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A fixation with tech is distracting everyone from what Tesla actually needs to do

Discussion in 'Tesla Motors' started by Bulletproof, Dec 29, 2015.

  1. Bulletproof

    Bulletproof Vendor

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    A fixation with tech is distracting everyone from what Tesla actually needs to do

    A fixation with tech is distracting everyone from what Tesla actually needs to do - Business Insider

    Thoughts on this?

    TLDR: Tesla is a pioneer in tech and enabling cars to update themselves via software which is a significant game changer. However, Tesla has failed to focus on being able to turn out higher numbers of cars. Tesla now produces about 50,000 which is what some large manufacturers produce in a month. Not being able to turn out high numbers of cars. Puts the company at a significant disadvantage.
     
  2. msnow

    msnow Active Member

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    I agree with the part of this article that says Tesla needs to justify its market cap by selling more cars but they also need to keep quality high, and continue to build out their service and charging infrastructure to keep pace with demand.
     
  3. jerry33

    jerry33 S85 - VIN:P05130 - 3/2/13

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    Each year has had a production increase. You have to walk before you can run. It's just a click-bait article.
     
  4. msnow

    msnow Active Member

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    As long as they meet or exceed managements and analysts expectations they should be fine. Making a consistent profit would be nice too.
     
  5. silverp85+

    silverp85+ Member

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    he's always negative about tesla.
     
  6. SebastianR

    SebastianR Member

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    Indeed. Also, let's not forget about the parallel to Porsche. This is the comparison car sales by Porsche over the years:

    1995/1996 - 19,262 cars (or about Tesla in 2013)
    1996/1997 - 32,383 - Tesla in 2014
    [...]
    2000/2001 - 54,586 - similar to Tesla guidance in 2015 (it took Porsche until 2000 to crack the 50k threshold)
    [...]
    2005/2006 - 96,794 - Tesla in 2016? (again, it took Porsche a few years to get up to about 100k)

    So remind me again why we are giving Tesla a hard time for not ramping quicker?
     
  7. bonaire

    bonaire Active Member

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    >> Tesla is a pioneer in tech and enabling cars to update themselves via software which is a significant game changer

    Downloading apps now is commonplace. Downloading firmware without a fleet of lawyers at corporate HQ drowing out advancement is what allowed Tesla to do it before GM and Ford and similar. But downloading firmware safely with the capability of no-loss firmware updates is not exactly new these days.

    Also, commodities have a lower intrinsic value once high volume adoption occurs.
    For example - let's say you compare today's BMW M5 to a 1980 Formula 1 race car. 1990, for that matter. Technology wise, the M5 has tremendous amounts of better technology in it and many can afford it. People driving M5 have it better than the factory drivers of a couple decades ago - and cheaply versus what a factory support team would require.
    If Tesla makes a 1/2 price Model 3 to the Model S, it has to be 75% as good as the Model S for half the price. If it is half as good for half the price, it will not be able to gain mass acceptance.
    Like the wall street guy Jonas said a while back. It has to be a riot to drive. So that means making it more powerful than the other competitive non-Model S EVs on the road. maybe a 0-60 time for the base version of 5.0 seconds (that beats Volt, Leaf and i3) and give it some good suspension for BMW 3-series performance. And give it 200+ mile range just because the number is far more effective than 180 mile range. 2xx is definitely more appealing than 1xx even if it is 201 over 199.
     
  8. tezzla

    tezzla Member

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    Everyone's a critic! and they all know how to run a better business, yea right.
     
  9. Ludus

    Ludus Member

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    #9 Ludus, Jan 3, 2016
    Last edited: Jan 3, 2016
    Tesla is ramping up production at about the same pace as Ford did with the Model T. That's pretty fast.

    I think this article may be classic in the future for getting things so amazingly dead wrong. Like critiquing Apple for wasting it's time with iPod and iPhone when it should be focused on selling more Macs.

    To me right now the critical reason Tesla deserves it's market cap is precisely the potential created by making it's cars like mobile computers that could be wirelessly updated. Right now Tesla is the only company on the planet seriously developing autonomous vehicles even though it appears to be a race with a lot of players. Google, Daimler, Audi, GM ...each have lab operations with a few dozen test vehicles accumulating data to train deep learning neural networks. Tesla has tens of thousands of vehicles on the road all over the world. By late this year it will have 100K vehicles. The competition will still have a few dozen each. Each of them is streaming data and iterating new updates on a daily basis. Nobody else is even close to being capable of doing this at any price because they chose to build cars the traditional way. Level 4 autonomous vehicles are about refining the learning algorithms with vast amounts of data and nobody else is even heading to the ballpark. EM recently said 2 years to full L4 autonomy. Everybody else is aggressively hoping for 5 years.

