that's the way I took it as well. Just test cars. Production moved to Spring. About a 1 qtr push out
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that's the way I took it as well. Just test cars. Production moved to Spring. About a 1 qtr push out
Citizen-T
Active Member
The truth is they can't even meet demand for the Model S right now. Launching the Model X on time would bring nothing but additional costs. Until they find the limits of Model S demand, there is no point in launching the Model X. That's not to say they should sit on it if it is done. I'm just saying, if there is more that they would like to do to get it just right, go for it. There's no rush.
From an investor standpoint, this delay is good news.
Mario Kadastik
Active Member
This was absolutely a non-news event because Elon said as much in Oslo. The #1 reservation holder asked when he'll get his car. And Elon said that they'll probably ship the US signatures first because they want to keep the first cars close to home to be able to react fast and nimble to any unexpected issues, but that he shouldn't receive his car later than ~1-2 months after US launches and that he should expect his car ~2015 Q2. So Elon basically said that the first Model X will be delivered in Q1 2015. This is therefore not news as it was known already 2 weeks ago or so.
Oh please. I didn't just lucky on Tesla. I also got lucky on Visa and Lululemon to just two other examples. I'm sure the other folks here also have other winners in their past. And here's what I see: pros just don't get startups. And that's okay. If they did, they'd be VCs not hedge fund managers. Every buddy I have who works on Bay Street (our version of Wall Street in Canada) told me that Tesla was a bad bet when I was getting in in the 20s. They are still telling me that today. It's laughable. And I finally understood why. Finance guys just don't get tech, and particularly startups. And they won't get it until it's reflected on the balance sheets. Of course, at that point, it's far too late to invest in the company as a growth stock.
Now, a finance guy will easier counter this with "Tech bubble 2.0!!!" and he may be right. But he also may be missing forest for the trees, which I suspect a lot of the pros are when it comes to Tesla. They simply cannot imagine a world where a startup can take on the big boys in a capital intensive sector and win. Unfortunately for them, silicon valley has a history of creating disruptive companies. Just look at what Nest is doing to Honeywell in high end thermostats at the moment. And the auto sector is one of the slowest lumbering dinosaurs out there. Want proof? Just look at the state of infotainment systems in cars. It's not going to get better till Apple or Google intervene. Or look at the way they fight fuel efficiency mandates from governments around the world. Or look at how sales and service is executed. In the age of the internet, I still have to spend hours at a dealership negotiating the purchase of a brand new car with the song and dance of "let me take this offer to my manager." And where's the mobile servicing teams of fixed, flat price servicing contracts? The auto sector just can't help being incompetent when it comes to future development. Too many entrenched interests.
I was also an early adopter to Android. And I remember lots of folks saying Android would never catch on. I saw the brilliance though of an OS that was very similar to the then dominant Symbian, easier to use than Blackberry and cheaper than Apple. Too bad Rubin didn't IPO instead of selling off to Google. And if only Nest had IPO'd, I was salivating at the idea ever since I installed one in my condo, and then another at my folks, and then another at my brother. They all saw mine and wanted their own. A flipping thermostat. If that's what silicon valley can do for a thermostat, I can't wait to see what Tesla does to the dinosaur that is the auto sector. They won't catch on until its too late. And neither will the financial analysts.
Here's one you can watch for in 2015. Stagnating or even falling Porsche Cayenne sales every market where the Model X launches in earnest. It's at that point the analysts will start to realize that Tesla is here to stay. Mark my words.
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I was long TSLA when it was trading between $20-30 (back in late 2012), I think it's a big difference where the stock was trading back then and now. I never opined TSLA couldn't sell about 50k of each Model S and X over time, plus maybe 2-3 times that in Model E sales per year. However, I don't think that justifies the current valuation as I see new risks and more competition for Model E going forward, see old posts for details.
