Short-Term TSLA Price Movements - 2016

[sub]

Tesla guided 80-90k model S/X for 2016, I'm fairly certain they know what their demand is. Number one bear belief = Elon (Tesla) is a liar. No need to debate demand any further.

As soon as we resume an upward trend again electricity and Maoing will make themselves scarce until the next down cycle, rinse and repeat.

 

[The Blue Owl]

That's not the feeling I get at all. Can you look at this statement from Maoing and say that (s)he is wrong?
.

He was right with respect to the price. He was and still is wrong in saying the reason for the drop was in any way related to lack of demand. Others guessed where the price was going, but attributed it to production issues. There is plenty of evidence for the latter, none for the former.

 

[Rafael]

But saying other battery technology has leapfrogged Tesla's (I'm not a native Anglian but I understand leapfrog as jumping way past) without mentioning what this supposed technology is, who makes it, what it's used for and what it costs is simply worthless information.

Just as it's worthless information stating that Tesla is now production constrained or that demand has peaked and is getting lower without any empirical evidence or actual observations to substantiate it.

Stating that demand growth may have slowed is unfalsifiable in itself because as long as Tesla are production constrained they are, and this will in turn somewhat regulate demand/orders in a form of negative feedback. (Ever increasing wait times are going to scare off potential buyers this moderating demand, when demand is measured by orders).

The statement about leapfrogging is quite ridiculous and proves that he has no clue how battery chemistries work. With novel battery solutions the cycle life is very poor and it takes a long time to develop good electrolyte additives to stabilize them. (I'm currently writing and researching my bachelor's thesis about lithium ion chemistries - major focus on silicon, electrolyte additives and novel cathode materials)

 

[MitchJi]

Chanos claims that battery technology "leapfrogged" ahead of the tech in use at the Gigafactory, and that's why "we don't hear about the Gigafactory anymore". He forgot to tell us what that new technology is.

He also didn't mention that GM is bragging about their cell costs, but their pack costs are about $250 per kWh and Tesla's costs today are under $190 and will be under $125 when they start using GF Cells.

 

[Johan]

With regard to missing guidance: Yes, those of us who have followed Tesla for some years know that they have a (somewhat nasty) habit of missing guidance or cutting it real close.

On the other hand, those of us following Tesla also know they have the habit of growing total revenue ~50% year to year. This doesn't necessarily mean there are no bumps on the growth curve and growth in revenue isn't always going to be linearly correlated with vehicle unit sales.

 

[Citizen-T]

Well, it is nice to go into an ER with depressed expectations for once.

 

[Johan]

He also didn't mention that GM is bragging about their cell costs, but their pack costs are about $250 per kWh and Tesla's costs today are under $190
and will be under $125 when they start using GF Cells.

LG may have put cell cost at $250/kWh in the offer they made GM. But the rest of the drive train wasn't as cheap. And I'm confident that if some other car producer wanted to buy cells only from LG they'd have to pay way more than $250/kWh. Look, LG basically got GM to fund the basis for their future vehicle program.

 

[Julian Cox]

Chanos making nonsense about changing from cylindrical cells to prismatic is a broad industry error of assumption. Just being a malicious short. Irrelevant to the facts. The fact is there are many GWh/year's worth of abandoned prismatic manufacturing facilities around the world. All useless because pack level energy density requires pack level safety systems and discrete cylindrical structures with end vents is the physically perfect structure to manage individual cell failure with directional ejection of cell contents into an exhaust duct. Thereby limiting the potential for pack wide thermal runaway and it enables even cooling of cells. This is what enables the use of high energy density cell contents which in turn makes for cars that work better than gasoline cars while getting progressively cheaper than gasoline cars.

