Long-Term Fundamentals of Tesla Motors (TSLA)

[wcfinvader]

And Model 3 will be 'premium' compared to that Leaf.

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I didn't say that. I said the Model 3 is directly tied to the Gigafactory. That is different. I've also said (in another thread) that the production of Powerpack and Powerwall may relieve some of the partnership pressure. There's no way of knowing what gross margins are going to be for either the car or the stationary storage (we have some guesses by management), but it's likely the car will still have a higher margin. Yes, the car will be more involved to produce. Yes, it's possible that there may be enough business from stationary storage to make up for lower margins etc., etc., But there's even more things involved, like employees and milestones that have to be reached for Tesla to get all the tax incentives etc... from the state of Nevada. So I contend, again, that Model 3 will not be late in terms being talked about by some (as if it's the X all over again). It would only make business sense to include a window of some sort for issues/delays, but it's not some 2 year window. The fact that the Gigafactory is on time/a bit ahead of schedule speaks to the seriousness of the venture. Model 3 is a whole new ballgame and will be viewed by Tesla entirely differently than the X. This is what I believe. I could be wrong. I'm betting I'm not.

Premium compared to Leaf? I find that hard to believe considering there are many features in the leaf that the Model S lacks. Let's just wait and see. We love our leaf. I'm not saying it's better than the Model S but for city driving I like it much better than the model s. MUCH easier to park.

 

[MitchJi]

So I contend, again, that Model 3 will not be late in terms being talked about by some (as if it's the X all over again). It would only make business sense to include a window of some sort for issues/delays, but it's not some 2 year window. The fact that the Gigafactory is on time/a bit ahead of schedule speaks to the seriousness of the venture. Model 3 is a whole new ballgame and will be viewed by Tesla entirely differently than the X. This is what I believe. I could be wrong. I'm betting I'm not.

I emphatically agree with almost everything you said except some of what you said about the GF. The GF being ahead of schedule allows the M3 to be on time. But IMO stating that that implies that the M3 will be on time is going a bridge too far.

 

[Krugerrand]

How do you know that those things won't be increased to match the model 3?

Educated guess. Watching Tesla innovate at a significantly greater speed than any other OEM and putting every single resource into advancing EVs (not being sidetracked by having ICE products). Listening to reports of what's coming out next from other OEMs.

I'm just saying for what I use the leaf for I prefer it compared to the model s. Leaf is a good car. Yes it lacks many things that the model s has but it is still a really good car.

And I clearly stated - let me quote myself for you: "Not a darn thing wrong with a Leaf."

It wasn't ever made to compete with the model s.

Right, so why are you objecting to my statement that: "Model 3 will be 'premium' compared to that Leaf."? Color me confused at this point.

 

[Gtoffo]

Educated guess. Watching Tesla innovate at a significantly greater speed than any other OEM and putting every single resource into advancing EVs (not being sidetracked by having ICE products). Listening to reports of what's coming out next from other OEMs.



And I clearly stated - let me quote myself for you: "Not a darn thing wrong with a Leaf."



Right, so why are you objecting to my statement that: "Model 3 will be 'premium' compared to that Leaf."? Color me confused at this point.

Guys, SHORT TERM PRICE MOVEMENTS remember?

 

[dakh]

I really believe Tesla needs to stop trying to re-invent the car with every vehicle they design and build. It's ok to build a run of the mill, small car or truck that gets 225-250 miles per charge - just get it to market.

I'd vote for them communicating delivery dates as "when it's done". I know as-is that they're working harder than just about anybody to get stuff done, no need to discredit this with publicising estimates for things that can't be reasonably estimated. It'll piss off some people but those would be well served going back to trading AAPL.

As far as the balance between being plain and fancy, might be useful to look at finer points. Simple but done right, again as a shareholder I'd be all for it, but not for a top dog luxury SUV. X isn't just a bridge to when Gigafactory is fully operational and M3 is done. It's a rolling advertisement for the company and possibly a pretty fat long-term cash cow. If X was plain there wouldn't be any reason to make it, just improve S and shoot for faster GF and M3 delivery. I don't know enough internal details to say if that was even in the cards, but for me that looked like a more straightforward path.

 

[Krugerrand]

I'd vote for them communicating delivery dates as "when it's done".

