Devils advocating...from someone who shorted TSLA

[EarlyAdopter]

<chuckle> I sense a combination of the typical "an EV won't work for me, so I don't understand how they could possibly work for anyone else" mindset plus a tiny hint of "not invented here, buy Europe, American cars can't compete with German cars" attitude.

Realist, be careful these aren't clouding your investment view. This, from all appearances in US sales, is a US car that competes quite favorably with the Germans.

 

[andrewt3000]

With regards to "Back seats only fit kids under 12" I assume realist is referring to the back facing seats.

It also sounds like realist is simply rooting for the home team since he is from Germany. However, with disruptive technologies, incumbents historically have failed to adapt due to conflicts of interest.

Realist, I suggest you read my blog post about why I have invested in Tesla.

Even better, I recommend you try to your hands on Morgan Stanley's research on Tesla. It's compelling.

Also read the book "innovator's dilema" for the long history of incumbent companies failing to adopt to emerging technologies.

 

[spleen]

In a recent talk the CEO of Honda Carlos Ghosn at Stanford, pointed out how regulations can form a market.
EU has a share of 60% Diesel cars, the US and Japan only 1%, that just shows how powerful regulations can be.

Nissan, no? Otherwise agree with your points.

 

[Realist]

I am surprised by the amount of replies and comments. Unfortunately I cannot comment on every subject.

Regarding superchargers I think it is fair to agree that the charging losses are much higher than on your home socket. I have no official data from Tesla but they obviously don’t recommend using the Supercharger very often. Would be interesting to see some official date here.

It honestly strikes me rather absurd that people think the electric drive is certainly the only way to go for the future. It reminds of the time than everyone thought solar and wind power has to be the energy source of the future. In Germany solar technology has had state support for more than 10 years. We had companies like Solarworld and q-cell trading at unbelievable market caps. Yet now almost all german solar companies are bankrupt, the Chinese are flooding the market with cheap panels and the percentage of solar power on the whole electricity grid in Germany is at a laughable 2% despite massive state incentives.

Ironically now it’s Mr. Elon Musk who tries to sell solar panels with his solarcity which is just exactly the same scheme we had here 10 years ago with Solarworld.

Therefore you understand that the germans just don’t want to go through that process again. No government will subsidy electric cars here in the same way the US does. The technology has to prove economic feasibility on its own. I strongly believe that the US government will go the same way in the future. At some point they will not grant tax subsidies on electric cars anymore. That is a given. Especially when society sees that the advantage for the environment is not worth the money.

One example: My brother is driving a VW Corrado every day. The car is 22 years old. It has the first engine and it is running on gasoline with 10% renewables. A 22 year old Tesla Model S would already be close to its third battery pack at that time. Of course you know about the massive amount of energy which is needed to produce a 85kwh battery pack. All in all the Model S would have a carbon footprint at least twice as high. I know this is again a provocative statement. But just think about it. You are buying a car knowing that the battery will be useless in 7 years. It just doesn’t make any sense.

Tesla’s concept with it’s powerful electric drive “only” and with a big battery is certainly not a really friendly solution regarding energy and carbon emissions. The people are buying the Model S because it is a great and cool car. So will people buy the Model X. But do you really think that the rest of (Non-Tesla) society will accept paying taxes for this twin engine gullwing monster SUV?

I believe that the tax incentives for electric cars around the world are premature. And this has clear implications on the demand. When the Gen3 arrives the electric car’s time might already be over again.

 

[WarpedOne]

I am surprised by the amount of replies and comments. Unfortunately I cannot comment on every subject.

You don't need to comment, just go and read them. You would learn much.

Regarding superchargers I think it is fair to agree that the charging losses are much higher than on your home socket.

Yes they are and no, they are not a problem.

have no official data from Tesla but they obviously don’t recommend using the Supercharger very often.

Tesla Motors official word is "we don't care how often one uses supercharging, warranty holds even for those who would only charge with superchargers".

You are buying a car knowing that the battery will be useless in 7 years.

You sir you are clueless. You do not know what you are talking about.
Do you really think you are scaring anyone with your misinformation and FUD here?

 

[Eberhard]

I own my roadster for more then 2 1/2 year an did over 142.000km. My batterie still holds 141.7 Ah, less then 12% loss. I think i can ride my roadster for more then 10years without change of batterie.

Model S battery are told to outperform the roadster.

best

Eberhard

 

[deonb]

I am surprised by the amount of replies and comments.

