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The problem of course is that the business model for most utilities is based on owning generation assess and selling power from those assets. Within this business model, distributed solar is perceived as a threat to revenue. More enlightened utilities like NRG are actively installing and financing distributed solar. This is a sensible way to recognize the long term economics of transition to solar while making a relevant business out of transitioning to this future.
This is what I personally find extremely interesting. While everyone was oohing and aahing about the Powerwall, I was stuttering in excitement over the Powerpacks... THEY are the game-changer in my opinion, while the Powerwall is simply a nice whole-home UPS.

The politics of delaying the inevitable transition are fascinating to watch. Not just from the electrical utility companies, but more so the Oil and Gas guys. When the Saudi oil minister is quoted making comments about building a solar infrastructure, you know things are going to happen. And I suspect (hope) that it happens sooner and faster than most people expect. I find it quite incredible that so much pressure is being applied to the various pipeline projects across both Canada and the USA... billions that want to be spent, to ensure a last orgasmic squeeze of revenue from the oil fields. Imagine if that money was spent on solar/wind/tidal infrastructure instead. All of those will continue to earn revenue long after the last oil pipeline is mothballed. Short term gain is the name of the game, at any cost apparently.

Sorry, I've digressed! The reconfiguration of the grid is a problem we're only just beginning to appreciate I suspect. It will be interesting to see how that plays out, and what efficiencies are discovered along the way.
 
This is what I personally find extremely interesting. While everyone was oohing and aahing about the Powerwall, I was stuttering in excitement over the Powerpacks... THEY are the game-changer in my opinion, while the Powerwall is simply a nice whole-home UPS.

Agreed!

The politics of delaying the inevitable transition are fascinating to watch. Not just from the electrical utility companies, but more so the Oil and Gas guys. When the Saudi oil minister is quoted making comments about building a solar infrastructure, you know things are going to happen. And I suspect (hope) that it happens sooner and faster than most people expect. I find it quite incredible that so much pressure is being applied to the various pipeline projects across both Canada and the USA... billions that want to be spent, to ensure a last orgasmic squeeze of revenue from the oil fields. Imagine if that money was spent on solar/wind/tidal infrastructure instead. All of those will continue to earn revenue long after the last oil pipeline is mothballed. Short term gain is the name of the game, at any cost apparently.

That's pretty deep actually. You'd think there was one thing the oil men loved more than oil: money. So why not skate where the puck is going to be? They've become emotionally attached to the oil and is ignoring the fact that it's the money and power that's important (if you're in to that kind of stuff), not the actual oil.
 
So why not skate where the puck is going to be?
I think they believe they can make a play from where they're standing without needing to skate, and they are willing to gamble that they can still get to where the puck will be before the play is finally whistled dead.

Unfortunately, they're making us gamble along with them and the smarter ones among us realize you can't typically skate faster than the puck.
 
I think they believe they can make a play from where they're standing without needing to skate, and they are willing to gamble that they can still get to where the puck will be before the play is finally whistled dead.

Unfortunately, they're making us gamble along with them and the smarter ones among us realize you can't typically skate faster than the puck.
Yes, they are betting that governments will bail them out. First, they try to pass the cost on to ratepayers using their status as legal monopolies. But this won't work because you can't beat the economics of distributed solar on captive ratepayers. After the economic damage has been done, they'll turn to governments to cover their capital losses. So ultimately taxpayers will be forced to pay for the missteps and malinvestments of the utilities. Just think of all the retirees living off utility, oil and gas, and coal dividends. Retirees are going to bear the brunt of this mess, so political sympathy for bailouts will be irresistible for politicians.

This is why divestment now is so critical. If investors wait a few more years before divesting, the economic damage will be much more severe.
 
So why not skate where the puck is going to be?

This quote, brought to you by Canada. :d

I must admit, I'm having a bit of trouble following all of the threads and discussions around Solar, but I'm very thankful to all of those lending insight into the discussion.

