I suspect uncertainty about the Gigafactory is the main reason the stock is not acting well. Panasonic has good reasons not to jointly do a battery factory with Tesla (or with any other EV makers).
No battery volume, no Model E volume, no good stock.
Why would Panasonic want to share all its battery IP and know-how with Tesla? Also, what if Samsung comes up with better battery technology in two years and Tesla wants to use Samsung instead. I don't blame Panasonic.
This is a wild guess: I also suspect there might have been some sort of communication problems between Tesla and Panasonic (Japanese culture in communications). When speaking with the Japanese they often say "yes, yes, yes" when what they mean is "no, no, no". They say "yes" often to not offend you. They say "yes" to mean "yes I understand what you just said". They don't mean "yes, we have a deal". They are very uncomfortable when they have to say "no" to you directly.
It's just culture. West and east. Different culture.
Perhaps that's why a few weeks ago Elon Musk sounded like Panasonic was about to commit to the Gigafactory. He and his management heard many "yes, yes, yes" over the past many months. But when it came to time to do the deal, Panasonic was a no show.
That's the negative.
The positive is Elon Musk.
Elon Musk has a track record of make if he cannot buy (at a reasonable price or if it's not available). He has done it over and over again with SpaceX and Tesla in the past 10 years. He will get the Gigafactory done one way or another. If not Panasonic, then with other partners. If no partners, then he will hire the necessary expertise. After all Tesla is a great company to work for if you are a battery expert.
When viewing those big rockets in SpaceX's factory last night on 60-Minutes, I said to myself that Elon Musk is capable of making the necessary batteries one way or another. This maybe a good thing in the long run because battery is the key to success. In a few years time Tesla may be producing the best batteries at the lowest cost. That would be ideal for TSLA stock in the long run.
Someone please correct me if my facts are incorrect, but I recall Elon was on his way to do battery research before he took a leave from Stanford's PhD program to do Internet startups.
Battery's cost, energy density, weight, volume, is the key. Elon is pretty determined to get it done. He will.
(note, Nissan has three battery factories of its own to supply the LEAF.)
- - - Updated - - -
Other positives:
In the short run (2014/2015/2016) I suspect worldwide underlying demand for the Model S and X is much higher than historical numbers show.
Tesla is production constrained (Fremont factory and battery supply), and distribution constrained.
Because of this, they will be able to manage numbers. I suspect it's possible Tesla will beat its guided quarterly numbers for each of the next 12 quarters (just like the iPhone did in its early years).
(They have the reservations list. They know in advance how many batteries are coming from Panasonic. They can manage how many cars the Fremont plant produces. Demand for cars is higher than supply. Gross margins should rise as volume ramps. Therefore they should be able to manage the numbers each quarter. That's the CFO and COO's job)
No battery volume, no Model E volume, no good stock.
Why would Panasonic want to share all its battery IP and know-how with Tesla? Also, what if Samsung comes up with better battery technology in two years and Tesla wants to use Samsung instead. I don't blame Panasonic.
This is a wild guess: I also suspect there might have been some sort of communication problems between Tesla and Panasonic (Japanese culture in communications). When speaking with the Japanese they often say "yes, yes, yes" when what they mean is "no, no, no". They say "yes" often to not offend you. They say "yes" to mean "yes I understand what you just said". They don't mean "yes, we have a deal". They are very uncomfortable when they have to say "no" to you directly.
It's just culture. West and east. Different culture.
Perhaps that's why a few weeks ago Elon Musk sounded like Panasonic was about to commit to the Gigafactory. He and his management heard many "yes, yes, yes" over the past many months. But when it came to time to do the deal, Panasonic was a no show.
That's the negative.
The positive is Elon Musk.
Elon Musk has a track record of make if he cannot buy (at a reasonable price or if it's not available). He has done it over and over again with SpaceX and Tesla in the past 10 years. He will get the Gigafactory done one way or another. If not Panasonic, then with other partners. If no partners, then he will hire the necessary expertise. After all Tesla is a great company to work for if you are a battery expert.
When viewing those big rockets in SpaceX's factory last night on 60-Minutes, I said to myself that Elon Musk is capable of making the necessary batteries one way or another. This maybe a good thing in the long run because battery is the key to success. In a few years time Tesla may be producing the best batteries at the lowest cost. That would be ideal for TSLA stock in the long run.
Someone please correct me if my facts are incorrect, but I recall Elon was on his way to do battery research before he took a leave from Stanford's PhD program to do Internet startups.
Battery's cost, energy density, weight, volume, is the key. Elon is pretty determined to get it done. He will.
(note, Nissan has three battery factories of its own to supply the LEAF.)
- - - Updated - - -
Other positives:
In the short run (2014/2015/2016) I suspect worldwide underlying demand for the Model S and X is much higher than historical numbers show.
Tesla is production constrained (Fremont factory and battery supply), and distribution constrained.
Because of this, they will be able to manage numbers. I suspect it's possible Tesla will beat its guided quarterly numbers for each of the next 12 quarters (just like the iPhone did in its early years).
(They have the reservations list. They know in advance how many batteries are coming from Panasonic. They can manage how many cars the Fremont plant produces. Demand for cars is higher than supply. Gross margins should rise as volume ramps. Therefore they should be able to manage the numbers each quarter. That's the CFO and COO's job)
Last edited:
If they do announce a 10-15% beat on deliveries, that should put us back on track to North of 220.
