Seeking Alpha Jan 4 Tesla analysis - very negative article

[valuationmatters]

Agreed. That was my point. They are not sold out. They are allowing people to enter their name and email address into a form. I laugh when I hear the arguments about how Tesla is supply vs. demand constrained. That is so meaningless. The point is they are not selling the product yet. If being supply-constrained equated justified putting a huge multiple on a product with no sales, then I would like to announce that I am supply constrained on my Delorean time machine with flux capacitor. I have a drawing (made by my 8-year old). There I think I will now get Goldman Sachs to do an equity offering for $50 billion.

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At least you are honest. I am short the stock purely based on mathematical reasons. I have no ill will toward Tesla and I kinda like the idea of a new American car company. Especially one that might reduce air pollution and reduce reliance on foreign oil. However I am just very skeptical they can ever make a profit or break even for that matter, when one includes all costs of the car including sales costs, support costs, admin. One cannot simply exclude the bulk of costs (sales costs, SC support costs, admin/overhead costs, R&D costs)and claim their cars have a 25% gross margin. If they made a 10% operating margin this would be a huge difference and allow Tesla to actually reinvest those profits. It is now clear that (i) yes Model S makes 20-25% gross profits (excluding R&D which really should be included but nevermind), (ii) Model X will struggle to break even due to its needless complexity and fit & finish issues, and (iii) Model 3 cannot possibly make money due to the low price point and cost of sales not much less than Model S (and Tesla's claim that everything will be new, front the ground up), (iv) Gigafactory will be an enormous capital expenditure which ultimately proves Tesla has no expertise in manufacturing.

Tesla will one day be fondly remembered for accelerating the move toward electric vehicles. Unfortunately Tesla will not be the winner and will likely fail to deliver any meaningful shareholder value. Another Blackberry.

BTW I checked out a Model S at the Tesla store today. I found the back seat space mediocre, and the fit & finish poor relative to most other cars, even my Infiniti G37 which I leased for zero money down and $270 per month. Specifics. 1. The leather was like vinyl -- almost like inflatable vinyl. 2. The gap between the interior door surface and the surface next to it were wide enough to stick my finger in. Yes the 17-inch touch screen was cool. Almost as cool as my iPad Pro, which has higher resolution and costs only $1000. No I did not test drive it because I do not believe in wasting someone's time. I have no doubt it would have awesome immediate acceleration and great handling. That's nice but does not come close to the other issues. The hatchback trunk was nice and big. The front was big enough for a small bag. So what?

I look forward to many other electric vehicle offerings. Not terribly impressed. If this hurts some feelings here it was not my intent, but feel to block me so that you can go back to all agreeing that Tesla is the best thing since electricity without having to listen to any dissent.

 

[wdolson]

(iv) Gigafactory will be an enormous capital expenditure which ultimately proves Tesla has no expertise in manufacturing.

You have made this point many times, but don't seem to notice when people point out to you that Tesla will not be making the battery cells at the Gigafactory, their partner Panasonic will be making the actual batteries. And I think Panasonic knows how to make Li-ion batteries.

 

[stopcrazypp]

One cannot simply exclude the bulk of costs (sales costs, SC support costs, admin/overhead costs, R&D costs)and claim their cars have a 25% gross margin.

That's how gross margin works. If you don't know that, then I'm not sure you should really be investing. Tesla's target is to exceed Porsche eventually (which has over 50% gross margin).

If they made a 10% operating margin this would be a huge difference and allow Tesla to actually reinvest those profits. It is now clear that (i) yes Model S makes 20-25% gross profits (excluding R&D which really should be included but nevermind),

Again not sure why you want to come up with some kind of custom definition of gross margin, however I disagree that Tesla is not reinvesting profits simply based on operating margin. Last I tracked it, they were spending ~20% of revenue on R&D, well above any other automaker. That is reinvesting profits. No one looking at Tesla is expecting them to be making quarterly profits any time soon given the ~50% YoY expansion pace they are going at (the company will always have overhead costs significantly higher than the immediately current sales at such an expansion pace).

