I am confident that we will close above 375 today.
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ValueAnalyst
Closed
Ok. Thanks for breaking down your view, and here are my responses:
- Please walk me through how you calculated "8 million cumulative AP2 cars" given that Tesla will have built 6 Gigafactories by 2021, and will likely continue to announce more locations in 2018 and beyond, and build up to 20 Gigafactories "as fast as [they] can" (which I deemed possible by 2025).
- Please elaborate on 10% owner participation, given that participating in Tesla Network will pay for most, if not all, of the car payment, if not more. Why do you think 90% of Tesla Model 3/Y owners will turn down tens of thousands of dollars every year.
- Please elaborate on how you estimated only 5 hours per day given that cars sit idle for 95% of the time.
- Please explain why 200 days vs. 365 days?
- Please explain why you estimated Tesla's gross margin on an app to be only 45%, when Apple Store is estimated to command 90% gross margin.
My assumption of 20 million cars on Tesla Network by 2025 does not necessitate a global fight against regulation. Just California and New York implementing the necessary laws would be enough. This will happen in 2018, let alone by 2025.
The financial benefit of joining the Tesla Network will be far above the total cost of any of the items you listed. I estimate the financial benefit to the owner to be more than $20,000 per year. That should pay for car wash...
UBER does 100+ million rides per day at an average cost of $10 per ride. My assumption of $2 per ride incorporates the increased availability of mobility-as-a-service, but it will be decades before the market is "entirely saturated." The world will need several hundred million autonomous cars.
Sorry - but "conservative" is an underestimation. By 2025, it is likely that Tesla will have more than 10 Gigafactories, so you're assuming less than 200,000 annual production per Gigafactory, when Tesla has already guided "more than 1 million" for Gigafactory 1.
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Visiting 369 for some buying opportunities and a chance to sell the 370 puts I bought this morning would not bother me one bit....
jhm
Well-Known Member
This is a bit rich for me. In 2025, I expect that 20% to 30% of the new car market to be EVs. So maybe 20M to 30M EVs total. My long-term expectation for Tesla's share of the EV market is about 30%. I really hope it is not necessary for Tesla alone to supply over half of the EV market. Of course, if the rest of the industry is so inept as to yield so much share, that's their problem, and Tesla will snap it up. But it is not at all necessary to imagine such scenarios. I think Tesla is quite a good buy even if it only holds on to a 10% market share.
I also don't think it is necessary at this point to be modeling Tesla Network. It may be fun, and I encourage having fun, but Tesla is quite a good buy and hold stock even if Network never contributes a dime to revenue. Why wouldn't Tesla just make Network a free feature of the car? It sounds a bit like cell phone companies trying to charge $0.25 per text message. Remember that? OTOH, if it is a free feature of the car, then it simply adds to demand for the car, and Tesla makes its revenue upfront in the sale of cars.
trendtrader scared them off over a week ago. They don't stop mmd from posting anyways, use a little restraint and moderate yourselves
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This is exactly what I did when I started in this forum to figure who to take seriously.
Side note, TIL mmd can at least put a list in alphabetical order.
ValueAnalyst
Closed
Two things:
1) My calculation involves cumulative number of cars Tesla will produce by 2025. You're talking about new production each year. Your number is actually (slightly) more optimistic than mine!
2) Please keep in mind that India, the fastest growing car market on Earth, banned any ICE cars on the roads by 2030. China, Norway, Germany, Netherlands are all implementing similar regulation. US will follow. I actually expect 100% of new car market to be EVs by 2025, but my formula I laid out is multiple times more conservative than that likely outcome.
Please explain to me how Tesla will only command 30% market share when Tesla is planning "8-12 Gigafactories, maybe 20" when no other company has announced plans for their first one yet. In fact, if you do the GWh calculation and add everyone else up, it's more likely that Tesla's market share of new EV cars throughout the next several years will be more than 70%, but nevertheless, my formula assumes less than 20% new car market share by 2025.
I certainly agree with this.
