Tesla mentioned in the past that service centers were intended not to generate profits. Have they publicly stated going against that goal?
At the very least though, no dealer middleman will definitely be huge just due to the lack of a dealer cut.
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Tesla mentioned in the past that service centers were intended not to generate profits. Have they publicly stated going against that goal?
At the very least though, no dealer middleman will definitely be huge just due to the lack of a dealer cut.
jhm
Well-Known Member
At the risk of staying off topic, I want to point out something really important that I did not fully comprehend until today.
When we invest in solar, it is customary to think about how much energy a solar system will produce and the value of that energy. The value of solar energy is primarily understood in how much value the asset produces, not a consumer good to satisfy some sort of subjective craving. Likewise, the value of a Powerpack is derived form the electricity and power management it can deliver at a lower cost than other options. A Powerpack creates economic value.
So as Tesla comes to offer autonomous vehicles, we move from a consumer good where value is derived from hedonic attributes of the product to an income producing asset. An automous vehicle can be placed into a transportation fleet like Uber and earn an income. Thus, a minimal value for such an asset is based on the income that it can produce, which may well outstrip the consumer value private auto buyers may place on it. Quite literally an autonomous vehicle can produce the income that a professional driver would have commanded. So Model 3 is not merely a car that some consumers may be willing to pay $40k or $50k for, it is an asset that generates more than $40k per year in income. As such, this asset is easily worth over $200k though no consumer would be willing to pay as much for it as a private auto. This is a truly startling realization. Once one grasps it, you can see why Uber would be willing to by every Model 3 Tesla can build.
We can see now why there will be a race among automakers to develop autonomous vehicles. Even a conventional car with autonomy can create an income comparable to one or more professional drivers, so an income over $40k per year. While this may not be the ultimate car in this space, these cars will put a lot of drivers out of work and drive down fares. So while EVs can take fares even lower, there will be a lot of money to be made with intermediate solutions as well. Basically we should start to see fares decline exponentially, perhaps 15% per year, until EVS saturate the market, having squeezed out all ICE fleet cars and EVs that have poor durability.
This is a radical new vision for automobiles. It does cause one to question what will happen to private ownership. But personally its got me worried about whether I'll ever be able to afford a Model 3. Even if Tesla were to sell me one for $40k, Uber would offer me twice as much to buy it from me because they would be able to make at least a 150% return on their investment in my slightly used Model 3. How can I afford not to sell to Uber? This is a strange world indeed.
Just remember this. Autonomy transforms an EV into an income producing asset. This changes everything.
This is much appreciated.
Much of what I have shared during what I regard as a hiatus of uncertainty before solid numbers start pouring out of MS MX and TE has been in regard to big picture stuff. This is assuredly in-game as far as Tesla, the auto industry at large and further afield to things like Apple. These observations are a first principles work-up of future history and while occasionally counter-intuitive I do not believe there is a significant scope for error in anything I have shared in regards to the prospects for the business or its competitors.
Today TSLA basically tracked the NASDAQ which basically tracked the DOW.
Just keep in mind that the TSLA stock price will track the progression of the business through the filter of a consensus optimism vs pessimism (greed and fear). As a psychology professor once said in a lecture that will resonate with me for all time: Psychological facts are still facts.
The absolute courage to act - to go all-in on the basis of a first principles work-up along the lines of the posts I have shared is the domain of people like Elon Musk. This is a confirmed demographic of one and Musk is not a short-term investor.
The good news is that Tesla (the business) is a purely logical entity that plays just about perfect 3D chess with the moves available to it on the 3D chess board. The truth of what those moves are and the truth of the effect on the opponent's game are exactly the same truth that really anyone can see for the looking. Musk included. Musk's genius is the ability to see the truth and act on it. Not in the making of stuff up.
