Short-Term TSLA Price Movements - 2015

[chickensevil]

If they have a 20% margin on the model 3, most people are not going to like the way the car looks. The car is half the base price of the 70D. Essentially the M3 will likely "consume" the profitability of the gigafactory to produce a car that is desirable enough to gather hundreds of thousands of back orders. This is probably the only way to make a proper sedan-like 5 door with a 200 mile range.

Tesla has said the M3 won't be aluminum. Considering Tesla bough a tool and die shop, the car is likely conventional. BMW spent 3 billion in R&D to make the i3 lightweight. Tesla doesn't appear to have that capability. So it appears we have a heavy steel car that will need a lot of battery.

When does the gigafactory ramp to significant volumes? Musk has said repeatedly that the M3 needs the gigafactory.

Yes, a fleet sale of MX to Uber or Lyft. This sort of sale explains the stupid second row seating.

Why do you think that just because it is a cheaper car that it can't have good margins. They were already talking about going above 30% margins on the S/X which is likely do to the continued drop in price from the batteries. Also note that while the 3/Y will be starting at 35k, that is hardly going to be the ASP. Most people estimate an ASP around 50k. So if the base 35k version is only, say 15% GM (maybe a bit lower), but the options that lead to a 50k price are at say a 30-40% GM then you would easily have a "nice" base model while having a GM overall hold up to a 20% margin.

I mentioned the batteries specifically because that is the single most expensive part of the car. So if they can drop that by a large amount then making a "nice" 35k$ car should be easy enough. Look at the Lexus, BMW, and Mercedes in that price range. They are very nice cars for their price and they have targeted the 3 Series BMW as the goal of what they want to be compared with, and BMW is the king of that market segment (they sell the most).

Is your approach to investing taking the company's word at face value?

I don't think anyone straight takes the company at face value. What we have done is examine the combination of their claims against how they have performed, against their likelihood to continue to perform, and that is where comments like those from vgrinshpun comes. In this case, it isn't about meeting production goals, that isn't the yard stick being measured here... it is to their claims on GMs. And have they ever failed on coming to their stated GMs in the past? No. In spite of terrible FX rates because of the strong $$$, they have continued to hold a very high GM and would have past 30% by now if not for the exchange rates. But they had stated 25% GMs on the Model S for a very long time.

They have never given reason to doubt their current, historical, (and therefore) future claims as it relates to GMs and their cost of building the product. If you doubt their claims by all means, I would love to see *data* behind it. Because we have certainly had many a discussion here surrounding how their claims of future costs actually make sense and could in fact be better than they have stated. Feel free to give a detailed description of why their targets are wrong. Would love to see it.

Until then, baseless claims against the company are just your opinion, which I am not inclined to take any weight on without any data. vgrinshpun, and many others have happily produced data to back up their statements toward the future.

 

[techmaven]

If they have a 20% margin on the model 3, most people are not going to like the way the car looks. The car is half the base price of the 70D. Essentially the M3 will likely "consume" the profitability of the gigafactory to produce a car that is desirable enough to gather hundreds of thousands of back orders. This is probably the only way to make a proper sedan-like 5 door with a 200 mile range.

Tesla has said the M3 won't be aluminum. Considering Tesla bough a tool and die shop, the car is likely conventional. BMW spent 3 billion in R&D to make the i3 lightweight. Tesla doesn't appear to have that capability. So it appears we have a heavy steel car that will need a lot of battery.

The i3 has a pitiful amount of battery cells.. only 18.8kWh usable. On the other hand, the Bolt is going to be mostly conventional also since it is based on the Gamma 2SC platform. It will have cells that are worse than Tesla's cells on the most important metric for BEVs - specific energy. Tesla has only said that the Model 3 won't be as extensively aluminum as the Model S. There are still many gradations and processes that can make the Model 3 lightweight while reducing the aluminum content. That doesn't necessarily make it "heavy" like a Buick Encore (that the Bolt is based on) or a Mercedes B-class. There are new and cheaper lightweight steels as well as low cost but high strength aluminum advances since the Model S was first shown in 2011. Since Tesla is clean sheeting it, they are free to make whatever decisions that are necessary. This is unlike other automakers that share platforms between many projects that hinder the design effort of any particular project.

