Short-Term TSLA Price Movements - 2016

[ggr]

"Lack of scale"... the Model S already has more scale than the Bolt is ever projected to!

I agree that the battery price is a big deal, but I really don't think the investing public, present company excepted, understands enough for this to change the stock price. I'd like to be surprised though.

 

[Johan]

"Lack of scale"... the Model S already has more scale than the Bolt is ever projected to!

I agree that the battery price is a big deal, but I really don't think the investing public, present company excepted, understands enough for this to change the stock price. I'd like to be surprised though.

Give it a day or two to marinate. I'm already set with quite a bit of June calls and a small speculative bet of weeklies.

 

[Rarity]

Is this really new information? If cell costs are going to be <$100/kWh after a 30% reduction and annual incremental reductions, can't we back out to the less than $190/kWh current pack figure?

 

[austinEV]

Is this really new information? If cell costs are going to be <$100/kWh after a 30% reduction and annual incremental reductions, can't we back out to the $190/kWh current pack figure?

This is a bombshell for (edit: we ) obsessive Tesla geeks and their models, but I don't know why the market would care.

 

[vgrinshpun]

Give it a day or two to marinate. I'm already set with quite a bit of June calls and a small speculative bet of weeklies.

You might be right on the timing, but I am just incredulous that there is no reaction form the so called "smart" money. Can't they put simple facts together: the PowerWall and PowerPack price of $470/kWh vs. current "all-in" pack costs $190/kWh, going down to $133/kWh?

Are they deaf? Can't hear the kaching this can produce??

 

[Johan]

This is a bombshell for (edit: we ) obsessive Tesla geeks and their models, but I don't know why the market would care.

You have to think like this: many analysts don't believe their pack cost to beat this level. Some's disbelief is at the level of not believing it even after the company's official spokesperson says it's so. This means a large share of the market had their pack cost estimated at higher levels. For this reason the market as a whole is currently pricing TSLA wrong. Now that Tesla's pack cost has been divulged by Tesla themselves there doesn't have to be any more uncertainty surrounding this variable. Given some time this means the market will incorporate this information in to its valuation of TSLA and I don't see any way it won't result in a higher valuation (all other things kept unchanged).

 

[jesselivenomore]

You have to think like this: many analysts don't believe their pack cost to beat this level. Some's disbelief is at the level of not believing it even after the company's official spokesperson says it's so. This means a large share of the market had their pack cost estimated at higher levels. For this reason the market as a whole is currently pricing TSLA wrong. Now that Tesla's pack cost has been divulged by Tesla themselves there doesn't have to be any more uncertainty surrounding this variable. Given some time this means the market will incorporate this information in to its valuation of TSLA and I don't see any way it won't result in a higher valuation (all other things kept unchanged).

Agreed. Which is why I would like some further confirmation from Tesla or at least listen to the call myself, because so far the only source has been streetinsider. It is very surprising that Tesla would divulge this info, especially so unceremoniously on some random UBS investors call.

 

[StapleGun]

Jon is skeptical about the <$190/kWh cost, as the raw material floor on current chemistries is ~$160 assuming 40% supplier margins.

This guy is claiming that a company who will be producing more batteries than the rest of the world combined won't be able to get a deal from suppliers of a commodity with less than a 40% markup?

 

[MitchJi]

Wow! this call-in by Jeff Evanson pretty much invalidated the whole "expert analysis" of the GM guy. I am just in disbelieve how he can be skeptical on the pricing that was point blank given by Tesla's head of IR? Based on what? Experience at GM? This is just preposterous.

The $190/kWh current all in cost of the pack, after 30% GF reduction will work out to $133/kWh and base 55kWh pack cost of $7,315...

Tesla and Panasonic have both emphasized that the 30% figure is conservative, and that it doesn't include "moderate, not big, not small" cell chemistry improvements. So the total cost reduction will be closer to 38-40%. $190 - 38% = $117 and Jeff said it's less than $190.

Thankfully this cane just in time. I was going to spend some time today explaining again why your $225 per kWh was impossibly high. It was already clear from the other information released publicly that $190 is the maximum price possible.

Whaaat??? Tesla spokesman saying <$190kWh? That is the single most important datapoint to have come out of TM in a very long time. I have to think he wasn't allowed to say that.

They have already said its about $200. This means that it's probably closer to $170-$180.