The below are all predictive statements that have no basis in "math" as you put it. The naysaying articles on Seeking Alpha at least show some analysis on how they predict Tesla's sales will be going. However, I will address them regardless:

(ii) Model X will struggle to break even due to its needless complexity and fit & finish issues

X is more complex, but I did not hear anything about fit & finish issues (if you are talking about the whole hand-wringing over the door gaps from the mules, they don't appear to be a problem on the production model).

(iii) Model 3 cannot possibly make money due to the low price point and cost of sales not much less than Model S (and Tesla's claim that everything will be new, front the ground up)

The base price may be low, but the ASP will be significantly higher, just like it is with the S. I find it unlikely absolute COGS per vehicle stays similar at 10x the volume, I would expect a measurable drop.

(iv) Gigafactory will be an enormous capital expenditure which ultimately proves Tesla has no expertise in manufacturing.

Tesla already has expertise manufacturing battery modules and packs. As wdolson puts it, Panasonic will be making the cells and no doubt they have expertise (they are by far the number one EV cell maker).

 

[30seconds]

Agreed. That was my point. They are not sold out. They are allowing people to enter their name and email address into a form. I laugh when I hear the arguments about how Tesla is supply vs. demand constrained. That is so meaningless. The point is they are not selling the product yet. If being supply-constrained equated justified putting a huge multiple on a product with no sales, then I would like to announce that I am supply constrained on my Delorean time machine with flux capacitor. I have a drawing (made by my 8-year old). There I think I will now get Goldman Sachs to do an equity offering for $50 billion.

- - - Updated - - -

At least you are honest. I am short the stock purely based on mathematical reasons. I have no ill will toward Tesla and I kinda like the idea of a new American car company. Especially one that might reduce air pollution and reduce reliance on foreign oil. However I am just very skeptical they can ever make a profit or break even for that matter, when one includes all costs of the car including sales costs, support costs, admin. One cannot simply exclude the bulk of costs (sales costs, SC support costs, admin/overhead costs, R&D costs)and claim their cars have a 25% gross margin. If they made a 10% operating margin this would be a huge difference and allow Tesla to actually reinvest those profits. It is now clear that (i) yes Model S makes 20-25% gross profits (excluding R&D which really should be included but nevermind), (ii) Model X will struggle to break even due to its needless complexity and fit & finish issues, and (iii) Model 3 cannot possibly make money due to the low price point and cost of sales not much less than Model S (and Tesla's claim that everything will be new, front the ground up), (iv) Gigafactory will be an enormous capital expenditure which ultimately proves Tesla has no expertise in manufacturing.

Tesla will one day be fondly remembered for accelerating the move toward electric vehicles. Unfortunately Tesla will not be the winner and will likely fail to deliver any meaningful shareholder value. Another Blackberry.

BTW I checked out a Model S at the Tesla store today. I found the back seat space mediocre, and the fit & finish poor relative to most other cars, even my Infiniti G37 which I leased for zero money down and $270 per month. Specifics. 1. The leather was like vinyl -- almost like inflatable vinyl. 2. The gap between the interior door surface and the surface next to it were wide enough to stick my finger in. Yes the 17-inch touch screen was cool. Almost as cool as my iPad Pro, which has higher resolution and costs only $1000. No I did not test drive it because I do not believe in wasting someone's time. I have no doubt it would have awesome immediate acceleration and great handling. That's nice but does not come close to the other issues. The hatchback trunk was nice and big. The front was big enough for a small bag. So what?

I look forward to many other electric vehicle offerings. Not terribly impressed. If this hurts some feelings here it was not my intent, but feel to block me so that you can go back to all agreeing that Tesla is the best thing since electricity without having to listen to any dissent.

Why don't you drive a Honda Accord? Much better value than a G37

 

[LargeHamCollider]

One cannot simply exclude the bulk of costs (sales costs, SC support costs, admin/overhead costs, R&D costs)and claim their cars have a 25% gross margin.

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(ii) Model X will struggle to break even due to its needless complexity and fit & finish issues, and (iii) Model 3 cannot possibly make money due to the low price point and cost of sales not much less than Model S (and Tesla's claim that everything will be new, front the ground up), (iv) Gigafactory will be an enormous capital expenditure which ultimately proves Tesla has no expertise in manufacturing.
.

