Now whether they will succeed or stumble is another argument. But they have a plausible business case, and to be fair, have so far managed to hit every step as they had described (mostly), with the only exception being time slip. Which BTW is pretty much what you would expect when building from ground up. I mean SOFTWARE slips years, and this is building complex machines and production lines.

Only real issues I see is that:

a) They are over selling potentially the rate of growth and market size,

b) The slip has caused viable alternatives to appear on the horizon, but that would have happened eventually anyway, and

c) The concern that if the powerwall business really rockets and the gigafactory is online it may dwarf the potential for the cars and the company focus may drastically shift. But this one is a very big what if and musing.
Click to expand...

unfair?? we are talking about relying on the stock market to pay its day to day expenses. There are no rules that are fair or unfair because its all based on hype.

how many times have we seen a company that had a great product that did not translate to a successful business model?

what we are essentially doing is gambling on Tesla's business sense, not their technological chops. there is a HUGE difference here. HUGE and why anyone else cannot see that is beyond me.

now do I think Tesla will fail? no. they have a product that is good enough to succeed and their S sales against other cars in its class is proof enough that they will easily control the luxury market. but it may very well survive only as an entity of another company. either way, this discussion is a moot point.

right now we have successful companies losing billions in stock market value and we can not say that they will survive since 99% of them do not have a margin large enough to suffer a 10% loss and after seeing iconic US corporations fail, there are realistically less than a handful (if its the hand of a far-sighted butcher) of companies that are insured of survival and Tesla is not one of them
 
dgpcolorado said:
epirali said:
...Only real issues I see is that:

a) They are over selling potentially the rate of growth and market size,

b) The slip has caused viable alternatives to appear on the horizon, but that would have happened eventually anyway, and

c) The concern that if the powerwall business really rockets and the gigafactory is online it may dwarf the potential for the cars and the company focus may drastically shift. But this one is a very big what if and musing.
Click to expand...
I'll suggest another:

d) Tesla hasn't yet solved service and quality control issues. Multiple "drive unit" replacements? That gets expensive and is a nuisance for customers. Even routine service is very expensive ($600 annual checkup, for what?) and much more than even high-end ICE cars. I thought EVs were supposed to be cheaper to maintain because they had fewer moving parts and reduced complexity. And the service centers are few and far between; unlike with conventional cars you can't just take the car to an independent shop either. This was supposed to be taken care of by the "ranger" program but they've cut way back on that and now charge a LOT for ranger service.

With these service and QC problems, how is Tesla going to cope with their planned 500k annual car production by 2020? It could get ugly...
Click to expand...

I'll suggest one more:

e) Batteries get much better.

Tesla's head-start in serious EVs is largely a factor of daring to power a vehicle with a large pack using somewhat volatile Li battery chemistry. This gives them a great power density and enables outstanding range. It also required them to design a number of complex safeguards. In essence, they tamed a difficult beast. Could the established auto manufacturers have done this? Sure. But none of them were going to risk their deep pockets to go down the road Tesla did.

So, taming difficult cells is really a large part of Tesla's early-leader advantage. If cell capacity and safety go way up, that advantage evaporates. Tesla then has to compete as a manufacturer on a level playing field. They do have smarter and better ways of doing some things. Is that enough to sustain them when any manufacturer can bolt-in a 200kWh battery-pack that's inexpensive, very safe, requires no advanced management, and has 20 year service life? I hope to see that question answered. :)
 
I'm not exactly sure how Tesla's plans to accentuate the conspicuous consumption fashion appeal of the ~$100k Tesla S (and the even-more-expensive Tesla X, whenever it gets here) jibe with Tesla's avowed intention to bring BEVs to the mass market.

Tesla revamps retail stores, adds apparel, gear

...Luring new customers and keeping current ones loyal to the Tesla brand is crucial if Tesla CEO Elon Musk is to reach an avowed goal of selling 500,000 vehicles a year by 2020...

In many ways, Tesla locations are much like the so-called experience stores once favored by Sony and other purveyors of consumer electronics; the idea is less to sell a product on the spot than to let shoppers spend time with the brand.

