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Long-Term Fundamentals of Tesla Motors (TSLA)
- Thread starter Robert.Boston
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- elon is an ass investing TSLA
RobStark
Well-Known Member
MartinAustin
Active Member
But... if you don't get the range extender, the space that would have been occupied by fuel tank, gasoline engine, radiator, fuel & water pumps, exhaust & pipework, catalytic convertor etc. etc. is still in the car - but it's not available to the owner, it's just wasted space. Further, there are bulkheads in weird places and holes in them, that aren't contributing to vehicle strength/safety. No doubt the i3's carbon fibre bodywork is a masterpiece, but with the capability to store all that gasoline engine stuff, the i3 is still missing out on the efficiency and capability that a ground-up pure EV can achieve.
chickensevil
Active Member
I think from this chart it is pretty safe to suggest that with exception to the Leaf and MAYBE the i3 (assuming no REX) none of the other ones out there are SERIOUS attempts at selling an EV whether from a US perspective or a global perspective (as is shown by this chart... that is global sales for 2013). Most of these other "options" aren't even taken seriously by the company making them (they are generally offering them because they have to... the fiat 500e is a great example there). And none of them are marketed as "Tesla Killers" which was the point of the poster whom you quoted.
The whole thing was framed under to scope of what Martin was talking about regarding Porche and Mercedes targeting vehicles that were specifically lined up against the Model S.
I agree that there are no alternative to Tesla when it come to range, but to suggest that the other makers "don't get it" is a bit naive. The battery argument is valid, but I think the main reason is economical and lack of risk-taking in the car industry.
My USA-comment (blame it on my rude, nordic-sarcastic debate technique
) was relaterte to this:
My USA-comment (blame it on my rude, nordic-sarcastic debate technique
) was relaterte to this:
chickensevil
Active Member
I agree that there are no alternative to Tesla when it come to range, but to suggest that the other makers "don't get it" is a bit naive. The battery argument is valid, but I think the main reason is economical and lack of risk-taking in the car industry.
My USA-comment (blame it on my rude, nordic-sarcastic debate technique
I get that, but these are at best "city cars" which says that they don't get it. They are making golf carts marketed as personal transportation and wondering why they don't sell at all and then making plug-in hybrids in huge earnest and wondering why people are buying regular hybrids or random other cars instead. Well no wonder! Because you aren't giving people enough range or making the cars very dull to drive.
The only company that "gets it" is Tesla. Nissan and BMW are close in as much as you can be close to missing the bullseye or the hole in golf... but everyone else is just way out in left field (Although, the kia looks promising, and I will be interested to see how that fairs, it was just released so I might add to that list of people who are "close" to getting it). Everyone else, it is all talk and no action until such time as I see a real car actually released from them... not some hypothetical concept car.
I'd like to ask you all about your stance on the GF effect on gross margins or price tags for Model S and X. The reason is, that I have found something in form 10-q of the quarterly report which I wasn't aware of before:
"We plan to use the battery packs manufactured at the Gigafactory for our vehicles, initially for Model S and Model X, and later for our Model 3 vehicle, and stationary storage applications."
During the conference call Elon reassured that they aim for at least 30% cost reduction for battery packs, so as an investor I have asked myself, how using Nevada battery packs in S and X would impact gross margins? And, can we expect prices for Model S and X to drop considerably (>10%) in 2017?
"We plan to use the battery packs manufactured at the Gigafactory for our vehicles, initially for Model S and Model X, and later for our Model 3 vehicle, and stationary storage applications."
During the conference call Elon reassured that they aim for at least 30% cost reduction for battery packs, so as an investor I have asked myself, how using Nevada battery packs in S and X would impact gross margins? And, can we expect prices for Model S and X to drop considerably (>10%) in 2017?
Newb,
There are others on this forum who have better ideas of the battery costs in Model S. Let's just say that it's $20,000. A 30% decline in the cost of the battery would yield a $6,000 cost savings to Tesla. That savings equates to about 6% of the average sales price of a Model S. My guess is that a 6% reduction in the cost of a Model S or X would not have a huge impact on sales numbers. On the other hand, increasing the gross margin by 6% would have a huge impact on profitability. I would expect S and X prices to stay relatively stable but to see margins rise as the GF batteries come into use. Tesla's plan is to use the Model 3 to reach buyers who cannot afford S and X. You will likely see lower gross margins on Model 3 for this reason. You would then see a mix of S and X models with high gross margins and Model 3 with lower gross margins.
