Long-Term Fundamentals of Tesla Motors (TSLA)

[jhm]

32no and Breser, thanks for your analyses. I am wondering if anyone has seen reactions from auto deal associations. This does strike me as a way to test the laws. And it seems that if dealers take Tesla to court on this, they risk violating first amendment rights. A temporary store is not actually selling cars as it leaves town long before the product arives. If dealers argue that Tesla needs a dealer licence just to show cars, then this interpretation could be used against the dealers themselves when they try to display their products off the dealer's lot, for instance at a mall, fair, sporting event or auto show.

Another analogy here is that of gun shows. Gun shows exist at least in part to get around certain laws that govern firearm sales. For example, some states allow gun show sales to bypass background checks. Now I am not wanting to get into any sort of debate here about whether this is a good thing or bad. The point is simply that different laws can apply to temporary vending situations than apply to permanent stores. So Tesla may have done its homework on how to exploit these differences.

In any case, it will be interesting to see how the NADA and the like respond to the Tesla pop up invasion.

 

[kenliles]

Ford following suit
Ford follows Teslas lead and opens all their electric vehicle patents | Electrek

 

[hcsharp]

Ford following suit
Ford follows Teslas lead and opens all their electric vehicle patents | Electrek

Hardly the same thing Tesla did, and not for the same reason. Ford is making the patents available through an organization that connects inventors with companies that want to buy or license patents. Ford will be licensing the patents for a fee.

 

[kenliles]

Hardly the same thing Tesla did, and not for the same reason. Ford is making the patents available through an organization that connects inventors with companies that want to buy or license patents. Ford will be licensing the patents for a fee.

yes- good point; Ford attempting to spin in order to attract the Electrical engineers it wants to hire apparently. Too bad... and a bit similar to Toyota. I was hoping Elon/Tesla mission to change the patent atmosphere would prove more fruitful. The more TSLA has to go it alone, the more suppressed the growth path imo. We're really going to have to get new players (Apple, Google, etc.) coming on very strong and very fast; or the legacy players will have to come around much faster (seemingly an impossible dream - like the song; and one I don't believe is possible).
IMHO Tesla is currently growing the market of EV at VERY much too slow a pace to be transformative, much less disruptive.

 

[chickensevil]

Something interesting caught my attention as I was reading through Wait But Why's piece on Tesla: http://waitbutwhy.com/2015/06/how-tesla-will-change-your-life.html

It’s a rule of thumb in the car world that every $5,000 decrease in car price approximately doubles the number of buyers who can afford the car. So if Tesla can somehow come out with a stellar EV for about $35,000 less than the Model S, it would double the buyer pool 7 times, or multiply it by 125-fold. Which would now mean most people could afford it.

The article referenced was from the 2013 EV sales which I found interesting that even in 2013 Tesla had already captured 8% of the 50k+ Luxury car market in the US. That is pretty insane! I would love to have seen a redo of the 2014 numbers like they did here for 2013.

But the really important thing I want to point out is if it is true that we are looking at a buyer pool increase of 125x going from the Model S to the Model 3, and if we assume that the Model S demand is going to be capped at 50k (even though it very likely will not be, but go with it...) then a 125x increase by bringing out the Model 3 would be a whopping 6.25M cars demand! I sense that Tesla is going to need a few more car factories very soon.

 

[JRP3]

That math doesn't seem plausible. $5K off a $75K vehicle doesn't seem as if it would suddenly open a door to a whole new buying audience, but $5K off a $25K vehicle certainly would.

 

[AudubonB]

Your skepticism is correct. It is extremely unlikely that the change in accessibility has such a simple relationship over the entire range of vehicle prices.

Nevertheless, there also is a fair change that waitbutwhy's noted maxim has some basis in reality. If you consider a variety of data points, it may become a little clearer.

Let's start with the absurd: the market for $2mm cars may be n=10. If you drop that price by $5K to $1,995,000, I'll bet you the whole $2mm that the market has not risen to n=20! Likewise, let's call the market for $5,100 vehicles to be n="X". If we apply that same price diminution, I'll likewise guarantee you the market for $100 vehicles to be a lot larger than 2X.

However, along the more reasonably-expected portion of the price spectrum, that d$5K----->p=2X doesn't sound unreasonable. It probably fairly represents reality between the $20K - $60K marks.

 

[chickensevil]

Its actually simpler than that. The doubling of 7 times was based on lumping all 50k+ cars into one category and then dropping 5k increments from there. And if you go look at the data which was pulling the real numbers from US 2013 sales it pretty much doubled every 5k drop. So going from the 50k+ category to 45k doubled the numbers, then 45 to 40, and so on. The presumption is that after tax incentives and gas savings the 35k model 3 will equal a 20k gas car. So you are considering a drop from 50k+ to 20k and doubling 7 times in the process. Even if we only hit 30k as the real value (tax savings reduced and gas savings curbed) that would still be a doubling 4 times over!

 

[hcsharp]

I don't think you can use this formula for anything useful. Applied to the $2M car results in 2^200 or 1.6x10E60. Having said that, I won't be at all surprised to see 50x the current demand (number of units). I've been saying all along that Model 3 demand will be way beyond general expectations. Many, many people, a very high percentage of the people i talk to about my car, have told me they don't want a luxury car but they will buy one as soon as an affordable model is available. A crude market study but if only 2% of those people I talked with follow through with what they said it will be well over 50x current demand.

I've said it so many times I sound like a broken record: Tesla's biggest obstacle is ramping up fast enough. Elon has said the same thing.

