Short-Term TSLA Price Movements - 2013

[InTheShadows]

You guys know I'm all for short term trading, but at this point we have no edge on short term price movements.

Hysteria has taken over, momentum players have turned against us, and shorts are back for more pain. We are quickly approaching the 200-day (or it is approaching us). I can't say what is going to happen day-to-day these next few weeks, but I can say that Tesla is going to be worth at least $150 billion in 10 years. That's a 10-bagger from here. So, I'm just accumulating common shares these days and largely ignoring the noise.

Call me if something important happens.

I agree. I'm happy buying long term here. Got some more jan 16's today. From what everyone is saying there might be another 7-10% drop, but at this point I'm extremely happy buying here. If I missed here because I was waiting for another 5% drop before it recovered I'd be a little mad at myself.

 

[ckessel]

can't say what is going to happen day-to-day these next few weeks, but I can say that Tesla is going to be worth at least $150 billion in 10 years. That's a 10-bagger from here. So, I'm just accumulating common shares these days and largely ignoring the noise.

I'm tapped out, but along those lines I'm thinking this is probably a good time to sell a JAN 2016 LEAP put and buy stock (or LEAPs). Of course, you'd be horribly hosed if Tesla dies between then and now

 

[InTheShadows]

You guys know I'm all for short term trading, but at this point we have no edge on short term price movements.

Hysteria has taken over, momentum players have turned against us, and shorts are back for more pain. We are quickly approaching the 200-day (or it is approaching us). I can't say what is going to happen day-to-day these next few weeks, but I can say that Tesla is going to be worth at least $150 billion in 10 years. That's a 10-bagger from here. So, I'm just accumulating common shares these days and largely ignoring the noise.

Call me if something important happens.

I agree. I'm happy buying long term here. Got some more jan 16's today. From what everyone is saying there might be another 7-10% drop, but at this point I'm extremely happy buying here. If I missed here because I was waiting for another 5% drop before it recovered I'd be a little mad at myself.

 

[tftf]

Hysteria has taken over, momentum players have turned against us, and shorts are back for more pain. We are quickly approaching the 200-day (or it is approaching us). I can't say what is going to happen day-to-day these next few weeks, but I can say that Tesla is going to be worth at least $150 billion in 10 years. That's a 10-bagger from here. So, I'm just accumulating common shares these days and largely ignoring the noise.

Call me if something important happens.

How many car sales/year do you predict for this market cap? A mkt cap of this size has to be based on meaningful revenue.

I guess at least 2 to 2.5 million cars/year, even with high operating margins (Comparable: Toyota and VW Group with similar market caps at present each sell about 10 million cars a year, so I'm generous for TSLA and its future margins).

Is this easy to achieve? (Assuming TSLA will still produce long-range "pure" BEVs and no hybrids etc.)

Please have a look the "giga factory" thread. TSLA and partners would have to expand the global battery production by factors of 4-5x to produce enough battery packs in 10 years. They would have to start building factories by tomorrow and in parallel, building one "giga" factory after the other most probably wouldn't be fast enough to achieve the goal:

How to solve the battery factory issue - Page 6

Also have a look at the video linked in that thread with TSLA CTO Straubel, especially the last parts at minute 22:00+ about battery supply and the 40GhW figure by 2019.

The 2019 figure of 40 GhW is for 700k cars/year "only" in his estimates (!), about 5000 cells per car. (In my estimates, I was even more optimistic, assuming only 3500-5500 cells/car).

It would probably take 4-5 "giga factories" (each with a capacity of the current total global capacity volume). At the moment, TSLA is just planning to build one.

Producing over 2 million EVs (except for the battery part) is certainly possible in 5-10 years, this is very similar to current well-known ICE production methods. Producing 2 million battery cells and packs is the bottleneck imho (because if demand is indeed so high for EVs, other big automakers will also produce more EVs. The demand could go up for battery raw materials and special factory equipment...).

Now add the risks for these huge investments because of evolving battery technology. It does make sense to build out slowly because battery chemistry and optimal cell sizes for car batteries might change until 2025. The car makers with the first giga factories could be forced to write down their oldest factories and forced to change/update their production lines...

 

[dha]

How many car sales/year do you predict for this market cap? A mkt cap of this size has to be based on meaningful revenue.