As for Porsche Cayenne sales: I think the heaviest competition for the Cayenne will be coming from the new Porsche Macan and other ICE competitors in 2015, not the Model X. There's also a Cayenne PHEV version coming in early 2015, probably earlier than the Model X. While some people may prefer a pure EV like the Model X, I see at least some people choosing a PHEV.
There will be many PHEVs in the SUV segment soon (Mitsubishi Outlander, Audi Q7...). I see heavy competition coming in this space soon.
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Krugerrand
Meow
Model X will outperform them all on every metric, and while a handful of people are negative on the Falcon Wing doors, when they see them work their minds will be changed and they'll wonder why no one ever made them before.
I think if Tesla sells 50k Model X and X and another 150k E like you say in 2019, the $200+ price is definitely justified. 250+ today? Probably not. And I think it'll settle back down in the next few days.
As for the Cayenne. It's ripe for disruption. I know some Cayenne owners. What strikes me about all of them is that none of them are uniformly rich or even staunchly upper middle class. They've done well and bought a vehicle they like. But for folks like this, the TCO of such a vehicle has to be hefty. Which is exactly why the Cayenne and its ilk are ripe for disruption. I throw the BMW X5, the Audi Q7, Acura MDX, Lexus RX, etc. The Model X will be robbing sales from all of them. But they won't feel it like Porsche will on the Cayenne. Because nothing else will drive as close to a Cayenne while carrying a quarter or less of the operating cost.
With the Giga factory news and financing publicly laid out, here's my summary. I still think batteries (basically all "new" markets for TSLA outside of traditional car sales) and battery manufacturing remain a low-margin business. Details for anyone interested here:
[Moderator: promotional links removed]
That concludes my view over the next few years for TSLA and I have adjusted my position accordingly (see comment in second link, as mods told me it's not ok to post trades here).
[Moderator: promotional links removed]
That concludes my view over the next few years for TSLA and I have adjusted my position accordingly (see comment in second link, as mods told me it's not ok to post trades here).
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1- how can the S be cannibalizing Porsche Panamera sales but the X wont do the same to the Cayenne? It will be quicker, quieter, and carry much more, just like the S
2- what does an SUV PHEV have to do with a Tesla? really
Krugerrand
Meow
It does not matter if battery manufacturing is a low margin business. The purpose of the Giga Factory is to 1) put an affordable mass market BEV on the road for all to enjoy (and force the auto industry to do the same), and 2) provide an affordable energy storage unit so that the world can more readily convert to sustainable energy sources such as solar (allowing individuals to get off the grid if they so choose). Ultimately for the betterment of this planet.
No where has it ever been said, hinted at or suggested by Tesla that they are making the Giga Factory to supply individuals/companies/others with singular batteries. Indeed, the intent (and the profit that you're so concerned about) is in the 'pack of batteries'.
Simply, you still don't get it.
I think I just have a different view of Tesla's future margins and its future competition. Nobody knows what the future holds. That said, I will certainly not add more to my short (now blended @$224) position.
PS: As for "betterment of this planet": In 2020, even if 500k TSLA cars are sold: With 100 million new cars/year sold (about 30 million more than today!) we will have more people in the middle class consuming more goods and resources, eating more meat, using more energy and exploiting more raw materials etc. So neither the Toyota Prius sold in the 90s nor the TSLA cars sold in 2020 will make a big difference in the grand scheme of things. It will be a drop in the bucket with billions of people entering the middle class (just my opinion). But that discussion tangent goes beyond investing in a single stock.
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Krugerrand
Meow
Certainly you do have a different view. Myopic.
It's entirely fortunate that not everyone feels as you do, or we'd all be too depressed to get out of bed in the morning. You may view 500k Gen III's in 2020 as only a pebble tossed into the lake, but we all know what happens after that. Or if you prefer, the snowball being pushed over the edge of a long, steep hill.
Batteries are indeed low margin, especially commodity cells.
