Short-Term TSLA Price Movements - 2016

[SPadival]

Amazon would be a better partner. Bezos & Elon would rule the universe. Gigafactory on every continent within 10 years. Besides, Elon needs a roomie on mars.

Yuck. Hell, no. I would sell off my TSLA shares if that happened. Why are you trying to solve problems that do not exist?? I don't think Elon wants to rule the universe whereas Bezos is a plutocrat.. he is better off in Pluto than in Mars.

 

[FredTMC]

Amazon would be a better partner. Bezos & Elon would rule the universe. Gigafactory on every continent within 10 years. Besides, Elon needs a roomie on mars.

They don't play well together (in space)

 

[paulch]

For the sake of transparency I have no info to back me up, and I don't like the deal so are probably letting my biases cloud my judgement.

Arbitrage is getting too big for the big investors not too capitalise.

The big players appear to have gone quiet speaking on the deal - I wonder if no one wants to attach themselves to it?

The rocket failure may refocus Elon and others on the big picture and make them realise that Model 3 and Tesla generally still has a way to go.

Solar as major power source (Elon mentioned this quite a number of time) is something has to happen to support EV becoming majority of transportation. The current power grid won't be able to scale faster enough to support the EV growth.

We can do some math:

(1) According to NHTSA: FARS Encyclopedia: about 3000 billion vehicle miles traveled per year, EV electricity cost is about 300wh per mile, which is 0.3Kwh / mile, 0.3Kwh / mile * 3000 billion miles = 900 billion Kwh.

(2) Total residential electricity consumption estimation of 2014 is 1407 billion Kwh, according to How is electricity used in U.S. homes? - FAQ - U.S. Energy Information Administration (EIA)

900 / 1407=64%, so that's 64% increase of load, it's very unlikely that the current grid can support a 64% increase in capacity. Not to mention, during the summer, when air conditioning is heavily used, it's also the time when people travel the most, etc, EV consumes more electricity during summer.

Then the logical thinking is grid/utility will have to increase the electricity price to reduce demand, which will encourage people to adopt the Solar+Battery (power wall) solution. And Solar+Battery (distributed grid) is probably the only solution, given the cost of upgrading the grid infrastructure will be super expensive and also time consuming.

I think this explains why it makes perfect sense for Tesla to acquire SolarCity,Tesla has to make Solar a major power source in order to achieve the sustainable transportation goal, so I don't think Elon will let the acquisition fail.

 

[Intl Professor]

Yuck. Hell, no. I would sell off my TSLA shares if that happened. Why are you trying to solve problems that do not exist?? I don't think Elon wants to rule the universe whereas Bezos is a plutocrat.. he is better off in Pluto than in Mars.

Also, Bezos doesn't treat his workers well.

 

[MitchJi]

SCTY LEAPS get converted to TSLA special leaps. You are right, liquidity goes down. But, if you are willing to hold until expiry, it isn't a problem.

Normally I'd think that's a bad idea, because LEAPS lose time value a lot faster during the latter portion of their lives.

But for J18 Tesla I think it's worse, either really bold or pretty foolish. Elon's guesstimate for 2017 M3?production is 100-200k. He expects about 35k per month in 2018. That means 100k is about three months production. I expect Tesla to come close to or meet their schedule, but I would not be shocked if they miss it by a few months. The problem with Tesla J18 LEAPS is if they miss their schedule by about 3 months that could mean zero M3's produced in 2017, which could make your J18 LEAPS literally worth nothing.

The reason I know that is that I thought that Tesla would hit their MX schedule. Looking back my plan was okay, but I should have had a better exit strategy. I bailed about six months before my LEAPS expired and it wasn't soon enough. If you are willing to buy some lottery tickets with a small portion of your portfolio that's fine but I wouldn't consider doing that with a major portion of your portfolio.

 

[vigleik]

Solar as major power source (Elon mentioned this quite a number of time) is something has to happen to support EV becoming majority of transportation. The current power grid won't be able to scale faster enough to support the EV growth.