As a result analyzing Tesla is nothing like as hard as the interaction of a typical greed and fear driven consensus-run corporation reacting with a greed and fear driven consensus-priced market (absurdity to the second power). With TSLA and the market there is absurdity only to the first power which is way better. It is actually a little better even than that because IMO there is a relatively sizeable hard core of philosophically driven buy and hold support which on the retail side includes many Tesla vehicle owners and an influx of both the very young investor and grandparents investing in trust for their grandchildren. On the institutional side there are buy and hold investors like Fidelity and DFJ with privileged access and regards Insiders there is of course Musk himself. This reduces the market irrationality considerably when compared with a typical publicly traded stock.
One thing I can say with the same kind of certainty as the sun rising in the East is that a short term investment in TSLA is a much better idea than a long term investment in any of its competitors - and that remaining invested in F, TM and GM etc is a really bad idea. A long term investment in TSLA would be a very good idea.
This is a game that is eminently winnable.
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Man... Between Fidelity upping their stake in TSLA and Julian's analysis I think having 2% of my financial portfolio in TSLA is not nearly enough... #Decisions #Decisions
WTF is this twitter feed...looks super spammy and I can't get any context on where this was spotted.
If it's anything legit, I would bet it is not Model 3 but rather a major refresh of S. Looks stunning.
Sorry to hear that you need an (uninsured?) repair at all but thank you for bringing this up because it reminds me of something that I think is highly relevant to the outlook for the business.
Battery upgrades.
I suspect that over the long haul that every 3-5 years until 400+ miles is commonplace, Tesla will come up with a battery upgrade offer that will extend the range and even the power of Model S / X / 3 by an appreciable amount, increasing the value of the refreshed and upgraded vehicle by more than the balance of a trade-in for the old pack considering the new pack will have a considerably reduced cost per KWh and the old pack an ongoing value for use in storage and eventually recycling.
The net effect I think will be a very high percentage take up worth at the limit in revenue terms 20-25% of the entire value of the fleet or currently $1.8 to $2.25 billion in battery upgrade sales that can presumed to be outstanding once the Gigafactory is up and running and yielding meaningful energy density and cost reductions. This upgrade path could be repeated possibly more than once in the vehicle's lifetime.
(This $1.8 - $2.25 bn is based on a back of the envelope $9 billion value of the fleet 100K vehicles x $90K average x 20-25%).
Note: This is nothing to do with bearish nonsense about costly batteries needing replacing. Except in rare warranty cases they won't need replacing. This is about the opportunity to take a 265 mile range P85 up to 350 or 400 miles of range with a battery trade-in for a net cost of upgrading that is most likely less than the resale value that the battery refresh and range upgrade will add to the vehicle. i.e. an incredibly compelling offer.
Pretty sure there was a TMC thread on this pic a few months back.
Here's the thread:
Model X with nose cone in video?
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FredTMC
Model S VIN #4925
This is a Model X, right? Look at those gull wing doors.
Where's the Model 3? Model 3 won't have gull wing doors
Johan
Ex got M3 in the divorce, waiting for EU Model Y!
He means the car in the background. Which is probably not a Model 3. Maybe S facelift?
FredTMC
Model S VIN #4925
Yeah, I saw that too. Looked like a regular Model S.
I doubt Model 3 will have that model S style BLACK grill. Likewise a Model S facelift will look similar to MX grill (IMO)
JenniferQ
Active Member
Nah, that's a prototype X guys. Remember that wide angle camera lenses distort towards the side.
The X got a nose job pretty close to the launch and I am pretty sure the S facelift and the 3 will no longer have the black cone.
This may add a little oomph to Musk's statement about summoning a car from NY to LA:
Obama Will Speed Self-Driving Car As Google Partners - Investors.com
Obama Will Speed Self-Driving Car As Google Partners - Investors.com
ZachShahan
Active Member
ev-enthusiast
Active Member
Ghosn answering question about OTA update tech at 5:30mins in incredible detail: 'everybody wants it', 'economical benefit', 'needed for autonomous driving to prevent old cars with older autonomous driving tech from quickly depreciating'!
Tesla again ahead of the pack and Ghosn honest enough to admit this publicly, big credits for Ghosn!