Next. Demand is another auto industry confusion that has no place in a rational Tesla thesis. First of all ICE cars don't have any demand. They are a forced purchase due to lack of a better alternative. The auto industry therefore confuses sale on the lot or even more self delusionally sales to dealers as demand. It isn't demand. Neither are Tesla's sales deliveries. Demand for Tesla's vehicles is on the Tesla reservation list to which there is no public access unless Tesla shares it or when it can be deduced roughly from the reservation account each quarter. Even this is next to impossible when there is a mixture of reservation deposits ranging from $1K $2.5K $5K up to $40K. So we are left to wonder if a $70-$150K vehicle that seems to bring in purchasers of $40K vehicles and upwards has got a limited demand outlook. To which the answer is clearly NO!

So after getting rid of these pointless distractions - then we can look at why the stock does what it does and to anticipate its future outlook. If you cannot get rid of these pointless distractions and leave them to the losing side of the trade - whether long or short, you get it wrong and you lose money.

 

[anticitizen13.7]

Bingo! Those folks blindly believe Tesla has production issue for years, just put their head into the sand always. If Tesla demand is really strong, you can't explain the SP trading in a range more than 2 years. Telsa has OK demand, but not the STRONG demand to support SP flying higher.

Production of Model X may still be an issue:

Vin42xx - Delayed Till June

The stock price trades in the same range because Tesla hasn't yet demonstrated that it can get to the next level, which I see as free cash flow from sales of current models.

Remember early last year, when the China demand issues popped up. I predicted Tesla will miss 2015 guidance, but many folks said China is irrelevant because Elon said so and model S demand was so strong in ROW. When the model X got delayed again and again, I predicted Tesla will miss 2015 guidance, but many folks insist that model S production can easily fill the model X gap because model S demand was so strong. So we all know what happened later, Telsa missed annual guidance two years in a row and will be likely for 3rd year.

There are 2 things here that people should understand about Elon Musk: (1) He usually does not meet his timelines for a goal (2) But he always manages to eventually accomplish that goal.

The Tesla Roadster, Model S, Model X, and SpaceX Falcon 1 and Falcon 9 are pretty solid proof of my observations. Elon said he'd land a rocket. It took numerous tries, but it happened.

The practical implications are that short term TSLA movements are difficult to gauge, because nobody knows exactly when Tesla will reach a particular goal. Trading TSLA in the short term is a very bad idea for the vast majority of people generally, and probably for the vast majority of people here at TMC.

 

[Fallenone]

LG may have put cell cost at $250/kWh in the offer they made GM. But the rest of the drive train wasn't as cheap. And I'm confident that if some other car producer wanted to buy cells only from LG they'd have to pay way more than $250/kWh. Look, LG basically got GM to fund the basis for their future vehicle program.

According to GM, the cell cost for GM from LG was $145/kWh. The rest is the pack cost. But LG was not happy of GM disclosing the $145/kWh price.

 

[Johan]

According to GM, the cell cost for GM from LG was $145/kWh. The rest is the pack cost. But LG was not happy of GM disclosing the $145/kWh price.

Agreed. I meant "all in pack cost" (the number that would be most comparable to Tesla's sub-190 number). Anyway I stand by my statement that this "price" was part of a package for GM and LG wouldn't sell packs to a competitor for $250/kWh.

You know, in the olden days people would change their oil and get the filter for $1. It doesn't mean you could walk in and buy 100 oil filters for $100...

 

[Curt Renz]

People always tend to forget that there is still an enormous opportunity for Tesla's market to expand. It has barely touched the surface. In the last earnings call, they stressed that they have not even properly expanded their presence in the East coast. Teslas may be prevalent in California but out here in the Eastern seaboard, we still get excited if we spot a Model S as it is not that prevalent yet.

Yes, indeed.

Here in Chicagoland, Teslas are not frequently seen. People generally do not closely follow financial news in the manner of participants in this thread. Most people that I meet here have either never heard of Tesla Motors, or hesitatingly indicate that perhaps they have. But when I press many of the the latter types, they really know nothing about the cars.

