Short-Term TSLA Price Movements - 2015

[ggies07]

They are production-limited right now. So it makes no sense to sell a cheaper, lower margin version.
Once that changes I expect to see a price reduction or a higher trim level for the same money.

Tesla doesn't raise prices: Bears: "Tesla is obviously struggling with demand. If they are so constrained, why not raise prices or at least enough to keep up with forex?"
Tesla raises prices: Bears: "Tesla is a rotten company that only wants to make money by selling toys to rich. If they really cared about promoting EV's they would lower prices bringing them into reach of more buyers"

My initial thought had nothing to do with production or demand, it had to do with the "secret" 3 phase plan by Elon/Telsa. It's laughable that this is supposed to be the "mid-range" affordable car (2nd phase), yet they keep upping the prices.....whatever guys As long as they can get the Model 3 down to $35,000 or below and have it on time.

 

[FANGO]

Interesting thought: Met someone at the Formula E race who had just gotten his 60, and it seemed like it went pretty quickly from ordering to delivery, like I think he only waited a bit over a month? That was surprising and actually a tiny bit worrying to me that the wait time was that low all of a sudden, but I guess this 70 announcement may partially explain that.

 

[daniel Ox9EFD]

If there was a new battery chemistry behind this, it would be the best of all news. This could be the testing ground before whatever replaces the S85. S100?

 

[pGo]

If there was a new battery chemistry behind this, it would be the best of all news. This could be the testing ground before whatever replaces the S85. S100?

Anyone remembers S60D range (which lasted only on paper for a few days after the D announcement). May be, we can draw something if that datapoint is known.

 

[GardenEye]

We seem to be bouncing around $208 this afternoon, which may be viewed either as a nice pop from the ~$180 levels of late March, or as an anemic rise relative to the >$250 levels of last November. What is the market looking for to regain those heights?

Education - The recent news is irresistible. I think that when all the news filters through and is understood, the short analysts and commentators will (or should be) held to account.
The game has surely changed. At the end of the month Tesla will reveal it has three potentially lucrative financial streams - Motors (and leasing), energy storage, battery production. Each of these are multi billion dollar industries in their own right. The X is real, the technology is adapting at a staggering rate, there is no credible competition, the general public are desperate for this sort of innovation - the gigafactory is being built - fast.
I wasn't around for the gains from 2/3 years ago - but the atmosphere around TSLA does seem to have changed over the last week form several months of gloom to one that smells extremely Spring like and Rosy. Considering the glorious Spring weather here in the UK, I'm wearing shorts.

 

[30seconds]

apparently the 70D is already in the wild

Warm Silver Pictures (aka Titanium)

 

[daniel Ox9EFD]

The market is slowly but surely reacting to the fact that the rate of innovation at Tesla is higher than other OEMs.

I still think TSLA is a high risk play, but that is due to the production scaling risks with model 3, and nothing shorter term.

 

[eloder]

My initial thought had nothing to do with production or demand, it had to do with the "secret" 3 phase plan by Elon/Telsa. It's laughable that this is supposed to be the "mid-range" affordable car (2nd phase), yet they keep upping the prices.....whatever guys As long as they can get the Model 3 down to $35,000 or below and have it on time.

CPO cars will be used to hold this gap over until Model 3.

CPO cars in some cases have longer warranties than new cars from reports so far. I imagine a Tesla is going to have extremely high reliability as it ages compared to ICE cars.

I have no worries about about Tesla's strategy and transition to mass market appeal.

 

[Curt Renz]

I've created a thread in the TMC Cars and Transportation forum regarding Fiat Chrysler spending $540 million to develop two new ICEs.

TMC thread: Back to the Past

Reuters article: Fiat Chrysler

While most replies should go to that other thread, those focusing on how this might affect the value of Tesla Motors can go here.

 

[drinkerofkoolaid]

Did Tesla move/remove the estimated wait times?

 

[maoing]

I think the order wait time was shrinking through Q1 by 2-3 weeks. So Elon threw out a serial of weapons to stimulate demand, ending range anxiety, autopilot and today's 70D. Note the 70D delivery date is May for US, so I guess there is quite some production capacity margin in Q2.

Interesting thought: Met someone at the Formula E race who had just gotten his 60, and it seemed like it went pretty quickly from ordering to delivery, like I think he only waited a bit over a month? That was surprising and actually a tiny bit worrying to me that the wait time was that low all of a sudden, but I guess this 70 announcement may partially explain that.

 

[JRP3]

CPO cars will be used to hold this gap over until Model 3.

CPO cars in some cases have longer warranties than new cars from reports so far. I imagine a Tesla is going to have extremely high reliability as it ages compared to ICE cars.

I have no worries about about Tesla's strategy and transition to mass market appeal.

Exactly this. I was starting to ponder what the CPO market might do to the MS 60, but Tesla obviously already had the answer before I asked the question. Love this company.

 

[daniel Ox9EFD]

I think the order wait time was shrinking through Q1 by 2-3 weeks. So Elon threw out a serial of weapons to stimulate demand, ending range anxiety, autopilot and today's 70D. Note the 70D delivery date is May for US, so I guess there is quite some production capacity margin in Q2.

Makes sense.

From reading around MB S class sells around 50k a year. So a reasonable expectation would be for sales long term to be around that value. Add another 50k or so for the X.
So even if demand is not peaked out - they should at least see some saturation, assuming a nice log curve for rate of saturation.

