Long-Term Fundamentals of Tesla Motors (TSLA)

[Gerasimental]

Incremental book value / incremental station went :

end 2013 - 284k
end 2014 - 283k
end 2015 - 1134k

I've seen lots of reports of stations being upgraded to more chargers - especially in Europe.
Not sure how much this expains.

ItsNotAboutTheMoney you have your fractions upside down, unfortunately. They've almost halved the loc/book value :/

 

[JRP3]

As of today they are showing 602 SC's with 3,519 chargers. https://www.teslamotors.com/supercharger

 

[Model 3]

I'd love to and I could explain the big rise in cost per location but I am not aware if that information is publicly available for the different years?

Me neither. But as we know a localisation may have one charger/two stalls or 6 - 8? chargers/12-14? stalls, so a pure "cost / localisation" or "cars / localisation" is more or less valueless without it. But "cost / charger" or "cars / charger" may have a meaningful value.

 

[Gerasimental]

Me neither. But as we know a localisation may have one charger/two stalls or 6 - 8? chargers/12-14? stalls, so a pure "cost / localisation" or "cars / localisation" is more or less valueless without it. But "cost / charger" or "cars / charger" may have a meaningful value.

I agree, but there is probably a large fixed cost per location and then a relatively smaller variable cost per charger. Maybe that variable cost rises when the chargers are being added to an already present location, which has certainly been happening. Feels like the numbers could add up. I'm also remembering that I was told yesterday that charging plans for the UK are 'massive' in the near future, so I wonder if there's something in the works.

 

[CHGolferJim]

This morning's Barron's article about Tesla Cash Burn is reasonable in tone and reassuring to the twitchy.

 

[schonelucht]

Speculation:
- pulling numbers out of their frunks
- Superchargers build-out rate is ahead of demand
- Installation and operating costs are falling so they've reduced value to recognize that the network isn't as valuable.

Year	Locs	Book	Book/Loc
2013	90	25.6	3.515625
2014	380	107.8	3.525046382
2015	584	339.2	1.721698113

- Basically halved the value per location.

You divided loc/book though in your table instead of book/loc. Book value per location has actually doubled!

- - - Updated - - -

I've seen lots of reports of stations being upgraded to more chargers - especially in Europe.
Not sure how much this expains.

I know of quite a few locations in France that were just two stalls on a mobile platform for a number of months. If that happened elsewhere I can see that the major costs came as they upgraded these to real superchargers.

As of today they are showing 602 SC's with 3,519 chargers. https://www.teslamotors.com/supercharger

Thanks! But we'd also have to know where they stood early this year to make a meaningful comparison.

 

[RobStark]

Thanks! But we'd also have to know where they stood early this year to make a meaningful comparison.

Under map options click the way back button and you can see the evolution of the network from the beginning to now.

Also click "changes" and you can see dates when permits and construction for a particular supercharger where known publicly plus dates superchargers went live.

 

[schonelucht]

Under map options click the way back button and you can see the evolution of the network from the beginning to now.

Sorry, I must be particularly dense today because I can't see where to click to get to the map options?

 

[Model 3]

Sorry, I must be particularly dense today because I can't see where to click to get to the map options?

I think he mixed up with this map: http://supercharge.info/

 

[ItsNotAboutTheMoney]

You divided loc/book though in your table instead of book/loc. Book value per location has actually doubled!

2013	90	25.6	0.28
2014	380	107.8	0.28
2015	584	339.2	0.58

Oh yes, sorry, duh.

That's really not good to see. Well, it is a sales driver, and so far there's no real signs of a competitive build-out, but I don't think it'd be hard if anyone were actually trying.

 

[uselesslogin]

2013    90    25.6    0.28
2014    380    107.8    0.28
2015    584    339.2    0.58

Oh yes, sorry, duh.

That's really not good to see. Well, it is a sales driver, and so far there's no real signs of a competitive build-out, but I don't think it'd be hard if anyone were actually trying.

I hope at some point we'll get an answer. But I will speculate. Is it possible they have been adding batteries to a significant number of sites? I know power companies charge for peak power so it would probably save them a lot on the electric bill. It may have gone unnoticed since it might fit into the existing electrical shed. Anyway, I'm having a hard time figuring this out any other way because from what I understand they have to record the cost as the book value so they can't be inflating it but then again IANAA.

 

[dc_h]

If they start loading batteries into the sites, they could monetize the stations and provide peak power to the host location businesses. Would be cool if they could actually break even on sites, by selling peak load electricity on site. For larger commercial sites, maybe they even partner with SCTY.