I'd be happy with them saying that as well, however, not going to happen. The outcry from most everyone else would be enormous. As a publicly traded company, investors, analysts et al... are expecting dates to be given so decisions can be made. Just look at the flak Tesla takes for their non-gap reporting, their refusal to say monthly sales numbers, for their distinguishing production vs deliveries, etc., etc.,

 

[MitchJi]

http://www.wsj.com/articles/tesla-...e-supply-for-its-battery-factory-1440767689/

Aug. 28, 2015 9:14 a.m. ET
Tesla Motors Inc. has secured a North American supply of lithium hydroxide through a long-term contract with mining company Bacanora Minerals Ltd. and Rare Earth Minerals PLC, giving the electric car maker a key base material used to produce lithium-ion batteries used its electric vehicles.

More details:

Minerals (LSE: REM) and BACANORA MINERALS (LSE: BCN) are surging this morning after the two partners announced that they have signed a lithium supply deal with Tesla Motors.

On the condition that Rare Earth and Bacanora’s Sonora lithium project in Northern Mexico reaches certain performance milestones during the next two years, Tesla will buy lithium hydroxide to feed the manufacturing of batteries at its Gigafactory in Nevada.

One of the conditions attached to the deal will be that the Sonora project has to be able to produce lithium hydroxide in accordance with the parameters determined by Tesla.

The deal between Rare Earth, Bacanora and Tesla will last for five years, starting from when Tesla places its first order. There’s an option to extend the contract for a further five years.

Commenting on the deal, Rare Earth Chairman David Lenigas said:

“The selection of the Sonora lithium project as one of the lithium suppliers to the Tesla Gigafactory is a landmark transaction that will support the development and commercialisation of the Sonora lithium project. This key supply agreement with Tesla will hopefully be the first of a number of potential lithium off-take partners for the Sonora lithium project…”

A big deal

There’s no doubt that this deal between Rare Earth, the company’s partners, and Tesla is a big deal.

Tesla Motors designs and manufactures premium electric vehicles, which have gained a reputation for being the best electric cars in the world. Tesla’s newest model, the P85D, an all-wheel-drive version of the battery-powered of the company’s Model S car, has recently earned a 103 out of a possible 100 in an evaluation by Consumer Reports magazine, setting a new standard for comfort, quality, reliability and overall perfection.

And to meet the rising demand for its vehicles Tesla is building a $5bn Gigafactory in Nevada, which will be able to supply enough batteries to meet the projected demand for Tesla’s vehicles. Along with strategic partners such as Panasonic, the Gigafactory will help reduce the cost of manufacturing batteries by around 30%.

Model S uses around 7,000 lithium-ion batteries, and Tesla is planning to produce 500,000 cars per year in the latter half of this decade. So, the company needs a reliable lithium supplier to feed production at its Gigafactory. The factory is set to commence production during 2017 and reach full capacity by 2020.

A long way to go

A deal with Tesla is a game-changing development for Rare Earth, but the company still has a lot to do before the contract translates into revenue. For example, today’s press release warned that:

“…the Sonora Lithium Project Partners will need to design and construct a suitable mining and processing operation. This will require the Sonora Lithium Project Partners to secure significant financing through debt and/or equity.”

What’s more:

“Bacanora and REM will be pursuing next steps to raise finances in order to achieve this goal. There can be no assurance that the conditions to supply product under the Supply Agreement will be met or that the agreement will prove to be economic.”

In other words, while Rare Earth and Bacanora may have a provisional agreement with Tesla, there’s no guarantee that the partnership will register any economic benefit from the deal.

Your own research

http://www.fool.co.uk/investing/201...signs-supply-contract-with-tesla-motors-inc/

 

[anticitizen13.7]

I'd be happy with them saying that as well, however, not going to happen. The outcry from most everyone else would be enormous. As a publicly traded company, investors, analysts et al... are expecting dates to be given so decisions can be made. Just look at the flak Tesla takes for their non-gap reporting, their refusal to say monthly sales numbers, for their distinguishing production vs deliveries, etc., etc.,

And... this is why average retail investors like most of us will not be able to invest in SpaceX anytime soon. Elon hates dealing with :cursing: from shareholders, regulators, and other stakeholders who instigate all kinds of drama. I can't say I blame him. These parties often demand hard dates for stuff where it's simply too hazy to accurately predict what will happen.

I'm as guilty of complaining as anyone else, but I think Tesla's communications could be much better.