I guess at least 2 million cars/year, even with high operating margins (Comparable: Toyota and VW Group with similar market caps at present each sell about 10 million cars a year, so I'm generous for TSLA and its future margins).

I'll have whatever you're smoking. Tesla needs to sell 2 million/yr to justify $15 Billion? That's how much BMW sells, and they have a $73 Billion market cap, lower margins and lower growth.

 

[ckessel]

I'll have whatever you're smoking. Tesla needs to sell 2 million/yr to justify $15 Billion? That's how much BMW sells, and they have a $73 Billion market cap, lower margins and lower growth.

I think you dropped an order of magnitude. Citizen-T and tftf were discussing $150 billion market caps.

 

[dha]

I think you dropped an order of magnitude. Citizen-T and tftf were discussing $150 billion market caps.

Ah, my mistake. When you said "this market cap" I thought you were referring to the present, $15B valuation. But, so long as we're making these sorts of comparisons, consider Porsche's $30 Billion valuation with production of a mere 86,000 vehicles/year.

 

[v12 to 12v]

I looked at the NHTSA documents that are available at this time. So far, according to their database, it is at the "preliminary investigation" phase. There isn't any information at the NHTSA, DOT or Safercar.gov stating whether it will turn into a formal full investigation or not as of late last night. It appears that many have assumed due to press reports that it has already been confirmed that a full formal investigation is underway. That is not the case from anything I have found. Please correct me if I am wrong.

A full formal investigation seems to be already built into the price even though it doesn't appear to be at that stage according to the public documents. The delivery of documents that open a full investigation into whether or not the case will be evaluated for recall, or whether the case is determined to be unnecessary and set aside, can happen within weeks, days or hours.

The missing bit of information here is how long it takes for the NHTSA to update their database. From what I saw in the database, it looks like the database and case status might not be updated until a certified letter with the determination as to whether or not a full investigation is delivered to Tesla. It sounds like Elon was pressing for the full investigation and that may be why the full investigation is already priced in.

All I'm trying to point out is that this thing could jump in any direction at any moment. There may not be weeks or months of waiting for an outcome like many have been assuming. Of course, the biggest wild card is how the press interprets any news.

 

[tftf]

I'll have whatever you're smoking. Tesla needs to sell 2 million/yr to justify $15 Billion? That's how much BMW sells, and they have a $73 Billion market cap, lower margins and lower growth.

I don't smoke. He was talking about 150 billion USD, not 15 billion USD. BMW has (except for Porsche and very few others) high operating margins among industry peers.

Anyway, my question was about units/year and needed battery supply for such a market cap. Please follow my links to read about the battery supply figures needed.

 

[bonaire]

For that number of cars, it is really going to have to be a lot of 20-30 kWh type of vehicles using today's tech. Nothing is sustainable with 85kWh battery packs unless the density of energy gets up and over 400-500 Wh/kg of materials. That is plausable down the road, perhaps, but what stops all the other car makers from doing the same? Once batteries with 500 Wh/kg are made that are safe, every car maker on the planet will be using the same tech. And having much lower GM per vehicle. Today's tech is what keeps Tesla moving along because they have the largest on-board battery. Tomorrow's tech will be shared among all manufacturers. GM's battery lab is already testing ... (nevermind, I don't want to spoil the fun)

The sweet spot for most consumers is about 2-3 times their daily commute. If you want to sell a small, inexpensive mass-market vehicle, it has to be cheap. Either batteries tend toward free or the competition tends towards expensive (ie. gas prices). If someone drives 40 miles a day and would feel comfortable with 80-120 mile range - that will sell great. If someone needs longer range on weekends, there will be the supercharger systems and high capacity DC fast-chargers out there. But I have to guess many current-day EV drivers do not come close to using their maximum range per day except for say a Volt driver who may drive 100 miles one-way somewhere and use up 45 miles electric and 55 miles gas. Those kind of commutes are far fewer than the common daily driver who covers 40 miles, on average. And, as battery density grows - you get 120-mile range Leafs, Spark EVs and eventually the 80+ mile AER of the Volt plus its gas extender. The BMW i3 will reach to 150 miles + ReX. Just gotta get the next gen batts going.

Tesla has reach out to the cars. Does anyone outside of the HQ know the daily average driving mileage of the fleet? Would be a great study. For Volts, you have voltstats.net which is quite useful.