...stores are typically located in luxury malls. At Santana Row in San Jose, the store shares a street with Gucci and Kate Spade; a steady stream of curious shoppers wander in and out.

The upscale locations are part of the company's plan to build a luxury lifestyle brand. Earlier this year, Tesla hired a former Burberry executive named Ganesh Srivats to extend its reputation for luxury to a global audience.

By pushing expensive clothing and accessories, Tesla boosts revenue and deepens its relationship with affluent customers.

Like BMW, Porsche and Ferrari before it, Tesla has its own fashion line -- the Tesla Design Collection, which includes a $300 tote bag, $100 sheepskin leather driving gloves and a $40 iPhone sleeve. Cycling jerseys will go on sale at most stores in October...

The bags, such as the "Moab Weekender," are named after specific Supercharger locations.

Tesla has found that customers typically buy a bag that matches the interior of their car.

Further echoing the fashion industry, Tesla plans twice-yearly, seasonal updates of the stores to generate buzz and attract shoppers while offering something new to existing drivers of the Model S sedan.

The current revamp, now rolling out to stores in North America, will last through two quarters; the next will arrive in the first quarter...
Click to expand...
http://www.autonews.com/article/20150822/RETAIL/308229999/tesla-revamps-retail-stores-adds-apparel-gear
 
edatoakrun said:
I'm not exactly sure how Tesla's plans to accentuate the conspicuous consumption fashion appeal of the ~$100k Tesla S (and the even-more-expensive Tesla X, whenever it gets here) jibe with Tesla's avowed intention to bring BEVs to the mass market.
...
Click to expand...

I don't see how you couldn't be aware.
Surely you have seen the plan before, haven't you?

Here is the answer for your question, just in case you really are not sure what their plan is...
http://www.teslamotors.com/blog/secret-tesla-motors-master-plan-just-between-you-and-me
 
Zythryn said:
edatoakrun said:
I'm not exactly sure how Tesla's plans to accentuate the conspicuous consumption fashion appeal of the ~$100k Tesla S (and the even-more-expensive Tesla X, whenever it gets here) jibe with Tesla's avowed intention to bring BEVs to the mass market.
...
Click to expand...

I don't see how you couldn't be aware.
Surely you have seen the plan before, haven't you?

Here is the answer for your question, just in case you really are not sure what their plan is...
http://www.teslamotors.com/blog/secret-tesla-motors-master-plan-just-between-you-and-me
Click to expand...
From the source above:
Elon musk, 2006 ...the second model will be a sporty four door family car at roughly half the $89k price point of the Tesla Roadster and the third model will be even more affordable...
Click to expand...
Since the second Tesla (model S) wound up costing, on average, considerably more than twice as much as Musk claimed it would, and the third Tesla (model X) will probably cost, on average, considerably more than the S, it is obvious the original plan, as Musk stated it, has been superseded...
 
You really love using average sale price interchangeably with base price.

As I am sure you are aware, anytime any manufacturer announces a price point, they are talking about the base price..

Here is the outline of the plan, yes, some details have changed as Tesla learns and grows, but the basics remain the same...

Step 1. Build the low volume, high price Roadster. This is a proof of concept level and the money from it is used to grow the business so they can build the next step.

Step 2. Build a higher volume, lower priced luxury sedan. Use the funds garnered from that to help grow the business to the point where it can build the third step.

Both the S and X are part of step 2.

Step 3. Build a lower priced, smaller sedan in larger numbers.

Tesla knows it can't replace all the ICE cars out there with EVs. It needs help.
Their mere presence has been good for the industry, motivating other manufacturers to build EVs. The Volt owes its existence on the market to Tesla. I'm also guessing BMW would not be building the "i" series if it were not for Tesla.

Nissan is likely the only company that was moving this direction anyways.

Tesla has come a very long ways, and they are executing it well.
Yes, there has been some detours in the road, some unexpected twists. The learning curve for Tesla has been steep, yet they have learned, and changed to adapt far quicker and effectively than most companies.
 
