Short-Term TSLA Price Movements - 2014

[woof]

This is why I think it was dumb to discontinue the 40kwh. The only saving grace has been that tesla is production constrained anyway.

The 40kWh pack was discontinued due to (presumably) low orders and the high cost of yet another set of crash tests.

Which brings up a point...if "The D" really is AWD, would that not trigger a new round of crash tests that need to be performed before the car can be sold?

 

[RobStark]

The 40kWh pack was discontinued due to (presumably) low orders and the high cost of yet another set of crash tests.

Which brings up a point...if "The D" really is AWD, would that not trigger a new round of crash tests that need to be performed before the car can be sold?

AWD version would need its own certification but presumably would have a high number of orders and high gross margins.

As opposed to the 40 kWh version.

 

[MartinAustin]

Why does the AWD version need re-certification? All the cars have the same bodywork and battery shells.

 

[brianman]

Sadly, this vision of Model X as more affordable than Model S has been lost. Instead, we're all expecting it to be a little more expensive than the Model S.

I've never heard Elon describe X in any other way. Perhaps it was a pre-Elon era thing. Some of the Tesla historians on TMC could speak to that perhaps.

 

[Newb]

Why does the AWD version need re-certification? All the cars have the same bodywork and battery shells.

+1

What I can say for Europe, is that AWD versions don't need re-certification or any separate crash testing. Neither it is necessary for high-performance versions like Mercedes AMG vehicles.

With regards to October 9, I think we'll see mounting pressure on Elon & team to unveil everything at once, i.e. AWD versions of Model S + Model X beta + Model 3 clay model/concept pictures. Those high expectations are already all over the place, especially in mass media which is even discussing pickup trucks or a totally new "Model D", an electric motorcycle and what have you. Plus, Tesla seems to have invited people from all over the world (SIG reservation holders, journalists, etc.) to the October 9 event in Hawthorne, who themselves express high expectations. Anything less than D+X+3 would result in TSLA getting into the red afterwards, I reckon. So, in case anyone of you who actually knows that Elon will "only" unveil the AWD Model S + driver assistance package, go for the puts! :biggrin:

 

[FANGO]

The 40kWh pack was discontinued due to (presumably) low orders and the high cost of yet another set of crash tests.

Which brings up a point...if "The D" really is AWD, would that not trigger a new round of crash tests that need to be performed before the car can be sold?

People tend not to order cars that get delayed indefinitely, and where the company actively tries to unsell them. Not to mention that the percentage given at the time was wrong for many reasons.

 

[Jack6591]

Tesla Rhinoplasty

I think the Model S is a beautiful car. If I could change one thing it would be the nose. I would like to see that "something else" be a little Chris Porritt influence, in a Model X reveal.

 

[blakegallagher]

I've never heard Elon describe X in any other way. Perhaps it was a pre-Elon era thing. Some of the Tesla historians on TMC could speak to that perhaps.

+1

I believe that started with journalist confusing the "Model E" with the Model X. I have read many times that the Model X would be cheaper but I ave have never heard it from Elon and company and never believed it. I have corrected some family who are big Tesla bulls who believed this.

 

[EnergyMax]

Geez. Tesla is production constrained, is still selling the S60, and is building the Gigafactory. Producing a P85D and X does not detract from the Master Plan; they get us to gen3 that much faster.

The GF is not for selling 400k S/X per year.

We all want to see AWD gen3 - this is the research cost!

 

[JRP3]

Sadly, this vision of Model X as more affordable than Model S has been lost. Instead, we're all expecting it to be a little more expensive than the Model S.

That vision of the X was not based in reality. A larger SUV based on the S platform was never going to be less expensive than the S, especially with AWD.

My proposal is modest. Reduce the S60 by $10000. They can charge $10000 for dual motors.

So you basically want Tesla to give away the dual motors for free. To get to a more affordable Model 3 Tesla needs to generate capital, you don't do that by dropping the price on a production constrained product or by giving away increased profit margins on desirable options. I want Tesla to produce a more affordable EV as much as anyone but I don't think cutting their profit margins before that gets them any closer any sooner. Taking the already developed dual motor technology and using it in the existing S to create another higher profit margin vehicle for minimal developmental cost is a smart move, and I expect Tesla to make smart moves.

 

[techmaven]

Geez. Tesla is production constrained, is still selling the S60, and is building the Gigafactory. Producing a P85D and X does not detract from the Master Plan; they get us to gen3 that much faster.

[...]

We all want to see AWD gen3 - this is the research cost!

Yeah, as long as Tesla is cell production constrained, it behooves them to find ways to make more $ per cell. Finding more options to for customers to buy is a good thing if Tesla can deliver them with value, excitement, and quality.

Matter of fact, I'm puzzled by the relatively poor brand merchandising... they could make more money with better clothing and accessories.

 

[JRP3]

@JRP how many kw can be theoretically be pulled from the 85 pack? Could we get 500-600kw from it?

Probably not, at least nor for long, but remember that the pack can already put out more power than the car can get to the ground. AWD eliminates that constraint.

