Are you also investing in Tesla?

[gg_got_a_tesla]

It's more likely that, one day, Tesla would be acquired by one of the biggies but continue to exist as a niche, EV-only subsidiary. I'd draw a parallel to Ferrari (part of Fiat), Bugatti (part of VW) and so on.

I'd also draw a parallel to other industries such as software wherein a giant such as a Microsoft or an Oracle finds it hard to innovate organically and would instead acquire a player who has something to offer via technology and customers.

 

[Larry Chanin]

It's more likely that, one day, Tesla would be acquired by one of the biggies but continue to exist as a niche, EV-only subsidiary. I'd draw a parallel to Ferrari (part of Fiat), Bugatti (part of VW) and so on.

I guess if Elon wanted Tesla to be acquired, that might come to pass. However, with him owning 29% of Tesla I would imagine it would be difficult to do without his cooperation.

Larry

 

[SByer]

Thousands of engineers don't matter if you've got a high percentage 1x or -2x engineers rather than mostly the 10x guys. I'm betting Tesla, being the new guy, the cool startup, almost certainly has a significantly higher percentage of good engineers than the established companies. Plus, we're taking about a specialized slice of engineering - high powered electrical power handling is outside (waaay outside) of the normal skill set of those thousands of engineers, further negating any advantage in numbers.

Not to mention that those older companies have significant established anti-bodies against anything new.

Plus, VW may have a low profit margin, but Audi taken on it's own doesn't. Porsche's isn't too shabby either (which is why I think it's critical that the Roadster 3.0 kick ass).

 

[Norbert]

My experience with big companies is that they take 3 years to decide when to hold their first committee meeting. Having "thousands of engineers" doesn't do much good as there are only so many that are useful before they get in each other's way and (mis)communication costs become so large that it kills the project.

And the article later mentions the "fundamental question of whether consumers will even want electric cars.". Which is one reason Audi can't just put their engineers on that task: they don't trust it will pay off. Plus, they still need their engineers to compete with BMW and Mercedes in the ICE arena. They'd risk a double failure and thereby the whole company. So they need a much more moderate approach.

 

[Larry Chanin]

Big companies will get there, without a doubt. Heck, that's part of Elon's stated goal (every car being electric). But hopefully Tesla will be fairly well established by that point.

I hope you are right, but it seems that Nissan has done a pretty good job of moving with speed and deliberation into the EV mass market. They are years ahead of Tesla in this area. It will be interesting to see what happens when they move into the luxury EV market with their electric Infiniti.

Larry

 

[Mycroft]

Connected to ckessel's point, there is a LOT of dead inertial built into the big boys. Without a very strong leader on the order of Carlos Ghosn or Bill Gates with a VERY strong track record, to push through the change, it's very unlikely to happen. Even when you have someone like that, (i.e. Bob Lutz), the plan can be crippled by compromise and committee designing a race horse and ending up with a camel scenario. One look at the compromises in the Volt, Spark, and Focus EV should be all it takes.

I hate bringing Apple into this again, but when they announced the iPod, everyone said that Sony and Microsoft would eat their lunches also. The iPad? Totally useless because a laptop can do so much more. And even if it is useful, RIMM and Microsoft will eat their lunches because they have the huge dedicated user base.

I just cannot, for the life of me, understand how anyone with half a brain can look at Tesla's amazing, magical Model S drive train and expect the "big boys" to beat it within 5 years.

 

[slavi]

Tesla's technology is good, but it's not rocket science.

Maybe not completely, though it helps to have a rocket scientist at the helm.

 

[stopcrazypp]

What happens when a company with dozens of factories around the world, thousands of engineers, the clout and budget and stability to hire anyone it likes, and massive, established relationships with hundreds of leading specialist auto suppliers decides to beat Tesla at its own game?

The thing is, there are very few car companies out there who have a strong enough CEO (like Ghosn) that can push through a big commitment on EVs. Like SByer said, there are strong "anti-bodies" in large companies against big changes.

And the "dozens of factories" are completely irrelevant, since they still need to build new factories to manufacture EV components like batteries and motors in order to be even remotely competitive (see all the new investment Nissan has to do for the Leaf, GM for the Volt, etc). "thousands of engineers" is also irrelevant, because they need the best battery and EV engineers, not just general vehicle engineers. "leading specialist auto suppliers" are also irrelavant since they need EV suppliers, not just normal parts suppliers (just look for the Focus for a counter example; depending on suppliers just leads to a suboptimal EV that costs more money than one built totally in-house).

