Short-Term TSLA Price Movements - 2016

[Spidy]

(Sale price to customer - cost)/cost=margin

Example: ($72000-$58200)/$58200=23.7% margin.
(Made up numbers, inventory car sold for $72k to customer, cost to produce for Tesla $58200)

So in theory if you sell that inventory car later with higher miles for less than $582000 you would get a negative margin? Doesn't seem to make a lot of sense, that's what I'm wondering about.

 

[bookfast]

I'll take a whack at checking your math by estimating a different way.

Aerodynamic & rolling resistance, power & MPG calculator - EcoModder.com

Rolling resistance - Wikipedia, the free encyclopedia

That link shows the ecomodder drag and rolling resistance calculator for an 80000lb fully loaded semi with optimistic Crr and Cd, with a frontal area of a little over 9 m^2 https://www.the-blueprints.com/blue...-4x2-semi-trailer-tractor-streamspace-cab.png

Using that table, somewhere right around 69mph it takes 150kW to overcome the drag.
150kWh = 69mi, therefore that's a fair bit more pessimistic than your example, at 2.17kWh/mi

Because the trailers are a standardized size and shape, I don't think you can appreciably change the A component of the drag equation, and .0045 is already pretty optimistic on the Crr. And sure, 80k lbs is a fully loaded worst case. Tesla does have experience with producing vehicles with low Cd, though, so maybe they can do better than my optimistic estimate of 0.6

Truck drivers are allowed to drive for 11 hours in the US, and 69mph * 11 hours = 759mi.

759mi * 2.17kWh/mi = 1647kWh. You could probably have 8x 200kWh modules.

If I use the Panasonic NCR18650B datasheet http://www.batteryspace.com/prod-specs/NCR18650B.pdf which is the cells Model S used to (still does?) use: 243Wh/kg, and you seem to be WAY optimistic on cycle life.

200kWh modules would be 823kg or 1810 lb. 8 of them would consume 14,485lb or about 18% of the load capacity.

The data sheet suggests 300 cycles to 80% capacity. This article Tesla Model S Battery Life: How Much Range Loss For Electric Car Over Time? claims 94% capacity after 50k mi on 85kWh Model S. S85 had 240mi EPA range, so that would suggest 208 cycles to that point. 80% cycles, times a more conservative 500 cycle life = 400kWh lifetime output per kWh capacity.

400kWh / 2.17kWh/mi = 184.3mi lifetime / kWh capacity. Using a more typical semi average fuel economy of 6mpg, that's about 30.7 gal of fuel displaced.

30.7gal * $2.50/gal = $76.80. - ($40/MWh energy cost * 0.4MWh) = $60.80 -- not enough to even reach optimistic gigafactory cell pricing.

Slowing down to 55mph cuts the energy requirement to around 89kW. Or 1.61kWh/mi
55mi * 11 hours = 605mi
605mi * 1.61kWh/mi = 974kWh
Use 8x 120kWh modules instead.
120kWh = 493kg or 1086lb * 8 = 8691lb or around 11% of the payload capacity.
400kWh / 1.61kWh/mi = 248.4mi lifetime / kWh capacity. Displaces 41.4 gal of fuel
41.4gal * $2.50/gal = $103.51 - $16 energy cost = $87.51 -- closer, but still not quite there.

I don't think you need to pay for the cell cost with the fuel savings though. Semi's are expensive vehicles, and I'm guessing the cost savings of not needing a big diesel engine will buy a fair number of batteries.

Thanks for these numbers. I think this helps to illustrate that having 100s of kWh of batteries on every truck may not be the optimal solution.

 

[Johan]

So in theory if you sell that inventory car later with higher miles for less than $582000 you would get a negative margin? Doesn't seem to make a lot of sense, that's what I'm wondering about.

Yes. Tesla would eventually loose money. That's the cost of keeping loaners.

 

[AlMc]

Yes. Tesla would eventually loose money. That's the cost of keeping loaners.

Yes, they will but all car companies 'lose' money on their loaner cars that are used in the 'service departments'.

I don't look at this particular situation as a big drain on TM's bottom line.

