Long-Term Fundamentals of Tesla Motors (TSLA)

[Mario Kadastik]

For once a not FUD SA article on Tesla valuation:

Tesla Motors Inc (TSLA): Dear Tesla Bulls: That's Not How You Calculate Tesla's Value - Seeking Alpha

Yes, there are risks and the current valuation already assumes near perfect execution that people should be aware of. Yet the author still misses on some items. The Model S GM of 25% is not only for the highest cost models. It's the net average of the sold cars and is in fact targeted above 30% (EM's goal options). Yes it's true we shouldn't assume 25% for Gen-III, that's more likely to be 10-15% GM product, but who knows. Even with the very conservative GM assumptions the author isn't too far off from current value so changing those assumptions to more realistic ones should give us current fair value around the current stock price.

 

[lolachampcar]

I'll bet they handle it the same way they handled the "what's my battery warranty and where is my exposure" question. I believe they should go out of their way to help owners that have an issue by lowering the cost associated with this particular damage mode.

I'm not advocating Tesla jump in with lower bumper prices for someone that has a fender bender. Those happen to ICE in exactly the same way they happen to MS. The battery floor, however, is a completely different story. If we start seeing more and more $40-$50K repairs for dents in the bottom of MS from road debris, you will be handing ammunition to those that would slow MS' progress as this is clearly a weakness when compared to ICE. Tesla was aggressive in dealing with this type of ammunition when it came to battery warranty. There is no reason to believe they will not respond similarly here.

 

[RationalOptimist]

Nice piece on Tesla's custom-built IT operation Being A CIO At Tesla Motors, A Startup That Builds Cars And Its Own IT | TechCrunch
This is a great example of under-reported long-term competitive advantage the company has. Really hard for the big auto companies to match. Will ultimately drive more efficient manufacturing, direct sales, and a better customer experience.

 

[huntjo]

Novice investor here
I got in with a small amount in the $30 range last year. Since then, I had basically been waiting for a time to add more shares (not a large portion of my dough, because that's just not how I roll, but a little more to kind of "double down" on my pet stock). Of course my cheap ass decided the $50 and $60 bump was going to be temporary, so I waited for it to come back down. By the time we got to $190, it maybe started to sink in that there was no more getting in for cheap.
Even though I am pissed that FUD based information is driving this most recent dip, I have taken it as a sign that it is time for me to put more into it. after adding maye 50% more shares in the last few days my cost basis is up to $60. I don't want to overthink this, as I am not planning to buy and sell frequently, but rather just buy and leave it there. What are people's thoughts on a reasonable buy in price? I arbitrarily chose 155, which seemed to work pretty well for the last few days. I am debating getting a bit more, though I am not sure it will dip much lower. Any guesses? calculations?

 

[GenIIIBuyer]

Earnings is Tuesday afternoon. You could put in half an order before then, and then the second half of your order after earnings. Would be a good way to average in.

 

[BornToFly]

There has been a lot of good news this week that has been overshadowed by the fire and Elon's out of context remarks about the stock price. I think the weekend will give time for all the good news to sink in. Percentage wise, there isn't a big difference between 155 and 162. If you are getting in as a long, just buy now and hold. It could take off Monday and never get back to <165 again. Only another fire, or an Earthquake at the factory can bring it back down, IMHO. If you are serious, I wouldn't wait for one of those bad things to happen before buying more stock.

 

[Mario Kadastik]

Larken posted in the chat thread this Vid: Tesla-Chef Elon Musk im Interview - Frontal 21 - ZDFmediathek - ZDF Mediathek

the interesting to me part from so far what I've seen is Elon claiming, that Tesla is producing at an annual rate of 25-30k and they hope to double that by next year. So the original 800/week end of 2014 number (40k annualized rate) seems to be upgraded to 50-60k or ca 1000 cars / week rate by end of 2014. This is what EM also claimed battery availability to be going forward and is confirmed by the battery deal. So I think we'll see at the ER an upgrade on the 2014 guidance on total cars as well as the year end rate.