Information arbitrage situation guys. I'm going to try to trade this one with a short term outlook.

We already knew that. The difference is that it was publicly stated.

 

[Julian Cox]

UBS Sees Telsa's (TSLA) Model 3 As Unprofitable

Colin Langan who recently reiterated his sell rating apparently hosted a call with former GM engineer Jon Bereisa, who sees the Model 3's factory variable cost at $1510 above base price, which implies a breakeven price of $50k.

More interestingly, Tesla head of investor relations actually called in to dispute some of these claims with some possible new info. Most notably: "Jeff stated that the Model S's all-in pack cost today is already <$190/kWh and that the Model 3 will have a battery size below Jon's estimate of 60kWh."

Seeing that Colin is a frequenter of CNBC, I would not be surprised if this gets more press than the GS note(which got none as expected).

Good info. Thank you. But note that the media will have it as "Tesla disputes senior analysts claim that Model 3 will lose money below $50K" because that is the sensational message the paying advertisers want to hear and many of listeners will tune in for.

Also: GM's $145 KWh/Kg battery cost from LG already 23.6% cheaper than Tesla, only 6% to be gained from Gigafactory by 2020 if Musk can pull off 30% which experts have long disagreed is possible. Also GM Bolt beats Model 3 on battery capacity due to lower cell cost.

It's fabulous news for anyone that understands power density and energy density both volumetric and per Kg and what that means for vehicle performance and quality but the media does not and would not admit to if if it did. Do not treat this as a buying signal. That is my opinion.

 

[JBRR]

Good info. Thank you. But note that the media will have it as "Tesla disputes senior analysts claim that Model 3 will lose money below $50K" because that is the sensational message the paying advertisers want to hear and many of listeners will tune in for.

If they are disclosing their costs on a random UBS call, one would assume that they will follow up by disclosing this number in the May 4th ER. At that point the market will have to react, no?

 

[tanner]

Good info. Thank you. But note that the media will have it as "Tesla disputes senior analysts claim that Model 3 will lose money below $50K" because that is the sensational message the paying advertisers want to hear and many of listeners will tune in for.

So I'm assuming you see that as a good thing? Because that's what it sounds like...

 

[FredTMC]

Agreed. Which is why I would like some further confirmation from Tesla or at least listen to the call myself, because so far the only source has been streetinsider. It is very surprising that Tesla would divulge this info, especially so unceremoniously on some random UBS investors call.

I'm putting in request to Tesla IR to confirm those quotes from Jeff

 

[everman]

This guy is claiming that a company who will be producing more batteries than the rest of the world combined won't be able to get a deal from suppliers of a commodity with less than a 40% markup?

Agreed, GM just doesn't think like Elon. Remember back to some of the first discussions of the Gigafactory on the ER's. Elon and JB spoke of directly contacting the mining companies, and how shocked they were to get a call from a company directly. Tesla will be removing the middle men layers in the commodity markets, pulling ore into one side of the GF and shipping packs out the other side. GM just doesn't comprehend this.

 

[austinEV]

There seems to be two competing Bull theories for 2016. The "down then up" theory and the "just up, don't know when" theory.

"Down Then Up": This theory holds that the reaction to the Q1 ER will be negative, owing to the fact that we know that deliveries were off. Based on that we can reasonably guess that earnings and cash burn were also bad. TM can pull levers to try to save the quarter, by selling ZEV's or announcing amazing things about the GF or TE products, assuming they do have substantive good news. It is a long summer between the Q1 ER and the Q2 ER and doldrums might well set in, retesting the low 200's. Then in Q2, costs are reduced and model X/S are in full swing. They sell lots of cars and ZEV credits and provide a blowout quarter. Wheeler said that was basically the plan, no reason to doubt it. Based on that excellent financial result the stock surges in August. So the theory goes.

"Just Up, Don't Know When": This theory holds that the financials are partially baked in and the market is in the mood to look to TM's future. The model 3 interest is still being digested, new investors are still coming in. Sometime in the next few weeks we could have a positive breakout due to the TE pieces falling into place. With the new pricing and cost information we know that the margins are very high. If the ER shows real volume, and they share guidance and order book info, analysts could be scrambling to revalue their models. The great Q2 financials are still coming, and Aug is still going to be great, but there is no unnaturally good and obvious summer entry point.

