Articles/megaposts by DaveT

[SteveG3]

That is a staggering amount of inaccurate nonsense in just a few bullet points. That analyst seems to be pulling his "facts" out of his rear end.

Indeed, Trip seems to be uttering nonsense to move the stock. For some time there have been Tesla naysayers trying to falsely paint analyst projections for Tesla as the 2014 version of dot.com bubble nonsense reports with ever increasing price targets.

Then the day of the GF announcement, Trip came out with this stuff to back his $385 price target ahead of the Nevada event. For the first time I thought the naysayers had a legitimate example of a dot.com like report, and game playing price target leaping (believe it was actually a $400 target for Trip that day). If Elon read this, I could see why later that day he'd say the price was running up a bit high or fast. Who wants to be associated with this kind of hype:

"We expect the location of GigaFactory-2 to be decided by December’ 2014 and the location of GigaFactory-3 to be decided by June’ 2014
We think that the location of GigaFactory-2 may be Texas and the location of GigaFactory-3 may be New Mexico. Selection of Reno Nevada rules out California for GigaFactory, as in this situation Geographical risk gets highly concentrated
Construction of GigaFactory-1, GigaFactory-2 and GigaFactory-3 is instrumental in creating a completely new Industry
The days of one-size battery fits all is over and it gets replaced by highly specialized batteries – Battery Categorization:

• Terrestrial- stationary Batteries
• Terrestrial- in-motion Batteries
• In-Air/Orbital Batteries
• Aquatic/Marine Batteries

Each one of the above batteries have different trade-offs in Power Density, Energy Density and Weight. This could give rise to new inventions in Material Science, which could in long term provide significant business opportunities to Tesla

Tesla Motors: First We Take Reno Then We Take - Stocks to Watch - Barrons.com

thank goodness we have the TMC investor community to analyze Tesla together.

 

[ckessel]

We think that the location of GigaFactory-2 may be Texas and the location of GigaFactory-3 may be New Mexico. Selection of Reno Nevada rules out California for GigaFactory, as in this situation Geographical risk gets highly concentrated

Geographic risk? WTF is that author talking about? Does he think someone is going to nuke a several hundred mile radius? Maybe the author lives in New Jersey and has no freaking idea how big the states of California/Nevada/etc really are?

I'm used to seeing stupid stuff about Tesla, but this takes WTF to a whole new level

 

[FluxCap]

thank goodness we have the TMC investor community to analyze Tesla together.

Amen.

 

[DaveT]

Clarification on James Albertine (Stifel Nicolaus) comment on 75-80% insourced prod..

I reached out yesterday to Tesla Investor relations with the following question:
Q: "James Albertine (Stifel Nicolaus) was on CNBC today and said that Tesla “insources 75-80% of their production”(Tesla debate: Opportunity or overvalued? | Watch the video - Yahoo Finance. Can you confirm if it’s accurate that Tesla insources 75-80% of production?"

I got the following answer today:
"Such stats are meaningless as there’s no way to accurately count something like this. His comment is based on our saying we do 'roughly 70-80% of the value conversion on Model S'".

 

[chickensevil]

I'm sorry, might be a dumb question, but what does "value conversion" mean?

I assume that in source would mean that that part of the car is made "in house" or at the very least "on site" since it is well known that some suppliers do their work at Fremont. But what does IRs response mean?

 

[ItsNotAboutTheMoney]

According to Google, define value conversion gives: Value conversion*is the act of*converting one type of*value or financial instrument into another type of negotiable*.

I'm sorry, might be a dumb question, but what does "value conversion" mean?

I assume that in source would mean that that part of the car is made "in house" or at the very least "on site" since it is well known that some suppliers do their work at Fremont. But what does IRs response mean?

So I think value conversion means making or doing stuff to make money. Take pieces worth x, build thing worth x+y. So he was saying that they do a lot of the valuable work themselves.

 

[TSLA Siempre]

DaveT, I saw Elon's recent Fox News interview and his ballpark estimate of production in 2020. I went back to your Tesla x.0 trajectory framework to see where that might fit in. I'm thinking its around Tesla 2.0. What do you think?

Also, I've been meaning to ask this for a while and haven't gotten around to it.... in your model you talk a lot about 'demand'. Is that really what you mean or do you mean 'sales'? With Tesla being production constrained, one does not always equal the other.

 

[DaveT]

According to Google, define value conversion gives: Value conversion*is the act of*converting one type of*value or financial instrument into another type of negotiable*.

So I think value conversion means making or doing stuff to make money. Take pieces worth x, build thing worth x+y. So he was saying that they do a lot of the valuable work themselves.