I am also a bit surprised that UBS (Sorry, merging the UBS link from STPM thread UBS lays out “dream solar scenario: 50% of global generation by 2050 : Renew Economy) is disputing the ability for Residential applications to actually help customers get off grid, especially considering this technology just came out and they are mapping a dream scenario.

I'm mostly basing this off jhm's explanation of Generation and Distrubution costs a couple pages back, which made perfect sense to me. The Powerwall/Pack may not be completely there in terms of off-grid capabilities, but it's only going to get better, while your house will always remain the same distance to a power plant.

Hopefully I've aggregated this into something coherent. I've only just gotten back into solar reading.
 
Getting back to BFPT, I'd like to point out that Tesla's price at $261 has crossed above the median sentiment price point of $256. I'll try to dona more complete update soon, but it is nice to note that we are headed into bullish territory, according to my BFPT methodology.

It will be interesting to see if this threshold means anything in terms of trading behavior or other overt expressions of sentiment. My totally subjective impression has been that from the time we passed from first quartile to median levels, bears have been pretty muted and have not attacked the price much. Passing through the quartile, bulls too have been fairly reserved in trading and sentiment. Now as we move into the third quartile, I wonder if well see much more overt bullishness with both aggressive price movements and hype. Some think institutional investors have loaded up, and now it is time to hype retail investors to get on board. The thing that would take us well into the fourth quartile is a lot of momentum. So the question for my methology is whether it can somehow mark where momentum gets going. Today's gain is certainly impressive and it built on a nice gain yesterday. Is this the beginning of new momentum? We'll have to keep watching to see how this plays out.

I should point out that my strong personal preference is that we not move into new ATH based on momentum. I'd rather not have take cover when the price gets too high above neutral sentiment. Retail longs get burned by hype and momentum. I'd rather not see that. But one thing I hope for in the BFPT is a little help to know when the stock price is getting to far ahead of the longterm vision.
 
Getting back to BFPT, I'd like to point out that Tesla's price at $261 has crossed above the median sentiment price point of $256. I'll try to dona more complete update soon, but it is nice to note that we are headed into bullish territory, according to my BFPT methodology.

It will be interesting to see if this threshold means anything in terms of trading behavior or other overt expressions of sentiment. My totally subjective impression has been that from the time we passed from first quartile to median levels, bears have been pretty muted and have not attacked the price much. Passing through the quartile, bulls too have been fairly reserved in trading and sentiment. Now as we move into the third quartile, I wonder if well see much more overt bullishness with both aggressive price movements and hype. Some think institutional investors have loaded up, and now it is time to hype retail investors to get on board. The thing that would take us well into the fourth quartile is a lot of momentum. So the question for my methology is whether it can somehow mark where momentum gets going. Today's gain is certainly impressive and it built on a nice gain yesterday. Is this the beginning of new momentum? We'll have to keep watching to see how this plays out.

I should point out that my strong personal preference is that we not move into new ATH based on momentum. I'd rather not have take cover when the price gets too high above neutral sentiment. Retail longs get burned by hype and momentum. I'd rather not see that. But one thing I hope for in the BFPT is a little help to know when the stock price is getting to far ahead of the longterm vision.

Thanks for all your work on this. I am not sure I fully understand what you are doing but it appears that it is a simple linear regression model (and associated deviations from the linear model to predict quartiles) starting from a time point X to the 700b valuation Elon predicted in 2025. However, I am confused what time point X is and what the valuation of the company was at that time point. It seems to me that the slope of the line will be different depending on the time point that you start the regression. If at time point X the stock was undervalued (like a few months ago) versus over-valued (like at the ATH), the slope of the line would be different. While in the long run this will not make much of a difference, in the short term (next 6-12 months) this would generate significant differences in predicting sentiment and implied discount. Do I have this right or am I way off base?
 