I have been a card-carrying member of the "down then up" crowd, but I am wavering now. The main reason to suspect DTU is that it makes it more likely to light the fuse on a short squeeze. If, for instance, the stock retested 180 in the summer, Bears would be ascendant and cocky. If they announced huge deliveries in July and great financials in Aug then the high, surprising density of good news in late summer would cause a squeeze which would propel the stock higher than the same news would more spread out. The (sort of) conspiracy theory is that Elon and Wheeler are engineering this situation specifically to raise capital at a >300 price.

That is why indications of a surprisingly bad Q1 ER would seem to confirm the theory. But any bit of voluntary good news weakens DTU and strengthens JUDKW. The news of very low pack cost, while perhaps accidental, weakens DTU.

I figure Q1 ER will either be "financials are bad BUT LOOK AT THIS SHINY THING", or "financials are bad mumble mumble". The latter is ironically very bullish.

 

[Julian Cox]

So I'm assuming you see that as a good thing? Because that's what it sounds like...

Of course it is a good thing - if the market knew everything about Tesla right now the stock would be standing at $500 today. You just got to find out a little chink of something.

Short term trading wise if good is up and bad is down, its a bad thing (competitor negative PR attack) that was defended from getting really bad at the cost of revealing a little piece of intel.

Storing up market upside is one thing. Getting slammed in the media for planning an unprofitable vehicle launch and GM trying to sledge Tesla's reservation holders to panic that their $35K car will jump to a minimum of $50K is a serious libel that is too damaging to ignore. They had to react to it.

 

[Johan]

Tesla and Panasonic have both emphasized that the 30% figure is conservative, and that it doesn't include "moderate, not big, not small" cell chemistry improvements. So the total cost reduction will be closer to 38-40%. $190 - 38% = $117 and Jeff said it's less than $190.

Thankfully this cane just in time. I was going to spend some time today explaining again why your $225 per kWh was impossibly high. It was already clear from the other information released publicly that $190 is the maximum price possible.


They have already said its about $200. This means that it's probably closer to $170$180.

We already knew that. The difference is that it was publicly stated.

IMO the information arbitrage lies in us here on this forum picking up and understanding this piece of information ahead of the market as a whole. As some claim, pessimisticly, the media will never get it because they are not smart enough, and the bears won't because they don't want to understand it. But smart money will. And that will affect stock price sooner rather than later. I could be wrong but I did put a good chunk of trading capital where my mouth is and it will be interesting to see how it plays out this week.

 

[techmaven]

We have been surmising that the pack costs are down at that level, but we didn't know for sure. Given the data that we already knew, Tesla's cell costs were already around $140-150/kWh and pack costs were likely in the $180/kWh range. Nice to get some level of confirmation from Tesla. This is *before* Gigafactory production.

GM's cell pricing of $145/kWh is pretty aggressive - enough so that their projected cost well into 2019 is still $145/kWh. The overall pack costs are then likely $175/kWh in 2019 when Tesla's is under $140/kWh.

 

[Dr ValueSeeker]

Think. Tesla's head of investor relations just said their battery cost is $190/kWh. As of today, in Model S and X. And this is "all-in pack cost".

Ha Ha Ha! Wasn't it exactly a year ago, that Elon tweeted $200/kwh pricing for power packs? I am waiting to see his tweet, announcing the new $470/kwh pricing.
A few hundred dollars on the total pack won't make any difference. Tesla will still lose a ton of money on each Model 3.

 

[Julian Cox]

IMO the information arbitrage lies in us here on this forum picking up and understanding this piece of information ahead of the market as a whole. As some claim, pessimisticly, the media will never get it because they are not smart enough, and the bears won't because they don't want to understand it. But smart money will. And that will affect stock price sooner rather than later. I could be wrong but I did put a good chunk of trading capital where my mouth is and it will be interesting to see how it plays out this week.

Johan. Sorry to hear about that. Because what I want to say here is that this is Tesla's competitors admitting that (by any standards they can imagine) the Base Tesla Model 3 is a car that competes in the class of $50,000 cars while being made available to consumers at $35K with significant fuel savings too. Which is of course true even before its full autonomy update in 2019 or 2020 or something like that.

BUT this news will get spun negatively. This is a pure defensive move on Tesla's part from a stunningly viscous attack on its customers and shareholders and they have said just enough to bunt it and no more than that which shunts it from a disaster to mere negative speculation material at the cost of a little bit of their ammo. This is not an aggressive move on Tesla's part.