-
Want to remove ads? Register an account and login to see fewer ads, and become a Supporting Member to remove almost all ads.
I'm trying to understand how this plays into Tesla's ultimate goal to drive the adoption of electric cars and sustainable transport. If introducing this service in the near term is a big catalyst to this eventual goal, then I can see the service being released by the time Model 3 comes out. What's super interesting about this is that the ride share platform can be fully integrated in the car. What's even more interesting is that this is being used as a marketing tool. You could very easily increase exponentially the amount of people that will get to take a "test drive" (or test ride in this case).
Curious to hear everyone's opinions.
Curious to hear everyone's opinions.
I am sorry, but this report is absolutely bogus in my humble opinion. He lists 5 key points a company needs to fulfill the promise of shared mobility. Let's examine them point by point, keeping in mind that the outlook for unlocking them value is 15(!) years.
1) Vehicle design and engineering. I don't believe this is necessary at all to become a large player in shared mobility. Automotive is a competitive market meaning any provider in the market can just buy the cars themselves. Sure, they'll have to pay the markup while Tesla Mobility could buy their own cars at cost. But from a stock price perspective this is irrelevant : any margin saved by using your own cars is also margin not earned by selling to, for example, Uber. In fact, this can become a double disadvantage. If somehow a new competitor in the car making business manages to beat Tesla in terms of bringing out a good car product, an Uber-like competitor is at an advantage since it can more freely decide to source its cars from the new upstart. It's the same reason there are no strong synergies from having a car rental and a car manufacturing business under the same company.
2) Leadership in a connected car. I believe Tesla's leadership is not that decisive, certainly not over a 10 year time frame. Google, Microsoft and Apple are all working on their car solution and we know their (network) engineering experience is top class. It's not unlikely their in house development is already a better connected car solution than Tesla's. But established car manufacturers are adding connectivity as well to their product offering that is barely behind what Tesla is offering.
3) Autonomous cars/Software expertise : judging by actual product that you can buy today as an ordinary customer and drive and not just see in an orchestrated demo video, Tesla is actually playing catch up here. The features it offers are lagging. It may yet leap frog existing manufacturers when (and if) it brings out what TMC is expecting it to bring out 'real-soon-now', but that remains to be seen. And here again established car manufacturers are not sitting on their hands. They too have impressive demo videos of technology they are working on. And that's even without taking into account what (again) Google and Apple are doing in private.
4) Battery/drivetrain experience : no doubt Tesla is the undisputed leader here with a significant advantage.
5) Proprietary infrastructure network : again, Tesla is the undisputed leader here. But at the same time, it's infrastructure is most lacking in the areas where shared mobility is promising the most : the inner city. Even more crucially, building out infrastructure is really a matter of expending capital. Here, Tesla is at a severe disadvantage. Established players have a much larger capital base and can spend the amount necessary to replicate what Tesla has in few quarters of free cash flow at most. Never mind when considering companies with real money spinners like Google, Apple or Microsoft. They can probably recreate the supercharger infrastructure with free cash flow from a few weeks of operation.
So Tesla scores a 1/5 on the analyst's own criteria. But it loses big time in what I consider the most important factor at all : the (social) network effect that comes from being first to market.
Users of a shared mobility app will judge it foremost by availability : how likely is there is a provider in my area. And vice versa, providers will judge any platform by the number of users it has. Both effects reinforce each other to essentially become a 'winner takes it all' market. It is no coincidence that Uber, Lyft and others are spending like crazy to increase their market share. By the time Tesla has cleaned up the backlog of Model X orders (end of 2016), it is likely too late for any shared mobility platform that hasn't yet been established in the market.
1) Vehicle design and engineering. I don't believe this is necessary at all to become a large player in shared mobility. Automotive is a competitive market meaning any provider in the market can just buy the cars themselves. Sure, they'll have to pay the markup while Tesla Mobility could buy their own cars at cost. But from a stock price perspective this is irrelevant : any margin saved by using your own cars is also margin not earned by selling to, for example, Uber. In fact, this can become a double disadvantage. If somehow a new competitor in the car making business manages to beat Tesla in terms of bringing out a good car product, an Uber-like competitor is at an advantage since it can more freely decide to source its cars from the new upstart. It's the same reason there are no strong synergies from having a car rental and a car manufacturing business under the same company.
2) Leadership in a connected car. I believe Tesla's leadership is not that decisive, certainly not over a 10 year time frame. Google, Microsoft and Apple are all working on their car solution and we know their (network) engineering experience is top class. It's not unlikely their in house development is already a better connected car solution than Tesla's. But established car manufacturers are adding connectivity as well to their product offering that is barely behind what Tesla is offering.
3) Autonomous cars/Software expertise : judging by actual product that you can buy today as an ordinary customer and drive and not just see in an orchestrated demo video, Tesla is actually playing catch up here. The features it offers are lagging. It may yet leap frog existing manufacturers when (and if) it brings out what TMC is expecting it to bring out 'real-soon-now', but that remains to be seen. And here again established car manufacturers are not sitting on their hands. They too have impressive demo videos of technology they are working on. And that's even without taking into account what (again) Google and Apple are doing in private.
4) Battery/drivetrain experience : no doubt Tesla is the undisputed leader here with a significant advantage.
5) Proprietary infrastructure network : again, Tesla is the undisputed leader here. But at the same time, it's infrastructure is most lacking in the areas where shared mobility is promising the most : the inner city. Even more crucially, building out infrastructure is really a matter of expending capital. Here, Tesla is at a severe disadvantage. Established players have a much larger capital base and can spend the amount necessary to replicate what Tesla has in few quarters of free cash flow at most. Never mind when considering companies with real money spinners like Google, Apple or Microsoft. They can probably recreate the supercharger infrastructure with free cash flow from a few weeks of operation.