Thanks for all your work on this. I am not sure I fully understand what you are doing but it appears that it is a simple linear regression model (and associated deviations from the linear model to predict quartiles) starting from a time point X to the 700b valuation Elon predicted in 2025. However, I am confused what time point X is and what the valuation of the company was at that time point. It seems to me that the slope of the line will be different depending on the time point that you start the regression. If at time point X the stock was undervalued (like a few months ago) versus over-valued (like at the ATH), the slope of the line would be different. While in the long run this will not make much of a difference, in the short term (next 6-12 months) this would generate significant differences in predicting sentiment and implied discount. Do I have this right or am I way off base?

It's not really linear regression. It takes the longterm price target at the endo for 2015 as a given and computed the growth rate from any recent price in past to this longterm price, and it does depend on the difference in dates from the historical price to the longterm price. We call this growth, implied discount, because it represents how much of a discout the market price is to the longterm price. I then take the last 12 months of historical implied discounts as a reference distribution. In particular, I often speak of different quantiles, like the quartiles and median. I can apply these quantiles to a specific point in time like today or 12 months from today to get what I call BFPT, blind faith price targets. So using current BFPT as I did above, I can relate the current price to the reference distribution on market sentiment. That is how I am able to say that the current price is just above median sentiment, representing a neutral price.

An essential difference with linear regression is that regression would attempt to estimate the rate of growth, slope, from historical prices. If you extrapolate the regression line out to 2025 you get some sort of forecast which likely is nowhere close to where Musk is taking this company. That is, recent trading history is a very poor predictor of longterm growth. Markets may be efficient, but they are not prescient. So with BFPT we take the longterm vision as a given and work backwards to see what sort of prices the market puts on that vision. The market tends to be bipolar alternating between extreme optimism and extreme pessimism. It is this cycling of sentiment that makes market prices a very unreliable basis for forecasting a price point out 10 years. And investors get caught up in the oscillations of mood. They keep changing their longterm view based on recent prices. This is why the BFPT is such a useful methodology, it is a yard stick that keeps the longterm clearly in sight a gauges market sentiment against that. It is a bit like a using the starry night sky to navigate a long voyage, or using fixed satellite GPS just to know where you are.
 
Hey guys. I'm new to the board but am a shareholder in Tesla and have been active in the stock market for years.

Do you guys have any forward (i.e. 2020 - 2025) EPS and P/E "guesstimates"?

I've done some numbers myself and figure if Tesla can sell anywhere close to BMW's total of about 1.5-2 million cars per year (and why can't they? I think Tesla is a better company) then I figure Tesla could have revenues of at least $90 billion (BMW's projected 2016 revenues according to yahoo finance). With a 10% profit margin that brings NET earnings to $9 billion. Divide $9 billion in earnings by the estimated 150 million or so shares (adding some for the possibility of future dilution) gives an earnings per share of $60. Slap a 30 multiple on that and you're looking at an $1800 stock.

Of course, these number are arbitrary and fail to take into account many variables and other sources of income. But interesting nonetheless.

Anybody else have a thesis?
 
Hey guys. I'm new to the board but am a shareholder in Tesla and have been active in the stock market for years.

Do you guys have any forward (i.e. 2020 - 2025) EPS and P/E "guesstimates"?

I've done some numbers myself and figure if Tesla can sell anywhere close to BMW's total of about 1.5-2 million cars per year (and why can't they? I think Tesla is a better company) then I figure Tesla could have revenues of at least $90 billion (BMW's projected 2016 revenues according to yahoo finance). With a 10% profit margin that brings NET earnings to $9 billion. Divide $9 billion in earnings by the estimated 150 million or so shares (adding some for the possibility of future dilution) gives an earnings per share of $60. Slap a 30 multiple on that and you're looking at an $1800 stock.

Of course, these number are arbitrary and fail to take into account many variables and other sources of income. But interesting nonetheless.

Anybody else have a thesis?

