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Is Tesla Motors’ (TSLA) Future In Danger?

Discussion in 'News' started by Richard Benson, Dec 17, 2014.

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  1. Richard Benson

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    Tesla Motors Inc stock has continued to decline over the last few weeks as concerns regarding increased future competition worry investors. Increased competition in the future could snatch Tesla’s technological edge, making it difficult for the company to achieve its long-term target of selling half a million vehicles annually by 2020.

    http://www.bidnessetc.com/30956-is-tesla-motors-tsla-future-in-danger/
     
  2. Johan

    Johan Took a TSLA bear test. Came back negative.

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    No.
     
  3. basvk

    basvk Active Member

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    Seeing this kind of articles in the press means that big money is starting to buy shares. For that, they need sheeples to sell their shares. Hence the bearish articles. ;-)
     
  4. Robert.Boston

    Robert.Boston Model S VIN P01536

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    I think @basvk has the truth of this...an article to rattle more shares off weak longs so that big players can deepen their long positions at a discount.

    Let's walk through some of this FUD:
    • "Increased competition in the future could snatch Tesla's technological edge." Tesla has already open-sourced its patents, so it's clearly not concerned about losing its technological edge, it's concerned that there aren't enough competitors. More OEMs making more EVs increases Tesla's addressable market, expands EV infrastructure, and establishes Tesla as the lead player in the fastest growing segment of the personal transportation market.
    • "making it difficult for the company to achieve its long-term target of selling 500,000 vehicles annually by 2020." Let's keep this number in perspective: Worldwide auto production is about 65 million, and VW alone makes 9.3 million vehicles. So Tesla is aiming at less than a 1 percent market share globally and aspires to be sell just 5% of VW's production. These are not unreasonable goals, especially in light of the continued high demand for its Model S.
    • "it now seems only a matter of time before Tesla loses its technological edge, as Volkswagen AG recently acquired a stake in QuantumScape, a startup that aims to develop battery packs which can provide almost double the mileage than Tesla's current lithium-ion batteries." Lots of FUD here:
      • Tesla, too, is looking for better battery technology; Tesla is a moving target.
      • QuantumScape's technology is far from proven, and even farther from being commercialized.
      • We've seen before that betting on a single breakthrough battery technology doesn't always pay out. Remember GM? What is VW's fall back plan?
      • How would VW, or anyone, make enough batteries to match Tesla's projected 500,000 vehicles by 2020? It's not enough to have a product on the drawing board if you can't actually manufacture it.
      • There is more technology in a great EV than the battery tech.
    • "Other automakers, including Toyota and Nissan are also looking forward to develop comparable [battery] technology." Implying that Tesla isn't? Elon has publicly stated that Tesla is looking at new technologies, and the Gigafactory isn't going to lock them into one particular technology.
    • "Tesla is considering introducing new graphene-based battery packs ... However, the success of such battery packs remains questionable." But somehow the unspecified, unproven QuantumScape battery technology is beyond question?
    • "Even if somehow Tesla manages to implement the use of graphene-based battery packs, it won't happen before the launch of ... the Model 3." And your point is? Tesla is confident that the cost reductions and incremental battery improvements from the Gigafactory will make the Model 3 a great, affordable car. In the meantime, no other automaker will have anything to market that is even vaguely competitive.
    • "According to estimates provided by Tesla, the Model 3 is expected to be priced in the range of $30,000 to $40,000...." Elon has said it will be priced starting at $35,000, presumably for the base car.
    • "However, analysts remain skeptical and forecast that the Model 3 will be priced much higher at $50,000." Analysts are optimistic that the average selling price will be higher than the base model price. The ASP for the Model S is over $100k, even though the base sticker price is $70k.
    What garbage.
     
  5. ItsNotAboutTheMoney

    ItsNotAboutTheMoney Active Member

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  6. Johan

    Johan Took a TSLA bear test. Came back negative.

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  7. MikeC

    MikeC Active Member

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    Took the word right out of my mouth.
     
  8. peet365

    peet365 Member

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    In which word VW find Venture Capital backed sturt up from San Jose, which Tesla, with its connection to VCs, does not know about?
     
  9. Robert.Boston

    Robert.Boston Model S VIN P01536

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    If I am parsing your question correctly, my guess is that Tesla knew about QuantumScape. Elon has said, show me the cells. QuantumScape had PowerPoints instead. VW was willing to take a gamble at an early stage, which makes sense: VW has more money and is at a strategic disadvantage. It's the team that's trailing that throws the Hail Mary pass.
     
  10. adiggs

    adiggs Active Member

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    An interesting observation (at least to me), and one that I left the thread before it reached my conscious brain, as I happen to agree with it.