 

[justdoit]

This is a must watch video. It's the Motley Fools founder talking about his 100 bagger with Amazon. Motley Fool Co-Founder David Gardner on His First 100-Bagger


I'm posting it here b/c in his talking about how to look for the next 100 bagger everything he said made me think of Tesla. Some of the points
1. Look for a big trend - auto industry and in particular EV's
2. Visionary leader - We know who that is
3. High sales growth rate - Tesla is on track to essentially double each year
4. Have connection to it as a consumer - Model S/X driving experience
5. Smaller company - not too long ago Tesla was considered small.

He also mentioned the importance of looking at the business and not the stock price. I think this is really important for Tesla b/c we often debate the stock price and if it's overvalued or not. But what's more important is the business, the stock price will take care of itself. Also, it took him 16 years to get that 100 bagger... so patience is key.

This was really motivating for me to watch and I'm glad I was able to get in on Tesla early and I plan on holding for a long time

 

[Discoducky]

Larken posted in the chat thread this Vid: Tesla-Chef Elon Musk im Interview - Frontal 21 - ZDFmediathek - ZDF Mediathek

the interesting to me part from so far what I've seen is Elon claiming, that Tesla is producing at an annual rate of 25-30k and they hope to double that by next year. So the original 800/week end of 2014 number (40k annualized rate) seems to be upgraded to 50-60k or ca 1000 cars / week rate by end of 2014. This is what EM also claimed battery availability to be going forward and is confirmed by the battery deal. So I think we'll see at the ER an upgrade on the 2014 guidance on total cars as well as the year end rate.

Yep, right at the beginning of the interview he says TM is right now producing "a little over 500 a week" and expects to double that in 2014. WOW!

 

[ggies07]

This is a must watch video. It's the Motley Fools founder talking about his 100 bagger with Amazon. Motley Fool Co-Founder David Gardner on His First 100-Bagger


I'm posting it here b/c in his talking about how to look for the next 100 bagger everything he said made me think of Tesla. Some of the points
1. Look for a big trend - auto industry and in particular EV's
2. Visionary leader - We know who that is
3. High sales growth rate - Tesla is on track to essentially double each year
4. Have connection to it as a consumer - Model S/X driving experience
5. Smaller company - not too long ago Tesla was considered small.

He also mentioned the importance of looking at the business and not the stock price. I think this is really important for Tesla b/c we often debate the stock price and if it's overvalued or not. But what's more important is the business, the stock price will take care of itself. Also, it took him 16 years to get that 100 bagger... so patience is key.

This was really motivating for me to watch and I'm glad I was able to get in on Tesla early and I plan on holding for a long time

I'll have to watch the video later, but I'm a big believer in how Warren Buffet operates and 2 is on the same lines. Look for companies with great management and hold for the long term. That's what we've found with Tesla and why I'm long.

 

[Mario Kadastik]

Not quite sure which thread to put it to as it has short and long term impact, but it looks like a huge amount of orders went from sourcing parts to In Production and it doesn't seem to have any geographic preference or when people were originally in queue. I see in the delivery sequencing thread and November delivery thread that people who had delivery targets in end of November and in December got to In Production yesterday. People in EU with January delivery dates got to in Production and so did my order. Yet two weeks ago Tesla told me that they expect my car to enter production end of December.

I have no clue what this means, the most obvious explanation is a software glitch that changed everyones status to In Production (that'd be a bummer) or that Tesla decided to favor TMC members and pulled a lot of people forward. Then again the other MS order in Estonia (an S60) also went into production as I found out last night over e-mail and he's not frequenting the forum. If this is really true, then it might indicate a serious rampup in November in production that might be gearing for a great end of year production rush. If indeed my car enters production now, then I will get it this year still and this would affect Q4 numbers a lot. As Q4 guidance is part of the Q3 ER, then this tidbit might be of interest. I guess we'll have to wait until one of us lucky upgrades gets through to Tesla to confirm that the car is INDEED in production until we all start celebrating, but if this really happened, then it may well mean that Tesla has solved supply issues to large part and can ramp up the production fast enough that they are pulling Dec-Jan deliveries forward.

 

[Zzzz...]

It is a software glitch. Other REMOTELY possible explanation - they might have changed an algorithm, so "in production" now mean not when vehicle enters assembly line(IIRC assembly takes 5 days), but when they start stamping parts... But not likely, glitch is much more plausible. Anyhow factory and supply chain could not ramp up overnight. Tesla was targeting 625 weekly production rate by September, but only achieved 570 by the end of October. No way they could dramatically increase production rate suddenly, overnight.