GM, Nissan, and BMW will ship BEVs with much less than 20% margin and most people don't like the way those cars look. The bar that Tesla has to achieve with the Model 3 is not all that hard when you look at the rental 2016 BMW 328i I'm driving around or the BEV competition. It doesn't have to look like an Aston Martin or i8 to achieve desirability that makes it production constrained for years upon years.

When does the gigafactory ramp to significant volumes? Musk has said repeatedly that the M3 needs the gigafactory.

To be clear, Tesla has stated over and over that they need the Gigafactory to be operational, some advances in the batteries, and a shrinkage of the Model S. The first phase of the operational Gigafactory is apparently around 1/5th the total plant. The biggest advance of the Gigafactory is the integration of the supply chain while making cells at the highest level of scale to achieve cost savings. That's probably in the 3-5 GWh range to achieve that, so the first phase at around 7 GWh will provide the necessary volume. Next, we have already had one step change of the cells and Tesla has hinted at another coming, with maybe even one more before the Model 3 ships. The NMC cells that BMW, GM, VW/Audi, Nissan and others will be shipping in 2017/2018 are worse in specific energy than the cells Tesla used in 2012. Finally, the Model 3 doesn't need to be more complex to build... it needs to be cheaper to build, and cheaper to maintain for both warranty reasons and ownership ROI. The technology that Tesla is developing for the Model S/X will trickle down to the 3 at much lower cost. For example, the initial build out cost of the Model S head unit was undoubtedly very high. Subsequent orders, 5 years later at 20x the volume will be far cheaper. Tesla can then move the cost over to say, OLED display in the Model S at the original price and cheaper IPS LED in the Model 3 that corresponds to what we have in the S today. Repeat on any number of items within the vehicle.

 

[electracity]

My "data" is actually having worked in the industry, as opposed to internet expertise. A manufacturing cost accounting system isn't designed to capture all the expenses that go into producing new cars in an inexperienced company.

As I said before, I don't believe gross margin claims until a company is consistently profitable. The same will apply to the gigafactory, which Tesla will strive to make the margins look better than they really are at the early stages.

But at this stage I don't care much about gross margins. Tesla will never be high margin and high volume. So the only paths forward to either stay a niche manufacturer or to grow.

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The i3 has a pitiful amount of battery cells.. only 18.8kWh usable.......

Why is getting 75 miles on 19 kwh pitiful? I would say it's damn impressive. It also suggest that BMW can make a lightweight cars that kicks Tesla's butt.

Inexpensive BEV's look the way they do to keep cost and weight down. Yet somehow Tesla is going to produce a great looking M3 out of steel at high margins.

 

[chickensevil]

My "data" is actually having worked in the industry, as opposed to internet expertise. A manufacturing cost accounting system isn't designed to capture all the expenses that go into producing new cars in an inexperienced company.

As I said before, I don't believe gross margin claims until a company is consistently profitable. The same will apply to the gigafactory, which Tesla will strive to make the margins look better than they really are at the early stages.

But at this stage I don't care much about gross margins. Tesla will never be high margin and high volume. So the only paths forward to either stay a niche manufacturer or to grow.

"having worked in the industry" .... "internet expertise"

Well, first off, you don't know the backgrounds of the people posting their messages, just like we don't know your background. Anyone can make a claim... I could say I am the President of the United States. Who are you know know if I really am Obama or not? It would be that little thing that I asked for called "Data" that would solidify your claims of knowing how an industry works and that Tesla can or can not meet their own stated claims. You saying: "I worked in the industry therefore I know..." is meaningless.

 

[JRP3]

Why is getting 75 miles on 19 kwh pitiful? I would say it's damn impressive. It also suggest that BMW can make a lightweight cars that kicks Tesla's butt.

So far they can't. Weight is only part of the equation, aerodynamics is actually more important during long distance highway driving, which is when range really matters.

Inexpensive BEV's look the way they do to keep cost and weight down. Yet somehow Tesla is going to produce a great looking M3 out of steel at high margins.

BEV's look the way they do because all the other OEM's don't seem to want to make a good looking EV. There is no added cost for good looks. The Model S is arguably the best looking EV, it also achieved a superior cd of .24.

 

[mejojo]

Why is getting 75 miles on 19 kwh pitiful? I would say it's damn impressive.