And their Audi example is probably the worst example they can come up with. Even the concept cars built by Audi are a joke compared to the Roadster in terms of range and performance. That doesn't bode very well for any production car they intend to offer.

And coming up with EV components (batteries, motors, power electronics, chargers) that have a good balance of performance and price isn't something that can happen quickly (it takes years of investment).

 

[Tommy]

You guys all make good rebuttals to the points made in the Motley Fool article Larry posted. Let's face it though, the author's real goal is to get you to subscribe to the Motley Fool as evidenced in his teaser in the last paragraph. Articles of this type I read with a skeptical eye, and hopefully as do other investors.

 

[Norbert]

I hope you are right, but it seems that Nissan has done a pretty good job of moving with speed and deliberation into the EV mass market. They are years ahead of Tesla in this area. It will be interesting to see what happens when they move into the luxury EV market with their electric Infiniti.

Tesla may be able to build around 15,000 Model S in the first 12 months. That's almost as many cars as Nissan built in the first 12 months by number (about 20,000), and while 1.5 years later, it is more capable technology, and: sold with profit. (We expect.) Making the step to larger volumes will take Tesla a few years, but we also have to see how soon Nissan will be able to sell volumes of perhaps 100,000 per year, even if it is financially much easier for Nissan to go to those volumes. So far I see Nissan more as opening doors for Tesla (and vice versa), than as a competition.

 

[vfx]

So far the big guys are just eating canopies. Real ranges in the 80s show they are not serious. I think only Nissan is a threat and there is certainly room for two the the space.

 

[Larry Chanin]

Tesla may be able to build around 15,000 Model S in the first 12 months. That's almost as many cars as Nissan built in the first 12 months by number (about 20,000), and while 1.5 years later, it is more capable technology, and: sold with profit. (We expect.) Making the step to larger volumes will take Tesla a few years, but we also have to see how soon Nissan will be able to sell volumes of perhaps 100,000 per year, even if it is financially much easier for Nissan to go to those volumes. So far I see Nissan more as opening doors for Tesla (and vice versa), than as a competition.

Hi Norbert,

I'm not sure I follow your remark about Nissan and Tesla opening doors for one another.

After the first flush of Model S and X purchases by early adopters, I fear that Nissan might be getting into full stride perhaps with a more stylish, longer range "reasonably priced" mass market car. So at the point in time when Tesla attempts to sell to "normal" folks, not EV enthusiasts, it might be rough going if Nissan already has first mover advantage in this market with established economies of scale.

Larry

 

[bonnie]

I agree with Norbert. There doesn't have to be just one successful EV manufacturer (think of all the ICE manufacturers). Viable infrastructure will only be built up with volume sales. Nissan selling cars helps Tesla and vice versa. Theory of abundance vs. theory of scarcity. It's not all a competition.

Besides, the Tesla brand name has a coolness factor that will serve them well.

 

[Norbert]

I'm not sure I follow your remark about Nissan and Tesla opening doors for one another.

In terms of general perception of the relevance of electric cars, to get attention for EVs as a viable alternative technology. One demonstrates affordability, and the other abilities, for example. One of the most important points to get across is the message that electric cars can be, or even will be, the future.

After the first flush of Model S and X purchases by early adopters, I fear that Nissan might be getting into full stride perhaps with a more stylish, longer range "reasonably priced" mass market car. So at the point in time when Tesla attempts to sell to "normal" folks, not EV enthusiasts, it might be rough going if Nissan already has first mover advantage in this market with established economies of scale.

People want to have a choices. Early adaptors are determined to buy an EV and pick among the available EVs. Many others will make choices of a much broader kind. There it helps to offer long range and fast charging so as to be seen as an alternative to an ICE, as much as possible. However, Nissan may first try to lower their production cost further and further, since as a high-volume car company, their goal may be to extend the first-mover-status into the very-high-volume market. Even Infinity may go for high volumes first, before trying to compete with ICEs, just like BMW seems to be fine with an about-100-mile range for the beginning. Also, these companies don't want to compete with their own ICEs, they want volume/market-share in a somewhat separate market in which people buy an EV as a second car in addition to an ICE. Whereas Tesla is the first mover in the "our EVs are getting close to be as usable as an ICE" space, and move that from the exclusive sports car level to the "premium" level and then lower-cost premium. Tesla will remain more willing to design cars in which the battery is a more expensive part.

