WSJ: Tesla’s Stock Ignores the Competition

[stephenpace]

Another negative piece from the WSJ, this time from Charley Grant:

http://www.wsj.com/articles/teslas-stock-ignores-the-competition-1441990454

I enjoy winding up the commenters.

 

[S'toon]

Copy of the article without the paywall:
http://www.ibloomberg.net/teslas-stock-ignores-the-competition-heard-on-the-street/

It isn’t yet known what the Model 3 will offer–Tesla’s Model S luxury sedan has a range above 200 miles–but the Leaf also carries a relatively modest price tag of $26,700 after tax credits.

What he doesn't mention is the Model 3's $35,000 - $8500 tax credit is $26,500. He also ignores the Model 3s projected range of 200+ miles. So, more range for less price.

 

[Auzie]

Another negative piece from the WSJ, this time from Charley Grant:

http://www.wsj.com/articles/teslas-stock-ignores-the-competition-1441990454

I enjoy winding up the commenters.

I usually find WSJ articles and comments quite disagreeable and that makes me not go there or abandod the read if I follow the link.

I checked your comments, thanks for the effort in educating that difficult public segment that is WSJ subscribers

 

[Objective1]

I read that, too, and thought it was embarrassing. It didn't address Tesla's exceptional margin on sales compared with other car companies, its technological lead, its second market in battery electricity storage, or the fact that no other BEV straight-up compares to a Tesla. These articles that confuse the cost of investing for 100% increases in production (with Model X and onward) with the cost of sales are shameful.

 

[EVNow]

I've not read the article- don't plan to. I stay away from right wing propaganda.

But I somewhat agree with the title. As you can read on TMC there are a lot of investors who completely dismiss even the possibility of a serious competitor.

 

[Skotty]

I completely dismiss even the possibility of a serious competitor because there is not even a hint of a serious competitor. If Nissan builds a 200+ mile Leaf, tames down the bug eyes, and begins a massive plan to build CHAdeMO chargers along all the major interstates, then there will finally be a serious competitor. But even then it would likely take them 3 years just to get to where Tesla is now.

Actually, at this point, if you want to be a serious competitor, you probably need to adopt the Tesla charging standard and sign on with Tesla to share the Supercharging network. But I don't see anyone doing that until the Tesla spankings get so severe that it's leaving everyone elses butts red.

 

[Phil Seastrand]

But I somewhat agree with the title. As you can read on TMC there are a lot of investors who completely dismiss even the possibility of a serious competitor.

I also don't see any serious competitor on the horizon. There's an article on Gas 2.0 that says the BMW i5 will be a hydrogen fuel cell, not a BEV. Tell me that's the best the competition can do? Really? And it's reported to not be available until 2020! I'm not worried at all.

 

[EVNow]

The above 2 posts prove my point. May be the valuation of TSLA makes sense only if you assume there won't ever be serious competition. As a long time TSLA investor - I think that a good possibility of serious competition exists in the next 5 to 10 years.

 

[jerry33]

The above 2 posts prove my point. May be the valuation of TSLA makes sense only if you assume there won't ever be serious competition. As a long time TSLA investor - I think that a good possibility of serious competition exists in the next 5 to 10 years.

If there is, it won't be from the current crop of automakers. There is just too much money for them by keeping the status quo. 10-20 years is a possibility as ICE becomes even more obsolete.

 

[vdiv]

Is the lack of real competition good for Tesla? Based on developments so far the answer seems to be yes, but if we consider the objective to proliferate plugin EVs then the answer is not so much.

 

[smac]

Is the lack of real competition good for Tesla? Based on developments so far the answer seems to be yes, but if we consider the objective to proliferate plugin EVs then the answer is not so much.

It depends if you are an investor or a consumer.

Right now Tesla have a somewhat monopolistic position, and certainly some pretty significant customer service gaffes (Ranger service in particular), I feel would likely be a little more thought trough if there was some realistic competition.

So yes I say bring it on, competition can be good, and strengthens the position for all.

 

[Objective1]

@EVNow. That article was not very good. But it wasn't "right wing propaganda." You seem to have confused the WSJ editorial page with their business news.

Look: it's not irrational to say a) No USA car startup has succeeded in nearly a century. b) Tesla is a small-volume manufacturer. c) The big dogs ought to be able to compete. d) Tesla's stock price bakes-in high anticipated future earnings. Conclusion: given all the foregoing, Tesla's stock is overvalued.

I don't agree myself, but the argument is not propaganda.

 

[dsm363]

If the Model 3 is a runaway success then I could see someone like BMW or Mercedes waking up and producing a good EV. Not in the next 5 years though.

 

[Zythryn]

The above 2 posts prove my point. May be the valuation of TSLA makes sense only if you assume there won't ever be serious competition. As a long time TSLA investor - I think that a good possibility of serious competition exists in the next 5 to 10 years.

I don't agree.
I believe the current value of TSLA makes sense if you assume no serious competition in the next 3-5 years.
Someday, there will be competition.

If someone had made a Model S before, or at the same time as Tesla, Tesla would have been gone.
They didn't.
Even if someone made a Model S competitor today, it would hurt TSLA, but unlike a few years ago, it wouldn't kill the company.
Every year Tesla gets a wider moat and is more and more resilient.
In five years, competition will have little effect.