What do you think would happen if I go onto a BMW or BP message board and question everything they do and the way they do it, but refuse to back it up by any facts? Same here.

Regarding superchargers I think it is fair to agree that the charging losses are much higher than on your home socket. I have no official data from Tesla but they obviously don’t recommend using the Supercharger very often. Would be interesting to see some official date here.

Source for this "obviously" statement? During the SuperCharger announcement, Elon mentioned it is fine to Supercharge every day. (In was in the context of people that thought Supercharging will kill your pack. In fact it has a negligible effect. What kills the pack is leaving it at a full SOC out at high temperatures). This isn't the same context, but still boils down to the fact that Tesla has NO SUCH RECOMMENDATION against regular Supercharging, whether it be because of the pack life, or because they have to go chop off a small forest to charge your car.

It honestly strikes me rather absurd that people think the electric drive is certainly the only way to go for the future. It reminds of the time than everyone thought solar and wind power has to be the energy source of the future. In Germany solar technology has had state support for more than 10 years. We had companies like Solarworld and q-cell trading at unbelievable market caps. Yet now almost all german solar companies are bankrupt, the Chinese are flooding the market with cheap panels and the percentage of solar power on the whole electricity grid in Germany is at a laughable 2% despite massive state incentives.

That's because it's easier to make solar panels than making drywall. It was inevitably that this was going to move to China. In fact, Elon warned the administration about the investment into Solyndra because of the low barrier of entry into that market.

Ironically now it’s Mr. Elon Musk who tries to sell solar panels with his solarcity which is just exactly the same scheme we had here 10 years ago with Solarworld.

Not the same. Solarcity does not manufacture solar panels. SolarWorld did. See Solyndra.

Therefore you understand that the germans just don’t want to go through that process again. No government will subsidy electric cars here in the same way the US does. The technology has to prove economic feasibility on its own.

Fair enough. I don't think Germany subsidizes oil either (basing that on your gas prices). You don't need more than that to make an EV more than viable.

You are buying a car knowing that the battery will be useless in 7 years. It just doesn’t make any sense.

Source? Tesla must be the biggest idiots in the world to warrantee a battery for longer than it's useful life.

 

[NigelM]

....the percentage of solar power on the whole electricity grid in Germany is at a laughable 2% despite massive state incentives.

Having defended your right to a point of view earlier this week, I'm now asking you to check your facts before throwing statements out there. Here's one simple example among many:

From Slate.com March 2013: Twenty-two percent of Germany’s power is generated with renewables. Solar provides close to a quarter of that. The southern German state of Bavaria, population 12.5 million, has three photovoltaic panels per resident, which adds up to more installed solar capacity than in the entire United States.

From Reuters May 2012: German solar power plants produced a world record 22 gigawatts of electricity per hour - equal to 20 nuclear power stations at full capacity - through the midday hours on Friday and Saturday, the head of a renewable energy think tank said.....

Norbert Allnoch, director of the Institute of the Renewable Energy Industry (IWR) in Muenster, said the 22 gigawatts of solar power per hour fed into the national grid on Saturday met nearly 50 percent of the nation's midday electricity needs. "Never before anywhere has a country produced as much photovoltaic electricity," Allnoch told Reuters. "Germany came close to the 20 gigawatt (GW) mark a few times in recent weeks. But this was the first time we made it over."

The record-breaking amount of solar power shows one of the world's leading industrial nations was able to meet a third of its electricity needs on a work day, Friday, and nearly half on Saturday when factories and offices were closed.

There's plenty of other sources out there saying the same thing........

 

[gameon]

Still, people tend to overlook the facts and the current market cap of Tesla is just insane for a car company of that size. I don't want to attack anyone here just telling you my assumptions.

I agree with your statement and wondering the same but again stock market don't work like that. Even yesterday bad news become good news (weak GDP meaning fed will put more money etc)

 

[mitch672]

poor Realist, he is taking a world class BEATDOWN today, too bad he chose the incorrect position in TSLA

I must say, the poor fellow is mostly clueless though, "battery will be useless in 7 years", well if its down to %80 of its orignal capacity, you won't go as far per charge, but I would hardly call it "useless". What these shorts don't get, and never will is, the pack, even if it degrades somewhat, will still probably be the only one you ever need in your Model S, assuming a 10-12 year life, which is the average in the U.S. The other point is, when you do finally need a new pack, your old pack is not "useless", it will have a 2nd life as "grid storage", sold to a utility, who will pay some good money for it, and your replacement pack, is likely to be larger in capacity, and lower in cost than the original 85KW pack that came with your Model S, and if you do put a new pack in your Model S, it will drive just like it did when it was brand new.