We can do some math:

(1) According to NHTSA: FARS Encyclopedia: about 3000 billion vehicle miles traveled per year, EV electricity cost is about 300wh per mile, which is 0.3Kwh / mile, 0.3Kwh / mile * 3000 billion miles = 900 billion Kwh.

(2) Total residential electricity consumption estimation of 2014 is 1407 billion Kwh, according to How is electricity used in U.S. homes? - FAQ - U.S. Energy Information Administration (EIA)

900 / 1407=64%, so that's 64% increase of load, it's very unlikely that the current grid can support a 64% increase in capacity. Not to mention, during the summer, when air conditioning is heavily used, it's also the time when people travel the most, etc, EV consumes more electricity during summer.

Then the logical thinking is grid/utility will have to increase the electricity price to reduce demand, which will encourage people to adopt the Solar+Battery (power wall) solution. And Solar+Battery (distributed grid) is probably the only solution, given the cost of upgrading the grid infrastructure will be super expensive and also time consuming.

I think this explains why it makes perfect sense for Tesla to acquire SolarCity,Tesla has to make Solar a major power source in order to achieve the sustainable transportation goal, so I don't think Elon will let the acquisition fail.

The increased load is not nearly as bad as you make it sound. If you include ALL electricity consumption in the U.S. instead of just residential it's about 5000 billion kWh, so that comes out to about an 18% increase if we replace all ICE vehicles with EVs.

Moreover there is a lot of excess capacity outside of peak hours, so in most places we would be just fine.

(I do agree that we should replace coal with solar as quickly as possible, and that charging your car with sunlight is much better than charging it with coal.)

 

[wycolo]

All this talk of Apple and Google taking a stake in Tesla really gets my back up. The think that got my interest in Tesla was the ethics behind the company. I am always impressed with Tesla values. For example they always seem to take the high ground when it comes to things like environment, public safety, contractor wages, etc.

Other companies always have the financials as the foremost priority. I'm glad to be invested in a company that has long term goals!

I don't think that having other companies pulling strings will benefit Tesla's direction.

To support such a company one would buy the product, not the stock. Company = Stock (!).
--

 

[phigment]

To support such a company one would buy the product, not the stock. Company = Stock (!).
--

Many people cannot afford the current price tag.
Also, buying and holding stock does increase its value. This would support the company when it comes time for secondary offerings.

 

[stealthology]

For those holding onto SCTY shares, does it even really matter if SCTY tracks TSLA share price much since what you'll be getting is solely based on the price of TSLA when the deal is done (.11%)?

 

[Dwdnjck]

For those holding onto SCTY shares, does it even really matter if SCTY tracks TSLA share price much since what you'll be getting is solely based on the price of TSLA when the deal is done (.11%)?

I think you just answered your own question.

 

[150 kWh]

I remember the share price taking a hit on the Apple car news, hopefully we get that back Monday if the market cooperates.

I just don't see Apple being a minority partner (non-dominant partner) with any other company because of their strong brand/ecosystem. E.g., would they would insist that all the cars run Apple Maps instead of Google Maps? Would they supply hardware or collaborate on software?

What is the chance that Tesla in future offers Apple / Google a white label solution based on Model 3 platform? It would be something like: "Provide us with your designs for interior and exterior and we'll make you as many cars as you want".

It would suit Tesla as Elon can focus on building his Alien Dreadnought without losing any control in his company. Apple / Google wouldn't need to go out of their ways by learning manufacturing and still can differentiate their products by branding, design and software. They would't need to build and operate infrastructures for charging and servicing as Tesla would be providing both.

I think this solution would benefit both parties as they can focus on part of the business they excel at.

 

[AlMc]

What is the chance that Tesla in future offers Apple / Google a white label solution based on Model 3 platform? It would be something like: "Provide us with your designs for interior and exterior and we'll make you as many cars as you want".

It would suit Tesla as Elon can focus on building his Alien Dreadnought without losing any control in his company. Apple / Google wouldn't need to go out of their ways by learning manufacturing and still can differentiate their products by branding, design and software. They would't need to build and operate infrastructures for charging and servicing as Tesla would be providing both.

I think this solution would benefit both parties as they can focus on part of the business they excel at.

