Long-Term Fundamentals of Tesla Motors (TSLA)

[vgrinshpun]

Thank you for kind words, Causalien, DonPedro and Keniles.

 

[DonPedro]

By the way, to the topic of this thread - the long term fundamentals.

If anyone ever asks me to point out the investment case again, I'll just point them to this thread on the Tesla Motors forum: http://www.teslamotors.com/no_NO/forum/forums/tesla-psychosis?page=1

This is the main thing. Companies that can make people feel like this about a product happen very rarely, and if they even happen to be good at execution...

 

[EVNow]

From running my very simple model, I've come to conclude that the core predictor of Tesla's long-term value is... how many cars it sells per year.

I have no idea how to predict that! It depends on trends in terms of car sales in general, and the general level of disposable income among the public, among other things.

I think Tesla will continue to sell between 20 & 30k cars until Gen 3. But with Gen 3, they will face competition from Nissan/Infiniti & BMW, may be even GM who talked about a 200 mile range car. Gen 3 sales will also depend on where the battery technology is at in a few years and if there are any leaps in that technology.

 

[Words of HABIT]

I'm new to the Tesla Forum, and this is my first post! :smile:
Been following/investing in TM since November 2012. TM is still in its infancy and prone to dramatic swings in share price over the most trivial of affairs.
What we know:
Fact: Battery cost will reduce, its size decrease and performance improved year over year (y-o-y), on a much greater scale than advancements over ICE.
Fact: Economies of scale will decrease TM manufacturing price y-o-y.
Fact: Supercharge stations and other electric source fill up stations will increase y-o-y
Fact: Most of my friends have never heard of Tesla or TM (I am a professional Project Manager). With greater recognition comes greater opportunity. No Dave, it's not a fish.
Fact: Expanding global reach will increase y.o.y.
Prediction: The price of Oil will continue to rise.
Prediction: Model X will outsell the Model S, by replacing all the SUV ICE >$100 fill ups at the pump. Some would rather spend that money on a nice meal with the family (not everyone enjoys eating in their car).
Prediction: TM will be profitable in 2013 with 20k production.
Prediction: Model X in 2014, Gen.III in 2016
The rest is noise.
Sit back, turn off Bloomberg and Yahoo Finance and enjoy life and those around you. The Tesla training wheels have just come off. This is a long term hold for 2016 horizon. Tesla is the future, and the future is coming whether we like it or not. I Believe!

Good Day Tesla Forum Readers. This is my 2nd post! :smile::smile: What has changed since November 2012? I still believe in EVs. I still believe Tesla is in the best position to capitalize on the EV market as the early innovator and quality leader. Those in the know should understand that we are only at the very cuspbeg of a revolution in the way the world powers automobiles. There is no much noise out there on Telsa for those looking, however if you ask around, 99 out of 100 people still have not heard of this company, or it they have certainly don't understand it and what it manufactures...and not just New Yorkers! 227% gains since November 2012 is irrelevant. This is a feel good, good story stock, for my kids to enjoy, even if the gains were 0%. Play a part in the future. Long Tesla.

 

[blakegallagher]

I think Tesla will continue to sell between 20 & 30k cars until Gen 3. But with Gen 3, they will face competition from Nissan/Infiniti & BMW, may be even GM who talked about a 200 mile range car. Gen 3 sales will also depend on where the battery technology is at in a few years and if there are any leaps in that technology.

Elon said that next year they will test the depth of demand with the Model S .... it is already over 20k per year and next year all signs point to over 40k per year .... to assume they will continue to only sell 20 to 30 k cars (their current rate) is a underestimate.

Keep in mind there has been no Traditional advertising and that the biggest sales force Tesla has is its own customers (and non customer believers like me) ... that base is growing daily and so will their sales for a long time to come.

 

[Words of HABIT]

Long EV, Long Tesla

Just correcting (in brackets) a couple of typos from my post yesterday.

...we are only at the very (cusp) of a revolution in the way the world powers automobiles. There is (so) much noise out there on Telsa.