 

[valuationmatters]

History rhymes

I wonder if Tesla longs realize there are/were equally passionate fans of Twitter, Gopro, 3D Systems, Netscape, CMGI (remember that one?), Kozmo.com, etc. Every time, there is a reason why fundamentals don't matter and massive losses are ok so long as the revenue keeps growing. They applaud each other on their stock price gains to date and confuse that with evidence of their investing acumen. Truly proof that a fool and his money are soon parted. It is almost unfair because Wall Street analysts cater to these retail investors who will buy at any price. The analysts tell you all exactly what you want to hear, making you feel vindicated. The bankers (and I am a former banker) who sell the stock get rich. The founders of the company who sell their stock get rich. The retail investors holding the bag lose everything. Very sad actually.

 

[Auzie]

valuationmatters, it is quite challenging for me to interpret your logic, but I will give it a go

..................... They applaud each other on their stock price gains to date and confuse that with evidence of their investing acumen. Truly proof that a fool and his money are soon parted..................

My understanding is that you are saying: If TSLA investors made gains on the stock, they need not consider that evidence of their investing acumen. Instead, they better fear losing money because they are fools and as such - 'fool and his money are soon parted'. Hmmm, that looks to me like a bit of a backhanded rude statement to make.

..................... The analysts tell you all exactly what you want to hear, making you feel vindicated.....................

Not sure I understand this one, who are the analysts and why do they matter in investing?

..................... The bankers (and I am a former banker) who sell the stock get rich.....................

My deduction from this statement is that you are someone who used to be a banker and is now rich. Not sure why you mention these facts. if you mention that you were a banker to increase your credibility, hmmm, that is more likely to backfire. Congratulations on being rich, enjoy it.

..................... The retail investors holding the bag lose everything. Very sad actually.

Very kind of you to show concern for retail investors. Someone who used to be a banker certainly might have a good insight into issues that cause him to be concerned about retail investors losing everything.

On the other side, no need to be sad for anyone, it is a pure waste of energy. It might be more constructive to deploy some of your wealth through worthy charitable causes, to help those you are sad about. For starters, I recommend making donations to homeless shelters and volunteering your time to serve meals. Guaranteed to wipe sadness away. No one deserves to be sad.

 

[valuationmatters]

Analysts are the wall street analysts that tell you Tesla is worth $400 per share. They do this to increase demand for the stock offerings which are snapped up by retail investors.

I am a former M&A banker but not an banker who sold stock offerings. But as an M&A banker I know exactly the role of the analysts and the bankers who arranged the stock offerings.

I am very charitable already, but thanks for the advice.

My advice to you all is separate love for the product (the Model S/X/3) for love of the stock. The car can be very cool and help the move toward electric vehicles. Simultaneously, the company can be massively overvalued. Ask yourself whether a company that sells 50,000 cars today at a loss is likely to sell 500,000 vehicles in 2020. Or 2025. Is is possible? Sure. Likely? No way. It's 1 in 5, or 1 in 10. I struggle to find a single example when a massively overvalued company did not fall back to earth. Amazon trades at a pretty low price-to-sales ratio and breaks even. Netflix too. In the car industry, companies trade at maybe 1x revenue. Tesla trades at 7x last year's revenue or maybe 4x next year's revenue. While it continues to burn massive amounts of money and dilute existing stockholders every year. If Tesla were to break even on a GAAP basis and be truly neutral on free cash flow (measured on a GAAP basis), I might have a different view of the valuation. Truly investors should demand more from management, rather than get upset at shorts who question the company's valuation. The X appears to be a disaster based on fit & finish issues. Tesla cannot make money on it, even at the high prices, due to its complexity. And Tesla cannot make money on the 3 due to its promised low price. Oh sure, the gigafactory will magically produce batteries at lower prices than anyone else today among the big Asian battery makers. Oh wait, Panasonic will do it. Yeah Panasonic will make incredibly cheap batteries for Tesla, for the benefit of Tesla? So much wishful thinking.

My 2 cents. Happy to continue to read all the wishful thinking.

 

[valuationmatters]

Interesting analysis I looked at. Note the 17% decline in Model S average selling price (ASP) in the first 9 months of 2015 compared to the same 9 months of 2014. And the corresponding drop in overall gross profit. This excludes leases which are an increasing percentage of revenue -- but that is a separate issue and not particularly bullish for Tesla.