And again, please nobody falling for the idea implementing OTA updates for a traditional car manufacturer is an easy task. The entire HW and SW architecture as well as the SW upgrade packaging and SW development process has to support the ability to do frequent updates. This is a project that will take years for traditional car manufacturers to fully implement, way too slow for the pace of the autonomous driving revolution currently happening to be ready in time!
Zach, thank you so much for posting this valuable link!
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Runarbt
Active Member
Tesla need to copy Uber. Let us owner activate "share modus", and rent out out cars during certain times of the day. When i work, my car can drive around makkng money, and tesla can have their share, as long as it is charged up and ready for me when i get of work.
why let uber get the market at all? Autonomous driving as a service can be a pure Tesla motors thing.:-D they have the software, the cars and a loyal group of owners who would be happy to lend out their cars i think. especially if they can earn back the cost of the car in a year or two.
ZachShahan
Active Member
Thanks for highlighting those points.
I'm definitely a Ghosn fan. Love the direct, honest way he talks, and think he has very good vision. He's a genuine colleague of Musk, imho. However, despite reiterating support for EVs and Nissan-Renault's leadership in that realm again, he also spoke a bit bearishly about the market and consumer demand. Seems to be more bearish in the past year or two -- probably because sales didn't take off as much as he projected back when the LEAF launched. Also consistently ignores the huge drive quality and convenience benefits of EVs when he talks about them.
Overall, he still struggles (it seems) with the challenge of running giant companies that have huge legacy ICE investments.
He has a clever and interesting response regarding Sergio's honest (if not proactive) stance on EVs eating into automakers' limited competitive advantage (something covered very directly here: #1 Reason Why Big Auto Isn't Big On EV Revolution?). But he doesn't really acknowledge that the transition is a huge threat even to Renault-Nissan. (Naturally, he can't, and I think he did about as well with that question as anyone in his shoes could, but it did display how differently these big automakers are basically forced to approach the EV market.)
As part of that, it seems he has transitioned to a "slow EV growth" ideology. He just doesn't have the bullish enthusiasm it seemed he had in the past. And he focuses a lot on the importance of charging but doesn't acknowledge that Level 3 charging just won't cut it (particularly once the Model 3 is out there). It was exciting to hear him say that vendors (iirc) are pitching technology to charge a LEAF to 80% in 10 minutes rather than 30 minutes (iirc), but makes it sound like this is just at an extremely early stage right now and Nissan isn't investing in a super-fast charging network yet... which means it is WAY behind Tesla. Tesla Superchargers are about twice as fast at charging as the DC Fast chargers BMW & Nissan are partnering on, not to mention better integrated. Superchargers just barely make road trips convenient/acceptable to the masses (not just EV-enthusiast early adopters). DC fast chargers just aren't going to cut it.
While he said Nissan holds its plans close to its chest until the car/tech is about ready to hit market, I get the impression that even if Nissan unleashes a 200+ mile EV this year (a slim possibility), it will suffer from the same thing the Chevy Bolt suffers from -- impractical use for long-distance road trips (despite better practicality for regional trips) and limited performance/tech/appeal. People will hold out another year for the Model 3 if they can.
To me, the whole thing keeps Nissan (& GM, Mitsubishi, & BMW) on a 2nd tier well below Tesla, and I think shows again there's no real "disruption" to TSLA coming down the road from major automakers.
And I really don't worry about Apple. If it does bring an EV to market, it's still years out, and it's more likely to boost Tesla (imho) via a raising of all the boats. Have a hard time thinking Apple will bring a car to market that is more competitive than a Tesla in the coming decade.
I won't reiterate my point for the next month or few, but yeah, just eager to see those production/delivery and $$ numbers grow, and investors/traders who follow less closely get their shot of espresso about the company/stock.
jhm
Well-Known Member
Tesla need to copy Uber. Let us owner activate "share modus", and rent out out cars during certain times of the day. When i work, my car can drive around makkng money, and tesla can have their share, as long as it is charged up and ready for me when i get of work.
why let uber get the market at all? Autonomous driving as a service can be a pure Tesla motors thing.:-D they have the software, the cars and a loyal group of owners who would be happy to lend out their cars i think. especially if they can earn back the cost of the car in a year or two.