 

[ZachShahan]

As far as the balance between being plain and fancy, might be useful to look at finer points. Simple but done right, again as a shareholder I'd be all for it, but not for a top dog luxury SUV. X isn't just a bridge to when Gigafactory is fully operational and M3 is done. It's a rolling advertisement for the company and possibly a pretty fat long-term cash cow.

This.

We have to realize that the majority of the population probably still doesn't know what a Model S is. For a new technology to disrupt a big incumbent, it needs to be *much better* and ~ the same price, or equally good and much cheaper. People are slow to change, and as a mass called society, that is compounded. The Tesla Model S has "disrupted" the world of auto journalists and bloggers. It has opened up a big road into the EV future thanks to record-chattering acceleration, record safety that broke some NHTSA testing devices, a giant tablet as the control center, over-the-air updates, 7 seats if you want them, and other amazing things. But we need more. Society needs more in order to wake up to EVs enough to even drive one. The Model X is MOAR. The gull-wing doors and, presumably, the super-fabulous 2nd-row seats are critical features to get beyond the 0-60 & tech crowd and open up a highway to the masses. So, imho, the delays due to the doors and back seats are likely well worth it.

tl;dr: disruption doesn't come easy. you have to WOW and go far beyond normal. Model X will open the eyes of non-tech and non-acceleration fanatics who haven't learned about Model S.

 

[MitchJi]

I have seen quite a few posts expressing concern about MS and MX demand (medium and long term) in terms of the M3 Launch. Short term, between now and about the beginning of Q2 2016 it is a possible issue. Of course most of that risk is mitigated by the MX waiting list.

Beyond that time frame I think that Tesla could be very successful selling only MS's and MX's.

There was some information posted about the increases in sales with $5k-$10 price reductions. There are at least two ways Tesla will be able to substantially reduce MS and MX prices without reducing profits.
1. It will cost them less to produce cars with their new assembly line (why else would they plan to stop using a multi million dollar assembly line?).

2. GF pack reduction costs.

Would someone please let me know how Tesla handles car deposits (do they spend it, or set it aside somehow)?

 

[hockeythug]

Some of that $1.5B in CapEx with the second production line.

 

[FANGO]

Mitchji, deposit money is used as working capital, not set aside

 

[MitchJi]

Thanks!

 

[ggies07]

Not sure where to put this comment, so I will put it in here as it deals with the long term timeline.

I just had a small chat about the car with a new teacher at our school who saw I had a Tesla poster in my office. He's in his mid thirties, but as he was talking about the car and wanting one he said this: "Oh, the car doesn't use oil?" He didn't realize there was no engine.......

So it seems until Tesla gets the cheaper "mass market" Model 3 out, the general public will still be clueless on specifics of how it works.

I could not believe he knew about it and still thought the car had an engine.....speechless I was. I then went on a informational ramble. haha

 

[FANGO]

There's a ton of people who think electric means hybrid. It's very strange to me. Partially the fault of all the PHEV marketing I suppose. And because people think tesla and fisker are the same thing.

 

[Robert.Boston]

Moderator's Note

I've moved a group of posts discussing convenience of EVs and other attributes to Demand drivers for Tesla / EVs

 

[MitchJi]

http://www.autoblog.com/2015/09/08/tesla-direct-sales-not-dealer-model-greatest-threat/

Tesla and direct sales aren't dealer model's greatest threat
New-car dealers and their lobbyists have been fighting a state-by-state battle against electric-car maker Tesla Motors, which sells its cars online directly to buyers. The franchised dealers for established carmakers apparently view this as a threat. But what gets lost in the coverage is that selling new cars isn't how dealers get rich.

There are two kinds of profit from selling new cars: slim, and none. It is true that nearly 99.7% of the new cars sold in North America are purchased at retail dealerships, and yet the average new car generated only $69 in per-vehicle-profit in 2013 and that number has remained flat for 2014 according to the National Automobile Dealers Association....

 

[MitchJi]

2016 Nissan Leaf with 107-mile range will start at $37,640*

2016 Nissan Leaf with 107-mile range will start at $37,640*

You Can Still Buy 84-Mile Model For $29,860*

 

[uselesslogin]

2016 Nissan Leaf with 107-mile range will start at $37,640*

And then the article goes on to say it starts at $35,050. Ah well.

 

[ecarfan]

107 mile range is still pitifully low. What is going to happen when Nissan has to compete against a $35K Tesla Model 3 with a 200 mile EPA rated range? No one will be buying Leafs.