Your suggestion does solve many issues for the companies and would allow movement towards the mission statement completion.
I just wonder despite that statement IF EM does not feel that he/TM has done all the heavy lifting towards EV manufacturing and autopilot/autonomous driving and will not want to share.
*I know he has opened up some patents but I do wonder if he will accept your scenario*. I would

 

[ggr]

I agree with you. However:

At present, I'm only aware of one other true EV player (Faraday Future). FF has a serious scent of vaporware to it, so I'm not prepared to trust that they will be competition to Tesla until they have a real product shipping in some semblance of volume, not a concept car.

The ICEV incumbents have so much investment tied up in ICEV tech, that they basically can't compete with Tesla even if they wanted to. To create a compelling EV, they would necessarily cannibalize their ICEV sales, which their shareholders won't stand for, and a compelling EV won't provide their dealers with a reliable source of service income, so their dealers just won't sell it. This is why we only get half measures like PHEVs. It will be really interesting to see what happens with Bolt. Even still, GM only has access to enough equipment from LGChem to build 50,000 Bolts/yr.

Gigafactory is Tesla's silver bullet. Nobody else has it, and nobody else will, unless they too drop billions to build one, and *even then* it will still take them years to build. The ICEV incumbents have spent the last 50 years or so increasingly outsourcing every part of their cars except the powertrain, and this is exactly the kind of expenditure they are used to avoiding now. Without a gigafactory though, you just can't buy up enough batteries to build EVs in mass scale, because there's nobody to buy them from. Remember; GF will produce more batteries than every other battery factory in the world did in 2014, combined. That will only be enough batteries to supply Fremont to build 500k-1M cars/yr (plus TE). How many factories like it need to exist to replace all the Honda Civics (400k north american sales/yr), Cavaliers, Focuses, etc out there? (Hint: the answer is lots)

I believe that Tesla is prepared to single handedly transition humanity to sustainable transport, if they have to. The plan was always to catalyse people with deeper pockets to move, but nobody seems to be following Tesla's lead.

What you say is mostly correct, if only BYD wasn't in the world. BYD's target market and Tesla's don't currently overlap, but they are on a collision course. I don't count FF at all.

 

[TrendTrader007]

Many people cannot afford the current price tag.
Also, buying and holding stock does increase its value. This would support the company when it comes time for secondary offerings.

i agree, personally i hold tons of TSLA stock and have 2 M3 preorders but just can not bring myself to shell out $160 k for a Ms P100D even though i can easily afford it simply because the investor in me wants me to put those extra $100 or $160k in the stock rather than the car
i may be an exception, i dunno

 

[TrendTrader007]

I wonder what and how long it will take for Tesla's potential competitors - Apple, Google, GM, VW, BMW, Mercedes, Nissan, Faraday Future, etc. - to realize that they are hopelessly behind Tesla and don't have a chance of catching up, much less surpassing Tesla. Model 3 may be the hammer that smashes their dreams.

Tesla in my eyes is a virtual monopoly like FB because the competition is so far behind that it is an illusion
unless ICE companies are willing to put 110% of their resources into EVs they don't even have a chance
look what is happening to AAPL

 

[TNEVol]

Solar as major power source (Elon mentioned this quite a number of time) is something has to happen to support EV becoming majority of transportation. The current power grid won't be able to scale faster enough to support the EV growth.

We can do some math:

Your calculations omit an important factor. There have been lenthy discussions on here regarding the amount of electricity used to refine a gallon of gas. As I recall many articles state that it takes more kW to refine a gallon than to power an EV an equivalent number of miles. (Google electricity used to refine a gallon of gas) You will also see EM quoted on this subject.

 

[Zhelko Dimic]

Solar as major power source (Elon mentioned this quite a number of time) is something has to happen to support EV becoming majority of transportation. The current power grid won't be able to scale faster enough to support the EV growth.

We can do some math:

(1) According to NHTSA: FARS Encyclopedia: about 3000 billion vehicle miles traveled per year, EV electricity cost is about 300wh per mile, which is 0.3Kwh / mile, 0.3Kwh / mile * 3000 billion miles = 900 billion Kwh.