My 2012 Chevy Volt got 42miles on 10.1 kWh. Not overly impressed with a newer/lighter(/ug-ug-uglier) platform getting 75 on 19.

 

[MitchJi]

They would need to borrow a lot of money to do that production. They would need to spend that money ahead of really knowing demand post early adopter. Unless gas prices surge, which seems unlikely in the U.S., rapidly scaling production seems like an unnecessary"bet the company" move.

They will be production constrained, even if they spend the money for higher production. Prius and Honda Hybrid buyers, plus a car that has performance that blows away the BMW 3 Series and comparable Mercedes, Acuras etc.

if their batteries are high margin (unlikely), they don't have enough production to take those margins in both cars and storage. High volume/ low price cars won't have high margins.

Why do you think that they won't make at least 20%30% on their batteries?

I know this goes against everything we have learned about Tesla's timing, but why do I get this gut feeling that the Model 3 may surprise us and arrive a bit ahead of schedule?

CC-about 55 minutes
Question:....with what you've gone through over the past few years in bringing this car to market, does this change your thinking at all over the longer term when you think about the pace that you will bring M3 to market....?

EM:
still aiming to have M3 in about 2 years, so but I think the cadence of future products should improve, as we have more resources to shorten the critical path on things like I was mentioning earlier like stamping tools and molding dies, the things that tend to drive our schedule, because from the time a car is designed it can take almost 2 years to get fully tooled up, that seems like a crazy amount of time to us and we want to try to reduce that significantly.

EM's statements above, combined with his decision to be more cautious about announcing schedules indicates that the design of the M3 is close to complete, and they have already taken and are currently taking steps to derisk potential M3 ramp issues.

 

[eloder]

Why is getting 75 miles on 19 kwh pitiful? I would say it's damn impressive. It also suggest that BMW can make a lightweight cars that kicks Tesla's butt.

By that logic, we should all be driving smart EDs or i-MIEVs at city speeds

Tesla is by far the most impressive EV out there right now, and it's also the least efficient. Why do you think the Model 3 will suddenly change into a highly efficient car when they clearly haven't needed to make an efficient car for the Model S or Model X relative to other models?

Also, I'd consider the base Leaf interior to be pretty nice and not too far from a ~$28k ICE. With Tesla scaling the battery costs/value down so much, I don't know why they couldn't come very, very close to a M3. The Model S after all doesn't come close to similar $75-$130k ICEs on the interior, but they have so many other features that very few people even care. Model 3 will be an amazing EV, not comparable to competitor cars, just like the Tesla.

 

[techmaven]

Why is getting 75 miles on 19 kwh pitiful? I would say it's damn impressive. It also suggest that BMW can make a lightweight cars that kicks Tesla's butt.

No... the amount of battery capacity is pitiful, not the efficiency. The BMW i3 hardly kicks Tesla's butt. Matter of fact, the i3's battery pack gravimetric energy density is a mere 81.7 Wh/kg. The 2012 Model S battery pack is 156 Wh/kg. If BMW tried put together 60 kWh of the i3's battery, it would weigh about 730 kg, or 1,600 pounds. Using BMW's i3's battery pack technology, a 85 kWh battery pack from BMW would weigh 1040 kg, or 2,300 pounds which is 92% heavier. That's a 1,100 pound penalty over the 2012 Model S's battery pack. That's comparing with Tesla's older chemistry, not what is going into the 90D or the Model 3. Samsung is likely to get the same NMC step that LG is getting, so even in the 2017/2018 timeframe, BMW's battery chemistry will have worse gravimetric energy density than Tesla's 2012 chemistry at the cell level. But by only putting in 19 kWh, BMW can keep the weight down but that also keeps the range down which limits the market and the utility of the vehicle. If you are only looking at efficiency metrics, then you can try comparing against electric motor assisted bikes. Those are far more efficient.

What really matters about range is the highway efficiency, as very few people are driving in city like conditions for 200+ miles at a time. The i3's highway efficiency is actually not all that great. The EPA highway rating is 111, while the Model S 85D is 106, a difference of 5%. Since the EPA highway testing has only an average speed of around 48 mph, the steady cruising efficiency at 70 or 80 mph may actually flip to the Model S's lead with superior aerodynamics. Making the jump between L3 chargers for long distance BEV travel is not just about a lightweight body, it's about aerodynamics, battery gravimetric energy density, and so forth.