FYI, most "daily driver" cars that are 22 years old in the US, have already been converted to scrap metal and made into new cars.

 

[fastcars]

Interesting discussion and looking forward to BMW i3 release. It will be inline with GenIII of Tesla (assuming many knows of GenIII) I need something in range of 100 or 130 miles.

Right now, market value of tesla is too high based on ONLY model S. If tesla brings (it will) GenIII in range of 40K with 200 miles it will create a nightmare for big three automakers but based on future assumption you can't evaluate a stock.

Again, I am not the one who thinks like that, but many things are irrelevant when comes to a stock market.

 

[Realist]

@Nigel,

Close to a quarter of 22% is about 5%, that is 2 % from the grid and the rest from solar panels used at home.

 

[theganjaguru]

@Realist - Thank you for shorting! Please continue! - Get as many friends as you can to short, because I am so happy with the results of your logic.

Though you should really adjust your logic on batteries. - but don't change your logic on shorting TSLA!!!

1. Because battery tech will definitely change in the next few years. Search Graphene or Sulfer battery. - So while you will have to change batteries in 8 years, packs will become more energy dense and inexpensive. You won't have to worry much about the electric motor. Try that with ICE.

2. I know gas is expensive in Germany, so you can relate to my calculations. I bought my vehicle new in 2005 - it gets 19 mpg. In 7 years I've driven it 140,000 + miles. Thus I've purchased over 7368 gallons of fuel. I've been paying well over $4.00 per gallon for the majority of these 7 years, but, we'll say $3.40 that puts my fuel costs at over $25,000 - Thus if I'd have been able to drive an electric over those same miles I'd have saved roughly 18 - 19 K$ - That's only 1-2K$ shy of replacing a pack at current TSLA new vehicle prices. Just think how much more I would have saved if we work supercharging into my math.

Given #2, how can you continue to short TSLA when a driver like me would save so much money by driving electric? Your logic would be sound if energy prices never increased and/or if battery tech could not evolve.

Please continue shorting. You're the best - Positions like yours definitely helped flush TSLA with cash so they could pay off their DOE loan and become even more viable of an investment.

 

[techmaven]

You are buying a car knowing that the battery will be useless in 7 years. It just doesn’t make any sense.

I would like to know where you are getting this information. I've seen it written by more than one person, so there must be some original erroneous source. The very fact that the battery life is expressed in calendar time - 7 years - instead of by mileage or by charge cycles probably presents an interesting case of "playing telephone."

I've contested this on SeekingAlpha and on Arstechnica - you have to look at charge cycles. Panasonic has published papers in conferences that shows NCA lithium-ion chemistry based batteries achieving charge cycles of at least 3,000. If you use 1/2 the minimum range of a Tesla Model S as a conservatively measured charge cycle, and 2/3 the number of charge cycles, you get 180 / 2 * 2000 = 180,000 miles or 290,000 kilometers. The average American drives about 12,500 miles a year, so that's 14 years worth of miles. Remember, that is using a very short definition of a charge cycle and a smaller number of charge cycles. If a full charge cycle is more like 220 miles and you get 3000, then we are looking at 660,000 miles. It is obviously possible to brick the battery by usage in 7 years - drive roughly 40 or 50 thousand miles a year and you have good shot at it. Obviously at some point there will be container failure and since it is a manufactured product, there are always manufacturing defect possibilities. Hence the unlimited mile 8 year warranty for the 85kWh battery pack. It is also possible to replace only a subset of cells if that makes sense down the road. Given the active thermal management climate, the active management of the SoC and DoD, and finally the driving habits of most people, your 7 year definitive number is very suspicious.

Again… where did you get this number?

 

[NigelM]

@Nigel,

Close to a quarter of 22% is about 5%, that is 2 % from the grid and the rest from solar panels used at home.

If so, you only told half the story. Interesting that Germany generates more power from private PV installations than from commercial installations; looks like your incentive schemes worked!

But this has what exactly to do with Tesla?