 

[vgrinshpun]

Elon said that next year they will test the depth of demand with the Model S .... it is already over 20k per year and next year all signs point to over 40k per year .... to assume they will continue to only sell 20 to 30 k cars (their current rate) is a underestimate.

Lately I really started feeling that something big is brewing in terms of demand. At about 18 min into the Q1 2013 call Elon said:

"And I think there's a potential for next year, a fairly significant increase in volume as we really test the depth of the demand that's out there. I think it's probably quite a bit higher than what we had originally thought. But like I said, we don't want to just ramp volume and if it's not, how it's taken care of gross margin or have that service and just dumping products on the market. I don’t think that sort of the line is course of action. But we’ll still exceed I think what most people are expecting us to do. "

Elon also indicated in shareholder letter that US demand for MS will exceed 15,000 units/year, while he previously indicated (Q4 2012 call) that US demand will be 10-15K cars/year.

I personally believe that we will see very significant increase in production starting next year, once margins reach steady 25%, up to 45 - 50,000 cars (two shift operation). I also feel that demand for Model S/X in 2 - 3 years could potentially surpass current production capacity of approx. 100K units/year. Of course given the recent influx of capital, Tesla will be in excellent position to fix such a mismatch, if necessary.

 

[FredTMC]

Lately I really started feeling that something big is brewing in terms of demand. At about 18 min into the Q1 2013 call Elon said:

"And I think there's a potential for next year, a fairly significant increase in volume as we really test the depth of the demand that's out there. I think it's probably quite a bit higher than what we had originally thought. But like I said, we don't want to just ramp volume and if it's not, how it's taken care of gross margin or have that service and just dumping products on the market. I don’t think that sort of the line is course of action. But we’ll still exceed I think what most people are expecting us to do. "

Elon also indicated in shareholder letter that US demand for MS will exceed 15,000 units/year, while he previously indicated (Q4 2012 call) that US demand will be 10-15K cars/year.

I personally believe that we will see very significant increase in production starting next year, once margins reach steady 25%, up to 45 - 50,000 cars (two shift operation). I also feel that demand for Model S/X in 2 - 3 years could potentially surpass current production capacity of approx. 100K units/year. Of course given the recent influx of capital, Tesla will be in excellent position to fix such a mismatch, if necessary.

We will need some of the locals to do a drive by at Fremont and see how full the parking lot is at night. Great indicator of grave yard and 2nd shift utilization.

Secondly, I don't recall a max production capacity of 100k units/year with the current line. I thought it was more like 50k units/yr. can someone reference a thread on this?

Man, if they relly can do 100k units with the current line using more shifts, that would be huge for the stock price.

 

[EVNow]

I personally believe that we will see very significant increase in production starting next year, once margins reach steady 25%, up to 45 - 50,000 cars (two shift operation). I also feel that demand for Model S/X in 2 - 3 years could potentially surpass current production capacity of approx. 100K units/year. Of course given the recent influx of capital, Tesla will be in excellent position to fix such a mismatch, if necessary.

People (including Ghosn) thought the same way when Leaf had a long waiting list. I expect a more hockey stick kind of demand, with a little drop in demand before a price reduction picks up the demand. A lot of early adopters are spending way more than they normally do on a car to buy Model S - I don't expect that trend to continue.

 

[Cattledog]

There's anecdotal evidence from a Fisker thread that there were 150 reservations placed over a recent weekend at the Menlo Park store. I'd love corroboration or refutation. That's not the end of 2012 with the price increase driving reservations, that's some random weekend in April or May. That would imply thousands (5? 10?) of orders from that store alone in 2013. That would be remarkable - you could just cede North Carolina to Hendrick Motor Sports...

 

[mitch672]

People (including Ghosn) thought the same way when Leaf had a long waiting list. I expect a more hockey stick kind of demand, with a little drop in demand before a price reduction picks up the demand. A lot of early adopters are spending way more than they normally do on a car to buy Model S - I don't expect that trend to continue.

Yes, and gasoline is more than double the price in the rest of the world vs. the U.S., and Tesla hasn't sold a single Model S overseas yet. Europe, Asia, China, Sweden, taken together could dwarf the U.S. Model S demand.