Further, we have yet to see a high performance motor out of BMW, as the i3's motor is 125 kW (170 hp) and 250 Nm of torque. The i8's electric motor is 96 kW with 250 Nm of torque. BMW has yet to ship a high performance BEV drivetrain as the i8's drivetrain relies on the internal combustion engine for most of its performance. They'll likely have to change out the motor technology away from the hybrid motor they are using if/when they ship a performance BEV. Really, the i3 is a toy in comparison to Tesla's products when looking at BEV technologies.

It simply isn't possible for BMW to build a 250 mile EPA range BEV that competes directly against the Model S using the technologies they have shipped thus far.

 

[electracity]

I never compared the i3 to the Model S.

My point on BMW is that the i3 is a carbon fiber body on an aluminum frame at the M3 price point. When they choose to build a real EV sports sedan, it will likely be of similar construction.

Tesla makes no claim of substantially superior battery chemistry that I have seen. When BMW gets serious about EV I'm sure they will buy or make what they need. The chance that Tesla has superior battery technology to Panasonic is slim to none.

 

[drinkerofkoolaid]

I strongly suggest everyone watch these 2 videos. Both videos are relevant for anyone interested in the environment, and are especially important for anyone who cares about why the public should be very involved in climate change policy, and investments in sustainable technology.

The website I linked above the video provides additional information. The comparisons between the lead industry, the plastic industry, and the oil industry should get a lot more attention.

Looney Gas and Lead Poisoning: A Short, Sad History

This video, should have far more than 172 views.
Panel Discussion: The Industrial History of Denial - YouTube

This video should have far more than 830 views.

Time to Wake Up: Exxon, RICO, and the Right-Wing Tempest - YouTube

 

[hockeythug]

None of this is short-term TSLA price related. Please take your BMW vs Tesla debates elsewhere.

 

[techmaven]

My point on BMW is that the i3 is a carbon fiber body on an aluminum frame at the M3 price point. When they choose to build a real EV sports sedan, it will likely be of similar construction.

Tesla makes no claim of substantially superior battery chemistry that I have seen. When BMW gets serious about EV I'm sure they will buy or make what they need. The chance that Tesla has superior battery technology to Panasonic is slim to none.

I'm not sure you've been paying sufficient attention. Again, 19 kWh of battery. At $325/kWh, it cost them $6,200 for the cells. Tesla is paying less than half that. They can hit that price point on the i3 partially because they put a pitiful amount of cells into the i3.

Even if they managed to secure the same price point as GM did with LG, they'd still be chasing Tesla on cost as well as gravimetric energy density. They'd better hope that CFRP gets them a sufficient edge. At the moment, the production levels are still quite low. We'll see what it means to scale up. Also, CFRP is not recyclable. It's all throw away. For the Model 3 and its competitors in the 2017/2018 timeframe, it's about the best gravimetric energy density at the lowest price and produced in sufficient quantity. BMW is likely to lose on all 3 key metrics.

Tesla and Panasonic are working together - and no one else seems to be willing to follow down that path except for Audi with the hand built quantities of the R8 e-tron. At the moment, these automakers including BMW treat BEVs as a side show with PHEVs dominating their path. That means emphasizing the wrong parts of the EV drivetrain. The motors are not the same, the battery chemistry is not the same, and even the charging standards and pressures are not the same. Tesla leads in this regard and thus far, we haven't seen anyone step up to compete in a real way.

 

[madodel]

Why is getting 75 miles on 19 kwh pitiful? I would say it's damn impressive. It also suggest that BMW can make a lightweight cars that kicks Tesla's butt.

Inexpensive BEV's look the way they do to keep cost and weight down. Yet somehow Tesla is going to produce a great looking M3 out of steel at high margins.

You are joking right? The BMW is butt ugly and has crappy range. It is like they really didn't want to build something that could succeed. If you think this is somehow competition for Tesla, and you claim to be an auto expert, you really need to look into a new career.

 

[aznt1217]

You are joking right? The BMW is butt ugly and has crappy range. It is like they really didn't want to build something that could succeed. If you think this is somehow competition for Tesla, and you claim to be an auto expert, you really need to look into a new career.[/QUOTE

Lol it's very simple. Model S has been around since 2012. It is now nearly 2016, where are the butt kickers? Proof is in the pudding.