A price reduction in S or X would only be needed as a competitive response to a vehicle of similar attractiveness, and I don't see that competitive response succeeding in the next few years.
This statement from the 10-Q is also interesting:
"We believe that the Gigafactory will allow us to achieve a major reduction in the cost of our battery packs of greater than 30% on a per kWh basis by the end of the first year of volume production of Model 3"
So, if 2017 is the first year of volume production, then perhaps the cost savings will come in the following year.
Thanks a lot for the numbers, Papafox. That makes me feel even more secure with my long-term investment. Even in an unlikely scenario in which Model 3 is delayed until 2018/2019, with GF battery packs, Tesla can easily make huge profit by selling Model S and X to ever more markets around the globe with higher margins. Demand for S and X won't peak anyway until Tesla stops expanding to new markets. And I'm also considering yearly hardware updates to S/X (new features, hardware improvements, innovations).
I wholeheartedly agree with Blip on this one. Other car makers are just making rational economic decisions that serve their businesses best.
Toyota Motors is doing quite well, TM's Q3 profit rose to $4.2b, sales rose 6.9% in October, and sales in China rose 27.1% in October. The BOJ recent decision to increase the monetary base at an annual pace of about 80 trillion yen will boost TM profits even more in the near future. It would be insane for TM to forgo established business path and not milk the last penny from their well-established business model, ie make and sell good ice cars.
TM, with ice car business model, is undoubtedly doing well now. The question is, at what point will their business model cease to be sustainable and profitable?
My guess is that they have at least a good decade of profitable business ahead of them, most likely longer than that. The decision to trade off today's profits for the sake of ensuring far away future business does not benefit today's TM shareholders, management, employees and many other stakeholders. Only some powerful outside force may bring change to this entrenched ice world.
I pinch myself to make sure that Tesla does exist. Without enormous (bordering on insane) risks, hard work and personal sacrifices taken by many individuals that contributed to Tesla's conception, growth and today's success and relatively safe position in the market, there would be no one to challenge the world of TM and others that would never change because it does not suit them to do so.
Tesla is not in a position to enforce the change yet. I also believe that we have passed the point at which the change can be stopped.
chickensevil
Active Member
Given the time it takes to bring a good vehicle to market, the longer they refuse to see the future the more it will hurt them at that time when they scramble to shift and play catch up. I strongly believe that the 35k vehicle will be that turning point in the new car market. Why would you buy anything else? Unless you are stuck in that brand loyalty which will be hard to sway. I briefly talked to a guy who had driven the roadster on a track but didn't own a Tesla. All of his cars were Porsche. Those will be the ones that we cant force to switch until their company makes a car. If Porsche and Mercedes are seeing enough of a decline to push out that they are going to make a model S competitor (their claim remains to be seen... But that is the stated intent) what is toyato going to do when Tesla releases a Camery killer? Because its coming sooner than Toyota is clearly planning for.
adiggs
Well-Known Member
I agree with your point chickensevil, but in fairness to Toyota, we only have what they talk about and do in public to go on. From their words and actions thus far, I agree completely with your point. It's also possible that internally, Toyota has their Model S / Gen 3 competitor hard at work in research, and they aren't as far behind as both of us think.
I mean - it's POSSIBLE!
(If I was them and I had a program going to try and close the gap, would I talk about it to create FUD around Tesla's offering, or would I be quiet about it so I don't emphasize what I can't do? H'mm...)
For some people, status quo is too good to worry about the distant different future. That does not translate into refusing to see the future, rather into enjoying the present. My guess is that once the future is here in the shape of Model 3, Toyota decision makers will be happily retired. Their retirement packages are heavily dependant on todays' profits, so they are very astute and prudent about their future.:wink:
Not to rain on your parade, but I don't necessarily think that the packs the gigafactory (GF) will initially produce will use cells made at the GF, if they are for Models S/X; current pack production would likely have been moved from Fremont to GF to make room for other production lines, INCREASING transpo expense unless GF is directly in the line of travel of the cells from Panasonic to Fremont.