 

[renim]

http://www.arb.ca.gov/msprog/zevprog/2015zevreg/06052015workshoppresentation.pdf
http://www.arb.ca.gov/msprog/mailouts/ecars1505/ecars1505.pdf
2015 ZEV Regulation

Tesla presumably has more ZEVs than Honda needs to buy, so additional credits are close to useless for Tesla financially. Long term, EVs having equality with H2 cars for CARB credits, is important for motivating companies like Toyota and Honda to offer EVs.

 

[ev-enthusiast]

Interesting article at Forbes about dropping costs for renewable energy and EVs and growing market adoption during recent years:
National Lab Director On Tesla Battery: 'This Is The Future, Now'
(link, please click "continue to site" to hop over the advertising page and display the above mentioned article)

Do not miss the charts at the bottom of page three

 

[AudubonB]

Mild-mannered Moderator chiming in -
that link in post 2751 as presently set up takes the viewer to an unrelated and fairly undesirable site. You might see if you can fix it - thanks.

 

[ev-enthusiast]

Mild-mannered Moderator chiming in -
that link in post 2751 as presently set up takes the viewer to an unrelated and fairly undesirable site. You might see if you can fix it - thanks.

Thanks for the hint!
Yes, following the link to the Forbes article the web site is displaying an advertising first, you have to click "continue to site" in order to see the article.
I do not like this kind of advertising, but I accept that Forbes has to earn some money with advertising
Added the info in the above post that the user has to click "continue to site" in order to see the article.

Is that ok, AudubonB?

 

[tinm]

AdBlocker is particularly useful on the Forbes site.

 

[eepic]

Thanks for the hint!
Yes, following the link to the Forbes article the web site is displaying an advertising first, you have to click "continue to site" in order to see the article.
I do not like this kind of advertising, but I accept that Forbes has to earn some money with advertising
Added the info in the above post that the user has to click "continue to site" in order to see the article.

Is that ok, AudubonB?

+1. Forbes always has that ad as the first screen when you load their site, personally I believe it's fair if I want to consume their content.

 

[GregTexas]

If Tesla can't deliver on Autopilot will it cause a big impact on stock value? Based on the current blind spot monitoring function, I doubt Autopilot will function anywhere near promised.

 

[Papafox]

If Tesla can't deliver on Autopilot will it cause a big impact on stock value? Based on the current blind spot monitoring function, I doubt Autopilot will function anywhere near promised.

GregTexas, I was at the annual shareholder's meeting recently where Elon said that an update to the software that will bring lane following will likely be released at the end of this month. Last week I drove 2,000 miles in my Model S with the adaptive cruise control, and I was not only impressed but the feature significantly reduced my workload while driving. Heck, that's almost enough driving to cross Texas! Add the auto-dimming lights and 2nd gen seats and the driving experience was exceptional. Elon has been testing lane-holding software in his personal Model S and must feel it is close to being ready for release if he said end of this month. Fully-autonomous driving is years in the future and will require significant redundancy of sensors, but autopilot should be with us in July. I wouldn't worry about a no-show.

 

[AlMc]

GregTexas, I was at the annual shareholder's meeting recently where Elon said that an update to the software that will bring lane following will likely be released at the end of this month. Last week I drove 2,000 miles in my Model S with the adaptive cruise control, and I was not only impressed but the feature significantly reduced my workload while driving. Heck, that's almost enough driving to cross Texas! Add the auto-dimming lights and 2nd gen seats and the driving experience was exceptional. Elon has been testing lane-holding software in his personal Model S and must feel it is close to being ready for release if he said end of this month. Fully-autonomous driving is years in the future and will require significant redundancy of sensors, but autopilot should be with us in July. I wouldn't worry about a no-show.

Sorry I missed you at the annual meeting! Small correction to the above: IIRC Elon indicared Beta testers will have the upgraded software by the end of the month. I would suspect that the fleet will get it a couple weeks ( a month?) later.

 

[chickensevil]

Regarding it affecting the value... Long term not at all because the real money is going to be in driverless tech which is about 3 years away from being practical (price and capability) and then beyond that whenever people feel like they will trust it enough to allow it. Tesla should be working on that tech as well, but if this auto pilot stuff fails, or doesn't live up to the hype, then it will get fixed better when they release the next set of hardware on the car. So log term I don't see this as a big deal since we have time for it to come around.

 

[Johan]

Well there is also some sort of pilot going in the Netherlands. Tesla owners can opt in for a program where the utility controls charging of their car overnight in 15 minute blocks. Correspondingly they get a rebate on electricity consumed during that period. Unfortunately since the charging protocols between car and charger aren't developed enough this can only be accomplished by giving the utility the login to your remote Tesla. But it does show there is an active interest from utilities.

If the grid could signal desired charging rate and could query cars how much supplemental load they can still absorb, it would go very far in helping power distributors manage grid wide fluctuations without having vehicle to grid capabilities (which, I think, car manufacturers are not interested in due to the extra strain on their battery)

(From short term thread).

I'd actually be quite interesting in tracking down this pilot program. Those guys would be the first example ever of this type of coupling between the car and utility, whereby the utility uses the car battery for load balancing by directly controlling charging/discharging of the car, occuring in reality. If these thing happen in reality somewhere in the world spontaneously it shows that this phenomenon could be huge in the future potentially. And if it becomes a wide spread demand for these types of collaborations between car owners and utilities this market could be huge. As jhm has suggested, Tesla could make deal with their customers on selling them the car as whether to participate in this or not, and Tesla might be able to knock the cash price down $1-2k which could mean a lot for any customer and if handled right would mean huge uptake of this option, making Tesla the world leader in distributet load balancing services. Tesla can basically say to the utilities: "You want to rent a 50GWh battery (bit arbitrary number but in the ballpark) from us every night"? How much is this worth? Ballpark answer: ALOT.