 

[vgrinshpun]

Secondly, I don't recall a max production capacity of 100k units/year with the current line. I thought it was more like 50k units/yr. can someone reference a thread on this?

There were two references that point to the 100K units/year capacity.

One is the 4 min 40 sec "tac" time for the battery/chassis/drive unit connection to the rest of the MS body - shown and discussed in the National Geographic Megafactories video. This translates to approximately 100 cars/shift, 500 cars/week for a one shift, 5 days a week operation.

The second is Gilbert Passin, Tesla Motors manufacturing VP, stating in one of the interviews that line can produce in excess of 100K cars/year.

 

[Causalien]

I was reading that TMC post about the obsessive owner. It seems that every owners spread the Tesla doctrine to at least 10 people while half of those refuse to drive. Tesla might want to solve this problem since they are the most likely people to buy a Tesla car seeing as we are the average of our 6 closest friends. One way I think that might work is to offer some type of insurance or co payment on accidents that occurred when owners let their friends drive a model S, like a car dealership's insurance for letting potential client's test drive a new car. All they have to do is call in or, in Tesla's case, push a button on the computer screen for the length of time it is in test drive mode.

 

[vgrinshpun]

People (including Ghosn) thought the same way when Leaf had a long waiting list. I expect a more hockey stick kind of demand, with a little drop in demand before a price reduction picks up the demand. A lot of early adopters are spending way more than they normally do on a car to buy Model S - I don't expect that trend to continue.

This is contradictory to the facts. We saw increased demand for MS in December of 2012, followed by weak demand in January - March, followed by the increased demand in April-May. The pattern is more consistent with the typical seasonal car sales dynamic, which is a an absolutely great indicator for MS.

Perhaps you missed that point in my original post, but EM have also recently increased his estimation of the US demand from 10-15K/year to more than 15K/year.

 

[FredTMC]

There were two references that point to the 100K units/year capacity.

One is the 4 min 40 sec "tac" time for the battery/chassis/drive unit connection to the rest of the MS body - shown and discussed in the National Geographic Megafactories video. This translates to approximately 100 cars/shift, 500 cars/week for a one shift, 5 days a week operation.

The second is Gilbert Passin, Tesla Motors manufacturing VP, stating in one of the interviews that line can produce in excess of 100 cars/year.

Thanks! I'll go back and review these.

 

[toastypasta]

I just get so excited from the thread. So much potential and it's great to see that we mostly believe that Musk and Tesla will reach it. Really really good times ahead for shareholders and for current and future Tesla car owners.

 

[ToddRLockwood]

It appears to me that Wall Street has not fully recognized the significance of the European market for the Model S. Much of Europe is ahead of the U.S. in adopting large scale solar and wind. The Model S is a natural extension of these efforts. Gasoline is much more expensive in Europe. It won't take as much convincing to make the switch to electric.

 

[Norse]

It appears to me that Wall Street has not fully recognized the significance of the European market for the Model S. Much of Europe is ahead of the U.S. in adopting large scale solar and wind. The Model S is a natural extension of these efforts. Gasoline is much more expensive in Europe. It won't take as much convincing to make the switch to electric.

Yes, that is probably the reason why alit of norwegians have bought shares in TSLA. All new cars will be electric in Norway soon, and Tesla would definently be the most famous brand for that kind of cars. Elon knows this. That is why he was in Norway some months ago. Tesla is alot in the news here aswell.

 

[ToddRLockwood]

Yes, that is probably the reason why alit of norwegians have bought shares in TSLA. All new cars will be electric in Norway soon, and Tesla would definently be the most famous brand for that kind of cars. Elon knows this. That is why he was in Norway some months ago. Tesla is alot in the news here aswell.

Wow. ALL NEW CARS WILL BE ELECTRIC IN NORWAY SOON! This bodes well for Tesla.

 

[Johan]

Wow. ALL NEW CARS WILL BE ELECTRIC IN NORWAY SOON! This bodes well for Tesla.

More personal opinion than fact but hey, I agree mostly. I would bet money on >30% of new cars being BEVs in 2018, given no major changes in incentives and a wider choise of cars coupled with technological progress (esp. battery tech).