I agree that Tesla Network is not necessary for TSLA to be a screaming buy at current prices, but I still try to incorporate the future in my DCF to the best of my knowledge, using appropriate discount rates that reflect execution risk and the factors that mitigate that risk.
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So if you weren't talking out of your a$$ in this particular post (broken clock right twice a day?)...
If Tesla gains 10% on each car by not having to give that 10% to a dealer, it can't claim that 10% as part of the revenue it gets from selling the cars directly?
Reciprocity
Active Member
So if you weren't talking out of your a$$ in this particular post (broken clock right twice a day?)...
If Tesla gains 10% on each car by not having to give that 10% to a dealer, it can't claim that 10% as part of the revenue it gets from selling the cars directly?
Exactly, many of those selling expenses and paid for by the services income. Yes, Tesla does not make a profit on servicing the cars, but it seeks to break even and since most of the cars are serviced at the same locations they are sold, those expenses are offset where a traditional auto maker must leave margin for the dealership, though dealerships make most of the their money from services, they still make some money from selling the cars. Same goes for parts, which drives the cost of servicing and repairing a traditional ICE much more expensive.
SG&A also includes advertising, which as we know large auto manufactures do a tremendous amount of and Tesla does none of. Aside from some signage in the stores and some promo videos, they do not spend any money on advertising. PR is done on twitter or at TED talks. Since Tesla also owns most of their locations, they are assets not expenses. In the places where they lease, I expect them to expand to larger locations that are owned by Tesla.
Short term, SG&A is high as a percent of the sales, but those expenses are about to spread out between a much larger number of sales. SG&A will always be higher because they do not pass those expenses onto the dealership, but that also means they can offset many of those expenses with servicing fees and still beat the traditional model by a large amount in terms of cost and customer satisfaction.
Yes he identified that one of his backers is a major part of the problem and decided that the only fair solution is for Tesla to strap a ton of lead around their neck as well and jump in the pool with the rest. Be sure to watch for this insane logic to be spread to all the usual suspects in the near future.
Discussion was about gross margin, not revenue. Point being (I guess) that using gross margin as a comparison between Tesla and a regular car manufacturer is flawed since it doesn't cover the same thing. It's like doing cost of ownership analysis between a Model 3 and a Bolt but not facturing in the value of free supercharging (assuming the former has it)
Reciprocity
Active Member
On a side note, it appears Tesla has indeed completely disconnected from Oil and is now tied to high flying Tech stocks like NVDA and APPL. Does anyone recall the last time that Tesla traded up or down on big moves in Oil? I think the current move in oil is just short a covering rally as I am sure oil is being heavily shorted at this point.
For one thing, there's nothing suggesting that the other Gigafactories will be as massive as the Gigafactory One. The inclusion of the buffalo plant shows that factories of varying size can be included. It also shows that the Gigafactories won't necessarily be producing batteries and cars.
Tesla might build one Gigafactory for the Semi in the US, three gigafactories for maybe 400k vehicles each in the EU, China and India, and a couple of gigafactories for solar, one in the EU and one in China. That's six, and the production capacity is only around 2 million (using 800k for Fremont and 400k for the three other plants). They may also be "built" by 2021, but the time they become operative and the time they reach full output are likely years apart. Look at the Gigafactory One, it's four years into construction and is nowhere near completion. Maybe the other factories can be built faster, but I doubt it. I don't think pretty much anywhere can compete with the Reno permitting process. At least not in Europe. Maybe China/India.
It will only be as profitable as you expect for a year or two. After that, the saturation of the ride market wipes out a lot of the revenue per owner, and it won't be worth the hassle for many owners.
Saturation will be reached for most hours of the day and many days of the year quite rapidly. At that point, the cars will be sitting idle.
- I didn't. I used 90% gross margin.
Okay, so those 1.2 billion rides per day was only in California and New York? In other words, 24 rides per person per day seems totally reasonable to you?