In some instances it may lead to people buying a new upgraded car. Ex: You get a P90D loaner when your 2013 S85 is in for service and decide you like the performance difference and the fact it has AP capability.

 

[madodel]

Yes, they will but all car companies 'lose' money on their loaner cars that are used in the 'service departments'.

I don't look at this particular situation as a big drain on TM's bottom line.

In some instances it may lead to people buying a new upgraded car. Ex: You get a P90D loaner when your 2013 S85 is in for service and decide you like the performance difference and the fact it has AP capability.

And other automakers dealers lose money on keeping large numbers of inventory cars on lots which they not only have to pay the automakers for but have to pay interest costs to finance it. Tesla doesn't have dealers to absorb a lot of those expenses. I bought my Model X sight unseen but most people need to see, touch and even drive a car before committing to spend money to buy one. Loaners and demos are the cost of doing business.

 

[imherkimer]

Yes. Tesla would eventually loose money. That's the cost of keeping loaners.

Does this qualify as a "Marketing" or PR expense? The return for Tesla on loaners and demo cars includes customer goodwill and probably additional sales.

 

[MitchJi]

I'll take a whack at checking your math by estimating a different way.

Using that table, somewhere right around 69mph it takes 150kW to overcome the drag.
150kWh = 69mi, therefore that's a fair bit more pessimistic than your example, at 2.17kWh/mi

Truck drivers are allowed to drive for 11 hours in the US, and 69mph * 11 hours = 759mi.

30.7gal * $2.50/gal = $76.80. - ($40/MWh energy cost * 0.4MWh) = $60.80 -- not enough to even reach optimistic gigafactory cell pricing.

Slowing down to 55mph cuts the energy requirement to around 89kW. Or 1.61kWh/mi

I don't think you need to pay for the cell cost with the fuel savings though. Semi's are expensive vehicles, and I'm guessing the cost savings of not needing a big diesel engine will buy a fair number of batteries.

55 mph is fine, particularly without a driver.

Four or five hours would be sufficient, particularly without a driver.

My conservative estimate for pack cost is $85 per kWh.

 

[Johan]

Does this qualify as a "Marketing" or PR expense? The return for Tesla on loaners and demo cars includes customer goodwill and probably additional sales.

It would go under SGA yes.

 

[ke6jph]

I am sure that Tesla "makes" money on the back side of the deal. My dealership "charges " the service department a rental fee for each day a car is used as a loaner. The customer signs a contract for "0" dollars but the service department is charged $50 a day. We have 10 loaner cars and most days all cars are loaned out. Not an accountant, but it seems to me that a good one uses each expense to its max.

 

[imherkimer]

I am sure that Tesla "makes" money on the back side of the deal. My dealership "charges " the service department a rental fee for each day a car is used as a loaner. The customer signs a contract for "0" dollars but the service department is charged $50 a day. We have 10 loaner cars and most days all cars are loaned out. Not an accountant, but it seems to me that a good one uses each expense to its max.

One problem with this: Tesla does not use dealerships. Service, sales, manufacturing are all one company. Why would the service department "charge" the manufacturing or sales departments for use of a loaner? Wouldn't this just create useless paperwork, and shift the expense back and forth pointlessly?

 

[AlMc]

Apple car delayed till 2021

Apple Car Rollout Delayed Two Years, Media Report Says | Stock News & Stock Market Analysis - IBD

 

[racer26]

55 mph is fine, particularly without a driver.

Four or five hours would be sufficient, particularly without a driver.

My conservative estimate for pack cost is $85 per kWh.

I'm not sure I agree with you on any of those counts.

Most freeways (limited access grade separated divided highways, like Interstates or 400-series Ontario Highways) have speed limits of 60-80mph. Some of them have lower limits for heavy trucks, in the name of safety -- existing heavy trucks can't stop as quickly as a small sedan. This creates a different safety problem in that the trucks are moving dramatically slower than the other traffic.

I believe that a Tesla Semi could probably be able to slow more aggressively than the kinds of trucks we see today - a big electric motor would allow for very strong regenerative braking.

I don't think you're going to see driverless Semi's for a while after we start seeing driverless cars.