 

[ElSupreme]

It honestly strikes me rather absurd that people think the electric drive is certainly the only way to go for the future. It reminds of the time than everyone thought solar and wind power has to be the energy source of the future. In Germany solar technology has had state support for more than 10 years. We had companies like Solarworld and q-cell trading at unbelievable market caps. Yet now almost all german solar companies are bankrupt, the Chinese are flooding the market with cheap panels and the percentage of solar power on the whole electricity grid in Germany is at a laughable 2% despite massive state incentives.

And how does a flood of cheap solar cells indicate a failure of solar power? And why do you assume the Chinese manufacturers aren't getting massive state subsidies on their panel production?

http://www.csmonitor.com/USA/2012/0...nels-US-finds.-Are-tariffs-the-right-response
http://www.greentechmedia.com/articles/read/china-pledges-huge-solar-subsidies-5964/
http://www.bloomberg.com/news/2013-...s-rise-on-government-aid-hong-kong-mover.html


These statements don't actually mean anything. And how do solar panel manufacturing in Germany failing, have anything to do with electric drive vehicles? This whole paragraph is a complete non-sequitur.

Ironically now it’s Mr. Elon Musk who tries to sell solar panels with his solarcity which is just exactly the same scheme we had here 10 years ago with Solarworld.

Not even close. Solar City is buying cheap Chinese panels. The only thing he is doing is installing them on roofs. Not even close to what SolarWorld was doing. And even if it were the same business, now with much better, and much cheaper solar cells, the business model could have shifted to being profitable.

One example: My brother is driving a VW Corrado every day. The car is 22 years old. It has the first engine and it is running on gasoline with 10% renewables. A 22 year old Tesla Model S would already be close to its third battery pack at that time. Of course you know about the massive amount of energy which is needed to produce a 85kwh battery pack. All in all the Model S would have a carbon footprint at least twice as high. I know this is again a provocative statement. But just think about it. You are buying a car knowing that the battery will be useless in 7 years. It just doesn’t make any sense.

Ok so this is a real logical mess. First it is an anecdote, which does not imply normalcy, and in general is not something you can place a general argument on. How do you know a 22 year old Model S will need its 3rd battery? I assume you are basing it on the warranty period, if that is the case then that Corrado is probably just into its 5th engine and transmission (5 year warranty). We can't even come close to assuming the carbon footprints between the cars. If they were driven a million miles, and the Model S used solar to recharge then I bet the battery construction carbon footprint is minimal. If they are garage queens who knows. But assuming a 'twice as high' carbon footprint is just that, and assumption; and one with no backing what-so-ever. And I fully expect 10 years of driving out of my battery, then I fully expect to use it as a house grid backup system for a decade or more.

Tesla’s concept with it’s powerful electric drive “only” and with a big battery is certainly not a really friendly solution regarding energy and carbon emissions. The people are buying the Model S because it is a great and cool car. So will people buy the Model X. But do you really think that the rest of (Non-Tesla) society will accept paying taxes for this twin engine gullwing monster SUV?

I assume you mean that tax incentives are the reason why people are buying these cars? That is a help, but honestly all the people blowing $100,000 on a car. Do you really think losing out on $7k is going to seriously impact sales? It isn't believe me.

I believe that the tax incentives for electric cars around the world are premature. And this has clear implications on the demand. When the Gen3 arrives the electric car’s time might already be over again.

I think you are saying the tax incentives may be dried up by the time Gen III rolls around. I think you are right. But a $40k Gen III will cost less to operate than a $25k Camry. So they will be able to compete on a level field, which you were complaining about earlier in your incoherent rant.

 

[fastcars]

Nice Thread, thx

I think BMW is a very serious threat for Tesla. In Europe certainly.

The BMW i3 is in fact very close to the so called Tesla Gen3 model. It’s range is about 150km and with the range extender it’s close to 500 with the big advantage that you can fill up your car at every gas station. So you can drive with this car wherever you want to. Furthermore for long trips BMW offers an upgrade to a gasoline powered car for free. This is something Tesla cannot offer obviously.

The i8 will be great. I have seen this car already. But of course it is not purely electric. Still I know they have already more than 5000 orders for the car.

BMW has been working on electric cars for more than 50 years. The BMW E1 had 150km range with app. 50hp back than in 1991. But it never went in production. The new i3 is the first serious attempt here to go electric. But it will be difficult.