Whether you are short or long, it will be fascinating interesting to see the ASP in Q4 FY15. Remember that the Model X had minimal deliveries (sales) in Q4 and thus will have almost no impact on revenue. So Q4 revenue will really be all about Model S pricing. If the company did it by discounting, it will be immediately obvious by simply doing the same math I have done above. Or if the company just did an amazing job selling more vehicles, then that will be apparent as well.

 

[Auzie]

Analysts are the wall street analysts that tell you Tesla is worth $400 per share. They do this to increase demand for the stock offerings which are snapped up by retail investors...................

So many people say so many things, analysts or not. You seem not to be listening to these analysts, what makes you think that retail investors are?

...........

I am very charitable already, but thanks for the advice.

................

You're welcome, anytime. I observed your charitable advice to TSLA investors, so I thought I might respond in kind, with some advice back.

...........

So much wishful thinking.

My 2 cents. Happy to continue to read all the wishful thinking.

................

I am glad you are happy, not sad.

I am also happy to continue reading about this investment, although I would not use the term wishful thinking to describe it, I would use the term entertaining, it fits perfectly. Actually, I think TSLA deserves a premium for the entertainment value, at least $25 on top of its basic value because it is so much fun to follow this company.

 

[valuationmatters]

Haha, you are correct Auzie, entertaining is the better word. That is probably why I spend time on this board. It is as much an interesting to study the psychology of investors and their points of view. I admit I have my own biases, and I am fascinated to see it all play out. Nobody is bad or good, and I think we all admire the audacity of Musk to try to build an electric car company. I probably just think it's harder to make money in this business than some other investors seem to think. But the jury is out and these are fascinating times. I do like the idea of having an alternative to gasoline-powered cars. Now I'd just love to see our country go nuclear/solar in a big way, so that electricity is massively cheap and plentiful. We could also take some of that hypothetical cheap electricity and solve the water shortage with dozens of desalinization plants around the USA. Solve the electricity and water shortage problems at the same time. Now we're talking!

 

[stopcrazypp]

Analysts are the wall street analysts that tell you Tesla is worth $400 per share. They do this to increase demand for the stock offerings which are snapped up by retail investors.

I am a former M&A banker but not an banker who sold stock offerings. But as an M&A banker I know exactly the role of the analysts and the bankers who arranged the stock offerings.

I am very charitable already, but thanks for the advice.

My advice to you all is separate love for the product (the Model S/X/3) for love of the stock. The car can be very cool and help the move toward electric vehicles. Simultaneously, the company can be massively overvalued. Ask yourself whether a company that sells 50,000 cars today at a loss is likely to sell 500,000 vehicles in 2020. Or 2025. Is is possible? Sure. Likely? No way. It's 1 in 5, or 1 in 10. I struggle to find a single example when a massively overvalued company did not fall back to earth. Amazon trades at a pretty low price-to-sales ratio and breaks even. Netflix too. In the car industry, companies trade at maybe 1x revenue. Tesla trades at 7x last year's revenue or maybe 4x next year's revenue. While it continues to burn massive amounts of money and dilute existing stockholders every year. If Tesla were to break even on a GAAP basis and be truly neutral on free cash flow (measured on a GAAP basis), I might have a different view of the valuation. Truly investors should demand more from management, rather than get upset at shorts who question the company's valuation. The X appears to be a disaster based on fit & finish issues. Tesla cannot make money on it, even at the high prices, due to its complexity. And Tesla cannot make money on the 3 due to its promised low price. Oh sure, the gigafactory will magically produce batteries at lower prices than anyone else today among the big Asian battery makers. Oh wait, Panasonic will do it. Yeah Panasonic will make incredibly cheap batteries for Tesla, for the benefit of Tesla? So much wishful thinking.

My 2 cents. Happy to continue to read all the wishful thinking.

Again completely unsubstantiated claims and speculation on your part.

No one would think five years ago that Tesla would ever sell 50k vehicles a year. Now we are here. Next year 75k vehicles should be easily achievable with the X out.

You keep mentioning disastrous fit and finish issues on the X. Point to me your source please?