The reason existing semi's have the range that they do is because of rules surrounding drive time. They're allowed to drive 11 hours. They can refuel when they're not allowed to drive anymore, so I think that a Tesla Semi should be able to achieve similar.

We know from JB that Tesla's existing pack cost is "under $190/kWh" and that GF is going to achieve 30-50% savings on that. I would argue a 'conservative' estimate ought to be more like $135/kWh.

 

[MitchJi]

In addition to consumer vehicles, there are two other types of electric vehicle needed: heavy-duty trucks and high passenger-density urban transport. Both are in the early stages of development at Tesla and should be ready for unveiling next year. We believe the Tesla Semi will deliver a substantial reduction in the cost of cargo transport, while increasing safety and making it really fun to operate.

We know the following two things:
1. Tesla will use batteries for their Semi's. No way that they will try to get the highway infrastructure built for electric roads. If you doubt that look at the hassles they've had getting dealership laws changed.

2. We can be confident that they have a clear path towards doing that affordably. They are competent to do the basic cost calculations.

I believe that a large part of their confidence comes from the fact that their battery costs are less than we know. I think even ny $85 per kWh figure is probably high.

I don't think you're going to see driverless Semi's for a while after we start seeing driverless cars.

The reason existing semi's have the range that they do is because of rules surrounding drive time. They're allowed to drive 11 hours. They can refuel when they're not allowed to drive anymore, so I think that a Tesla Semi should be able to achieve similar.

We know from JB that Tesla's existing pack cost is "under $190/kWh" and that GF is going to achieve 30-50% savings on that. I would argue a 'conservative' estimate ought to be more like $135/kWh.

I think believe that driverless Semi's are part of Tesla's plan. Highway driving is a relatively easy problem to solve.

Why would they need to go 11 hours without stopping. The only reason would be if there's a cost benefit. You are arguing that it's a necessity and using that as reason that's the economics don't work. Circular arguments.

From Tesla's officials statements you don't know what you claim to know. Inaccuracies and omissions. I'm sure that $135 too high. Of course you are welcome to your own opinion.

 

[pGo]

We know the following two things:
1. Tesla will use batteries for their Semi's. No way that they will try to get the highway infrastructure built for electric roads. If you doubt that look at the hassles they've had getting dealership laws changed.

2. We can be confident that they have a clear path towards doing that affordably. They are competent to do the basic cost calculations.

I believe that a large part of their confidence comes from the fact that their battery costs are less than we know. I think even ny $85 per kWh figure is probably high.

Two posts and two claims about $85/kWh. Any source to back you up?

 

[EinSV]

A few high-level weekend thoughts on SMP2:

1. Model 3 production process v. 0.5 is very encouraging. Elon is showing discipline and restraint by getting product out the door, and saving improvements (this time in the manufacturing process) for the future. Lessons learned from Model X seem to be applied broadly, which is very, very good news.
2. Network effect is absolutely critical to Tesla's future. It has a superior automotive platform and appears to be ahead of the competition in self-driving technology, which is now central to its future success.
3. Because of 2, a very fast ramp of Model 3 and Model Y and related infrastructure (service centers and supercharging capability) will provide massive dividends.
4. Since it has superior technology, if Tesla were the next Google or Facebook, it could simply upload its platform to the internet and it could be adopted overnight. That is obviously not possible in a capital intensive business.
5. Therefore, IMO it is to Tesla's advantage to ramp up Model 3 and Y (plus S/X) production well beyond 1M/vehicles per year as fast as it possibly can to capitalize on its current advantages. Even with a significant contribution from TE, I personally hope that Tesla goes to the markets to raise additional capital over the next couple years as needed to accelerate its production. Due to 1-4 above, I would expect capital contributions in the next couple years to easily return 10/1 or more in terms of market cap within a short period of time (less than 5 years).
6. Regardless of whether Tesla raises capital, I believe the likelihood of Tesla producing >1M vehicles/year in 2020 is high -- much higher than most people expect.
7. Still digesting Tesla Pickup, Semi and Mini-bus, no Model 4 and no mention of Powerpack.

 

[bookfast]

We know the following two things:
1. Tesla will use batteries for their Semi's. No way that they will try to get the highway infrastructure built for electric roads. If you doubt that look at the hassles they've had getting dealership laws changed.

