What a day. I think the drop shows the market is just looking for excuses to sell TSLA right now. Execution fears and increased EV competition (in part spurred on by Dieselgate) seem to be the largest drivers of this current drop. Having broached the $220 level, it's possible we're headed for $180 by the end of the year. The Q3 call will have to be tremendous in order to reverse this negative trend. But I don't see positive momentum returning until at least next year, assuming production of the MX goes well (which seems very likely) and continued strong demand for the MS. And any indications that production capability and execution are increasing will be received very highly, as it bodes well for the M3, which of course is the key for positive stock price momentum.
-
Want to remove ads? Register an account and login to see fewer ads, and become a Supporting Member to remove almost all ads.
Short-Term TSLA Price Movements - 2015
- Thread starter Robert.Boston
- Start date
-
- Tags
- TSLA
- Status
Which is fine. We understand the argument about component OEM manufacturing, but the economies of scale you speak of as being an advantage to take something mainstream isn't there yet for LG Chem or Samsung for that matter. The economies of scale that you speak of is coming from Tesla Motors via the Gigafactory. We don't care about proof of concepts when you have the reality now.
It's bad for operating margins, especially in the mass-market space (where the Model 3 will play at the upper end) when dozens fight over a small slice of the paseenger car market.
EVs will still be a niche by 2020 (single digits), there is no "escape velocity" for any new car sector entrant such as Tesla.
Gtoffo
Member
Missed the total dip....and this might be a bull trap but I just rebought my long term hedges for a nice profit. (380$ J17 CALLS)
When the stock recovers I'll sell them again.
When the stock recovers I'll sell them again.
The Blue Owl
Endangerous Herbivore
People predicted the same about Apple's Macs and iPhones. And yet, their margins are as high as ever. It's not a given that Tesla's margins must collapse.
Competition is bad for operating margins? It has nothing to do with it. Please clarify.
The Blue Owl
Endangerous Herbivore
[Wearing the black hat] Well, isn't it? Competition does generally drive everybody's margins down. What did you mean?
everman
Member
I feel the need to weigh in on this reliability situation with my experience from the manufacturing sector.
Tesla has many things going for it, but one relatively under-appreciated one is the rate of improvement in their change management process.
Based on circumstantial data from multiple sources, including the Musk biography, WaitButWhy posts and many Musk interviews, I believe Tesla is highly responsive to making manufacturing and part quality adjustments. Where most manufacturing is bogged down in lengthy change review processes, I think the Tesla engineering culture moves to analyze and improve failure points much faster than traditional auto manufacturing.
This won't every be completely evident in the short term, as it will only become clear once long term data is analyzed. It manifests in the short term due to a lot of owners driving some of the original 2012-2013 models that are many generations behind parts and processes in use today. I think the 2012 and 2013 Model S's are relative dinosaurs compared to the 2015 cars. They just look the same from the outside.
TL;DR, Tesla has remarkable speed of innovation and improvement in manufacturing process and supply chain, and this will become evident as the 2014, 2015 cars become 2-3 years old. Just nothing to be done in the short term but hold.
Tesla has many things going for it, but one relatively under-appreciated one is the rate of improvement in their change management process.
Based on circumstantial data from multiple sources, including the Musk biography, WaitButWhy posts and many Musk interviews, I believe Tesla is highly responsive to making manufacturing and part quality adjustments. Where most manufacturing is bogged down in lengthy change review processes, I think the Tesla engineering culture moves to analyze and improve failure points much faster than traditional auto manufacturing.
This won't every be completely evident in the short term, as it will only become clear once long term data is analyzed. It manifests in the short term due to a lot of owners driving some of the original 2012-2013 models that are many generations behind parts and processes in use today. I think the 2012 and 2013 Model S's are relative dinosaurs compared to the 2015 cars. They just look the same from the outside.
TL;DR, Tesla has remarkable speed of innovation and improvement in manufacturing process and supply chain, and this will become evident as the 2014, 2015 cars become 2-3 years old. Just nothing to be done in the short term but hold.
ludicrousspeed
Member
I think he's implying that Tesla will have to lower their sales prices (thus reducing margins) to stay competitive. I, like most here, believe that as long as Tesla stays product-focused and simply puts out the best cars they can, they will be able to sell them at the prices they want and maintain the margins they want.
I adressed this point over at SA many times, can't repeat all the arguments whe this analogy doesn't work here.
LOL nice black hat. I sat quietly and read his posts, but he's a fool. Quote me.
In the business of batteries, everybody's operating margins are going to look like crap because they are all going to have a high capex investment just to build capacity. What he's referring to is gross margin. Competition will dictate itself. If GM is going lose money on its Bolt and price it low and expect it to be offset with sales of the ICE vehicles sure, that's fine. It's not price alone. This strategy has been tried time and time again and they went insolvent for it. They can have a price war to squeeze out EV makers like Tesla, but only for as long as the company can stay solvent.