People have continued to point out one of your biggest errors that you still fail to address: dismissing Panasonic completely. Have you even read even one article about how the gigafactory is structured? Panasonic will be moving in workers and equipment to run the cell production line. Tesla will run the module and pack production line (which they have plenty of experience with already having made more than 100k EVs).
http://www.greencarreports.com/news...dreds-of-panasonic-workers-starting-this-fall
https://www.teslamotors.com/blog/panasonic-and-tesla-sign-agreement-gigafactory

Panasonic holds 39% of the EV battery market today with Tesla being its largest (and almost exclusive) customer. You think Panasonic wouldn't want to keep them happy (same with NEC and Nissan's relationship)?
http://www.luxresearchinc.com/news-...s-ev-batteries-39-market-share-others-aim-its

Back in late 2014, Navigant Research said Tesla was already only paying $180/kWh to Panasonic ($154/kWh by late 2016 with 8% industry average annual drop). GM had to hand all their EV component manufacturing to LG Chem in order hit $145/kWh by the end of this year. You seriously think with Panasonic working in a Tesla factory with ~4x the capacity of LG's even in the first stage scheduled to be finished mid this year that they can't match or get lower than that?
http://reneweconomy.com.au/2014/battery-storage-costs-plunge-below100kwh-19365

 

[Auzie]

Haha, you are correct Auzie, entertaining is the better word..............Now we're talking!

Yes we are, now that we established some common ground (being entertained) we can continue to be entertained by talking some more

.................. I admit I have my own biases, and I am fascinated to see it all play out. ...............

Same here. Only my bias is the opposite to your bias, but that is a small detail that need not create animosity or separation.

I observed something that looks like a heavy bias to me in your post quoted below:

View attachment 109133

.....................

Out of 9 listed metrics, your post and comment focus on a single metric that was negative, a drop in ASP. ASP is the least relevant metric out of 9.

............. Note the 17% decline in Model S average selling price (ASP) in the first 9 months of 2015 compared to the same 9 months of 2014. And the corresponding drop in overall gross profit. This excludes leases which are an increasing percentage of revenue -- but that is a separate issue and not particularly bullish for Tesla.

Here is how I see the same numbers:

Automotive revenue 24% growth yoy
Vehicles delivered 52% growth yoy
ASP 17% drop yoy, (unfavorable forex, downward market expansion)
Automotive revenue GAAP 24% growth yoy
Automotive COGS GAAP 28% growth yoy
Automotive gross profit GAAP 15% growth yoy

My comments to the same table and the same numbers is: Yay Tesla team, you rock!!!!:love:

.................. I am fascinated to see it all play out. Nobody is bad or good, and I think we all admire the audacity of Musk to try to build an electric car company. .............

We agree again. I find it fascinating as well, and inspiring, and so many other things. Most of all I am very grateful that someone is doing the hard stuff against all odds, showing us it can be done.

 

[adiggs]

...
My advice to you all is separate love for the product (the Model S/X/3) for love of the stock. The car can be very cool and help the move toward electric vehicles. Simultaneously, the company can be massively overvalued.... .

You mentioned upthread as well, that when you checked out the Model S in person, you ended up passing on the test drive. I commend to you - go take that test drive. It's important for understanding the company and the product. If a car, were a car, were a car, then I'd agree with you - the test drive is irrelevant to the investment. Actually, my belief is that you need to be driving the car for ~6 months before the changes that come from driving it regularly really sink in. I "knew" all about 1 pedal driving, charging in my garage, and instant acceleration from multiple Model S and Roadster test drives, and it still took me 6 months driving the Roadster before it really sunk in how these cars change the paradigm of daily living with personal transportation.

If you're on the wrong side of the paradigm, then they're still just cars, and that means Tesla is just another car company, and that means it should be evaluated as a car company.


Can the company be massively overvalued while still producing an outstanding product? Absolutely can. It may even be the case that it is at this moment. I'm comfortable with the idea that it isn't - that the present stock price is a reason to become more invested. There are two core ideas that go together, that don't reduce to a simple financial analysis, that persuade me of that.

The first is that the driving experience changes the paradigm for personal transportation. This is a disruptive innovation and if you don't see the paradigm shift, then the company will be perpetually baffling to you.