    What happens if Tesla can put a fully autonomous Model X in service on it's own Mobility app in 2 years when nobody else is close? Try the arithmetic for Uber SUV rates applied 24/7 with no driver costs. Every vehicle putting in 100k miles a year or so. Other than the vehicles themselves and the App there are few other costs besides setting up snake chargers in the market that the vehicles can go to to charge. Tesla could earn as much as Toyota with a tiny fraction of the vehicles manufactured. It seems strange because it's so unlike the traditional auto biz but every Model X they manufacture to use with the Mobility App rather than sell could earn several times it's total price per year. Margins of 500% seem bizarre but Apple having $200B in cash after trying it's best to buy back stock and pay dividends would have seemed pretty bizarre 10 years ago too.
     
  10. Mookuh

    Mookuh Member

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    Tesla can't seriously ramp up production until the Gigafactory is operational, afaik.
     
  11. Skotty

    Skotty 2014 Model S P85

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    Market cap is currently based on future potential. Future potential is strong due to the Gigafactory, which clearly Tesla is serious about. It's potential, as well as the potential of the PowerWall and PowerPack products, are currently understated. Tesla has the potential, in partnership with traditional battery suppliers, to be the dominating supplier of batteries for transport and grid storage for the next century, and those are markets that will be growing substantially.
     
  12. Vitold

    Vitold Member

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    #12 Vitold, Jan 4, 2016
    Last edited: Jan 5, 2016
    Tesla should not aim to be just another car company. Chasing high production numbers now will burden and slowdown them in the future. Model S has QC issues and Model X has issues. There's little advantage of increasing production of imperfect cars.

    Attention to quality, safety and technology are Tesla's advantages and Tesla should continue keeping that way instead of becoming another 'normal' car manufacturer.
     
  13. valuationmatters

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    I don't think Tesla is a bad company. I applaud the lofty goals of changing the world. I love solar, and I think there will be a role for partial or fully electric vehicles in the future, since this is better for the environment that gasoline.

    I also like the model S and applaud a new US-based automobile company.
    Model S has a great exterior look and great performance. Although inside, I hate giant touch screens and prefer simple buttons and knobs. I also think the interior is somewhat unimpressive for the price.IMHO Model X is ugly like an inflated Prius. Falcon Wing Doors are a ridiculously complicated solution to a problem that did not exist.From an investment perspective, the current market valuation seems ludicrous. My valuation analysis shows the stock worth about $25 per share based on my discounted cash flow analysis, which assumes the following:

    1. Tesla actually sells 300,000 cars in 2020 (a huge increase from 50,000 in 2015). On any planet, 6x growth is a huge leap and less likely.

    2. Tesla and somehow actually makes 10% gross margins on the Model 3.

    3. Tesla achieves continued 25% gross margins on Model S, as well as those margins on the Model X despite its massive overcomplexity.

    4. Tesla overall company operating margins of about 4% (even though F and GM have massive economies of scale and still manage only 4% margins on $100 billion in sales). This despite the massively negative overall margins today.

    I think all these assumptions are optimistic for Tesla, and still it says TSLA is worth $25 per share.
    I put my money where my mouth is and am short via owning long-dated puts and shorting the shares directly.

    The gigafactory seems like a terrible idea, since Tesla has zero experience manufacturing batteries, and others (LG Chem, Panasonic) have massive economies of scale and minimal margins.

    Nothing against the company. But basic impartial math suggests the stock is 8x overpriced.





     
  14. Paddy

    Paddy Member

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    I'm not buying a car that updates itself from downloads unless it is from a company that has Internet security in its DNA. This is why I will probably buy a tesla, rather than some other ev.
    Look at the mess that Sony got itself into with Internet security in consumer electronics.
     
  15. CarlK

    CarlK Member

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    #15 CarlK, Feb 5, 2016
    Last edited: Feb 5, 2016
    There are only a handful of car companies in the world that sell 50,000 $100K cars a year. A lot more, including some of the largest auto companies in the world, could not, and likely will never be able to, do that not because of without trying.

    Porsche in 07', just before the financial melt down, was making about 100,000 car a year but was the most profitable auto company in the world. It generated more profit than even Toyota at that time. Tesla, with about the same margin as Porsche, could be hugely profitable if it just stop here and to make only S and X but not to invest any more in R&D or production of future models. But Tesla won't do that because it has the goal of make it a much stronger company.


    Panasonic is a partner in Gigafactory and is to invest $1.5B in the venture. If Panasonic put money where its mouth is regarding battery manufacturing so should we.
     
  16. ankitmishra

    ankitmishra Member

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    Wow!! Experts everywhere. Tesla is doing great. Have these people considered the possibility that maybe they are wrong. Maybe they are the ones who can't understand what Tesla is doing? Maybe they have sold themselves short in life and made their minds have become atrophied due to not being used to their potential? But hey, maybe I am delusional about Tesla and everything else in my life. Who knows? No offense to anyone.
     
  17. tander

    tander Member

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    +1 My understanding on the main reason things keep getting delayed is that they could get enough batteries. Half the point of the Model X was just to keep people's interest while they figured out how to get batteries. They had to a) get enough batteries and b) keep reducing the cost of manufacturing them.
     
  18. CarlK

    CarlK Member

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    And since batteries are in limited supply until then it's best to maximize the return by putting them in the most expensive car possible.
     

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