2. We can be confident that they have a clear path towards doing that affordably. They are competent to do the basic cost calculations.

I believe that a large part of their confidence comes from the fact that their battery costs are less than we know. I think even ny $85 per kWh figure is probably high.


I think believe that driverless Semi's are part of Tesla's plan. Highway driving is a relatively easy problem to solve.

Why would they need to go 11 hours without stopping. The only reason would be if there's a cost benefit. You are arguing that it's a necessity and using that as reason that's the economics don't work. Circular arguments.

From Tesla's officials statements you don't know what you claim to know. Inaccuracies and omissions. I'm sure that $135 too high. Of course you are welcome to your own opinion.

The only way Tesla can solve the renewable trucking problem themselves is by building trucks with batteries. No one is arguing that. As a society however, we need the optimal solution to the problem. This would be maximum efficiency - as fast in mph as safely possible (renewable energy source so loss of efficiency due to drag does not matter), as continuous as possible (no stopping to charge/swap) and as cheap as possible. Also, the faster you move freight, the more you can charge for it, so that is a major cost benefit.
Right now the numbers show that batteries are more expensive compared to the alternatives. Perhaps in 10 years they will cost the consumer <$100 kWh but you can't argue we are anywhere close to that yet. Who knows what will happen, but it seems to me the electrified roadway is superior. This makes me curious as to what Tesla's solution will look like, and how it may evolve.

 

[sundaymorning]

Apple car delayed till 2021

Apple Car Rollout Delayed Two Years, Media Report Says | Stock News & Stock Market Analysis - IBD

Not as easy as they thought. Gives perspectives into X delays, especially it being the toughest vehicle to build in the world.

 

[MitchJi]

Two posts and two claims about $85/kWh. Any source to back you up?

I'm getting really tired of trying to provide pack cost opinions and information on this forum.

About a year ago I spent several days preparing a long post which I put in it's own thread on the investors forum. I explained why, I believed that Tesla's pack cost was less than $170. I also added a more pessimistic figure of $190 because I knew that nobody would believe the $170 figure. Everyone pretty much ignored that analysis or disagreed with it based on reasons like it didn't feel right, or based on the using an analysts guesses!

Then when Jeff confirmed that Tesla's pack costs were under $190 a lot of the people on this forum were surprised. I have explained several times why I think that by the end of 2017 Tesla's pack costs will be at or under $85 per kWh. I'm not going to keep repeating myself for people who won't believe me anyway.

But I will say that by the time the Tesla Semi rolls out that under $85 is a slam dunk. Tesla said at least a 50% reduction by 2020:
$190 minus 10% due to cell chemistry improvements, that's 10%. Elon said that when they start producing cells at the GF they would have moderate, not big or small improvements. Say that's 5% which means that they only need another 5% over three years to hit the 10% total..

Fifty percent of $171 equals $85.50 by the end of 2020 is an extremely conservative figure!

 

[schonelucht]

(Sale price to customer - cost)/cost=margin

Example: ($72000-$58200)/$58200=23.7% margin.
(Made up numbers, inventory car sold for $72k to customer, cost to produce for Tesla $58200)

This is incorrect for loaners. The gross margin is calculated as if the car is sold new to a customer. Any depreciation due to loanage miles and age of vehicle is recorded in selling, general&administration expenses.

So for example, car build for 80k, list price is 100k racks up 6 months and 5k miles as a loaner/inventory and gets sold sold for 90k to a customer. Gross margin for that car is 25% (100-80)/100 = 25%. Tesla records 5k for the two quarters as cost of selling.

 

[TMSE]

Apple car delayed till 2021

Apple Car Rollout Delayed Two Years, Media Report Says | Stock News & Stock Market Analysis - IBD

Not as easy as they thought. Gives perspectives into X delays, especially it being the toughest vehicle to build in the world.

So, the $200+ billion war chest didn't help Apple leapfrog Tesla. I wonder how pathetic will other competitors be. I think we can bury the "competition will crush Tesla" argument now.

In any valuation, competitive threat is a valid and significant discount to target price. Big boys on the buy side will definitely take note of it, if this story is true.