I'd acknowledge the argument that Tesla should slow their capex in batteries and buy from LG like the other car makers are... if the capacity was there. Right now, it isn't so Tesla is making it happen because the other companies are sitting on their butts and simply do not innovate or execute as quickly.
[sarcasm]
Yeah, Tesla is doomed. I think the 30,000 people waiting in line for the Model X will jump ship now and reserve the Chevy Bolt asap. The hundreds of thousands people waiting for the reserve button for Model III to appear will go for the Bolt, too. no question.
And by the way, who cares about performance, range, supercharger networks, design, obsessive customer focus, OTA updates, being part of the greatest vision of sustainable transport ever...
And forget about the utilities, corporations and businesses waiting in line for powerpacks from the GF either. They'll probably go for the LG stuff now. They have an abundant supply of batteries to cover world demand for a good price easily.
[/sarcasm]
Yeah, Tesla is doomed. I think the 30,000 people waiting in line for the Model X will jump ship now and reserve the Chevy Bolt asap. The hundreds of thousands people waiting for the reserve button for Model III to appear will go for the Bolt, too. no question.
And by the way, who cares about performance, range, supercharger networks, design, obsessive customer focus, OTA updates, being part of the greatest vision of sustainable transport ever...
And forget about the utilities, corporations and businesses waiting in line for powerpacks from the GF either. They'll probably go for the LG stuff now. They have an abundant supply of batteries to cover world demand for a good price easily.
[/sarcasm]
I figured that. I just wanted to give the guy a chance to articulate better. For a guy on seeking alpha, not being able to pinpoint the difference between gross and operating is very sad.
As others pointed out already in parts:
- More intense competition (dozens of EV models) while pure EVs still a single-digit niche in 5-10 years
- Large car makers able to cross-subsidize between model lines
- Still a huge capacity overhang in the global car industry (only around 70-80% utilization rate at the moment)
- Large battery suppliers closing gap on economies of scale fast (especially LG)
- Technology gap risks (Tesla overinvesting in current Li-Ion technology) in batteries (solid state...) coupled with huge cap-ex and historically low margins in the sector (cars and batteries).
Last edited:
The Blue Owl
Endangerous Herbivore
I don't read SA, but you seem (to me, anyway) to see the market for electric cars as separate from the overall car market, and because it's a small market, the other makers will flood it and Tesla will get suffocated. But there is only one car market. The new electric cars from both the old and new manufacturers will instead displace the existing ICE fleet and new ICE sales. Established manufacturers will have to deal with cannibalization, something Tesla doesn't need to worry about.
I don't see why Tesla's margins must come down due to competition. There will be enough to go around for everybody selling EVs.
Right, all of what I cited in the last post. Maybe you didn't get to read it yet. The only critical point is the supply capacity for Li-On batteries... that doesn't exist for Model 3 + stationary storage demand needs.
Perfectlogic
Member
Ofcourse it is, the pricing power a company has is determined by the competition. It has been repeated a lot that competition is a good thing for Tesla, probably because Elon has mentioned it a few times, but I think the way he means it is that it will accelerate the transition to BEVs, which is good for mankind. But lets be clear, for the TSLA investor competition means margin erosion which is a bad thing. The whole reason Tesla has managed to achieve such a high market cap is because of having a headstart in the future technology of cars, a competetive advantage. But it looks like competition is heating up. Do you think Tesla could have achieved such a high market cap if they tried to enter the autoindustry without a disruptive technology? Ofcourse not. You guys also shouldn't underestimate LGs ability to ramp up, clearly they have already begun and I am sure they can ramp up to supply a few hundred k vehicles within a few years if the demand is there, LG is a big company.
So the CR guy said
Reliability problems push Consumer Reports to pull Tesla recommendation - LA Times
So for someone who has been following Tesla closely, any news?? Did the sales drop because of those issues? So now reports those again and changes a rating, while Tesla is still better than Mercedes - I do not think the story has changed one bit since yesterday. Curt, time to post the stock manipulation video again.
Reliability problems push Consumer Reports to pull Tesla recommendation - LA Times
So for someone who has been following Tesla closely, any news?? Did the sales drop because of those issues? So now reports those again and changes a rating, while Tesla is still better than Mercedes - I do not think the story has changed one bit since yesterday. Curt, time to post the stock manipulation video again.
- Agreed competition may have provide some margin pressure
- They can subsidize tiny compliance programs. They would not structurally subsidize 100k+ volume programs.
- Capacity overhang for ICE cars. Only part of those assets can be used as is for EV production. The entire engine and drivetrain production assets would be stranded and lead to huge writedowns that slow capex in general.
Again, more serious EV programs is great. You'll just have to agree to disagree with the consensus here.
- Status
Similar threads
