Long-Term Fundamentals of Tesla Motors (TSLA)

[callmesam]

I don't think any of that will come to pass. Clearly those are not constitutional and I'm sure Tesla will sue.

It's currently illegal for a manufacturer to directly sell in TX, NC etc. These laws are actively preventing things like price discussions and test drives. So it has ALREADY come to pass.

I agree that those laws inhibit interstate commerce and will very likely EVENTUALLY be ruled so by a court. But until then, the restrictions remain in place PREVENTING sales that might otherwise be taking place.

 

[gregincal]

It's currently illegal for a manufacturer to directly sell in TX, NC etc. These laws are actively preventing things like price discussions and test drives. So it has ALREADY come to pass.

I agree that those laws inhibit interstate commerce and will very likely EVENTUALLY be ruled so by a court. But until then, the restrictions remain in place PREVENTING sales that might otherwise be taking place.

And yet there are plenty of people from those states on these boards who own Teslas. The states can make it difficult for Tesla to open galleries, but it's not like they can do anything else (and no state has actually managed to prevent even that so far).

 

[Iz]

Was not sure where to plop this link because Yahoo! articles do not remain out there for long.

Tesla Bulls Are Ignoring A Bunch Of Serious Issues

1. The recent demand has reflected pent-up demand, and it's unclear if this is sustainable.
2. A 25% gross margin by the end of the year is unlikely considering the company's low volumes.
3. Tesla has limited room to absorb warranty costs.
4. The car is expensive and affordable only to the one-percenters.

Time to go plug in my S!

 

[Soflason]

Looking strictly at the chart, this long-term argument in this "Technicals vs. Fundamentals" face-off on CNBC mediated by Maria Bartiromo tells the story, TSLA momentum is compelling:
Talking Numbers: Will Tesla Your Portfolio? - CNBC

 

[Causalien]

Need you guy's help on this thought experiment.

USA population 313.9 million.
Non financed buyers = 1% of the population = 3.139 million potential buyer
Tesla expect to get 2% of this luxury market which represent 62k people. Worst case scenario is 1% which lands it at 31k.
62k means TSLA need to have GEN3 ready in 3 years. i.e. 2016. Whereas 31k means TSLA will fail.

With leasing Elon said the top 10% should be able to buy the car. Again with the same logic:
31.39 million at 1% market share = 310k cars. Which means TSLA have 10 years to mess around with before it needs to get GEN3 out. Unfortunately that means 2023. But this sounds too good to be true and my brain stopped there.

I still haven't factored in Europe, The cost of super charger, the cost of turning SC into power distribution centers, development cost of Model X and Gen 3. Reserve for recall.

Basically asking. Will TSLA be able to make $1 billion for the Capital investment needed for Gen3 by year 2017 calculation.

 

[Zythryn]

Need you guy's help on this thought experiment.

USA population 313.9 million.
Non financed buyers = 1% of the population = 3.139 million potential buyer
Tesla expect to get 2% of this luxury market which represent 62k people. Worst case scenario is 1% which lands it at 31k.
62k means TSLA need to have GEN3 ready in 3 years. i.e. 2016. Whereas 31k means TSLA will fail.

...

A few things to consider. First, the top 1% earned $370,000/year (2010). You can afford a Model S on less than that, especially when you consider you will be spending much less on fuel. So I think the market is much larger than 62k total.
The 'luxury car' market is about 1 million/year. While the bottom of this market falls under the base model price, if you call the 62k-110k market 300,000/year Tesla needs 5% of that market to hit their USA number of 15k.

Second, while the entire market doesn't buy a car every year, people do buy a car more than once over time.
There are some people that hold onto a car for ten years, however there are also people that buy a new car every couple of years. So repeat sales will be a factor in year 3, becoming a bigger and bigger factor in years 4,5 and 6.

 

[JRP3]

A few things to consider. First, the top 1% earned $370,000/year (2010). You can afford a Model S on less than that, especially when you consider you will be spending much less on fuel. So I think the market is much larger than 62k total.

Indeed, the S is not a 1%er car, it should easily be a 10%er.

 

[c041v]

I wonder if it is worthwhile to cross reference the income thread with demand projections. I know it's a bit empirical, but I noticed that not everyone who bought the car is in the top one percent. It may be logical to assume that demand could be derived from a percentage of the top earners, but I think we're seeing more class transcendence than these projections account for.

 

[Causalien]

I wonder if it is worthwhile to cross reference the income thread with demand projections. I know it's a bit empirical, but I noticed that not everyone who bought the car is in the top one percent. It may be logical to assume that demand could be derived from a percentage of the top earners, but I think we're seeing more class transcendence than these projections account for.

Yeah, I am pretty sure the data is on this forum, just scattered around. Will look for it when I am stuck transferring flights I guess. Really would like to analyze this... but brain is on strike.

 

[DonPedro]

FWIW Elon has started using "1 million households" instead of "top 1%", and "10 million households" instead of "top 10%".

 

[ItsNotAboutTheMoney]

FWIW Elon has started using "1 million households" instead of "top 1%", and "10 million households" instead of "top 10%".

Interesting.

