Q2 2013 Results - Expectations and Projection

[Julian Cox]

It was obviously spontaneous-- The analyst started laughing, and the laugh was contagious. It was all very natural. Elon genuinely wants to encourage EVs becoming a mainstream vehicle from all manufacturers, and so in a sense even the BMW i3 is a success for Elon.

Maybe I can shed some light on this.

The biggest possible nuisance on planet Earth to Tesla and the very last thing Elon would want is to face genuine competition in the form of a competing brand and value offering that holds similar sway to Tesla and a similar ability to innovate and to anticipate the market.

Of the remaining nuisances on the menu:

1. Creating needless violent animosity towards Tesla
2. Upsetting potential drive train customers until they won't do business with Tesla on principle.

Given the fact that there is no valid competition on the horizon, it is simply very smart to keep pedaling the line: We welcome competition.

Finally, it sends the message that Tesla does not fear competition.

This last point to some degree serves to suppress the advent of competition.

 

[DonPedro]

Maybe I can shed some light on this.

The biggest possible nuisance on planet Earth to Tesla and the very last thing Elon would want is to face genuine competition in the form of a competing brand and value offering that holds similar sway to Tesla and a similar ability to innovate and to anticipate the market.

Of the remaining nuisances on the menu:

1. Creating needless violent animosity towards Tesla
2. Upsetting potential drive train customers until they won't do business with Tesla on principle.

Given the fact that there is no valid competition on the horizon, it is simply very smart to keep pedaling the line: We welcome competition.

Finally, it sends the message that Tesla does not fear competition.

This last point to some degree serves to suppress the advent of competition.

Do I understanding correctly that you think Elon Musk is not genuine when he says he wants real competition? In that case I disagree. My read is that his ultimate goal is very genuinely to switch the planet to clean transportation and alleviate the climate Russian roulette. Having seen (among other things) the interview where he is almost moved to tears when talking about the candlelight vigil for the EV1, I think for him the business and the money are just means to a greater end.

I may be naïve. On the other hand, I may also be right.

 

[Julian Cox]

Do I understanding correctly that you think Elon Musk is not genuine when he says he wants real competition? In that case I disagree. My read is that his ultimate goal is very genuinely to switch the planet to clean transportation and alleviate the climate Russian roulette. Having seen (among other things) the interview where he is almost moved to tears when talking about the candlelight vigil for the EV1, I think for him the business and the money are just means to a greater end.

I may be naïve. On the other hand, I may also be right.

I think more to the point that Elon is not naïve. (No insult intended Mr Musk in case you are watching). Of course Elon does not want to be facing margin pressure or a complete revision in the virtual monopoly thesis driving stock multiples. That would seriously hinder the rate at which Elon can manifest his vision of the future of the auto industry. What Elon calls welcome competition I would reclassify as industry followers. Facing a contender for industry leadership is not something I suspect would be welcomed at all.

 

[DonPedro]

I think more to the point that Elon is not naïve. (No insult intended Mr Musk in case you are watching). Of course Elon does not want to be facing margin pressure or a complete revision in the virtual monopoly thesis driving stock multiples. That would seriously hinder the rate at which Elon can manifest his vision of the future of the auto industry. What Elon calls welcome competition I would reclassify as industry followers. Facing a contender for industry leadership is not something I suspect would be welcomed at all.

. It's a fine line. I think EM has a good reason to assume that he can outsmart, outmaneouvre and outinnovate any of those guys, so I'm not sure that that kind of competition is considered a likely scenario. Certainly with efforts like the i3, he can feel quite relaxed about it.

I actually thought: "Wow, an all-electric BMW" and had an interested look with procurement in mind. I spent about 8 seconds with the brochure before thanking the gods I can soon take delivery of the TMS. (And we bought a Leaf for the wife, at roughly the price of the i3).

 

[Julian Cox]

. It's a fine line. I think EM has a good reason to assume that he can outsmart, outmaneouvre and outinnovate any of those guys, so I'm not sure that that kind of competition is considered a likely scenario. Certainly with efforts like the i3, he can feel quite relaxed about it.

Agreed, non-genuine competition, especially those that decide they are better off getting a Tesla drive train are all very welcome competition indeed. So far there is nothing on the horizon that can stand a value for money comparison with anything that Tesla either has done or plans to do.

OK, on another topic, apparently that analysts are just starting to publish their upgrades, hold on to your stocks guys!

update.

GS "trailing upgrade" from $84 to $94 indicative of $145 in real life from a base of $130.

Barclays neutral, Morgan bullish but can't find the memo. Hate to say it but a pop and correction to the $140 to $150 level looks like it may just be a rational progression to the $140s to $150's without the pop.

 

[DaveT]

Tesla's 10Q quarterly report is a good read and provides more details than the shareholder letter:

Tesla Motors Q2 10Q Quarterly Report (pdf)