 

[nwdiver]

The more important component here is corporate culture; Tech and Talent are necessary but insufficient to capitalize on an opportunity... you also need vision.

Kodak invented digital image sensors in 1975 but they were never able to really capitalize due to the corporate paradigm surrounding film cameras... also their reluctance to cannibalize film sales.

The Legacy Automotive Manufacturing Enterprises (Lames) are mired in the same trap... they lack the vision that EVs are the future and don't want to cannibalize engine and transmission sales. They likely see it as more beneficial to keep fighting EVs than produce them.... I doubt they will offer an alternative without an intentional handicap (too expensive, too ugly or too little range) for several more years. The Lames are far more interested in prolonging the ICE-age than in producing appealing EVs... advantage Tesla :wink:

 

[Krugerrand]

If the Model 3 is a runaway success then I could see someone like BMW or Mercedes waking up and producing a good EV. Not in the next 5 years though.

If this happened: on one hand they'd have a target to aim for, on the other hand it's a fast moving target. How could they possibly offer something at least on par? I suppose they could deck their EVs out in luxurious materials and such, but if they aren't buying the 'guts' (batteries, drivetrain, Supercharger Network access and such) from Tesla, then what can they honestly produce? According to an ER statement made by Elon, Model 3 is going to likely have the third iteration of motor and at least a second iteration of the battery. Superchargers are on their third already and we've got the possibility of automatic snake connectors coming. I can't see a path to parity for BMW or Mercedes if they wait for Model 3 to be out and about to get serious.

 

[SebastianR]

If this happened: on one hand they'd have a target to aim for, on the other hand it's a fast moving target. How could they possibly offer something at least on par? I suppose they could deck their EVs out in luxurious materials and such, but if they aren't buying the 'guts' (batteries, drivetrain, Supercharger Network access and such) from Tesla, then what can they honestly produce? According to an ER statement made by Elon, Model 3 is going to likely have the third iteration of motor and at least a second iteration of the battery. Superchargers are on their third already and we've got the possibility of automatic snake connectors coming. I can't see a path to parity for BMW or Mercedes if they wait for Model 3 to be out and about to get serious.

I agree at least to some point. I think the technology advantage of Tesla right now is pretty good. However, there are issues that relate to available capital and these might have an impact. If we assume for a second, that we need 10 more Gigafactories to make a serious dent in car sales world-wide, then I believe the one who finds intellectual and fiscal capital to build these factories first will win. We know that Tesla has a huge advantage on the intellectual capital but GM, VW, Toyota & Co could (if they only wanted) raise more money quicker and at a larger scale than Tesla.

Same thing with the Supercharger network: Of course Tesla has a huge advantage in terms of technology and reach, but if someone would start to spend real serious money, then Tesla would lose that advantage.

 

[dsm363]

No tech company is immune from competition or can keep their lead forever. The automakers have thousands of talented engineers and lots of resources I'm sure but there currently is no willpower to compete. That could easily change if they saw their future in the industry threatened. That could well take many many years though and maybe Tesla will be the dominant force by that point. Will be interesting to watch what happens.

 

[Krugerrand]

We know that Tesla has a huge advantage on the intellectual capital but GM, VW, Toyota & Co could (if they only wanted) raise more money quicker and at a larger scale than Tesla.

Same thing with the Supercharger network: Of course Tesla has a huge advantage in terms of technology and reach, but if someone would start to spend real serious money, then Tesla would lose that advantage.

Well, there is an interesting limit to money...there's some things that you simply can't throw more money at to make it happen faster.

 

[RobStark]

The automakers have thousands of talented engineers and lots of resources I'm sure but there currently is no willpower to compete.

The legacy automakers outsourced most of their electrical components in the late 90's - 00's. They largely closed their electrical engineering departments and fired their electrical engineers. And kept their mechanical engineers to focus ICE powertrains,manufacturing body panels, and final assembly.


They got rid of the wrong guys. On top of that the legacy OEMs have outsourced most of their software development. They are giving up control of their dashboards to Microsoft,Apple, and/or Google. They are keeping their core competency in making ICE that last 100k-300k miles. Even outsourcing transmissions more and more everyday.

Tesla correctly is keeping software development in house as well as powertrain technologies. Yes, they have partnered with Panasonic for cell development but hey Rome was not built in a day.

Legacy OEMs need more than plans to build 300 mile BEVS and fast charging national networks.

They need to start breaking ground on serious battery cell capacity factories. On their own, in partnership with each other or with a battery maker. The idea that LG Chem or Samsung SDI is going to make all the battery cell investment for the global auto industry and take all the risk outside of Tesla and Chinese automakers then give European,Korean,Detroit and Japanese automakers rock bottom prices and mass volume to compete with Tesla is beyond silly. It is ludicrous.

LG Chem and Samsung SDI will make conservative investments until legacy automakers prove they are selling enough BEVs to justify expansion or if they do make aggressive investments alone they will demand prices justifying those risk.

Meanwhile Tesla charges ahead with the accelerator pedal to the metal. Expanding capacity of cells,gliders,Supercharger Network,and Sales & Service Network ASAP.