I'm a native Chicagoan, but during the eighties I lived in Palo Alto, California while working in San Jose. My Bay Area friends tell me that they see Teslas all the time. One told me that it seems there is a Tesla in a driveway on almost every block in Palo Alto. When I tell them that we don't see many here, they are incredulous.

Since Tesla still does not advertise, it continues to take a while for word about its cars to spread across the country. As long as there is a backlog of orders that production cannot quickly reduce to near nil, then advertising remains foolish. As time progresses, people in the Midwest and further east will become more aware of Tesla Motors and its cars. As they do, demand should increase dramatically. Eventually a ceiling will be hit for the rate at which luxury Models S & X are demanded, but I suspect we're nowhere near there yet. By then the Model 3 will be out, and the current 430,000 reservations made by the first adopter class should be completely dwarfed by the millions of cars being demanded and produced.

 

[Causalien]

I personally know of about two developments that have leapfrogged the current battery tech. Believe it or not, the inventors of these battery techs didn't consider Tesla seriously. In the knowledge of the rest of the world, Tesla is still a car company.

Not only that, even after hearing what I have to say about Tesla's future demand, they do not know how to approach Tesla. What the inventors are thinking about is this: how do I slowly bring this to mass production? Which small production company to use with a lesser tech to improve on the important part until the whole manufacturing chain are hammered out for mass production. There are also other factors like geopolitics in play. But you get the gist.


It kind of remind me of when Tesla first started ramping mass production in 2011 I was in the Metal industry back then and was talking to another exec about trying to get some of their products into Tesla's factory as chances are, once they get the production line working, they will buy more. Since Tesla gives factory tours, people will see which company these machines are from. It's free advertising.

People thought I was dreaming. The dream of a young and naive lad.

The only reason why the battery tech inventors even listened to me is because of my previous history of spot on prediction with Tesla, Visa, the banking crisis (I am guilty of buying BAC, but I wanted USA to live and my USD to still worth something), bitcoin and gold. It took this many correct calls to get people to finally listen to me.

So yeah they exist, but like Tesla, whether or not they survive is another story.

 

[Fallenone]

Production of Model X may still be an issue:

Vin42xx - Delayed Till June

The stock price trades in the same range because Tesla hasn't yet demonstrated that it can get to the next level, which I see as free cash flow from sales of current models.




There are 2 things here that people should understand about Elon Musk: (1) He usually does not meet his timelines for a goal (2) But he always manages to eventually accomplish that goal.

The Tesla Roadster, Model S, Model X, and SpaceX Falcon 1 and Falcon 9 are pretty solid proof of my observations. Elon said he'd land a rocket. It took numerous tries, but it happened.

The practical implications are that short term TSLA movements are difficult to gauge, because nobody knows exactly when Tesla will reach a particular goal. Trading TSLA in the short term is a very bad idea for the vast majority of people generally, and probably for the vast majority of people here at TMC.

That Vin42xx thread is worrying to read...

 

[electracity]

The statement about leapfrogging is quite ridiculous and proves that he has no clue how battery chemistries work. With novel battery solutions the cycle life is very poor and it takes a long time to develop good electrolyte additives to stabilize them. (I'm currently writing and researching my bachelor's thesis about lithium ion chemistries - major focus on silicon, electrolyte additives and novel cathode materials)

Chanos compared SCTY to sub-prime lenders. That was an exaggeration, but he was fundamentally right on SCTY finances and price.

He likely has good intel on real progress on batteries by large companies. But he probably doesn't have good insight into Tesla's next gen. battery. Plus, as an older numbers guy, I doubt Chanos gets the value of the sum of everything Telsa. Tesla just needs enough batteries and a competitive price to do great.

I was never a believer in Tesla establishing a dominant battery position. But I'm also not a believer in anyone else establishing dominance either. The history of near-commodity manufactured goods suggests that no one clearly dominates.