Welcome aboard! Read this thead from the beginning. BFPT is all about tracking progress from recent stock prices toward a long-term price target in 2025. Musk himself set out the basic trajectory of becoming a $700B market cap company by 2025.
 
Welcome aboard! Read this thead from the beginning. BFPT is all about tracking progress from recent stock prices toward a long-term price target in 2025. Musk himself set out the basic trajectory of becoming a $700B market cap company by 2025.

Thanks. And, yes I've read the entire thread. Great analysis.

With a 700B market cap in 2025, what type of Earnings Per Share are we lookin' at?
 
Thanks. And, yes I've read the entire thread. Great analysis.

With a 700B market cap in 2025, what type of Earnings Per Share are we lookin' at?

Short-Term TSLA Price Movements - 2015 - Page 690
This link shows the longterm calculation. So following that we are looking at $34.6B in earning on 185M shares for $187 EPS.

Pretty impressive. Do you believe it?

For kicks, let's see if we can back into Gigafactory output, number of cars and GWh of stationary.

Auto assumptions. 70 kWh and $56k per vehicle, $800 revenue per kWh.

Stationary assumptions. Revenue now $300/kWh, declines 7% per year for 10 years leads to $145/kWh.

Product mix assumptions. Stationary uses 2/3 of battery supply. Thus combined revenue per kWh is $363.33.

Battery production. To get $346B revenue, 952 GWh of supply is required. So to go grow 50 GWh in 2018 to 1000 GWh in 2025, gigafactory capacity must grow at a rate of 45% per year.

Stationary sales. 635 GWh, revenue $92B. To get to this volume on a base of say 2 GWh in 2016, an annual growth rate of 53% is needed.

Auto sales. 317 GWh, 4.5 M vehicles, revenue $254B. To get to this unit sale volume from a base of 55k in 2015, unit sales need to grow 55.5% annually for the next 10 years.

So how do people feel about that growth plan? What assumptions would make better sense? Of course, any number of alternatives can be constructed so as to hit long-term revenue growth. If more cars are sold, then few GWh of supply is needed to hit revenue targets. The cool thing is we can scale the whole business and figure out how quickly capacity must be added. For example, at 500k vehicle capacity, the Fremont plant will suffice until 2020, but an additional 277k auto capacity will be need for 2021. Anyway, let me know what you all think.

BWT, did anyone catch the significance of the GWh capacity needed by 2025?
 
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Short-Term TSLA Price Movements - 2015 - Page 690
This link shows the longterm calculation. So following that we are looking at $34.6B in earning on 185M shares for $187 EPS.

Pretty impressive. Do you believe it?

For kicks, let's see if we can back into Gigafactory output, number of cars and GWh of stationary.

Auto assumptions. 70 kWh and $56k per vehicle, $800 revenue per kWh.

Stationary assumptions. Revenue now $300/kWh, declines 7% per year for 10 years leads to $145/kWh.

Product mix assumptions. Stationary uses 2/3 of battery supply. Thus combined revenue per kWh is $363.33.

Battery production. To get $346B revenue, 952 GWh of supply is required. So to go grow 50 GWh in 2018 to 1000 GWh in 2025, gigafactory capacity must grow at a rate of 45% per year.

Stationary sales. 635 GWh, revenue $92B. To get to this volume on a base of say 2 GWh in 2016, an annual growth rate of 53% is needed.

Auto sales. 317 GWh, 4.5 M vehicles, revenue $254B. To get to this unit sale volume from a base of 55k in 2015, unit sales need to grow 55.5% annually for the next 10 years.

So how do people feel about that growth plan? What assumptions would make better sense? Of course, any number of alternatives can be constructed so as to hit long-term revenue growth. If more cars are sold, then few GWh of supply is needed to hit revenue targets. The cool thing is we can scale the whole business and figure out how quickly capacity must be added. For example, at 500k vehicle capacity, the Fremont plant will suffice until 2020, but an additional 277k auto capacity will be need for 2021. Anyway, let me know what you all think.