Yeah, I take "value conversion" is taking raw materials and making something out of them of greater value.

It appears that Tesla is tracking the cost of raw materials that goes into the entire car, and then dividing out the percentage of the end value of the car that they had a direct role in taking those raw materials and adding value to them.

- - - Updated - - -

DaveT, I saw Elon's recent Fox News interview and his ballpark estimate of production in 2020. I went back to your Tesla x.0 trajectory framework to see where that might fit in. I'm thinking its around Tesla 2.0. What do you think?

Also, I've been meaning to ask this for a while and haven't gotten around to it.... in your model you talk a lot about 'demand'. Is that really what you mean or do you mean 'sales'? With Tesla being production constrained, one does not always equal the other.

500k cars in 2020 could be TSLA 2.0 or TSLA 3.0, IMO. I think it depends on demand for the Gen3 car. When I refer to "demand" I'm actually referring more to the actual demand for the cars if Tesla could produce as many cars as there was demand for. If demand for Gen3 in 2020 is 500k-1M cars, then it's probably TSLA 2.0. But if demand for Gen3 in 2020 is over 1-2M then it's probably TSLA 3.0.

 

[TSLA Siempre]

Thanks. My sense is that Tesla will continue to be production constrained even in 2020 and beyond. I believe that Gen3 worldwide demand in 2020 will be over 1-2M, but I'm not convinced they will be able to make that many cars. Hope to be proven wrong.

 

[chickensevil]

Thanks for the response guys! Your descriptions make sense.

It appears that Tesla is tracking the cost of raw materials that goes into the entire car

This does appear to be the case as far back as I can recall, at least for the battery, but given their deep concerns about the environment I am not surprised if they do it for everything.

 

[dalalsid]

500k cars in 2020 could be TSLA 2.0 or TSLA 3.0, IMO. I think it depends on demand for the Gen3 car. When I refer to "demand" I'm actually referring more to the actual demand for the cars if Tesla could produce as many cars as there was demand for. If demand for Gen3 in 2020 is 500k-1M cars, then it's probably TSLA 2.0. But if demand for Gen3 in 2020 is over 1-2M then it's probably TSLA 3.0.

I'm really afraid (in a good way) of the magnitude of the Model 3 demand. That is one reason I want Tesla to simultaneously launch the Model 3 sedan/SUV because I expect the demand to be 500k+ in 2018 itself if the car is even remotely decent looking. And if that is the case, the Gen 3 SUV (the car I really want - something like the Porsche Macan but electric - but will settle for the Gen 3 sedan) will not launch before 2020 at the earliest.

 

[mershaw2001]

Yeah, I take "value conversion" is taking raw materials and making something out of them of greater value.

It appears that Tesla is tracking the cost of raw materials that goes into the entire car, and then dividing out the percentage of the end value of the car that they had a direct role in taking those raw materials and adding value to them.


.

What is the dominant component of the car, the aluminum? Flux capacitor, you had an indicator that you were using to predict tesla price- was it the price of a raw component?

 

[FluxCap]

What is the dominant component of the car, the aluminum? Flux capacitor, you had an indicator that you were using to predict tesla price- was it the price of a raw component?

Are you asking me if I have a model that predicts TSLA valuation based on raw material inputs, the answer is no -- Dave might but I don't.

 

[FluxCap]

Dave, any thoughts on latest price action?

 

[DaveT]

Dave, any thoughts on latest price action?

Hey Flux, I'll share some brief short-term TSLA price action thoughts. First a disclaimer; I'm currently holding on to a bunch of Jan15 calls purchased at various points in 2013 and haven't sold any yet.

I personally look at TSLA price action through the lens of volatility (volatility as a result of the wide dispersion of belief surrounding the company's future prospects). TSLA goes up until it runs out of buyers and then goes down until it runs out of sellers, and repeats itself. What's difficult is to know where we are in that cycle and how long each cycle lasts.

I look at this past dip from $291 to $235 as not substantially based on fact or risk factors like the downtrend we saw from $194 to $116 (due to the fires and lack of 2014 guidance). I think Tesla has given strong forward guidance with it's 100k production run rate by end of 2015 and a strong Q4 guidance as well. However, I think there are some jitters due to the ramp up after the factory shutdown being somewhat slow. And some people (including Andrea James) thinks that Tesla is not going to meet Q4 or 2014 guidance.

I'm actually quite bullish on Q3 earnings (probably due first week of November) because I think Tesla will re-affirm their 2014 guidance, simply because they can and know it's important to do so.