Of course, you can counter with "fewer full recharges of batteries is better". Well, that is a symptom of a problem. Future batteries need to have less issues with recharge count. For instance, A123 cells have had 8000+ recharges done and stay within 80% of original capacity. And they are somewhat "old school". new-school cells should have a technology within the cell design to not endure physical breakdown and the argument of the # of recharges will become moot. Smaller, more-often recharged systems is what sustainable transportation will need to target. Charge at home for enough miles for the typical day - then extend through infrastructure reach.

My feel is we can get to:
500 Wh/kg+
fully compliant with EUCAR testing and cell stability, no venting with flame
10,000+ full recharges within a SOC of 10% to 95%
prismatic and cylinder packaging offering same Wh/cubic area
less need for TMS
by 2025.

 

[tftf]

Ah, my mistake. When you said "this market cap" I thought you were referring to the present, $15B valuation. But, so long as we're making these sorts of comparisons, consider Porsche's $30 Billion valuation with production of a mere 86,000 vehicles/year.

Your Porsche numbers are also wrong. They now sell over 150k annualized and thanks to the new Macan SUV, they are estimated to sell 200-250k in late 2014 and 2015+ annualized:

Daten Fakten - Porsche im Ãœberblick - Unternehmen - Dr. Ing. h.c. F. Porsche AG

The market knows about the Macan already, it's in the pricing. Porsche can also source parts and use the global network of the giant VW Group, as a stand-alone, it would look different.

PS: You were probably quoting Porsche's H1 2013 numbers:

Porsche Boosts Sales and Results in the First Half of 2013

These are for six months only.

Porsche is an absolute outlier in terms of margins. TSLA will sell a Gen III at $35k base price (now even about talking about Gen IV in 2020+ at even lower price points), I very much doubt this will come with similar margins. Take the Japanese manufacturers: Honda has Acura, Toyota has Lexus and Nissan has Infiniti. Even if these high-end sub-brands generate higher operating margins, the rest of the portfolio "drags" their margins down.

 

[RobotGrease]

So it looks like we're seeing the epic battle between RobotGrease's down channel and Curt Renz's Golden Rule. I tip my hat to both members for sharing their perspectives.

I've been buying more stock in the low 120s because I think if we're not at the bottom we're close enough for my purposes.

Thanks for the reference. The channel clearly depicts (dare I say predicts...) the recent behavior and I think we are all hoping Curt's Golden Rule or some other event causes us to break the trend. Looks like we will know by Monday the latest, as we will be hitting the top of the channel and will either breakout or be forced lower, back into the channel and below the point of the "golden rule". As I said before, I think the point of inflection will be around the 200d ma, if its not here.

Also, notice how we are getting sqeezed over the last three days....lower highs and higher lows.

 

[ckessel]

YTSLA will sell a Gen III at $35k base price (now even about talking about Gen IV in 2020+ at even lower price points), I very much doubt this will come with similar margins.

I really doubt this price point. One, Elon (or maybe one of the others on a CC) said it was $35k in dollars at the time that price point was set, but that in future dollars when G3 comes out that's more likely at least $40k. Second, that's probably like the Model S 40kwh version...basically a marketing number for a car that no one bought. The actual G3 anyone would want, much like the S that anyone really wants, is at least 50% more, so we're talking a $60k car.

 

[FredTMC]

I really doubt this price point. One, Elon (or maybe one of the others on a CC) said it was $35k in dollars at the time that price point was set, but that in future dollars when G3 comes out that's more likely at least $40k. Second, that's probably like the Model S 40kwh version...basically a marketing number for a car that no one bought. The actual G3 anyone would want, much like the S that anyone really wants, is at least 50% more, so we're talking a $60k car.

Agreed. Same roll out plan as MS. Sell the signature "loaded" versions first and deliver the "base model" much later. This is the only way to roll out GenIII (IMO)

 

[tftf]

I really doubt this price point. One, Elon (or maybe one of the others on a CC) said it was $35k in dollars at the time that price point was set, but that in future dollars when G3 comes out that's more likely at least $40k. Second, that's probably like the Model S 40kwh version...basically a marketing number for a car that no one bought.

I'm not making this number up. It was even below that. This is direct quote from the man who should know:

$30k in 2013 $ (ie + inflation) w 200+ mile range w some really cool tech that we can't talk about yet.

Twitter / elonmusk: .@benmacy $30k in 2013 $ (ie ...