A safe battery pack built from commodity cells could be a mid or even high-margin item, depending on the amount of proprietary IP required to build such a pack and proprietary software running outside the pack to use the pack safely. With any pack that uses commodity cells, the answer seems to be high and high. That won't change unless by some miracle, some next-gen commodity cell chemistry is inherently much safer. But I think that will take a great deal of luck because commodity pressures will drive the engineers to optimize for best capacity/cost with reasonable safety and issues like auto-quality safety are secondary. Unless we get lucky, we will need that extra IP to make commodity cells usable in environments like auto or solar where safety requirements are much higher.
Volumes will depend on how easy it is to integrate with different power-draining and power charging systems. If Tesla puts the software onto h/w that is bundled with the pack and non-Tesla users see a simple well-defined interface, integration could be very easy which means high sales volumes are realistic.
The 500K per year number is a small step in and of itself. However, that 500K number represents the snowball rolling downhill that becomes an avalanche. Once *anyone* sells 500K EVs a year at a reasonable profit, it will be clear that EV's are a viable mass-market product that are here to stay and other auto companies will have no choice but to join the trend or see their markets cannibalized by those who do.
Having owned an S for a year now, I think that if you can deliver an EV with a 500 mile range at a cost equivalent to an otherwise comparably equipped ICE, no one in their right mind will buy the ICE. And I'm speaking as someone who loves to drive high quality, comfortable, high performance cars.
A safe battery pack built from commodity cells could be a mid or even high-margin item, depending on the amount of proprietary IP required to build such a pack and proprietary software running outside the pack to use the pack safely. With any pack that uses commodity cells, the answer seems to be high and high. That won't change unless by some miracle, some next-gen commodity cell chemistry is inherently much safer. But I think that will take a great deal of luck because commodity pressures will drive the engineers to optimize for best capacity/cost with reasonable safety and issues like auto-quality safety are secondary. Unless we get lucky, we will need that extra IP to make commodity cells usable in environments like auto or solar where safety requirements are much higher.
Volumes will depend on how easy it is to integrate with different power-draining and power charging systems. If Tesla puts the software onto h/w that is bundled with the pack and non-Tesla users see a simple well-defined interface, integration could be very easy which means high sales volumes are realistic.
The 500K per year number is a small step in and of itself. However, that 500K number represents the snowball rolling downhill that becomes an avalanche. Once *anyone* sells 500K EVs a year at a reasonable profit, it will be clear that EV's are a viable mass-market product that are here to stay and other auto companies will have no choice but to join the trend or see their markets cannibalized by those who do.
Having owned an S for a year now, I think that if you can deliver an EV with a 500 mile range at a cost equivalent to an otherwise comparably equipped ICE, no one in their right mind will buy the ICE. And I'm speaking as someone who loves to drive high quality, comfortable, high performance cars.
The battery pack will supply commodity batteries. That's the point! The gigafactory is not there to product profit by selling battery packs. It's there to lower costs on the major cost component of a Tesla car and SolarCity backup system.
If Tesla's battery packs are 30% cheaper than the competition that creates a natural cost moat. For anybody else to compete, they will have to put forward a similar investment and build similar partnership. And most importantly, they'll have to start lining all that up this year.
If trends hold, batteries will simply continue their 7% per year natural price decline. Add that to the 30% promised by the gigafactory and you are talking a 60% reduction by 2018. What would that do for Tesla's profitability and pricing flexibility?
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As for the Cayenne and the rest.
Here's the thing, the X is even more competitive with its ICE competition than the S was with its competition. Thanks to all those past truck loopholes in fuel economy standards, SUVs are horrible on fuel consumption. The operating cost difference between gas and electric will be very much amplified in the SUV category.
Next, think of who the X is aimed at: women. Or more precisely upper middle-class suburban moms. How many ladies you know like talking to a mechanic about problems with their vehicle? That job is usually labelled a "man" task. But what if you were to give them a vehicle as easy to understand as their iPhone? This will be the standard going forward for every upper middle-class suburban soccer mom. Just watch. The X is going to be bigger than the S.