 

[Papafox]

I think the order wait time was shrinking through Q1 by 2-3 weeks. So Elon threw out a serial of weapons to stimulate demand, ending range anxiety, autopilot and today's 70D. Note the 70D delivery date is May for US, so I guess there is quite some production capacity margin in Q2.

I observed that the wait time was relatively short recently for non-D cars and higher for the 85Ds. Tesla gave priority to the P85Ds, however, because of the high margins. I suspect Tesla was cranking out the non-Ds fairly quickly but had some sort of supply constraints on how quickly the D models could be created. The slower rate of production for the Ds is likely the explanation for why the non-Ds were moving through the line so quickly. I know there were lamentations about the longer wait times for the Ds. If Elon has changed the base model from 60 to 70D now, those supply constraints must be under control now and dual motor Model S cars will become the majority of production now.

 

[Robert.Boston]

Makes sense.

From reading around MB S class sells around 50k a year. So a reasonable expectation would be for sales long term to be around that value. Add another 50k or so for the X.
So even if demand is not peaked out - they should at least see some saturation, assuming a nice log curve for rate of saturation.

The Model S addressable market is much larger.

The MB S class competes, more or less head-to-head, with the Audi 8L and BMW 7-series, so I'd be inclined to aggregate those cars sales to determine the relevant market for premium large sedans. Then you need to add in people who would buy the Model S for its green attributes but who would never buy an MB S (I'm in that group). Then you need to add in people who buy the Model S for its performance, which far outstrips the S-class/8L/7-series.

Weighing all these segments, I would place worldwide "steady state" sales of the MS around the 100k mark until the introduction of the Model 3. I believe there will be a marked drop in Model S sales then, when people (like me) who wanted to drive a very competent BEV but don't need the sheer size of the Model S leave the Model S market.

 

[daniel Ox9EFD]

The Model S addressable market is much larger.

The MB S class competes, more or less head-to-head, with the Audi 8L and BMW 7-series, so I'd be inclined to aggregate those cars sales to determine the relevant market for premium large sedans. Then you need to add in people who would buy the Model S for its green attributes but who would never buy an MB S (I'm in that group). Then you need to add in people who buy the Model S for its performance, which far outstrips the S-class/8L/7-series.

Weighing all these segments, I would place worldwide "steady state" sales of the MS around the 100k mark until the introduction of the Model 3. I believe there will be a marked drop in Model S sales then, when people (like me) who wanted to drive a very competent BEV but don't need the sheer size of the Model S leave the Model S market.

But subtract people who will never buy a Tesla due to Lack of engine noise/Range/Brand loyalty/General dislike for EVs/....
Anyway, 50k is a nice conservative number. I think Tesla would be wise to have a higher range model, and probably will. The reason for optimism for me at least is not how lucrative the EV market is at the moment, but the learning/innovation speed.

 

[MikeC]

But subtract people who will never buy a Tesla due to Lack of engine noise/Range/Brand loyalty/General dislike for EVs/....
Anyway, 50k is a nice conservative number. I think Tesla would be wise to have a higher range model, and probably will. The reason for optimism for me at least is not how lucrative the EV market is at the moment, but the learning/innovation speed.

50k is an incredibly conservative number. They're at 50k right now (2015 guidance) and even California is not close to saturated. If you look at some of the "what did you drive before?" threads, you'll see that many owners (if not most) did not drive luxury cars and would never have spent $60k+ on a different car. The only real threat to Model S sales are the Model X and 3.

 

[jhm]

They are production-limited right now. So it makes no sense to sell a cheaper, lower margin version.
Once that changes I expect to see a price reduction or a higher trim level for the same money.

Cheaper does not mean lower margin. The margins on options are probably higher than the drivetrain. So right-sizing the battery et al leaves the customer less financially constrained to spend more on high margin option. Thus, the well optioned 70D could have a higher GM than a modestly optioned 85D.

Regarding supply constraints, if the supply constant is battery cells, then making more cars with fewer cells per car is one way to optimize revenue. Ignoring option, for the same amount of kWh, you could sell 70 85Ds for $85k each and get $5.95M in revenue. Or you could sell 85 70Ds for $75k each and get $6.375M in revenue. Thus for the same supply of batteries 70D generate 7% more non-option revenue than 85D. So if the GM on non-option revenue is identical, then selling 70D can generate more gross profit per kWh. Likewise, Tesla can sell more leather seats and panoramic roofs on 85 70Ds then on 79 85Ds. The same argument applies to most options.

So the 70D has the potential to generate more gross profit per kWh on both non-option and option revenue. The revenue and GM problem with the S60 could simply have been too few sales limiting the revenue per kWh supply. So the 70D could be just the ticket to drive up revenue per kWh and GM.

 

[Curt Renz]

I've created a thread in the TMC Electric Vehicles forum regarding a halt in production of the current version of the Chevy Volt.

TMC thread: GM Unplugs

WSJ article: Volt

While most replies should go to that other thread, those focusing on how this might affect the value of Tesla Motors can go here.

 

[SteveG3]

I think the order wait time was shrinking through Q1 by 2-3 weeks. So Elon threw out a serial of weapons to stimulate demand, ending range anxiety, autopilot and today's 70D. Note the 70D delivery date is May for US, so I guess there is quite some production capacity margin in Q2.

maoing, are you suggesting that autopilot, the 70D, and the new software in 6.2 to address range anxiety were some kind of plan hatched a few months ago to address a possible demand issue you suspect surfaced at that time?