 

[electracity]

I'm not sure you've been paying sufficient attention. Again, 19 kWh of battery. At $325/kWh, it cost them $6,200 for the cells. Tesla is paying less than half that. They can hit that price point on the i3 partially because they put a pitiful amount of cells into the i3.

I don't care about the battery in the i3. I doubt batteries will be a major differentiator between manufacturers once once the EV market really gets going. The i3 is a niche city car they used to do a lot of R&D in conjunction with a carbon fiber equipment manufacturer. If they hit the 5 minute per body rate they claimed, this will be significant for building EV.

 

[Causalien]

My "data" is actually having worked in the industry, as opposed to internet expertise. A manufacturing cost accounting system isn't designed to capture all the expenses that go into producing new cars in an inexperienced company.

As I said before, I don't believe gross margin claims until a company is consistently profitable. The same will apply to the gigafactory, which Tesla will strive to make the margins look better than they really are at the early stages.

But at this stage I don't care much about gross margins. Tesla will never be high margin and high volume. So the only paths forward to either stay a niche manufacturer or to grow.

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Why is getting 75 miles on 19 kwh pitiful? I would say it's damn impressive. It also suggest that BMW can make a lightweight cars that kicks Tesla's butt.

Inexpensive BEV's look the way they do to keep cost and weight down. Yet somehow Tesla is going to produce a great looking M3 out of steel at high margins.

"having worked in the industry" .... "internet expertise"

Well, first off, you don't know the backgrounds of the people posting their messages, just like we don't know your background. Anyone can make a claim... I could say I am the President of the United States. Who are you know know if I really am Obama or not? It would be that little thing that I asked for called "Data" that would solidify your claims of knowing how an industry works and that Tesla can or can not meet their own stated claims. You saying: "I worked in the industry therefore I know..." is meaningless.

I am assuming he is talking about the that old stocks like screws and bolts for older versions become useless as soon as the new process comes online.

Yes, in an old outdated accounting system, these things are usually held at value until it is disposed of. In GAAP, the values should depreciate over time. Some fraudulant owners will hold these values at market price until it is disposed, but most big company will not.

If this is not what you have in mind, you can point out which specific places you think might not be tracked well and we can debate about it. The corporate world is filled with wonderful loopholes so you need to be more specific.

 

[eloder]

I don't care about the battery in the i3. I doubt batteries will be a major differentiator between manufacturers once once the EV market really gets going. The i3 is a niche city car they used to do a lot of R&D in conjunction with a carbon fiber equipment manufacturer. If they hit the 5 minute per body rate they claimed, this will be significant for building EV.

The battery is going to be the limiting factor for EVs for quite a while. Just keep in mind that a very large number of gigafactories would be needed to completely replace ICEs with EVs and we don't even have one yet.

I'm not sure I see the advantage over the i3 body over just using aluminum. Carbon fiber does not appear to have a cost or weight advantage over aluminum if the i3 is the best they can do. Carob fiber doesn't even appear to have any sort of advantage whatsoever over the smart electric drive, one of the most econo of econo-EVs out there.

The smart electric drive weighs 2000 pounds and has a 16.X kwh battery and can be purchased for nearly $20k less. Why is the i3 a good model of engineering compared to any current EV? Why's the i3's engineering a threat to Tesla, now or in the near future?

 

[Drax7]

Electracity, go ahead and buy BMW, forget tesla. Do what makes you happy .

 

[mmd]

The smart electric drive weighs 2000 pounds and has a 16.X kwh battery and can be purchased for nearly $20k less. Why is the i3 a good model of engineering compared to any current EV? Why's the i3's engineering a threat to Tesla, now or in the near future?

Smart ED is a two seater. A lot of people (like me) won't buy it no matter what it costs. BMW i3 is a 4 seater, and much closer to meeting more people's needs. More BMW i3 are sold with the REX than without. The REX allows long distance travel with fast refills, while driving pure electric most of the time. It doesn't matter what we say here. BMW i3 is selling in decent volumes too.
EV Sales: World Top 10 September 2015 (Updated)
Worldwide position: Tesla no. 2 with 32995 sales, BMW i3 no. 5 with 18040 sales