The second is that the change is so dramatic, it leads to a product that competes (as Christiansen would describe it in Innovator's Solution) against "non-consumption". That the experience is so compelling, it leads to people buying as far up the feature stack as they can afford to get as much of the experience as they can afford. With Model S, you see people that have never been in the market for even a $50k car, and still aren't in any other $50k market, buying Model S' for much more. That's irrational if its just another car. And it's completely sane for those buyers.


I can't get you to the far side of the paradigm shift by telling you about it. That's how paradigm shifts work - they're harder than that. I can tell you that regardless of which side of the Tesla trade you're on, if you don't understand both how Model S is just like any other car on the road, and you don't understand how it's completely different from any other car on the road, then you have incomplete information about your investment. You don't understand why people who can afford a $100k car but choose to spend <$30k on transportation, are now stepping into that market. You don't understand what longs are expecting to happen when Model 3 comes along, and generate a similar dynamic of pulling people that wouldn't otherwise spend $20k on a car into the $35-70k market.

 

[ggr]

I guess if all you do is sit in a stationary car, fit and finish issues are top of the list. Most of the time, when I sit in a car, it is to drive it somewhere, so driving is actually pretty important to me.

 

[valuationmatters]

You mentioned upthread as well, that when you checked out the Model S in person, you ended up passing on the test drive. I commend to you - go take that test drive. It's important for understanding the company and the product. If a car, were a car, were a car, then I'd agree with you - the test drive is irrelevant to the investment. Actually, my belief is that you need to be driving the car for ~6 months before the changes that come from driving it regularly really sink in. I "knew" all about 1 pedal driving, charging in my garage, and instant acceleration from multiple Model S and Roadster test drives, and it still took me 6 months driving the Roadster before it really sunk in how these cars change the paradigm of daily living with personal transportation.

If you're on the wrong side of the paradigm, then they're still just cars, and that means Tesla is just another car company, and that means it should be evaluated as a car company.


Can the company be massively overvalued while still producing an outstanding product? Absolutely can. It may even be the case that it is at this moment. I'm comfortable with the idea that it isn't - that the present stock price is a reason to become more invested. There are two core ideas that go together, that don't reduce to a simple financial analysis, that persuade me of that.

The first is that the driving experience changes the paradigm for personal transportation. This is a disruptive innovation and if you don't see the paradigm shift, then the company will be perpetually baffling to you.

The second is that the change is so dramatic, it leads to a product that competes (as Christiansen would describe it in Innovator's Solution) against "non-consumption". That the experience is so compelling, it leads to people buying as far up the feature stack as they can afford to get as much of the experience as they can afford. With Model S, you see people that have never been in the market for even a $50k car, and still aren't in any other $50k market, buying Model S' for much more. That's irrational if its just another car. And it's completely sane for those buyers.


I can't get you to the far side of the paradigm shift by telling you about it. That's how paradigm shifts work - they're harder than that. I can tell you that regardless of which side of the Tesla trade you're on, if you don't understand both how Model S is just like any other car on the road, and you don't understand how it's completely different from any other car on the road, then you have incomplete information about your investment. You don't understand why people who can afford a $100k car but choose to spend <$30k on transportation, are now stepping into that market. You don't understand what longs are expecting to happen when Model 3 comes along, and generate a similar dynamic of pulling people that wouldn't otherwise spend $20k on a car into the $35-70k market.

Thanks adiggs. I appreciate the thoughtful response. Here is a question I truly need help with (not being sarcastic or snarky). What is it that is so special about Tesla? Is it the fact that:

- Tesla is 100% electric?
- Tesla provides instant torque?
- Superior interior to any other vehicle?
- Superior exterior looks?
- The Supercharger network?
- Tesla was the first company to go all-electric?
- Tesla is willing to lose a ton of money and be less concerned about profits?

In other words, if there were another great looking all-electric vehicle, would you feel as special about that vehicle? Five years from now, if there are 3 other beautiful all electric cars with similar range to Model S, would you feel the same about them?

Thanks in advance.

 

[wdolson]

Thanks adiggs. I appreciate the thoughtful response. Here is a question I truly need help with (not being sarcastic or snarky). What is it that is so special about Tesla? Is it the fact that:

- Tesla is 100% electric?
- Tesla provides instant torque?
- Superior interior to any other vehicle?
- Superior exterior looks?
- The Supercharger network?
- Tesla was the first company to go all-electric?
- Tesla is willing to lose a ton of money and be less concerned about profits?