DaveinOlyWA said:
unfair?? we are talking about relying on the stock market to pay its day to day expenses. There are no rules that are fair or unfair because its all based on hype.

how many times have we seen a company that had a great product that did not translate to a successful business model?

what we are essentially doing is gambling on Tesla's business sense, not their technological chops. there is a HUGE difference here. HUGE and why anyone else cannot see that is beyond me.
Click to expand...
A lot of growth companies rely on stock market exactly for that: to pay for infrastructure growth and paying for "day to day" expenses WHILE growing the business. But whether that is based on pure hype is debatable. They have so far managed to make and sell a good number of cars. The real test is whether they can make the Model 3 at the price and quantities they claim, and whether pure BEVs have an inherent adoption ceiling.

I on the other hand disagree that it's a great product. It's ok, it's a novelty overpriced proof of concept.
 
epirali said:
...The real test is whether they can make the Model 3 at the price and quantities they claim, and whether pure BEVs have an inherent adoption ceiling.

I on the other hand disagree that it's a great product. It's ok, it's a novelty overpriced proof of concept.
Click to expand...

I wouldn't say the Model 3 is the real test, it is a test.
A very significant one, but don't dismiss all the other tests Tesla has already passed.

You are welcome to your opinion on the quality of Tesla's product.
Car reviewers, product reviewers, customers, competitors etc seem to agree the Model S is a great product.

The Model S 85kWh was formerly the highest rated car ever tested by Consumer Reports. It scored a 99 on a 100 point scale.
It just lost that title when another car was rated at 100 today.
http://www.cnbc.com/2015/08/27/teslas-p85d-is-the-best-car-consumer-reports-has-ever-tested.html

Of course, loosing that title to another Tesla vehicle is not a bad consolation;)

The Model S has almost as many sales as the category leading Leaf, even though it is 2.5-3 times the price.
It has clocked more electric miles than any other plugin.
It has the largest DC charging network (by kW) of any network.

I'd say Tesla has been using the money they raise very well so far. As long as they keep executing as well, if not better, this company has a lot of upside left.
 
dgpcolorado said:
Even routine service is very expensive ($600 annual checkup, for what?) and much more than even high-end ICE cars.
Click to expand...

Tesla has done away with the mandatory $600 annual checkup. I may do it the first year just to see what all they include.

edatoakrun said:
I'm not exactly sure how Tesla's plans to accentuate the conspicuous consumption fashion appeal of the ~$100k Tesla S (and the even-more-expensive Tesla X, whenever it gets here) jibe with Tesla's avowed intention to bring BEVs to the mass market.
Click to expand...

My S70D was only $71,950 after the Federal Tax Credit. If I had stayed with the plain vanilla white RWD S70 (no pano roof) I would only have $63,700 out of pocket.
 
epirali said:
DaveinOlyWA said:
unfair?? we are talking about relying on the stock market to pay its day to day expenses. There are no rules that are fair or unfair because its all based on hype.

how many times have we seen a company that had a great product that did not translate to a successful business model?

what we are essentially doing is gambling on Tesla's business sense, not their technological chops. there is a HUGE difference here. HUGE and why anyone else cannot see that is beyond me.
Click to expand...
A lot of growth companies rely on stock market exactly for that: to pay for infrastructure growth and paying for "day to day" expenses WHILE growing the business. But whether that is based on pure hype is debatable. They have so far managed to make and sell a good number of cars. The real test is whether they can make the Model 3 at the price and quantities they claim, and whether pure BEVs have an inherent adoption ceiling.

I on the other hand disagree that it's a great product. It's ok, it's a novelty overpriced proof of concept.
Click to expand...

name one. but before you do that, compare cash flow, P/E ratios, and assets first to make sure the company you name is comparable to what Tesla is doing and try to name one that is still in business

as far as "product worth" your opinion is not in the majority
 
Zythryn said:
epirali said:
...The real test is whether they can make the Model 3 at the price and quantities they claim, and whether pure BEVs have an inherent adoption ceiling.

I on the other hand disagree that it's a great product. It's ok, it's a novelty overpriced proof of concept.
Click to expand...

I wouldn't say the Model 3 is the real test, it is a test.
A very significant one, but don't dismiss all the other tests Tesla has already passed.