The Model S is an aspirational vehicle, meaning people are trying to afford one, so it's a > 1% vehicle at a 1% price.
Any calculation has to include global markets. Tesla doesn't have to get 20k US model S sales.
If the batteries prove themselves it will open up the limo/high-end taxi market further.
Physical improvements will allow Tesla to get some repeat sales.
Tesla has the Model X coming, which shares significant components with the Model S.
Tesla is aiming to be a grid storage and back-up business and that can add a revenue stream and allow them easily to sell battery upgrades.
They have sales of the drivetrain to Toyota and MB to bring in extra income
They earn more on ZEV credits for their first sales.
They are earning CA carbon credits.
They are likely to improve production and lower unit manufacturing costs.
A large part of the cost is the battery and the cell costs should continue to fall.

I think Tesla has plenty of ways in which they can live with delays of Gen 3, even if US model S sales fall off to 800-1000 per month.

 

[Soflason]

Just read a fascinating piece comparing GM's stock trajectory (from 1911 - 1915 when they were revolutionizing ICE) with Tesla's (from 2011 - 2015 when they're revolutionizing EVs)... some real market similarities that (if correct) might bode well for TSLA as a long-term hold - the graphs nearly mirror one-another:
Tesla Stock Today Looking A Lot Like General Motors In 1915 - Forbes

 

[kevin99]

I've post my 2nd article "Truth Or Myth: Most People Still Don't Get Tesla" on a separate thread:

Truth Or Myth: Most People Still Don't Get Tesla

Here is the main arguments. Go check it out and cast your verdict!

Truth or Myth #1: A Tesla is a gorgeous, high-tech, sexy, rich person's toy purchased mainly to impress one's friends.

Truth or Myth #2: Spending $50K+ on a BMW, Audi, Mercedes, Lexus, Jaguar, Aston Martin or Maserati makes you look foolish, or worse, irresponsible.

Truth or Myth #3: The true cost of the Model S is lower than that of a $50K BMW, Audi, Mercedes, Lexus or Jaguar.

Truth or Myth #4: Range anxiety

Truth or Myth #5: The EV is unproven technology; the battery will degrade significantly after a maximum of 1,000 charges.

Truth or Myth #6: Tesla makes expensive electric vehicles affordable only to the wealthiest 1%, while EVs account for less than 1% of car sales. The $11 billion market cap is a bubble.

Truth or Myth #7: Tesla's 21,000 car sales target for this year is doubtful. The 25% gross margin is untenable without ZEV credit revenue.

Truth or Myth #8: The big automakers, Toyota, GM and Ford, will launch their own EV products and crush Tesla. Tesla has no intellectual property or competitive advantage that will enable it to stay ahead.

Truth or Myth #9: Tesla is the next Apple (AAPL); Elon Musk is the next Steve Jobs.

Truth or Myth #10: Forget about Great America; just take your kids for a Tesla drive.

Truth or Myth #11: Gallons of light

Conclusion​

 

[Soflason]

Truth or Myth #9: Tesla is the next Apple (AAPL); Elon Musk is the next Steve Jobs.
​

Great article - read it over on the other thread... interesting that your #9 has been such a point of reference -- even the Motley Fool folks have been pointing this out as an important rationale to have TSLA as a long-term investment:
Tesla Is Still One of the Market's Best Investment Opportunities - DailyFinance

 

[Citizen-T]

I still maintain that call Elon "the next Steve Jobs" significantly understates what he has/might accomplish. Steve Jobs made toys. Elon is trying to solve the biggest challenge that we face as a race right now; and at the same time, he is trying to enable humanity to become a space faring civilization.

Again, Jobs made toys.

 

[ItsNotAboutTheMoney]

I still maintain that call Elon "the next Steve Jobs" significantly understates what he has/might accomplish. Steve Jobs made toys. Elon is trying to solve the biggest challenge that we face as a race right now; and at the same time, he is trying to enable humanity to become a space faring civilization.

Honestly, space-faring would be nice, but before that, re-usable rockets would absolutely revolutionize the satellite industry: launches are expensive and satellites are expensive because launches are expensive. It'd usher in an era of cheap satellites and that would have a dramatic effect on broadcasting and rural telecommunications.

Again, Jobs made toys.

Toys make people happy. But, he was no rocket scientist.

 

[brianman]

Citizen-T covered it pretty well. That's only part of what bothers me about the Jobs comparison.

 

[gregincal]

I still maintain that call Elon "the next Steve Jobs" significantly understates what he has/might accomplish. Steve Jobs made toys. Elon is trying to solve the biggest challenge that we face as a race right now; and at the same time, he is trying to enable humanity to become a space faring civilization.

Again, Jobs made toys.

I do have a slight problem with characterizing people's access to information via the internet and the devices that allow it as being just toys, but I agree that Musk is focussing on larger issues.

 

[Royal TS(LA)]

Honestly, space-faring would be nice, but before that, re-usable rockets would absolutely revolutionize the satellite industry: launches are expensive and satellites are expensive because launches are expensive. It'd usher in an era of cheap satellites and that would have a dramatic effect on broadcasting and rural telecommunications.

[..]

That, and making the orbits littered with 10s of 1000s of satellites, making space travel a nigh impossible task .

 

[Zaxxon]

I do have a slight problem with characterizing people's access to information via the internet and the devices that allow it as being just toys, but I agree that Musk is focussing on larger issues.

Same here. Many of us may use smartphones/tablets in large part as toys, but the information revolution that these devices played a large part in spurring on is most certainly much more important than 'toys', and characterizing them as such misses the mark.

That said, a rather strong argument could be made that Jobs merely accelerated a change that was nigh inevitable. Musk seems (to me) to be 'the guy' making the strongest push in two areas that will prove extremely important over the next century (sustainable transport and space exploration).