That said, some people are waiting for TSLA to hit the 200 dma, but I personally doubt that it's going to hit it. Mainly because this dip wasn't caused by any significant negative news. I think it gets to a point where it seems too good of an investment entry point (this could be the $235.65 we saw today or it could be a lower), and then we find a bottom with buyers accumulating shares. It also depends on the macro environment as well (I'm assuming that it will hold up).

Overall, since I'm holding on to all my Jan15 calls I'm betting big that TSLA will be a decent amount higher in 2-3 months compared to now.

Final note: Elon's tweet about "The D" reveal could be something that reverses this downward price pressure we've been seeing. We'll see what happens tomorrow and Friday.

 

[FluxCap]

Thanks for the great thoughts, Dave. Or should I say, D?

 

[davecolene0606]

Dave,
Aluminum Lithium, Alcoa has a giant jump in this production and has some proprietary processes that they have not filed patents for so as to keep em close in. The alloy apparently has cost, weight and strength advantages over existing alloys and carbon fiber.

Perhaps addition of this drops weight/cost and the increase in production speaks to one of its customers (TSLA) dramatically increasing production.

A little more food for research?

I'm curious what you might learn.

 

[Chickenlittle]

Dave,
Aluminum Lithium, Alcoa has a giant jump in this production and has some proprietary processes that they have not filed patents for so as to keep em close in. The alloy apparently has cost, weight and strength advantages over existing alloys and carbon fiber.

Perhaps addition of this drops weight/cost and the increase in production speaks to one of its customers (TSLA) dramatically increasing production.

A little more food for research?

I'm curious what you might learn.

actually this alloy is used for jet engines. Very heat resistant so engines can burn fuel more efficiently and get better cost savings

alcoa also has aluminum alloy for cars that is easier to weld. That is patented and other aluminum companies can produce with royalty fees to alcoa. They licensed this patent because some car companies were reluctant to sole source the aluminum

 

[davecolene0606]

Saw this and..
"While lithium has not been adopted for this application yet, savings in weight resulting from increased proportions of aluminum-lithium alloys would impact fuel consumption. Although the economic practicality of this application is not currently evident, it could provide a second market for the aluminum-lithium alloy, increasing demand and investment interest in lithium producers and junior exploration companies."

Thought on this...
"Take, for instance, "Efficient Dual Source Battery Pack System for an Electric Vehicle," which is Tesla's patent application # 20120041625."

 

[AlMc]

Hey Flux, I'll share some brief short-term TSLA price action thoughts. First a disclaimer; I'm currently holding on to a bunch of Jan15 calls purchased at various points in 2013 and haven't sold any yet.

I personally look at TSLA price action through the lens of volatility (volatility as a result of the wide dispersion of belief surrounding the company's future prospects). TSLA goes up until it runs out of buyers and then goes down until it runs out of sellers, and repeats itself. What's difficult is to know where we are in that cycle and how long each cycle lasts.

I look at this past dip from $291 to $235 as not substantially based on fact or risk factors like the downtrend we saw from $194 to $116 (due to the fires and lack of 2014 guidance). I think Tesla has given strong forward guidance with it's 100k production run rate by end of 2015 and a strong Q4 guidance as well. However, I think there are some jitters due to the ramp up after the factory shutdown being somewhat slow. And some people (including Andrea James) thinks that Tesla is not going to meet Q4 or 2014 guidance.

I'm actually quite bullish on Q3 earnings (probably due first week of November) because I think Tesla will re-affirm their 2014 guidance, simply because they can and know it's important to do so.

That said, some people are waiting for TSLA to hit the 200 dma, but I personally doubt that it's going to hit it. Mainly because this dip wasn't caused by any significant negative news. I think it gets to a point where it seems too good of an investment entry point (this could be the $235.65 we saw today or it could be a lower), and then we find a bottom with buyers accumulating shares. It also depends on the macro environment as well (I'm assuming that it will hold up).

Overall, since I'm holding on to all my Jan15 calls I'm betting big that TSLA will be a decent amount higher in 2-3 months compared to now.

Final note: Elon's tweet about "The D" reveal could be something that reverses this downward price pressure we've been seeing. We'll see what happens tomorrow and Friday.

Dave, as always, thanks for your thoughts. I wish I was as confident as you are about Q3 ER/CC. Is your bullish position because you feel a big beat on the finances (beat delivery/production goals) and higher
GM or an animated Elon (like Q2) with reaffirmation or increase in bullish guidance? Also, will you sell your J15s to buy J17s in November. I thought you might be out of the J15s by now worrying about time decay increasing as you wait for Q3 ER.

Thanks Al