Again, the profits will fall as the market becomes saturated. And the hassle involved in adding the car to the Tesla Network is more than just an occasional car wash. It means not being able to use the car as your own car. It has to be presentable at all times. You can't leave stuff in the car, especially valuables like EVSEs. Child seats must be removed. If you have manual seats, you will always be adjusting them when you get into your car. You will be picking up trash every day. At your estimated 30 rides per day and say 5 miles per ride, including some driving for pickup and return home, you're adding 55k miles to the car per year. That will ruin your car in maybe 3 years, because these won't be gentle highway miles. There are so many downsides.
I didn't say it would be *entirely* saturated. It will only be saturated in the markets with a lot of Teslas.
I think that guidance is very soft. 800k is a number I would be happy with.
DragonWatch
Small FootPrint
By your scenario, very interesting by the way, Ford, Chevy and the like are French Toast ~ no Burnt Toast by 2025
Gone are the days of the '56 ChevyNo idea what you are trying to say with all these. Every company does these. GM, for example, developed an entire Bolt and revamped Volt in the last few year. All companies continuously spend on these.
Let me put it another way to make it simpler. if GM and Ford were allowed to operate like Tesla, with direct sales and using customers as sales people, and use Tesla style accounting, their gross margins will be 10%+ higher.
If we are not comparing gross margins among other car makers and Tesla and touting Tesla's high gross margins, then it's all fine.
Quite simple. I am here to stomp on misinformation spread by folks like yourselves, pulverize them into the ground
Shoved away into the *sugar* pile. Oops, I meant my ever growing ignore list.
My ever growing ignore list (making public first time ever):
1 Bgarret
2 Bobfitz1
3 D-egg-O
4 DragonWatch
5 EinSV
6 Garlan Garner
7 Intl Professor
8 kbM3
9 Krugerrand
10 Lycanthrope
11 madodel
12 MitchJi
13 MXWing
14 Navin
15 racer26
16 rdalcanto
17 Reciprocity
18 Sancho
19 shrspeedblade
20 TMSE
21 TrendTrader007
22 ValueAnalyst
23 winfield100
Let me make things even MORE SIMPLE for you. We make decisions based on WHAT IS, not WHAT WE IDEALIZE IT TO BE IF WE COULD JUST CHANGE THE RULES. If we changed the rules of gravity on Earth to match martian gravity, I could tell my doctor that my BMI is perfect and I don't have to lay off the buffet. I like your world.
As much as you enjoy "stomping and pulverizing" on misinformation - it's also entertaining to see the village idiot piss against the wind when it's cold outside.
Using "customers as sales people". Yeah I wish I could sell 100k depreciating assets based entirely on my powers of persuasion.
Now that we know that there is a "Who's who's list of non MMD Kool-Aid Drinkers" you are about to receive a lot of membership applications. There might be days before you see a new post and only from new users.
JRP3
Hyperactive Member
@ValueAnalyst Currently Tesla has one functioning partially completed GF with no evidence of extensive expansion of that before 2018. Tesla also can't automatically turn on wipers in the rain. Some of the projections of GF's and Tesla Autonomy services seem slightly divorced from reality...
DragonWatch
Small FootPrint
Yes, based on my color code on the iPhone app of red and green, I think that Tesla will close above 375 with a hairline chance of green. I consider $0.01 as positive note
Besides I get to ride in my MX to the lake this afternoon
Sorry for going on-topic ...
Not any kind of specialist here, but if TSLA is indeed coupled to other hi-tech it may be pertinent to market movements that EU Commission has just fined Google about 2½ billon Euro for limiting competition in various ways within the EU. I have no usable link, but the Commissioner is Margrethe Vestager from Denmark. And GIYF ... oh wait
Since I have some fresh salary money and the exchange rate is fortunate, I may add a little tomorrow.
Not any kind of specialist here, but if TSLA is indeed coupled to other hi-tech it may be pertinent to market movements that EU Commission has just fined Google about 2½ billon Euro for limiting competition in various ways within the EU. I have no usable link, but the Commissioner is Margrethe Vestager from Denmark. And GIYF ... oh wait
Since I have some fresh salary money and the exchange rate is fortunate, I may add a little tomorrow.