    You just said, Robert (and I'm paraphrasing generously), that big VW is so far behind Tesla, and the game is so far along, that good game strategy at this point for VW includes desperation measures (such as Hail Mary passes thrown at the end of a football game). I happen to also see the world in that way, and yet the dominant dialogue around Tesla (especially in the financial media) is more about whether Tesla is going to survive and how they're going to survive the onslaught that's coming their way.

    Even more interesting, again if you and I are right, is that Tesla is already starting to find itself in a leadership position where "conservative" choices need to be made. THe risky choices and actions to create leadership have been made and executed - now it's time for conservative choices to maintain the lead. They might today still look risky compared to the rest of the auto industry, but relative to what Tesla's done in the past, it might be time for Tesla to be calling a prevent defense (hate those things).

    (Note that I don't really think that it's yet time for that for Tesla, but we might start seeing a bit of creeping big-companyitis in Tesla's choices. H'mm...)


    Somewhere in here the analogy back to football games breaks down, but the idea that Tesla might be so far further developed and ahead that the company starts becoming conservative is kind of a weird.
     
  11. Johan

    Johan Took a TSLA bear test. Came back negative.

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    Good observations, and I agree. I think the shift from being the "innovative, risky up-and-coming new car company" to being "the one to beat" to being an established inustry leader will be quite rapid, if the EV technology coupled with solar economy game plan plays out as it likely will. Now, and in the future, change seems to happen at an steadily increasing pace as compared to historically where it perhaps took decades to transform av large industrial sector nowadays that can happen in less than a decade.

    On a domestic forum there has been a long running debate as to if, how and when the big established firms will come out with their first real Tesla competitor. There are opposing views, but one common view, that I happen to agree with, is that for now Tesla is just barely making a dent in the large manufacturers' profits by stealing a few high-end customers, and there is not enough incentive to go head-to-head with Tesla, but this will soon change and those left behind will suffer badly. Tesla's main advangtage right now is having no history or legacy with regards to an ICE-line-up to keep dragging them down financially and innovatively. Someone made the good analogy to the situation in Europe post WW2 where Germany was bombed to pieces but quickly rebuilt and within a few decades German industry was the leader, quickly taking over the English who kept to "their old ways" and "doing what they always had done well". Well, today Tesla is outpacing the "old" German industry, but tomorrow someone else will be outsmarting and outpacing Tesla. The old The Innovator's Dilemma - Wikipedia, the free encyclopedia all over.

    Now, what would really be remarkable is if Tesla with Elon at the helm found a way to outsmart the Innovator's dilemma paradox. That would really be something. Can it be done over a long period of time? In such a capital intensive business as car building? I'm not sure but Tesla are sure proving so far that they are willing and able to think outside of the box and reinvent themselves all along.
     
  12. adiggs

    adiggs Active Member

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    The best example that I've studied (from the outside / as an outsider) of a company disrupting an industry, and then BEING their own disruptor, is Netflix. They disrupted the retail DVD / Video cassette rental market with DVD-by-mail, and then about 8 years later decided that video streaming was going to disrupt DVD-by-mail, and that they were going to be the ones to do it. It's interesting to me how large of a role that their customer base played in how Netflix went about that disruption.

    Actually, by "best", I really mean "only" - I can't think of another example of a company that put an established industry out of business, and then turned around and put it's own product/business model out of business (well - they're trying), with the next disruption.

    The PC industry doesn't count, even if the processors are changing specs every year or two, and the OS running on the hardware is changing every year or 3. The business model isn't being invalidated each year or two, even if the products do change.


    It is intensely difficult to be that innovator, and in Tesla's case, what will the incentive be? If Tesla is really successful, and becomes the #1 seller of BEV vehicles, in a world in which BEVs have put the ICE industry into a niche / collector market, I see that as fulfillment of Tesla's mission. At that point, the new Tesla mission becomes something very much like today's Auto behemoths - make good cars, generate massive profits, and return cash to shareholders. I think that's a completely fine mission and evolution for Tesla, and I doubt it'll actually be that simple, but I don't see the underpinnings in the culture that drives to victory over all others and for all time that would be needed. Also - I expect that Elon is long gone from daily operations of the company, with only occasional input as a major shareholder.

    Now what MIGHT happen is some new technology comes along that can be productionalized, and that is so much better at doing what a BEV does, it replaces batteries as the storage medium for electricity. Maybe it's a 200 kw capacitor that can be charged and discharged instantly (for some reasonable approximation of instantly), and for lower prices than the battery, and with more capacity. That sounds like something Tesla adopts into the product line and uses - not something that disrupts the industry.
     
  13. Thumper

    Thumper Member

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    Whether Tesla can beat the innovator's dilema or not remains to be seen. Elon clearly has a strategy to beat it though. By opening Tesla patents and stating that the only path for continued success is rapid innovation, Elon shows great leadership. Executing that plan year after year is the trick.
     