 

[pGo]

IMO, Tesla is still on track to deliver Elon's mass market car. But you don't get there in one step after Model S. Tesla is not a one trick pony, but instead, its on its way to become the most innovative company in transportation. Hence, as it goes along the way to develop a mass market car, it shows how innovation can be applied that makes ICEs obsolete.

The 90% autonomous cars next year is another thing that you may wonder why are they doing it? Well, because they can innovate and innovate cheaply compared to any other companies including Google in this case (Google technology aims for 100% autonomy with expensive tech while Tesla may not solve all issues, it will be most useful at a much cheaper price).

Above all, to get to a mass market car, they need money. They also need to show the world that going Electric is worth it so others eventually join them. From here to 2017, Tesla needs to invest about $2.5 B just on Giga factory. They will roughly invest another $2-400M on Superchargers, service centers, and stores. They are hugely expanding on RnD. They have about $2.5B in bank. Elon states that starting 2H next year, they will generate a huge cash flow that can be applied elsewhere. Where will that money come from? With AWD, 90% autonomous vehicles, Model X, and what not, they will be the leader in gross margins by next year (beating Porsche).

Telsa is also doing something only a few companies do successfully in tech industry. That is to develop a product and nurture it well by making it better. Then, applying it all to future products with ease. Think Apple. Ratina display starts in one product and gets applied to all. Same with processors, apps, hardware design, everything they do. Others try to imitate them but they don't know how to play the game. Current developments that Tesla offers will easily come in future products. This process actually will save them on RnD and especially on time.

Most companies strive to have an image that relates them with performance. To do that, they develop small set of very expensive cars to show off capability - beware, they are not mainstream vehicles. Tesla, on the other hand, will offer such performance vehicles at a high end of luxury segment but still well below the small set of very expensive cars offered by others. This will fuel a brand value unmatched by others and will create its own category. When will this be rewarding? Just when Tesla will offer a mass market car. Tesla will sell tons of them without spending a dime on stupid TV ads.

These developments only solidify my belief that Gen 3 is going to be developed and will be a huge hit. Go Tesla.

 

[jhm]

This is why I think it was dumb to discontinue the 40kwh. The only saving grace has been that tesla is production constrained anyway.

I think the S40 would have the problem as the S60, too little value for the price. Consider the price per kWh.

S85.......$953 = $81000/85
S60.....$1183 = $71000/60
S40.....$1525 = $61000/40

The problem here is not that the cost of batteries is to high, rather the cost of the body (everything but the drive train) is too high. With such an expensive body, you have to match it with a really large battery to get a good value, a low total price per kWh.

If the supply constraint was simply batteries, then it should be recognized that smaller battery packs is the way to get the most cars per constraint. Consider this. Suppose you have 1GWh of batteries. How many cars can you make?

S85.....11,765 = 1,000,000/85
S60.....16,667 = 1,000,000/60
S40.....25,000 = 1,000,000/40

So had Tesla taken a path of emphasizing smaller pack versions of the Model S, it would have been able to produce as much as twice as many cars. This of course assumes that battery supply was the only constraint. So the fact that Tesla did not take this path suggests that the supply constraint is not the battery supply. It is something else.

I think the basic constraint is the overall cost and complexity of expanding per car capacity. The constraint is per car, not per GWh. Moreover, the Gigafactory is not going to resolve this per car constraint. Fortunately, Tesla is addressing this constraint. The have added a second line at the Fremont plant and have the potential to ramp per car capacity up to 2500/week.

This puts Tesla at a crossroad. They can continue to emphasize higher end vehicle and maximize gross margin per car, or begin to tackle affordability and go for higher unit sales. Does it make sense to maximize unit sales at the expense of profitability? Absolutely not, beacuse profit is the fuel that makes expanding capacity possible. Tesla cannot get to making millions of cars per year without a substantial gross margin to reinvest in growing capacity. What I would like see is just a modest move toward affordability and higher unit sales. Suppose we define two constraints:

1) Model S ASP not to exceed $100,000 and not to fall below $95,000
2) Model S GM not to exceed 33% and not to fall below 29%

Under these constraints it is posible to lower the base price and increase unit sales. Consider that options can be priced at a margin higher of 50% or higher and add to ASP. Pricing the D option at say $10,000, if uptake is 20% to 50%, this would add $2000 to $5000 to the ASP and add 1% to 3% to GM. This may well take ASP and GM above the my proposed constraints. This affords Tesla the option to lower the base price on S60 to bring ASP and GM back within target constraints. Essentially this approach leverages advancements in options offered to drive greater affordability and higher unit sales. When the D is unveiled, I hope the other thing is that base lrice on the S60 is lowered. Tesla can offer both.

 

[CyberDutchie]

With regards to October 9, I think we'll see mounting pressure on Elon & team to unveil everything at once, i.e. AWD versions of Model S + Model X beta + Model 3 clay model/concept pictures. Those high expectations are already all over the place, especially in mass media which is even discussing pickup trucks or a totally new "Model D", an electric motorcycle and what have you. Plus, Tesla seems to have invited people from all over the world (SIG reservation holders, journalists, etc.) to the October 9 event in Hawthorne, who themselves express high expectations. Anything less than D+X+3 would result in TSLA getting into the red afterwards, I reckon.