There is no free lunch anywhere. It will come down to accounts payable and accounts receivable. Nitpicking about unfair Tesla direct sale advantages and referral codes is pointless.
If Tesla wants to have a model where they operate this way, it's their choice. Nothing stops F, GM and other legacy auto to go this route if they wish.
ValueAnalyst
Closed
There's no definitive indication that subsequent Gigafactories will be as large or larger than Gigafactory 1, but given that Chinese car market will be 2-3x of US car market by 2020, it makes sense for Tesla to build either one very large Gigafactory there or two or three Gigafactories at the size of Gigafactory 1. Europe (including eastern Europe) is also a very large market. I also think Tesla will build one more on the east coast of the US.
The massive demand for Model 3/Y/Semi is there, and it makes sense to build many large Gigafactories to satisfy that demand. I don't see Elon going smaller with next-gen Gigafactories.
I expect increased vertical integration with next-gen Gigafactories. If you listen to Elon's words during the Shareholder meeting, he interchangeably uses Gigafactory/assembly factory. Remember: "materials in from one end, cars out the other end."
I agree that the scenario you laid out is possible, and that there is not definitive indication that it is not possible, but I don't believe is likely, because: demand for Tesla's products is massive and is only increasing, no other car company is positioned well to satisfy this demand for several years, Tesla's access to capital has and will continue to improve as revenues and gross profit grows, Tesla has already built one with limited capital so experience will help build next-gen faster and at a lower cost, other countries now see what Tesla has accomplished in the US and want a piece of the action etc.
You are simply overestimating the rate at which EVs will be produced by anyone other than Tesla. Just look at the announcements from Volkswagen, Volvo, Audi, Porsche, and most recently Aston Martin. They all have press releases out with immense marketing B.S. but no indication of how much or how many. There's a reason for this! They don't have Gigafactories, they don't have the capital/experience/will to build any anytime soon. Their balance sheets are leveraged, and on the asset side of their balance sheets, the real assets are mostly PP&E for ICE manufacturing (i.e. worthless soon). I think if you add up their "goals," it adds up to less than 3 million EVs per year by 2025!!!
I never said 1.2 billion rides per day; you did. My math comes out to 600 million rides per day by 2025. I said I expect California and New York to put in place laws for Tesla Network by 2018. You have simply distorted my words on this; I'm assuming unintentionally, but still important because people take these distortions and run with it.
I believe 500+ million rides per day on Tesla Network by 2025 at $2 avg cost per ride is the likely outcome.
I think you are overestimating the damage to the cars on Tesla Network. Tesla and Jeff Dahn are working on battery tech that extends battery (most costly part of EVs) lifespan to more than 1m+ miles. Owners will also be able to only service highly rated customers etc. These are small details that will be worked through. Important factors are the ones I laid out in my formula.
Thank you for a great discussion. Let's see how reality plays out. I'm so excited to be a part of this future.
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jeewee3000
Active Member
My view on ridesharing (actually a better term for it would be 'car-sharing') lies in the middle between yours and Yggdrasill's.
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Damage to the car mechanically (battery, drivetrain, brakes, tires, ...) and lower car value because of more miles driven would be minimal, and the revenue from lending your car out would cover this cost, and then some.
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What I do worry about is how the interior of my car will suffer due to others. Yes, I may only give 4 and 5 star customers the option to use my car, but this will limit my income. If I lend my car out for only 2 rides a day, the costs will not cover the gains.
As someone who drives around 25.000 miles a year, I keep my car in mint condition. I never ever eat in my car, only consume water, etc. I try not to transport smokers, as the smell stays in the car for way longer than I can handle. Am I boring and perfectionist? Probably, but my car is spotless and I love it.
Even a five-star user of the Tesla Network will not be as careful with my car as I am. So unless I buy a Tesla (or other autonomous EV) as a second vehicle with the purpose of earning money by car-sharing, the hassle (and stress) is probably not worth the risk.
BACK ON TOPIC: $373 showing to be a solid support level.
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