You see driving habits and infrastructure are very different here. I live in the south of Germany and I can drive more than 200kph every day. It is not really a problem. I tried the Tesla Roadster and it was fun but I just couldn’t help wondering why I should spend so much money on a car offering very limited performance for a sportscar. In the end I ended up with a Lotus costing half as much but offering very similar performance and much better handling.
And it is the same with the Model S. It’s obviously a great thing but there is still the problem that you get a vehicle with very limited range. Very limited because you can travel app. 400-500km and then you need to charge it for hours. It is also a very big car. It would not fit into my garage. The rear seats are way too small and don’t forget that without tax incentives it is hugely expensive. It costs more than a BMW M5. A 305kph M5.

So why am I short the stock?

I see a lot of people got burned by shorting the stock too early. Musk grilled them. But now short interest has come down to 15% so any further squeeze is unlikely. It might go to the 120-130s but I cannot imagine much higher. The valuation is too high. Way too high.

It will be very difficult for Tesla to make any money until 2015 and their cash levels are already not too compelling. They are running massive investments for Model X and Gen3 and at the same time they are battling the US auto dealers. Demand for the Model S is very good at the moment but unlikely to continue at this level. They are dominating the luxury segment ,but I cannot see this continuing even I the Model S truly is such a great car.
For reference, the Fiat Group inc. Chrysler is producing more than a billion cars a year with net cash flows over 2 billion. The market cap is 30% lower than Tesla. And these guys have in fact a very deep knowledge about electric cars. Ferrari has been running KERS Systems in Formula 1 for many years. They are in fact producing in-house batteries with pretty unbelievable power density levels. I just don’t see Italians suddenly buying Tesla cars instead of their Fiats and Alfas.

If electric cars indeed become viable Tesla will face severe competition. You already see GM launching cars like the Chevy Spark (which is quite astonishing for the money). Tesla cannot totally control the supply base. Their battery cells are Japanese. Toyota and Honda will come up with their own solutions if the electric car will move further, which is still a big question mark.

All in all, it is just a battle Tesla cannot win. This is not David vs. Goliath it is David vs. the world.

I agree with your assumption about the competition and hence think it is overvalued.

Again, you have to give credit to tesla for selling many luxury EV (after all that's the selling point). If EV start selling others can get into game and buy tesla in future (that's what will happen around GenIII or before who knows the timing)

 

[raymond]

You just cannot get into your Model S and drive with it from Munich to Hamburg.
And this speed does matter here. People who buy a M5 just want to be faster than anyone else.

I find it interesting to juxtapose this with the - mostly US - comments on this thread.

The US and Germany have extremely different car worlds. And I think most of the rest of Europe is more like the US. There is only one country in the world where top speed matters: Germany. In the US, France, UK, etc. the top speed of an M5 is 130 kph (80 mph) because that's the law. Yes, you can drive a bit faster, but when I drive 180 kph (in The Netherlands) I run a significant risk to loose both my license and my car.

Next, I wouldn't *think* about driving from Munich to Hamburg - that's what airplanes are for.

People who buy a $100,000 car want comfort. Perhaps the Bentley Continental I once drove comes close the the Model S. Audi, Mercedes and BMW do not.

But it will probably be a very cold day in hell when Germans and Americans agree on the Model S. Which given the huge amount of PV in Germany really is a shame.

- - - Updated - - -

One example: My brother is driving a VW Corrado every day. The car is 22 years old.

Those are the cars that will soon be banned from driving in Amsterdam because of their high pollution. The problems of ICE cars in big cities is getting bigger by the day. Have you ever been to Beijing? Replacing ICE's with EV's really does help here.

- - - Updated - - -

LOL. In Norway the cheapest BMW M5 COSTs 300 000$, whats the price in the US?

It's "just" US$ 172.000 in The Netherlands.

 

[Realist]

I would like to know where you are getting this information. I've seen it written by more than one person, so there must be some original erroneous source. The very fact that the battery life is expressed in calendar time - 7 years - instead of by mileage or by charge cycles probably presents an interesting case of "playing telephone."

I've contested this on SeekingAlpha and on Arstechnica - you have to look at charge cycles.

You also have to look charge/discharge rate. Compare the Tesla with a Toyota Prius Plug In on that matter.

The Tesla Roadster has clear signs of battery degradation after a few years and the rate of degradation is not linear. Of course it depends on charge rates, temperature and so on. Still there is a reason why Toyota is only using 40-80% of their 4.4 kWh Prius battery.

How are the exact max. charge and discharge rates on the Model S?

 

[WarpedOne]

How are the exact max. charge and discharge rates on the Model S?

Why, you don't know that? You are not capable of figuring it out yourself?
All data is there on Specs site. You learned the math in second grade.