Or have I missed something (very possible) somewhere?
That said, I still feel VERY secure with my long-term investment in TSLA.
Happy uh... Sunday?! (why am I still awake?)
chickensevil
Active Member
It was stated in either the shareholder letter or the 10-q I don't recall which off hand, but that the initial 2016 production that they are bringing online will go into the Model S and X packs. They aren't going to see the cost savings in 2016 anyway since they said it will be 30% (or more) by the first year of production on the Model 3.
callmesam
Member
TM cannot get battery cost reductions of 30% when they get their first cells produced from scale.
The initial factory module is supposed to be equal to the largest factory now in existence anywhere in the world, but not equal to the entirety of all production in the world.
From the recent Q3 2014 conference call:
Rod Lache - Deutsche Bank
It sounded like most of your projection [cost reduction due to Gigafactory] was related to logistics and location and the scale of the cell and things along those lines.
Elon Musk
Yes, to be precise about our prediction was that we felt comfortable with at least a 30% improvement in cost or reduction in cost just based on the location and economies of scale. That's without taking any technology improvements into account and we will certainly do technology improvements. If we can't get to 30% even without technology improvements, somebody should shoot us because that would be in complete defiance of economies of scale and obvious cost savings.
http://seekingalpha.com/article/2647055-tesla-motors-tsla-ceo-elon-musk-on-q3-2014-results-earnings-call-transcript?page=2&p=qanda&l=last
The initial factory module is supposed to be equal to the largest factory now in existence anywhere in the world, but not equal to the entirety of all production in the world.
From the recent Q3 2014 conference call:
Rod Lache - Deutsche Bank
It sounded like most of your projection [cost reduction due to Gigafactory] was related to logistics and location and the scale of the cell and things along those lines.
Elon Musk
Yes, to be precise about our prediction was that we felt comfortable with at least a 30% improvement in cost or reduction in cost just based on the location and economies of scale. That's without taking any technology improvements into account and we will certainly do technology improvements. If we can't get to 30% even without technology improvements, somebody should shoot us because that would be in complete defiance of economies of scale and obvious cost savings.
http://seekingalpha.com/article/2647055-tesla-motors-tsla-ceo-elon-musk-on-q3-2014-results-earnings-call-transcript?page=2&p=qanda&l=last
Did you just say "cannot"? Is that a typo? :tongue:
But on a serious note, I doubt Tesla will launch Model 3 in 2017 without a battery pack that is (at least) 30% cheaper than the current one. And in 2017 the gigafactory will only have that initial factory module, so we can expect the 30% cost reduction to be effective in 2017.
For me, it remains an open question if S and X will get the new Nevada cells in late 2016/early 2017 prior to Model 3 launch, or - as GLDYLX suggests - it will only be the battery packs to be built together at GF from the current Japanese cells. If the former is true, Model S and X will benefit from technological improvements on cell and pack level from late 2016/early 2017 onwards, perhaps with higher energy density, less weight and thus higher range. Maybe I'm getting too excited about it, but this is only two years from now.
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One other factor seems to be very important to me. The success for the other companies will depend on their ability to construct a drive train that will be as good or better than Teslas. So here is the problem I see today with their EV´s: Nada. Isn´t one reason for Tesla being so successful that they adopted the ideas of Nicola Tesla ? I think the other companies overlook the elephant in the room by trying to reinvent the wheel (so to speak) when Nicola Tesla has it already done for them. So instead of copying this marvellous piece they try to invent a new one. It´s right there before their eyes. Why is the companies name Tesla again ? Exactly. Trying to invent something better ? Go ahead and try. Good luck. At least Daimler has stuffed their B-Class with it. But they haven´t yet declared a price for it, as far as I know. I don´t see a way for them to sell it in the 35.000 € range.
Yanno, I've been mulling over the whole spinning up of the reactivated Panasonic factories and the supply commitments. Do we have info on the length of the off-site supply contracts? Is it possible that Panasonic could fold those contracts into GF production or will they be separate from their GF operations until they expire? And then, is it possible that one (or more) of these previously mothballed factories (factories exist in China and Europe as well as Taiwan and Japan) could become part of future Gigafactories (assuming there's available real estate around any of them to build on/repurpose)?
Just stuff that's been roiling up my grey cells.......
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