I hope at some point we'll get an answer. But I will speculate. Is it possible they have been adding batteries to a significant number of sites? I know power companies charge for peak power so it would probably save them a lot on the electric bill. It may have gone unnoticed since it might fit into the existing electrical shed. Anyway, I'm having a hard time figuring this out any other way because from what I understand they have to record the cost as the book value so they can't be inflating it but then again IANAA.

 

[schonelucht]

Is it possible they have been adding batteries to a significant number of sites?

Possible, yes. Likely, no. They mention in their reports that costs associated with running the superchargers are marginal, read basically zero. Adding $100M of batteries to supercharger sites to reduce cost from basically zero to half of basically zero makes no financial sense at all. Also, we have a pretty good idea of how supercharger site is built up. As far as I know none have weird additional cabinets that could potentially house the necessary batteries.

 

[Norse]

Not much active atm, so not to sure if this has been posted earlier. But it is pretty good news for EVs: Asia To See First Gasoline Squeeze In More Than 15 Years | Hellenic Shipping News Worldwide

 

[anticitizen13.7]

I'm not entirely sure how this affects Tesla Motors fundamentals, but the value of the Tesla brand must have gone up a lot after last night. Model 3 is being discussed EVERYWHERE.

Model 3 is a headline "top post" at tech website Ars Technica. It was on the front page of MacRumors, despite not even being an Apple product. The New York Times, BBC, and USA Today all have front page articles on Model 3.

I'm seeing the same effect on social media and other message boards. If Model S was kicking the hornet's nest, then Model 3 is overturning a Tractor Trailer full of honeybees. The car community is buzzing over this, and there is a lot of debate and arguing over what Model 3 means for the automotive industry. Many enthusiasts are super excited about Model 3, but others are frankly resentful and angry that electric cars are proving themselves to be viable and better alternatives to gasoline cars. Stirring up this conversation is definitely getting people to consider electric transport, and I think it goes a long way towards helping achieve Tesla's long term goals.

 

[RationalOptimist]

Yes, the long-term picture looks more robust this morning in every way. Until this morning, we had hopeful glimpses of an amazing possibility. Now we can see that all the elements necessary to realize that possibility are snapping into place. Seeing the company actually commit to a $35k price point and 215 miles range (as opposed to predict it) is an amazing moment. And for anyone who doubted that those specs were enough to drive demand can just pick their jaw off the floor at what has happened. This is now, demonstrably, the tipping point moment. No doubt a massive amount of production planning ahead, but for anyone not poisoned by cynicism around renewables, there's a crystal clear road ahead that will take us to many hundreds of thousands of Tesla's sold within just a few years. Elon's 3-stage strategy is proven solid.

And then there's the raw human factor of delight at a gorgeous design. We all hoped it would come. But it wasn't clear that a design that gorgeous would be compatible with the raw specs needed for this vehicle. And now it is. That's huge.

Suddenly Tesla's valuation doesn't seem so high. A company that can generate $6 billion worth of orders in 24 hours on a single vehicle, mostly sight unseen, is today valued at just 5 times that number?

Based on the evidence of the past 24 hours, is it plausible that in 10 years time Tesla will still own less than 10% of the auto market, I find it hard to get to yes. Which means we're going to see YEARS of spectacular growth from this company. I've never been so confident in my Tesla holdings. 2018 leaps look to be an absolute steal.

 

[anticitizen13.7]

Suddenly Tesla's valuation doesn't seem so high. A company that can generate $6 billion worth of orders in 24 hours on a single vehicle, mostly sight unseen, is today valued at just 5 times that number?

Based on the evidence of the past 24 hours, is it plausible that in 10 years time Tesla will still own less than 10% of the auto market, I find it hard to get to yes. Which means we're going to see YEARS of spectacular growth from this company. I've never been so confident in my Tesla holdings. 2018 leaps look to be an absolute steal.

I spent some time today reading comments on Model 3 articles from NPR, Ars Technica, and Car & Driver.

The $6 Billion worth of orders (now around $8.31 Billion as of Elon's last tweet: 198k reservations) is just the beginning. Based on the comments I've seen, most potential customers are still unaware of the advantages of EVs over gasoline cars. Many of the myths about charging, power plant pollution, and range still persist in the general public. EV proponents on the news sites however, persistently push back with correct info.

If demand is this strong now, it will be beyond comprehension once ordinary buyers accept and even desire an EV as their next vehicle.