 

[Bonken]

This might be an extreme event. The battery pack is protected by the ballistic shield (Tesla patent linked below). This .25 inch metal plate and compressible material sandwiched between the plate and battery lower cover could be penetrated only by fairly large and heavy objects. I believe that there will be very few claims for complete battery replacement due to the collision with road debris.[/COLOR]

Vehicle Battery Pack Ballistic Shield - Patent application

I have a very limited understanding about patent laws and such but to me this patent seem to prevent any other manufacturer to use floor mounted battery packs as they will not be able to protect it using any kind of armor, as this is patented by tesla? If so this is really limiting any other company to create a really compelling car as, IMO they must use a floor mounted battery to truly take advantage off being an electric car? What do you guys think about this? This might be a truly long term advantage for tesla?

 

[JRP3]

Other EV's are already using floor mounted packs, the LEAF and the i3 for example, and protection for the bottom of a vehicle does not seem patentable.

 

[DonPedro]

I have a very limited understanding about patent laws and such but to me this patent seem to prevent any other manufacturer to use floor mounted battery packs as they will not be able to protect it using any kind of armor, as this is patented by tesla?

It's still just an application, and they may have to limit claim 1 (the important one) to get it approved. Furthermore, all the characteristics in the first claim must be present. So for instance, as presently formulated, there would have to be a spacing of at least 5 mm between the ballistic shield and the pack, and there would have to be "compressible material interposed between the ballistic shield and the pack. Otherwise you steer clear of the patent.

- - - Updated - - -

Other EV's are already using floor mounted packs, the LEAF and the i3 for example, and protection for the bottom of a vehicle does not seem patentable.

I am not sure what you're saying here. Is it that you think that the patent application will not be approved? If yes, on what basis are you saying that?

 

[JRP3]

I don't know enough about patents to say one way or another, but I don't think this specific patent can preclude others from putting a sheet of some sort on the bottom of a vehicle, since a belly pan is not a new concept. Frankly the floor of any vehicle is a sheet of metal on the bottom of a vehicle.

 

[DonPedro]

I don't know enough about patents to say one way or another, but I don't think this specific patent can preclude others from putting a sheet of some sort on the bottom of a vehicle, since a belly pan is not a new concept. Frankly the floor of any vehicle is a sheet of metal on the bottom of a vehicle.

The specific arrangement is to leave a space between the pack and a ballistic shield, and fill it with a compressible material. This is the essence of the patent. If it is granted, others will not be precluded from putting a sheet on the bottom, as long as they don't use that arrangement.

The US Patent Office will be evaluating whether this arrangement is new and whether it is sufficiently innovative (the two criteria for granting a patent). If they grant it, anyone can still sue Tesla to contest the decision by the UPO. Until those processes have played out, I think it is premature for us bystanders to have opinions on the probability of the patent being granted. Obviously, Tesla thought their chances were enough to spend the cash and the effort to go through the application process.

 

[blakegallagher]

It is a software glitch. Other REMOTELY possible explanation - they might have changed an algorithm, so "in production" now mean not when vehicle enters assembly line(IIRC assembly takes 5 days), but when they start stamping parts... But not likely, glitch is much more plausible. Anyhow factory and supply chain could not ramp up overnight. Tesla was targeting 625 weekly production rate by September, but only achieved 570 by the end of October. No way they could dramatically increase production rate suddenly, overnight.

what if there was one supplier left that was the bottleneck for the whole factory. Elon has stated that if not for the bottlenecks they could be at a 40k run rate now. What if the last supplier got their production capacity up from 570 to 675 (insert other large number here).

It sounds like a software change is most likely but hard to rule out a sudden ramp up.

 

[Zzzz...]

Elon has stated that if not for the bottlenecks they could be at a 40k run rate now.

Could you please provide a link to that statement?

 

[drinkerofkoolaid]

In one of the interviews that Elon gave in the past two weeks he mentioned that he thinks Tesla's stock is higher than is deserved today (is pricing in more than what Tesla is able to do today) and he is going to work very hard to exceed the current expectations. He also said that he thinks the stock will be significantly higher in the future. Anyone else catch this? I'll try to find a link to the interview.