BWT, did anyone catch the significance of the GWh capacity needed by 2025?

I like it but 4.5 million vehicles seems high just 10 years out. Although I won't rule it out as impossible if they keep doing what they're doing. Also, I don't know much about the stationary storage. I see great potential but hard for me to forecast any sort of future revenue/profitability. Either way, the future looks bright.

I was thinking more along the lines of 1 million vehicles by 2025, although that could be low.
 
I like it but 4.5 million vehicles seems high just 10 years out. Although I won't rule it out as impossible if they keep doing what they're doing. Also, I don't know much about the stationary storage. I see great potential but hard for me to forecast any sort of future revenue/profitability. Either way, the future looks bright.

I was thinking more along the lines of 1 million vehicles by 2025, although that could be low.

It doesn't matter you know if it's 1 or 5 million vehicles, it's that there are very few that dare to think in those types in numbers but here at TMC we know so much about Tesla that we know they'll build a lot cars, at least 1 million in 2025. So with your crude numbers above (unforgiving margin for example that I absolutely think Tesla can keep above 20%) you came up with $1800 in the year 2025, with a P/E multiple of 30 whichs seems in line with a high growth company that keeps growing. This means if you understand Tesla well you can put a lowish bound on the stock price in 2025 of at least $1000/share undiluted. Upwards "sky is the limit".

You got it perfectly though forumman83 - go ahead and invest, welcome to the party :)
 
Hi Everyone, I am new to this thread. I am currently not long or short the stock so please don't attack me either way.

I am very excited about what JB has been telling the world that they (Tesla and the industry) will get to $100 per kWh by 2020, which is only five years from now. At sub $100 per kWh, this world will begin to be completely transformed (fading out oil, gas, coal, and even nuclear, not to mention the transformation of world geopolitics as well).

Have you guys discussed how the competition will play out in the electric car industry to about 2025, 2030? Will Tesla always be limited to the premium segment of the EV market?

At $100 per kWh, cars such as the Nissan Leaf and VW e-Golf will have range of 200 miles at starting price of $20,000 before government subsidies. (Math: 60 kWh battery x $100 = $6,000 battery pack, good for 200 miles for cars like the LEAF)

Do you see Tesla ever addressing the low end of the market? (e.g. $20,000) or will Tesla always be a premium product? sort of like what Apple does?

Another question I had was which battery vendors are supplying who at the present time? I know LG Chem supplies the Chevy Volt and soon 2016 Nissan Leaf. Panasonic supplies Tesla and Toyota. Who supplies BMW, Mercedes, VW, etc.... Is there a article somewhere that summarizes these supplier relationships? Actually, which suppliers for which cars is what I am looking for. (Sorry, this is definitely a bit off topic)
 
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Hi Everyone, I am new to this thread. I am currently not long or short the stock so please don't attack me either way.

I am very excited about what JB has been telling the world that they (Tesla and the industry) will get to $100 per kWh by 2020, which is only five years from now. At sub $100 per kWh, this world will begin to be completely transformed (fading out oil, gas, coal, and even nuclear, not to mention the transformation of world geopolitics as well).

Have you guys discussed how the competition will play out in the electric car industry to about 2025, 2030? Will Tesla always be limited to the premium segment of the EV market?

At $100 per kWh, cars such as the Nissan Leaf and VW e-Golf will have range of 200 miles at starting price of $20,000 before government subsidies. (Math: 60 kWh battery x $100 = $6,000 battery pack, good for 200 miles for cars like the LEAF)

Do you see Tesla ever addressing the low end of the market? (e.g. $20,000) or will Tesla always be a premium product? sort of like what Apple does?

Another question I had was which battery vendors are supplying who at the present time? I know LG Chem supplies the Chevy Volt and soon 2016 Nissan Leaf. Panasonic supplies Tesla and Toyota. Who supplies BMW, Mercedes, VW, etc.... Is there a article somewhere that summarizes these supplier relationships? Actually, which suppliers for which cars is what I am looking for.