 

[neroden]

Based on the evidence of the past 24 hours, is it plausible that in 10 years time Tesla will still own less than 10% of the auto market, I find it hard to get to yes.

OK, here's the case for that -- I don't really believe it, but here's that bear case. Suppose Tesla has trouble setting up its fourth and fifth factories and trouble sourcing materials for Gigafactory 2 and 3 -- delays in expanding, in other words. Meanwhile, other companies *finally* start to catch up. Consider Apple, Google, BYD, GM, Nissan, Audi, BMW, and various Chinese and third-world companies I don't know about yet -- suppose by 2026 they manage to make tolerable cars which are not as good as Tesla's but are signiifcantly cheaper. I could see Tesla being pushed below 10% of the global auto market, by being supply-constrained while others are not.

The thing is this: Tesla has now positioned itself at the *top* of the auto market as the *elite brand*. So even if they're under 10% of the market it will be the *top* of the market, with the best profit margins in the industry. I see *no* way for any other company to challenge that. Nobody can beat the brand identity Tesla has built, except possibly Apple or Google, both of which are way behind and huge execution risks.

 

[EinSV]

I was a little stunned yesterday and today not to see the through-the-roof demand for the Model 3 reflected in the share price. I think there is such a deep-seated skepticism/resistance to what Tesla is trying to achieve that even getting hit over the head with a 2 x 4 is not enough to get many people's attention.

The two articles below are typical -- when Tesla gets 200,000 reservations in 24 hours, and half of the customers have never even seen the car, the LA Times headline is about the "stiff challenges" Tesla faces:

Tesla faces stiff challenges with Model 3

The Detroit Free Press article is even more comical. Buried way down on the business page (a couple rows down from "Detroit 3 sales rise in March") there is an article with the headline: "Tesla 3 Model Pricing Could Hinge on Smaller Tax Credit":

Tesla Model 3 pricing could hinge on smaller tax credit

I mean, really???? That's all you have to say????

As others have said, this is very reminiscent of of late 2012/early 2013, when it seemed blindingly obvious that with the Model S, Tesla had shown that a Tesla EV could be better than the very best ICE cars in the world. Even after all the car magazines raved about it and basically said just that, the stock stayed stuck for a few months. Eventually, the significance of the Model S started to sink in, and the stock started to take off.

The off-the-hook demand for the Model 3 is game, set, match for EVs and for Tesla. But it may take a couple years of ups and downs for that to completely sink in with many people. There is gigafactory-size denial in many quarters still.

 

[anticitizen13.7]

I was a little stunned yesterday and today not to see the through-the-roof demand for the Model 3 reflected in the share price. I think there is such a deep-seated skepticism/resistance to what Tesla is trying to achieve that even getting hit over the head with a 2 x 4 is not enough to get many people's attention.

I watched the same thing happen with Apple in the late 2000's. There seemed to be major lag due to skepticism about the iPhone.

Apple's share price did well in the early to mid 2000's, driven by the success of iPod, iTunes, and the Mac line. At the same time, companies like Nokia, Motorola, and RIM were dominating the mobile phone market. As ARM processors slowly became more powerful, I began to suspect that convergence would ultimately doom the iPod, and that Apple would be forced into the mobile phone market in order to retain/grow hardware revenues and defend iTunes Store.

Many people, including myself, were skeptical that Apple could go from 0% to any significant share in mobile phones, where they had no experience. From iPhone to iPhone 3G and then 3GS, Apple's stock price really did not reflect the growing potential of the iPhone line. Granted, the economic crisis of 2008 and associated macro conditions had a severely depressing effect on AAPL independent of the company's future prospects and actual financials. Something though changed around 2009 and then 2010 with the iPhone 4. The skepticism surrounding Apple and mobile phones all but disappeared, and even the emergence of Android did little to dampen the new reality. AAPL began to rocket upwards as iPhone went from "niche for the rich" to mainstream.

Share price often lags actual accomplishment, because the herd doesn't see the direction or the destination of a company. When they finally do understand, it becomes a a buying stampede as parties are willing to pay more and more for shares.

The key is to be positioned before the stampede happens. If in 2018-2019, Model 3 is a success and the numbers become impossible to ignore, TSLA will become vastly more valuable than it is today, assuming that macro events don't cause a disruption. This is why I encourage long term investing rather than trading. I believe there is a reasonable probability that Tesla will succeed within a general time period. I just do not know precisely when it will happen.