Well, I hope you're wrong, for the stock price movement I'd rather see a whole series of announcements versus one big reveal of everything they have in store. Each reveal has potential to push the stock 5% versus one big reveal maybe 10%?

To me ideal would be for Elon to reveal the dual motor version, and some little extra stuff, but then hint to a series of announcements coming over the next three months. Like he did 2.5 years ago which created much anticipation and moved the stock up quite significantly.

 

[bonnie]

My two cents: Tesla is throwing a big party at their Space X facility. The last time they did this was for the Model X reveal. This is not just a Model S AWD 'plus some little extra stuff'. The 'something extra' will be something big enough to justify getting the facility ready for this event.

As far as those thinking that it's at Space X so that Elon can show the AWD on the track, you haven't been there. I have no idea how they'd move these crowds out to the little track area for a demo - and if that was the plan, 1) this event would be in the daytime (current sunset in Hawthorne is at 6:33 pm and event starts at 7pm, and 2) they'd do it on the weekend (so it could be day time and staggered with smaller groups).

 

[DaveT]

My two cents: Tesla is throwing a big party at their Space X facility. The last time they did this was for the Model X reveal. This is not just a Model S AWD 'plus some little extra stuff'. The 'something extra' will be something big enough to justify getting the facility ready for this event.

As far as those thinking that it's at Space X so that Elon can show the AWD on the track, you haven't been there. I have no idea how they'd move these crowds out to the little track area for a demo - and if that was the plan, 1) this event would be in the daytime (current sunset in Hawthorne is at 6:33 pm and event starts at 7pm, and 2) they'd do it on the weekend (so it could be day time and staggered with smaller groups).

My, oh my. I was expecting just a Model S AWD and driver assist features. But Bonnie is the one person on here that I would trust the most with her opinions/thoughts on Tesla since she's so level-headed and also because she's knows a lot of folks at Tesla. And I do think that Tesla is inviting a boatload of people. A whole new set of invites went out yesterday afternoon and it seems like a lot of people received them. I haven't been to the track area (didn't even know one existed) so it might be too much to handle the crowd moving. I thought that they might just have the event outdoors (at the Hawthorne airport) with lights and such. But if it's indoors at SpaceX, then yeah showing a demo outside probably isn't going to happen. Also, another data point is that Tesla has invited reporters for a press conference at the event (ie., they did this for their battery swap event last year and their major events).

So Bonnie, I'm wondering are you positive that the event/party is going to be indoors at the SpaceX facility or is it just a guess?

 

[FluxCap]

My, oh my.

I second that! When Bonnie speaks, it's wise to take heed folks. This makes me even more excited for the possibilities.

 

[Krugerrand]

I think the S40 would have the problem as the S60, too little value for the price. Consider the price per kWh.

The S40 was a hobbled car on all fronts (per Elon).

So had Tesla taken a path of emphasizing smaller pack versions of the Model S, it would have been able to produce as much as twice as many cars. This of course assumes that battery supply was the only constraint. So the fact that Tesla did not take this path suggests that the supply constraint is not the battery supply. It is something else.

There were other constraints initially, many related to suppliers unable (sometimes unwilling) to provide components in needed quantities not made by Tesla. But ultimately the market didn't want the 40 and for good reason, it already had mileage limited EVs for less money.

The(y) have added a second line at the Fremont plant and have the potential to ramp per car capacity up to 2500/week.

No they have not. There was always two assembly lines; general assembly and BIW. They simply took bits and pieces of the old general assembly line and added new bits and pieces to make a more efficient and flexible general assembly line that could produce S and X together, and increase the rate at which vehicles could be assembled. They'll likely have to add a second general assembly line for Model 3 when the time comes.

This puts Tesla at a crossroad.

I don't think they're at any crossroad, but rather on a straight and clear road to the end goal.

Under these constraints it is posible to lower the base price and increase unit sales.

There is no reason to do this (lower base price) and never has been. They can't keep up with current demand. Per Elon they will be testing the demand level (2015 if I recall his comment correctly) and will do so without reducing base price.

The world is just simply going to have to wait a little bit longer for the more affordable Model 3. Right now Tesla is laying the groundwork in a super methodical and focused manner. Like many others here, I have a feeling that Model 3 demand is going to be spectacular.

 

[AlMc]

My, oh my.

I second that! When Bonnie speaks, it's wise to take heed folks. This makes me even more excited for the possibilities.

Great....You guys (and you too Bonnie) are killing me:wink:. I would really like a chance to be at the X reveal (check out the 3rd row/convince my wife it would serve us better than an AWD S....she being a 'hater of the falcon doors') but it initially looked like this was going to be AWD S/DA only so I have not altered/made plans to attend. In DaveT terms I put the chance of a model X reveal at 10-20%........now I am thinking there is a 50% chance.......Decisions...Decisions......

In addition: Now I don't know whether to add to my weekly calls or buy some puts