So Tesla scores a 1/5 on the analyst's own criteria. But it loses big time in what I consider the most important factor at all : the (social) network effect that comes from being first to market.
Users of a shared mobility app will judge it foremost by availability : how likely is there is a provider in my area. And vice versa, providers will judge any platform by the number of users it has. Both effects reinforce each other to essentially become a 'winner takes it all' market. It is no coincidence that Uber, Lyft and others are spending like crazy to increase their market share. By the time Tesla has cleaned up the backlog of Model X orders (end of 2016), it is likely too late for any shared mobility platform that hasn't yet been established in the market.
BoerumHill
not great not terrible
Anyone have a copy of the MS report they could perhaps PM me with?
everyone is prejudging their call without seeing their actual report to justify it. I just read another snippet of the report from the Barron's link but I think reading the entire report would be best. The fact that everyone on TV and even on these bull forums thinks the call for this high price target is bogus makes me think there is still a lot of upside as the details of this report come out and settle with people.
Adam Jonas and is his team are the #1 auto analyst out there. For any of us to claim we're smarter is delusional. For any of us to claim some conspiracy in the timing of this target upgrade or integrity of Adam Jonas' team is also borderline delusional in my opinion, but not as much as thinking we're smarter than them when it comes to the auto industry.
I share your opinion. But because I hear a lot about Blablacar (a marketplace for city-to-city ridesharing that is a huge success among young people), I wonder if Elon is looking beyond Uber.
What if V7 include a ride-sharing app? Any member of My Tesla could ask for a ride and pay a small fee to Tesla. In exchange, Tesla would transfer some credits to the car owner, which can be used for rides, supercharging, discounts or cash. At first, Tesla could partner with other ridesharing services. By enabling the app by default, this network would grow organically and very quickly. Any Tesla owner would be a potential driver: Ding! Pick Alice on 147th St & 150th Ave on your way, and get 50 credits!
Also, what if Tesla offers some special financing for the Model E, for anyone who wants to become a full-time on-demand driver? There's no gas to pay and the car will certainly have excellent warranty (1 million miles drivetrain?) so it would cost almost nothing to drive a Model E. I guess that's a huuuge advantage compared to Uber. Also, why become a Uber driver with an ordinary car if you can become a Tesla owner and choose to drive for Tesla and Uber?
Sure, Uber's network will be enormous when Tesla will enter the on-demand transportation market. But the cheapest car fleet to operate on a per-mile basis will gain the upper hand very quickly. I bet that Tesla can win this race if it manages to sell millions of cars by 2025.
Last edited:
larmor
Active Member
I think Morgan Stanley is doing a classic pump-and-dump. A “Tesla Mobility” that competes directly with Uber and Lyft doesn’t match Tesla Motor’s goal. Providing a service that only covers Tesla vehicles is a poor idea as luxury car owners don’t want to provide taxi services. Tesla Motors is still very low production automotive manufacture. An app where you can’t find someone to give you a ride isn’t helpful. Morgan Stanley’s view of $31B for that business is a joke.
The sensors on the current Model S do not have enough redundancy or lateral range to do autonomous driving on public roads. I don't expect Tesla to have a hardware and software package that can do autonomous driving for 5 years or more. Tesla running a fleet of taxis would mean poor demand to me and would likely hurt residual values.
The sensors on the current Model S do not have enough redundancy or lateral range to do autonomous driving on public roads. I don't expect Tesla to have a hardware and software package that can do autonomous driving for 5 years or more. Tesla running a fleet of taxis would mean poor demand to me and would likely hurt residual values.
Mobileye (MBLY +7.0%) shares are performing even better than TSLA today. It's a supplier of camera-based advanced driver assistance systems to Tesla and other OEMs. Just as Morgan Stanley today provided positive comments and an increased price target for TSLA, it did the same for MBLY: Analyst Sees Mobileye Domination . Morgan Stanley analysts seem to have developed a common outlook regarding how robotic car driving will benefit both companies.
This is better than the IPO Road Show Video:
The Future of Computer Vision and Automated Driving by Prof. Amnon Shashua - YouTube
Just got through reading Adam Jonas' note from this morning. If you're able, try to get your hands on the full note (don't rely on article summaries). I think it's extremely well-written and presents a fairly compelling (yet 100% hypothetical) business model for Tesla to provide shared mobility services. I don't have time to post a megapost on it, but I think it's one of the most important notes on TSLA to date.
Also, another hint while reading the note... I think it's heavily influenced by Uber's recent hyper-growth and recent $50 billion valuation. Uber has got to be one of the fastest growing companies in terms of valuation (ie., above $5 billion valuation) in history, along with Xiaomi. Both are solid, impressive companies with probably a lot more room to grow.
I think it's easy to overlook Uber since they aren't public. But that company is growing like a weed and bringing in revenue like crazy. Don't be surprised if they IPO at a valuation of over $100 billion... or even over $150 billion. This is the context of why Adam Jonas is excited about Tesla's possible entry into the field.
Also, another hint while reading the note... I think it's heavily influenced by Uber's recent hyper-growth and recent $50 billion valuation. Uber has got to be one of the fastest growing companies in terms of valuation (ie., above $5 billion valuation) in history, along with Xiaomi. Both are solid, impressive companies with probably a lot more room to grow.
I think it's easy to overlook Uber since they aren't public. But that company is growing like a weed and bringing in revenue like crazy. Don't be surprised if they IPO at a valuation of over $100 billion... or even over $150 billion. This is the context of why Adam Jonas is excited about Tesla's possible entry into the field.
Similar threads