 

[FANGO]

So I'm pretty pissed off that I didn't get a chance to sell my June $240s last week as I was very busy and putting it off, and then TSLA decided to take a big dump on the one day I was actually able to pay attention to the market. Then I waited, stupidly, longer and longer, to just see things keep dropping. Now I'm trying to decide if the stock is low enough that I should expect ER to mitigate some of the baseless dropping that's been happening for the past several days, or if we'll continue to be low for another month and a half and I should cut my (non-catastrophic) losses now, or at the end of the day at least since I would expect a small pop in the last hour (who knows, I'll probly be wrong about that too). If we were still up in the 240-250 range I was considering selling off several positions and maybe even doing some covered calls, but now that we're at 222, I'm not so certain.

 

[tander]

The statement about leapfrogging is quite ridiculous and proves that he has no clue how battery chemistries work. With novel battery solutions the cycle life is very poor and it takes a long time to develop good electrolyte additives to stabilize them. (I'm currently writing and researching my bachelor's thesis about lithium ion chemistries - major focus on silicon, electrolyte additives and novel cathode materials)

I wonder about the technology getting old too. But for Tesla it doesn't actually matter that much unless the new technology precludes them from making really good cars and a tons of batteries that may or may not be cutting edge, but still far from obsolescence.

 

[JRP3]

That's not the feeling I get at all. Can you look at this statement from Maoing and say that (s)he is wrong?

Sure. It had nothing to do with lack of demand, so the premise was wrong.

 

[Julian Cox]

Did you know that Henry Ford didn't want to build the Model A? Without the model A, Ford would not exist today as a separate company today.

Companies are run by fallible human being who make a lot of mistakes. God's are created by people wanting an improved reality.

Did you know that Henry Ford built Ford in almost exactly the same way Elon Musk is building Tesla? He built it on customer demand that outstripped Ford's ability to supply. Excess consumer demand presented itself to the early 20th Century Equivalent of an Internet Shopping Cart and placed their reservations there: The Auto Dealers. Auto dealers paid forwards the funds to expand the capacity to meet demand. Today dealers are unnecessary because consumers can present the sum of excess consumer demand directly to Tesla and they can arrange vehicle loans or savings to pay cash on delivery. The stock market simply fills in for dealer franchise fees that Ford received for the right to become middlemen and service agents and the Supercharger Network and Tesla Energy (also Solar City) ensures that Tesla does not bleed the main opportunity in transportation of the day that Ford bled to Rockefeller and later a combination of Big Oil and the Kochs in the supply of gasoline. Instead Tesla retains the equivalent value network to present to it its own customers and to capture for its shareholders.

 

[Fallenone]

I personally know of about two developments that have leapfrogged the current battery tech. Believe it or not, the inventors of these battery techs didn't consider Tesla seriously. In the knowledge of the rest of the world, Tesla is still a car company.

Not only that, even after hearing what I have to say about Tesla's future demand, they do not know how to approach Tesla. What the inventors are thinking about is this: how do I slowly bring this to mass production? Which small production company to use with a lesser tech to improve on the important part until the whole manufacturing chain are hammered out for mass production. There are also other factors like geopolitics in play. But you get the gist.


It kind of remind me of when Tesla first started ramping mass production in 2011 I was in the Metal industry back then and was talking to another exec about trying to get some of their products into Tesla's factory as chances are, once they get the production line working, they will buy more. Since Tesla gives factory tours, people will see which company these machines are from. It's free advertising.

People thought I was dreaming. The dream of a young and naive lad.

The only reason why the battery tech inventors even listened to me is because of my previous history of spot on prediction with Tesla, Visa, the banking crisis (I am guilty of buying BAC, but I wanted USA to live and my USD to still worth something), bitcoin and gold. It took this many correct calls to get people to finally listen to me.

So yeah they exist, but like Tesla, whether or not they survive is another story.

Just curious, for these battery tech developments, are they:
1. in the lab, proving a certain new material can increases the battery capacity/density significantly?
2. in the lab, assembled a battery that is functional with an unknown cost to make it?
3. proven to be applicable in real world and ready to be test manufactured?
4. further down the road.