You are welcome to your opinion on the quality of Tesla's product.
Car reviewers, product reviewers, customers, competitors etc seem to agree the Model S is a great product.

The Model S 85kWh was formerly the highest rated car ever tested by Consumer Reports. It scored a 99 on a 100 point scale.
It just lost that title when another car was rated at 100 today.
http://www.cnbc.com/2015/08/27/teslas-p85d-is-the-best-car-consumer-reports-has-ever-tested.html

Of course, loosing that title to another Tesla vehicle is not a bad consolation;)

The Model S has almost as many sales as the category leading Leaf, even though it is 2.5-3 times the price.
It has clocked more electric miles than any other plugin.
It has the largest DC charging network (by kW) of any network.

I'd say Tesla has been using the money they raise very well so far. As long as they keep executing as well, if not better, this company has a lot of upside left.
Click to expand...
Actually If you look up thread I have pretty much said they have been executing exactly as they said. So not sure where the disagreement is.

And I was not questioning the quality of the model S, rather its look and feel. In my opinion it does not live up to a car at that price.

The leaf is also a novelty car in a sense. Tesla, by their own plans, are aiming to make a much larger impact with the Model 3. And I think that is the big test, I don't think there is much more market left in the model S/X space.
 
DaveinOlyWA said:
epirali said:
DaveinOlyWA said:
unfair?? we are talking about relying on the stock market to pay its day to day expenses. There are no rules that are fair or unfair because its all based on hype.

how many times have we seen a company that had a great product that did not translate to a successful business model?

what we are essentially doing is gambling on Tesla's business sense, not their technological chops. there is a HUGE difference here. HUGE and why anyone else cannot see that is beyond me.
Click to expand...
A lot of growth companies rely on stock market exactly for that: to pay for infrastructure growth and paying for "day to day" expenses WHILE growing the business. But whether that is based on pure hype is debatable. They have so far managed to make and sell a good number of cars. The real test is whether they can make the Model 3 at the price and quantities they claim, and whether pure BEVs have an inherent adoption ceiling.

I on the other hand disagree that it's a great product. It's ok, it's a novelty overpriced proof of concept.
Click to expand...

name one. but before you do that, compare cash flow, P/E ratios, and assets first to make sure the company you name is comparable to what Tesla is doing and try to name one that is still in business

as far as "product worth" your opinion is not in the majority
Click to expand...

The basic test you propose is faulty. There are very few companies that are on the same curve, and tesla is doing something unique: they are building a car company but using some of the economics/investment and approaches of tech companies. Only "issue" I see is that their stock price already has a lot if their future "baked in."

And I am not sure how you can say my opinion is not in the majority. By definition it is not in the majority of Tesla owners, they like the car. But how do you quantify every person who passed on it because they thought it wasn't worth the money?
 
edatoakrun said:
I'm not exactly sure how Tesla's plans to accentuate the conspicuous consumption fashion appeal of the ~$100k Tesla S (and the even-more-expensive Tesla X, whenever it gets here) jibe with Tesla's avowed intention to bring BEVs to the mass market.
Click to expand...
="keydiver"
My S70D was only $71,950 after the Federal Tax Credit...
Click to expand...
You bought a loss leader, which is always a good strategy for a buyer.

In this sense, Tesla has an entirely conventional vehicle pricing strategy, using a low base price to get buyers through the door (even if virtual) then upselling most of them to a higher margin (or in TSLA's case, lower loss) final purchase.

If the average sales price of A TESLA S were ~$80,000 last quarter, rather than something well over $100k (anyone found a solid number?) TSLA's loss per car sold would of course have been far higher than the ~$5,000 reported.

And in all probability, TSLA could not have sold the equity it recently had to meet it's short-term cash needs, certainly not at the price it received.

Even your (relative) bargain S sales price still means your total cost of ownership will probably be in the five-figure range for each of the next four or five years, a price only a tiny fraction of drivers are willing to pay.

BTW, have you gotten the sales pitch for any or all of the "upscale" TESLA branded accessories, yet?

Tesla revamps retail stores, adds apparel, gear

...Luring new customers and keeping current ones loyal to the Tesla brand is crucial if Tesla CEO Elon Musk is to reach an avowed goal of selling 500,000 vehicles a year by 2020...