If Tesla's battery packs are 30% cheaper than the competition that creates a natural cost moat. For anybody else to compete, they will have to put forward a similar investment and build similar partnership. And most importantly, they'll have to start lining all that up this year.
If trends hold, batteries will simply continue their 7% per year natural price decline. Add that to the 30% promised by the gigafactory and you are talking a 60% reduction by 2018. What would that do for Tesla's profitability and pricing flexibility?
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As for the Cayenne and the rest.
Here's the thing, the X is even more competitive with its ICE competition than the S was with its competition. Thanks to all those past truck loopholes in fuel economy standards, SUVs are horrible on fuel consumption. The operating cost difference between gas and electric will be very much amplified in the SUV category.
Next, think of who the X is aimed at: women. Or more precisely upper middle-class suburban moms. How many ladies you know like talking to a mechanic about problems with their vehicle? That job is usually labelled a "man" task. But what if you were to give them a vehicle as easy to understand as their iPhone? This will be the standard going forward for every upper middle-class suburban soccer mom. Just watch. The X is going to be bigger than the S.
Even more fundamentally, it's there to ensure sufficient supply (regardless of cost). Someone has to step up to the plate and build that capacity. Tesla has an amazingly low cost of capital, and it doesn't have to be convinced that the demand for Model E packs will justify building the plant.
bareyb
Active Member
Elon is smart enough to see that the Batteries are the wild card here. Some less the scrupulous corporation could construct barriers to getting the batteries he needs and that would be that. The more you can do in house, the less likely it is that outside forces can manipulate the materials you need and hold them hostage. I don't blame him one bit. He's a very savvy businessman.
NigelM
Recovering Member
No. You said you wanted to post all your trades here because you couldn't do that at SA; you were told that TMC shouldn't be used as a trading diary.
The promotional links were edited out of your post. Trying to drive people to click on your own articles isn't cool.
Ok.
But just to note: I don't receive a cent for that article (SA has two different article types, mine is without compensation) or the Instablog post in the two links. My only intention to post these two articles was so I didn't have to retype everything that sums up my outlook for TSLA (concerning new TSLA markets outside of traditional car sales and integrated battery production).
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You make good points about Model X and SUV sales potential, the women you cite are indeed important buyer segments for "traditional" SUVs. On the other hand, I doubt if many people really buy an SUV (even if it's a full EV) for ecological reasons. I saw sales for X at 50k/year as well, maybe more in a short spike in year two after its introduction.
As for PHEV vs EV. I'm aware of the differences, but many people just want the savings and drive short distances 90% of the time.
The sales success of the Outlander PHEV outside of Japan shows (even more so because Mitsubishi was really struggling as a brand in recent years) the potential for PHEV SUVs.
In general, I see competitors even react faster in this category: Since there is more floor/body space in SUVs, large competitors can introduce SUVs shared on production lines (the approach VW uses already with the e-up and e-Golf for smaller EVs) and with the same design as their existing ICE or PHEVs SUVs.
We will see how many customers prefer special design elements like the Falcon doors etc. on the X. It's the same challenge BMW is facing vs VW (traditional design for EVs) with the i3, i8 and future i-cars.
My main concerns never were the S and X, Tesla has a good niche there (and again I don't mean this in a disparaging way, see what Porsche achieved in a similar niche in ICE cars over the years). My concern is the Model E and the competition and margins in that mass-market segment longer term.
Without E, TSLA wouldn't need the gigafactory (or at least it would only need a much smaller factory or maybe a JV with a battery producer with lower cap ex/less risk). See my earlier posts for details.
TSLA is going all in again to use a poker analogy. It may succeed or not. I don't know. Noone knows. I just don't like the risk/reward with shares trading well above $200 and have positioned myself accordingly.
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