In other words, if there were another great looking all-electric vehicle, would you feel as special about that vehicle? Five years from now, if there are 3 other beautiful all electric cars with similar range to Model S, would you feel the same about them?

Thanks in advance.

First off, I think there is a wider range of opinion here about Tesla, both the company and their products, than you give us credit. All I can talk about it my own opinion. I'm an engineer and think about things from a scientific/engineering perspective. About a year ago I started investigating what was out there in the way of new cars. My 24 years old Buick still runs great, but it looks like I'm going to have to take more roadtrips to California in the next couple of years. The last trip we took my SO's Subaru Impreza and it didn't have quite enough leg room for me and I was very stove up for a few days and still hurting for a month afterwards. I don't like SUVs and with my long legs, I need a lot of legroom. I crossed a lot of cars off the list right from the start. Because of my legs I was looking at a larger car.

My criteria was I wanted a car with at least the acceleration of my Buick (only 8s 0-60, but pretty good passing on the highway), at least a bit better gas mileage (not tremendous, but at least 20-30%), and at least close to the same cargo space (20 cf), though I would sacrifice a bit there. Amazingly enough, I found it impossible to meet these three criteria. Most hybrids have tiny cargo space because they are cars built to be ICE with batteries in the trunk. If a car had decent acceleration, it had gas mileage the same as my old Buick or worse. If it had better gas mileage I was looking at exceedingly long acceleration times. There are times I need to get to freeway speeds relatively quickly.

I was rather at a dead end hoping some cars coming in 2016 might fill the need when I looked at the Model S's specs on a lark. It not only gets close to 100 mpg equivalent, the regular 85/90D has sports car acceleration, and the cargo space is about that of a Subaru Forester. It not only met all my criteria it vastly exceeded all of them. I was initially dismayed at the poor range and charge time compared to fueling an ICE, but I still dug further and learned about the supercharger network, which does go a fair bit towards offsetting two of the negatives for electric cars (charge time and range). And on top of that, it's free. Even if it is a little more inconvenient, being free offsets that a bit.

The price was still something that made me pause. I was looking at cars in the $35-$40K range and my current car cost me $22K new. A car that was going to cost 5X my last car was something that needed some time to save if not some time to think about it too.

While I do believe we should be moving away from fossil fuels for pollution, political, and the general social costs, I'm far from convinced that we're all going to die because of it. From what I know about production of any technology, even if the public started demanding BEVs tomorrow, it's still going to take a couple of decades before they become mainstream, at minimum, maybe closer to 40 years. A tremendous amount of battery building capacity has to be built just to get to 10% of the market with long range BEVs. And batteries are still a more expensive way to go than gasoline. Even more now that the price of oil has dropped.

What has sold me on BEVs is from an engineering point of view, they are just plain superior to gasoline. Electric drive systems are simpler and more compact than ICE, you have instant torque which is impossible with an ICE, acceleration is inherently better, and energy economy is much better. Unlike a lot of other BEVs out there, Tesla completely rethought how to build a car and came up with a design that put the batteries very low and centered on the car. This has a number of advantages, it gave them a blan slate with the layout of the passenger cabin and allowed incorporating a lot of cargo space. More than I've ever seen in a sedan. Additionally with the heaviest part of the car centered between the axles and at axle height, it makes the car inherently more stable than any car ever built. That adds to both safety and handling. From an automotive engineering perspective, I think it's the best anyone has ever built.

Now there are other aspects of the Model S that are sort of meh. Interior storage for small items in the passenger space is very poor. On looks, it's about average for a modern big sedan. If you compare it to other sedans in the $100K class, the other cars are all much fancier, but I would never have bought one of those cars no matter how much money I had. I do drive a Buick, which is nicer than a Chevy, but I mostly bought the Buick because the Chevy built on the same chassis that year was beaten with the ugly stick and Ford's equivalent was gutless on hills. I'm not a luxury car buyer. Maybe an upgraded car buyer, but I don't buy cars to impress others (I caught a lot of hell from my peers for buying a Buick in my 20s, but it's what worked for me).