In many ways, Tesla locations are much like the so-called experience stores once favored by Sony and other purveyors of consumer electronics; the idea is less to sell a product on the spot than to let shoppers spend time with the brand.

...stores are typically located in luxury malls. At Santana Row in San Jose, the store shares a street with Gucci and Kate Spade; a steady stream of curious shoppers wander in and out.

The upscale locations are part of the company's plan to build a luxury lifestyle brand. Earlier this year, Tesla hired a former Burberry executive named Ganesh Srivats to extend its reputation for luxury to a global audience.

By pushing expensive clothing and accessories, Tesla boosts revenue and deepens its relationship with affluent customers.

Like BMW, Porsche and Ferrari before it, Tesla has its own fashion line -- the Tesla Design Collection, which includes a $300 tote bag, $100 sheepskin leather driving gloves and a $40 iPhone sleeve. Cycling jerseys will go on sale at most stores in October...

The bags, such as the "Moab Weekender," are named after specific Supercharger locations.

Tesla has found that customers typically buy a bag that matches the interior of their car.

Further echoing the fashion industry, Tesla plans twice-yearly, seasonal updates of the stores to generate buzz and attract shoppers while offering something new to existing drivers of the Model S sedan.

The current revamp, now rolling out to stores in North America, will last through two quarters; the next will arrive in the first quarter...
Click to expand...
http://www.autonews.com/article/20150822/RETAIL/308229999/tesla-revamps-retail-stores-adds-apparel-gear
 
edatoakrun said:
...
In this sense, Tesla has an entirely conventional vehicle pricing strategy, using a low base price to get buyers through the door (even if virtual) then upselling most of them to a higher margin (or in TSLA's case, lower loss) final purchase.

If the average sales price of A TESLA S were ~$80,000 last quarter, rather than something well over $100k (anyone found a solid number?) TSLA's loss per car sold would of course have been far higher than the ~$5,000 reported....
Click to expand...

The bold is highly misleading.
The Tesla base model is not a loss leader, and none of the cars are sold at a loss.
The per car loss number is arrived at by adding up all R&D as well as capital investments and dividing that into the number of cars sold.

Tesla makes a 20% + profit margin on its cars.

The way you phrase it implies that the car costs Tesla more to build than they sell it for which is false.
 
Zythryn said:
edatoakrun said:
...
In this sense, Tesla has an entirely conventional vehicle pricing strategy, using a low base price to get buyers through the door (even if virtual) then upselling most of them to a higher margin (or in TSLA's case, lower loss) final purchase.

If the average sales price of A TESLA S were ~$80,000 last quarter, rather than something well over $100k (anyone found a solid number?) TSLA's loss per car sold would of course have been far higher than the ~$5,000 reported....
Click to expand...
...The per car loss number is arrived at by adding up all R&D as well as capital investments and dividing that into the number of cars sold...
Click to expand...
That statement is correct.

For all the genius of Mr. Musk, he has still not quite figured out how to manufacture and sell BEVs without expenditures for "R&D as well as capital investments"...

Maybe after he licks that minor problem, TSLA will be profitable...
 
epirali said:
And I was not questioning the quality of the model S, rather its look and feel. In my opinion it does not live up to a car at that price.
Click to expand...

Tesla's stance, as I understand it, is that Model S is offering a new definition of "luxury" at that price point. I tend to agree, though fully understand that there are plenty of people who want the old definition.
 
Never has there been a company with the vision of Tesla which is totally disrupting the car business (albeit at a tiny scale of the business). Has any car company ever built a worldwide network of fueling stations? And had its second model ever built going against the best of the best and stole the hearts and minds of their customers? Without any paid advertising?

What is stopping TESLA is that they must built two GIGAFACTORIES per year for the foreseeable future and their detractors are holding him to only one (due to financing and their backward looking analysis) - which he already is trying to expand with the purchase of 1,700 additional acres.

The creation of the battery business is brilliant, but again it will require more capital to get the factories humming.

His genius is self-evident but more when the oil business gets literally on fire due to conflict in the Gulf and the gas glut is quickly forgotten.
 

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