Note he is even talking about $30k base price in present dollars (and CPI is basically flat at the moment....I generously added $5k for inflation).

I guess 200+ miles will be hard to achieve with 40kWh, I estimated 45-50kWh (even that may be too low). If you think that's the marketing/entry-level car no one will buy:

More kWh will of course raise the number of cells needed per car (assuming 18650 cells); even if we go to 4 Ah in future cells that will require at least 3500+ (18650) cells/car.

As for timing, this is not far away. In my estimates (taking Nissan's battery plants as comparable), TSLA has to be start building the battery plant in early 2015 to be able to sell Gen III cars by 2017, otherwise there are delays (one of my old predictions, either a delay of about 12+ months or the price of the Gen III car will be indeed higher and batteries initially sourced in smaller quantities from new third-party suppliers such as Samsung or LG).

 

[ckessel]

I'm not making this number up. It was even below that. This is direct quote from the man who should know:

$30k in 2013 $ (ie + inflation) w 200+ mile range w some really cool tech that we can't talk about yet.

Twitter / elonmusk: .@benmacy $30k in 2013 $ (ie ...

Oh, I believe you, but that tweet was 8 months ago and I think they've put more fuzz into the price target in the conversations since then. And I still think the "real" car that anyone will buy is at least 50% more just like the S. Remember the S was "sub-50k", but the average selling price has been near 100k.

That statement you quoted, and mine, aren't that far apart really. It's all in how you interpret it.

 

[Chickenlittle]

Oh, I believe you, but that tweet was 8 months ago and I think they've put more fuzz into the price target in the conversations since then. And I still think the "real" car that anyone will buy is at least 50% more just like the S. Remember the S was "sub-50k", but the average selling price has been near 100k.

That statement you quoted, and mine, aren't that far apart really. It's all in how you interpret it.

8 months ago there was to be a 2 wheel drive and a 4 wheel drive. now i understand only 4 wheel drive. will need to wait for prices especially since it is still being engineered. that is the only reason i have not placed a reservation yet. want to see pricing first.

 

[tftf]

Oh, I believe you, but that tweet was 8 months ago and I think they've put more fuzz into the price target in the conversations since then. And I still think the "real" car that anyone will buy is at least 50% more just like the S. Remember the S was "sub-50k", but the average selling price has been near 100k.
That statement you quoted, and mine, aren't that far apart really. It's all in how you interpret it.

That's entirely possible, but the projections about TSLA can't have it both ways and take the best of both scenarios rolled into one. Let's assume two simple scenarios:

Scenario 1: Gen III as a mass-market car at $35k, ASP below 50k. In 2020+, a Gen IV car even well below that base price. TSLA will become a "small mass-market" manufacturer similar to Audi or BMW over time, selling 750k to 1.5 million units/year in 10+ years. For this, TSLA has to break ground on a giant battery plant soon (and soon after that a second one).

Scenario 2: Gen III around 50k, ASP at 65-75k+. TSLA remains a niche manufacturer, selling 100-250k cars a year, similar to Porsche. In this scenario, it probably doesn't make sense to build a giant battery factory.

(As a comparison, 65 million passenger cars are sold worldwide per year, likely to grow to 75+ million in the future because of demand in SE Asia.)

TSLA bulls often assume the higher revenue of scenario 1 mixed with the smaller costs/cap ex of scenario 2.

PS: I personally think scenario 2 makes more sense for TSLA shareholders, but TSLA at the moment is on course for scenario 1. Given the huge battery investments needed and competition in the mass-market, I highly doubt they can uphold high operating margins in scenario 1 (it will likely be a mix, as for Toyota and Lexus: Low margins with Gen III and Gen IV models and higher margins with Model S, X, possibly a pick-up and Roadster 2.0 beyond that).

 

[Causalien]

Why will tesla be worth 150 bil?

Simple, super charger network. Unless the others start building their own in 3 years, I see Tsla becoming the monopoly. We are already at year 2 of building the network, time flies by and the other auto manufacturers are still just designing an answer to the model S.

Another simple way to increase by 40bil overnight is to charge for twitter app ads. Another 100bil for creating itunes for cars.

If there is one auto company that can do software right, it will be tesla and I think a lot of people are overlooking that potential revenue stream.

 

[TSLAopt]

Blankenship is gone. I think it could be a good thing though

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