Right. My point is that if Tesla sells an autonomous car too cheaply, then the likes of Uber, Lyft, taxis, etc.will buy them all up. It would help if Tesla had its own service, but the fundamental economic problem is pricing the car well below the value of a vehicle in ridesharing service. The idea that Tesla customers are going to reap incredible profits here is naive. The cars will be bought up to what they are worth, not sold at a deep discount. As shareholder, we would not want Tesla to sell at a deep discount. Basically, reservations and orders would be filled up with people who simply flip the car into service once they acquire it, and Tesla leaves massive money on the table.
stealthology
Member
Below is my attempt to model Model X ramp-up/production for Q1. I'm thinking out loud here; your feedback is appreciated. I'm probably pretty off base here, and there's probably a better way to do this, but I wanted to write up my thoughts.
I think the ramp up in Q1 is one of the largest, if not the largest upcoming catalyst. I wonder if The Street will get a little impatient with Tesla if they have to wait until Q2 to see steady state X production (800+/week).
Model X Ramp-up
Assumptions:
Since 500 cars were produced last year, (5760 - 500) = 5,260 P90D's to produce in this initial run before switching production to 90D. TeslaHQ said a couple days ago that you'd likely get your P90D in 3-4 months if you configure it now, and since all US reservation holders have been invited to configure, we can probably stick to that. Lets give Tesla 4 months, first week of Jan. - last week of April to finish producing the 5,260 P90D's (16 weeks). 5,260/16 = 329/X's per week, on average. So the first few weeks of production could be more like 2-300/week, and I guess there's potential the last week could be something crazy like 800+. Changing up the numbers a little can really impact the weekly rate.
I'm also monitoring the Model X forum here and the Model X Facebook page, it looks like early/mid-February is when we can expect the first non-Sig X's to be delivered. If there's about 1,700 Sigs/Founders/FBR's total, and 500 X's were produced last year, that's about 1,200 Sigs/Founders left to produce in January. I guess it's possible they could also produce some inventory/service center test drive cars.
I think the ramp up in Q1 is one of the largest, if not the largest upcoming catalyst. I wonder if The Street will get a little impatient with Tesla if they have to wait until Q2 to see steady state X production (800+/week).
Model X Ramp-up
Assumptions:
- 24,000 US X reservations
- 60% conversion rate (14,400)
- 40% of these X orders will be P90D (5,760)
- As of Jan 12th, it appears ALL US reservation holders have been invited to configure
- Tesla HQ telling PeterK on 1/11 it'll take 3-4 months to get a P90D; this agrees with the configurator saying 90D deliveries begin mid 2016
- 500 X's were produced in 2015, ended Dec. @ 238 X's/week
Since 500 cars were produced last year, (5760 - 500) = 5,260 P90D's to produce in this initial run before switching production to 90D. TeslaHQ said a couple days ago that you'd likely get your P90D in 3-4 months if you configure it now, and since all US reservation holders have been invited to configure, we can probably stick to that. Lets give Tesla 4 months, first week of Jan. - last week of April to finish producing the 5,260 P90D's (16 weeks). 5,260/16 = 329/X's per week, on average. So the first few weeks of production could be more like 2-300/week, and I guess there's potential the last week could be something crazy like 800+. Changing up the numbers a little can really impact the weekly rate.
I'm also monitoring the Model X forum here and the Model X Facebook page, it looks like early/mid-February is when we can expect the first non-Sig X's to be delivered. If there's about 1,700 Sigs/Founders/FBR's total, and 500 X's were produced last year, that's about 1,200 Sigs/Founders left to produce in January. I guess it's possible they could also produce some inventory/service center test drive cars.
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