 

[daniel]

The Problem With Investing in Electric Cars

Years ago, I listened to The Motley Fool radio show for a while. At first, it seemed interesting. Soon, though, I realized that they were full of s**t. They couldn't tell the back end of their alimentary canal from a hole in the ground. They tell you what stocks to buy, but if they really knew what stocks to buy they'd be too rich to spend their time publishing/broadcasting investment advice on public radio; they'd be flying private jets to exotic places where they'd be served fancy drinks by beautiful girls or boys. Their show isn't worth the time it takes to listen to it, and their newsletter isn't worth the bandwidth it takes to download it.

That said, competition from "the Big Boys" is a very real concern for a small company like Tesla. If the Big Boys decide to buy them out and Musk decides to let it go, so he can move on to something else, shareholders will get a nice pay-out, either in cash, or more likely, shares of the purchasing company. If Tesla merely loses to the competition, it could go bankrupt and shareholders could lose everything.

It's the risk of investing in a start-up company, and anybody who thinks that Tesla is a sure thing that cannot fail is living in fantasy land. It's the reason I'm very unlikely to ever buy more than my 100 feel-good shares. But I'm also not likely to get scared and sell them either, because I like the company and if the share price drops to five cents I won't lose enough that I'd miss a meal. Tesla is a small company facing real challenges and it could fail.

But on the other hand, Tesla has a great product and very savvy management who are committed to an ideal and determined to make it work. And if there are risks, there is also great potential. I believe Tesla will make it. As I said in another thread, I would not have bought my Roadster if I didn't believe the company would be around for the long term to service it. And I'd much rather support the company and its ideals by having fun driving my Roadster every day, than invest the same amount in their stock and hope that in ten years that hundred and twenty grand would turn into a million. And if the stock does go up tenfold or a hundredfold, I won't regret my decision because I'll have enjoyed this car for that decade, rather than just watching the stock ticker anxiously every day from now to then.

There are no sure things. But Tesla has a lot going for it. I express my confidence in Tesla by driving my Roadster. It's my daily driver, and it's the slickest car on the road. I think they'll succeed. But I sure would not invest my entire life savings in them, or even a large part of my portfolio. That's in much more stable investments than a start-up company with an uncertain future. TSLA is, IMO, a great place to put some of your risk capital. Not a great place to bet the bank.

 

[ckessel]

If the Big Boys decide to buy them out and Musk decides to let it go, so he can move on to something else, shareholders will get a nice pay-out, either in cash, or more likely, shares of the purchasing company.

No idea what the legal wranglings would be, but I know Elon mentioned in an interview he had to hold a certain percentage of shares as long as Tesla was part of the DOE loan. I'm sure there'd be ways to sell and work out that detail, but it does provide at least a bit of a hurdle to Elon selling off his Tesla investment.

 

[Iamthecaliflower]

Any of you technicians out there wish to explain the decline in volume over the past 2 days? We got 2 days of 2-3x average volume then a complete collapse. I heard the term cup and handle being thrown around, but I don't really understand it. Anyone care to explain?

 

[AnOutsider]

Any of you technicians out there wish to explain the decline in volume over the past 2 days? We got 2 days of 2-3x average volume then a complete collapse. I heard the term cup and handle being thrown around, but I don't really understand it. Anyone care to explain?

Hasn't the volume been higher than usual? If so, then I'd guess the drop would just be a return to the norm. As for the cup and handle:

Seeing lots of references to the "cup and handle" chart trend re: TSLA over the last 4 months.

The reason for a price rise following a cup and handle formation is largely unknown. Likely because many traders know about this signal and buy when they see it forming thus artificially creating the bullish uptrend.

Hears a link to the concept expalanation. Cup and Handle Definition | Investopedia

 

[Iamthecaliflower]

So if I'm understanding that correctly, this selling pressure is well in line with the definition and that this selling pressure is simply those that bought at the top selling at break even.. If it is right, it should spike at some point in the next few weeks?

 

[Larry Chanin]

Also, these companies don't want to compete with their own ICEs, they want volume/market-share in a somewhat separate market in which people buy an EV as a second car in addition to an ICE. Whereas Tesla is the first mover in the "our EVs are getting close to be as usable as an ICE" space, and move that from the exclusive sports car level to the "premium" level and then lower-cost premium. Tesla will remain more willing to design cars in which the battery is a more expensive part.

Hi Norbert,

You make an excellent point. I believe in "Revenge of the Electric Car" Carlos Ghosn made a statement to that effect regarding the Leaf.

Larry