Tesla has spent a lot of money on R&D and capital expenses, but that's the nature of a start up. Tesla is a car company run on the model of a Silicon Valley start up. The tech industry is the only American industry willing to take some risks to grow. Most corporate executives on other American industries are bean counters who just want to milk the company for as much profit as they can as quickly as possible and retire rich. The institutional investors looking for the quickest return are rewarding that kind of agenda. I've looked carefully at Tesla's plan and it's about equally as ambitious as Amazon's has been. Back in 1998 or so people thought Amazon was nuts to expand beyond books and try to be the place people shopped for almost everything. They don't think that now. Tesla is about where Amazon was in 1998 and their plan is, if anything, more carefully thought out than Amazon's was.

And as far as your last question, if there were other BEVs that were as good. I'd look seriously at any car that met my initial criteria. Thus far, the Model S is the only one that ticks all the boxes. There are a lot of concept cars that claim they will meet or exceed the Model S in one or more areas, but so far these are all vaporware. Some of the cars announced are sports cars which don't interest me and neither do the SUV/CUVs. The small cars like the Bolt, Leaf, and i3 are too small for me. I need a car with enough legroom and some cargo capacity. Those small cars lack one or both.

None of the cars that have made it to something real they can demonstrate to the world seem to get the concept of putting the motors down around the wheels. The mainstream car makers are beginning to get a clue about putting the batteries under the floor, but they are still thinking in terms of putting the motor up front where ICE cars have it. They are still stuck in the old paradigms and are wasting space as a result. The other BEVs out there have great energy economy, but none have acceleration like you get with even the least powerful version of the Model S. So for only Tesla has built the performance aspect into their EVs.

If there was something as good or better than the Model S out there and it was more affordable with access to good quality fast charging on the highway, I'd probably be driving it now and would never have joined this forum. However, looking at the realistic engineering and production factors, even if someone comes out with something as good as the Model S, they are going to strain their battery supplier to produce even 1/2 current Model S production numbers and I don't see signs anybody but Tesla has given any serious thought to long range charging. Everyone else is talking like gnomes are going to build a network for them and they don't have to worry about it. They are going to be very surprised when they start producing long range BEVs and there is no charging. Much like Toyota hit the wall with the Mirai. There aren't enough fuel stations to keep even the handful on the road fueled and there is no chance of taking one on even a moderate road trip.

I've suggested before reading Ashlee Vance's book on Musk. You can pick them up used on Amazon. Musk has many faults, but he is literally a genius, both as a scientist and he's not bad for a self taught engineer. He also is very, very driven to meet his goals of revolutionizing the car industry and putting a human presence on Mars. He's like a grand master chess player who knows 50 moves ahead at all times. He doesn't just have vague ideas about 2 years hence, he has a detailed day by day plan how he's going to get to what his goal is in 2 years. Because he isn't that great with scheduling (one of his faults), he over estimates what poor humans can do each day and his schedules go to hell pretty quickly. So instead of making the goal in 2 years, it might be more like 4, but he still accomplishes things nobody else thinks is possible even when he's on the verge of proving it's possible. Musk takes everything down to the basic physical principles and then works his way back up from there. Because he knows what he's trying to do is possible from a Physics perspective, he knows it can be done and he sets out to do it.

Having gotten to know Tesla now, I can see that even when other car makers make BEVs with the capabilities of the Model S, Tesla will likely be a few steps ahead of them making their shiny new thing obsolete. There are several scenarios under which Tesla could go under. It would be a critical blow if something happened to Elon Musk. He doesn't take care of himself and might die young. They may stumble scaling up from current production levels to the Model 3. With an average management team, I would give it a high probability of failure. Because Musk is the detail freak he is, I give it at least an 80% chance of success. I'm sure Musk has thought through how to do it in detail that would probably put the rest of us to sleep. He's that kind of person. He thrives on tackling what other people consider impossible and his track record is much better than most who don't try things as ambitious.

As an engineer who has always loved science (and even read the stuff for pleasure), I appreciate Tesla's engineering. Form is nice all else being equal (rather have a nice car than an ugly one), but function trumps form. If it doesn't meet my needs, it doesn't matter what it looks like. I'm not interested.