  14. Johan

    Johan Took a TSLA bear test. Came back negative.

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    With regards to Tesla the core values and goals of the company will be very important. We may all have a slightly different view of what Tesla is about and what Tesla will be, but in fact it has been clearly stated by Elon that Tesla's mission is " to accelerate the advent of sustainable transport by bringing compelling mass market electric cars to market as soon as possible". But what happens after this? Clearly Tesla is thinkg beyond this, as you point out. They are going in to partnerships to build batteries for many applications, mainly (for now) stationary storage. They are looking to be a leader in autonomous driving. Who knows what could happen tomorrow? One way Tesla could be disruptive is to constantly change it's goals to include what is on the horizon, always keeping focus on the "big picture" which IMO Elon seems to have a remarkable ability to do. It seems he is able to filter out a lot of the noise and see things clearly, simply and better than most.

    In an interview his cousin Lyndon Rive (CEO of Solarcity) said Elon is like Neo in the Matrix - he can see 1's and 0's. Also, he said about Elon:

    "It is, Rive said, as if he is at the wheel of a car. Musk is in the passenger seat and sometimes instructs him to swerve into a pothole. But why would I do that? Rive asks. "The pothole will be less harmful than the invisible wall," Musk says. To which Rive says: What invisible wall?
    "Without Elon, we may have hit a few walls," Rive said."

    I don't want to idolize too much, since it's unhealthy, but we have to admit that it does take an extraordinary and innovative leader to disrupt and in best case to keep disrupting.
     
  15. 30seconds

    30seconds Active Member

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    don't forget that VW only bought a 5% stake in the company. I'm not sure what they get for that, but pretty sure they don't get scale production of a new solid state cell
     
  16. Tasdevil

    Tasdevil Member

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    Tesla still looks good leading up to model 3.
    After that if musk steps down and gen4 will have more competition. So time will tell if tesla can buck the car making trend.
     
  17. Richard Benson

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    I fear if china comes in this electric etc just like tesla is in right now what will be the scenario
     
  18. Skotty

    Skotty 2014 Model S P85

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    Tesla still has no competition anywhere in sight.

    Here's the thing. There are many people out there that seem to think one of two things -- that either you can't build anything better than has ever been built before, or that magical startups they put their faith in will give such-and-such company the edge in X number of years. The former usually being thought by the public, and the latter usually being thought by the companies.

    This is why we love Elon's companies and why some of us are able to make big bucks betting on them. While everyone else is out there either talking big talk without walking it or naysaying the possibilities, the teams Elon puts together actually $&*&@# deliver! He's proven it time and time again, and people still don't get it. He has an almost magical combination of what it takes to be great in this society: knowledge of both business and engineering, ambition, the ability to inspire others, the desire to improve humanity rather than just make money for himself, the necessary capital to get work off the ground (thanks to his early work with Zip2 and PayPal), and the balls to lay it all on the line and make huge commitments required to realize the desired future (personal investments in the company to the point of going broke and committing to building things like the supercharger network and the gigafactory as a few examples).

    Keep it up Elon! Elon makes it happen while everyone else bickers. Many would call me a fan boy meaning it in a negative way, but there is good reason to be an Elon fan boy and in this case I am happy to admit it.
     
  19. Robert.Boston

    Robert.Boston Model S VIN P01536

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    Sitting here today it's impossible to see what the next industry-shattering change will be (re Netflix putting the DVD shop out of business, then replacing its own business with streaming). If I were to guess, it will be about autonomous driving, which will radically change the ownership model of transportation. But it will be another decade before the industry gets to its next inflection point.

    The key is, what is the corporate culture? Or, more to the point, what will the corporate culture be in a decade? It takes a very bold CEO to overthrow a successful business model; most businesses only do a fundamental rethink when they've hit the rocks (or are about to), by which time their strategic options are sharply limited.

    At the top of Tesla are two gentlemen that I hold in the highest regard: Elon and J.B. J.B. is in the "Tim Cook" category, while Elon is in the "Steve Jobs" category. A great combo, but I wouldn't look to J.B. for the out-of-the-box thinking we see almost daily from Elon. If Elon drops his CEO position (but stays as chairman) after the Model 3 launch, I'm sure Tesla will be very well run under J.B.'s very capable hands. But will it be willing to make hard choices about product and strategy innovation? I think that will depend a lot on how active Elon would be as non-executive chairman.
     
  20. wycolo

    wycolo Active Member

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    #20 wycolo, Dec 18, 2014
    Last edited: Dec 19, 2014
    Sorry, streaming sucks, give me hardcopy. Just sayin'.
    --
     

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