(2) Total residential electricity consumption estimation of 2014 is 1407 billion Kwh, according to How is electricity used in U.S. homes? - FAQ - U.S. Energy Information Administration (EIA)

900 / 1407=64%, so that's 64% increase of load, it's very unlikely that the current grid can support a 64% increase in capacity. Not to mention, during the summer, when air conditioning is heavily used, it's also the time when people travel the most, etc, EV consumes more electricity during summer.

Then the logical thinking is grid/utility will have to increase the electricity price to reduce demand, which will encourage people to adopt the Solar+Battery (power wall) solution. And Solar+Battery (distributed grid) is probably the only solution, given the cost of upgrading the grid infrastructure will be super expensive and also time consuming.

I think this explains why it makes perfect sense for Tesla to acquire SolarCity,Tesla has to make Solar a major power source in order to achieve the sustainable transportation goal, so I don't think Elon will let the acquisition fail.

This is along the lines of what I was thinking, that SCTY is a long term hedge against utilities that wouldn't play nice, and possibly escalating electricity prices that would hamper EV adoption.

My problem with this is buying this long term hedge comes at the expense of short and mid term results. SCTY is not needed for at least couple of years, probably up to five, and in the meantime will weight heavily on results and confuse financial picture.

This would be less of a problem if stock price isn't 30% down from the peak, but it is. Tesla needs to be respectful of investors of all vintages, not only ones that bought before 2013

So, I keep holding and will vote 'no'.

 

[Krugerrand]

The VIX is up 36% today. Holy crap.

Mods, I'm opposed to 'crap'. Can we make it holy *sugar*?

 

[McMuggets]

This is along the lines of what I was thinking, that SCTY is a long term hedge against utilities that wouldn't play nice, and possibly escalating electricity prices that would hamper EV adoption.

My problem with this is buying this long term hedge comes at the expense of short and mid term results. SCTY is not needed for at least couple of years, probably up to five, and in the meantime will weight heavily on results and confuse financial picture.

This would be less of a problem if stock price isn't 30% down from the peak, but it is. Tesla needs to be respectful of investors of all vintages, not only ones that bought before 2013

So, I keep holding and will vote 'no'.

I suppose you do not hold any SCTY shares? Tesla needs to buy Solarcity, there is a free factory in New York to be had and $400M less debt than Tesla thought it had to take on. Also, new replacement roofs need to be done yearly in North America, MANY MANY roofs. Why not make them solar shingles? There is a huge market, and merging both Tesla and Solarcity would create a major player, if not the biggest player, in the macro renewable energy trend. Please watch this:

Basically the conclusion of the presentation by Tony Seba is pretty much what Tesla will be after engulfing Solarcity. It'll be best positioned in the world and probably end up becoming one of the biggest if not the biggest companies in the world. Do the Earth a favour and hold onto your Tesla shares, buy some Solarcity shares, and vote YES.

By the way, Tesla would be getting SCTY on the cheap in an all-stock style offer instead of a cash offer. Usually all-stock offers are less premium than cash+stock or cash. Albeit, today's SCTY price seems cheaper, but to purchase 100% of all shares of SCTY on the public market would drive the price up undoubtedly in an uncontrolled manner. Doing a merger at a % of TSLA shares is fine and actually quite favourable to Tesla.

 

[150 kWh]

This is along the lines of what I was thinking, that SCTY is a long term hedge against utilities that wouldn't play nice, and possibly escalating electricity prices that would hamper EV adoption.

My problem with this is buying this long term hedge comes at the expense of short and mid term results. SCTY is not needed for at least couple of years, probably up to five, and in the meantime will weight heavily on results and confuse financial picture.

This would be less of a problem if stock price isn't 30% down from the peak, but it is. Tesla needs to be respectful of investors of all vintages, not only ones that bought before 2013

So, I keep holding and will vote 'no'.

In my opinion if the SCTY deals doesn't go through, TSLA will plummet even more. It would be signaling that Tesla investors don't trust it's management. It will also left Solarcity financing in though spot. Shorts would be screaming: "Elon Musk's (second) company is facing bankruptcy" which will put additional pressure on TSLA.

I think at this point, voting "no" has very limited upside but significant downside implications.