Hi. Welcome to the thread.

Yes, obviously competition will catch on, eventually but I will take the stance that Tesla is similar to Apple when it comes to competition. Samsung, Blackberry, Sony, LG, etc all make smartphones too, but Apple makes all the money. Why? Because they run a tight and innovative ship that was built on the back of a visionary CEO (Steve Jobs). Tesla is the same.

Tesla is not just building the best car; they're building the best service. I personally have come to hate GM, Ford, Chrysler, BMW, Volkswagen, etc. Simply because I feel like I get abused every time I deal with them. I go to a "dealership" for instance and "bargain" with these scumbags and feel like I'm in Mexico trying to knock $500 off the price. Then, with all the moving parts in my ICE vehicle, something is always knocking or ticking or something is wrong. So I bring my car into a "stealership" and they tell me I need this and that and I never feel like they're being honest. They have abused, and subsequently lost, my trust.

Elon Musk, apparently, told his service department "don't ever make a profit on fixing cars..." This is going to feed into long-term loyalty with the brand. Speaking of brand, Tesla has probably the best one going. They're high-tech, innovative, have a great logo and don't do any cheesy advertising which cheapens them (unlike Ford, for instance). Also, direct-to-consumer sales takes out the middle-man, which I think we can all agree we strongly dislike. Go into a dealership and have someone follow you around trying desperately to make a sale. I'm an informed consumer, I know what I want please leave me alone.

For all these reasons, Tesla will succeed over the competition, IMHO.

Thoughts?

- - - Updated - - -

So with your crude numbers above (unforgiving margin for example that I absolutely think Tesla can keep above 20%)

I thought Tesla's NET margin was closer to 10%? Please correct me if I'm wrong. If it's closer to 20% then my numbers are way off.
 
Hi. Welcome to the thread.

Yes, obviously competition will catch on, eventually but I will take the stance that Tesla is similar to Apple when it comes to competition. Samsung, Blackberry, Sony, LG, etc all make smartphones too, but Apple makes all the money. Why? Because they run a tight and innovative ship that was built on the back of a visionary CEO (Steve Jobs). Tesla is the same.

Tesla is not just building the best car; they're building the best service. I personally have come to hate GM, Ford, Chrysler, BMW, Volkswagen, etc. Simply because I feel like I get abused every time I deal with them. I go to a "dealership" for instance and "bargain" with these scumbags and feel like I'm in Mexico trying to knock $500 off the price. Then, with all the moving parts in my ICE vehicle, something is always knocking or ticking or something is wrong. So I bring my car into a "stealership" and they tell me I need this and that and I never feel like they're being honest. They have abused, and subsequently lost, my trust.

Elon Musk, apparently, told his service department "don't ever make a profit on fixing cars..." This is going to feed into long-term loyalty with the brand. Speaking of brand, Tesla has probably the best one going. They're high-tech, innovative, have a great logo and don't do any cheesy advertising which cheapens them (unlike Ford, for instance). Also, direct-to-consumer sales takes out the middle-man, which I think we can all agree we strongly dislike. Go into a dealership and have someone follow you around trying desperately to make a sale. I'm an informed consumer, I know what I want please leave me alone.

For all these reasons, Tesla will succeed over the competition, IMHO.

Thoughts?

- - - Updated - - -



I thought Tesla's NET margin was closer to 10%? Please correct me if I'm wrong. If it's closer to 20% then my numbers are way off.

The net margin is negative.
 
I like it but 4.5 million vehicles seems high just 10 years out. Although I won't rule it out as impossible if they keep doing what they're doing. Also, I don't know much about the stationary storage. I see great potential but hard for me to forecast any sort of future revenue/profitability. Either way, the future looks bright.

I was thinking more along the lines of 1 million vehicles by 2025, although that could be low.

Elon alreay called it "Gigafactoy 1" so they must have a second in plan already, maybe it will be in china.