Analysis of Sal Demir's Tesla Analysis 2.0

[kevin99]

With daily volatility of TSLA, one has to have the coverage to be a long term Tesla investors. It would help if you have the long term view and not be affected by the daily noise while keeping up to date with the company's development and execution.

Sal's article gives an comprehensive forecast of where TSLA is going:


Tesla Motors' Full Analysis 2.0

It is an very optimistic and strong bull case. However I don't find any major flaws or anything irrationally exuberant. Anyone interested in taking a crack at the numbers and find some fault? If everyone buys in to these numbers then all he/she needs to do is hold it for 5 years and retire.

----update----


One thing I missed. I have to say it is an impressive model considering the it was done in oct 2012, when TSLA was at $30 range. So far for 2013 the trajectory is right on.

I remembered when I started investing on march, I knew TSLA will hit $70 and perhaps over $100 by year end. When I read articles that have more bullish forecast like $160 price target, I was smiling but in the back of my mind I call them crazy.

 

[TSLAopt]

With daily volatility of TSLA, one has to have the coverage to be a long term Tesla investors. It would help if you have the long term view and not be affected by the daily noise while keeping up to date with the company's development and execution.

Sal's article gives an comprehensive forecast of where TSLA is going:

Looks good to me. Part of me wants to cash out now that im so far ahead as that is the emotional part of me but part of me thinks I'll be kicking myself a lot later if/when I see the stock price go up to 500+ within a couple years as Sal's analysis shows

 

[Convert2013]

With daily volatility of TSLA, one has to have the coverage to be a long term Tesla investors. It would help if you have the long term view and not be affected by the daily noise while keeping up to date with the company's development and execution.

Sal's article gives an comprehensive forecast of where TSLA is going:


Tesla Motors' Full Analysis 2.0



View attachment 29093


It is an very optimistic and strong bull case. However I don't find any major flaws or anything irrationally exuberant. Anyone interested in taking a crack at the numbers and find some fault? If everyone buys in to these numbers then all he/she needs to do is hold it for 5 years and retire.

Looks optimistically reasonable. Infrastructure, infrastructure, infrastructure- SC Network needs to grow, charging times reduced and with swap stations too.

 

[AudubonB]

Good, hard, number-crunching, even though he does fall into the trap of trying to induce accuracy through precision. Can't be done; that's a big, though common, failure.Still, he gets high marks from me for his effort. Am wondering about squeezing 663K vehicles out of the NUMMI plant. I have read in multiple places Toyota/GM designed it for 500K, and certainly one can submit that the increased level of automation introduces efficiencies, but at the same time TM in-sources a significantly higher fraction of vehicles than the plant's earlier tenants did. That suggests a higher floor footage/vehicle ratio...indicating a lower absolute capacity. Thoughts?

 

[aronth5]

Good, hard, number-crunching, even though he does fall into the trap of trying to induce accuracy through precision. Can't be done; that's a big, though common, failure.Still, he gets high marks from me for his effort. Am wondering about squeezing 663K vehicles out of the NUMMI plant. I have read in multiple places Toyota/GM designed it for 500K, and certainly one can submit that the increased level of automation introduces efficiencies, but at the same time TM in-sources a significantly higher fraction of vehicles than the plant's earlier tenants did. That suggests a higher floor footage/vehicle ratio...indicating a lower absolute capacity. Thoughts?

Also have concern over over stated goal of 663k vehicles out of the NUMMI plant. According to Wikepedia http://en.wikipedia.org/wiki/NUMMI "Up to May 2010, NUMMI built an average of 6000 vehicles a week". That is 306k per year based on 51 weeks. (note an automotive plant always has some downtime). While that in no way excludes ramping up production to 600k+ per year I would like to see a more conservative number used.

 

[Jonathan Hewitt]

I like how we are discussing the merits of the 2019 numbers. If Sal's 2014 PPS comes out to be true I will be more than happy. Everything past that is better than the icing on the cake.

 

[c041v]

I like how we are discussing the merits of the 2019 numbers. If Sal's 2014 PPS comes out to be true I will be more than happy. Everything past that is better than the icing on the cake.

Sorry, I couldn't help myself. After reading your comment, this was the first thing that came to mind.

Money Fight - YouTube

as for Sal's analysis, is it just me or does the 2014 demand seem a little ... Low? Only 23000 when there is a strong likelihood that number could be achieved in 2013.

I also do not see 5000 X's in 2014. That's a whole quarter's worth and then some. From what I've been reading, it sounds like Sig holders will be lucky to see their X in 2014.

I realize this is a short sighted view in a long term topic, but those are the numbers I'm struggling with the most.

 

[vfx]

Also have concern over over stated goal of 663k vehicles out of the NUMMI plant......

Tesla's forward thinking has shown that today does not equal tomorrow in the Teslaverse. Is there land to expand the factory? Are there nearby sites with or without buildings that could be acquired? Are the train tracks that feed the factory still direct-line operable to other regions?

 

[StapleGun]

as for Sal's analysis, is it just me or does the 2014 demand seem a little ... Low? Only 23000 when there is a strong likelihood that number could be achieved in 2013.

Where do you see 23k? I see 41k Model S in 2014 and 5k Model X.

 

[c041v]

My mistake. I'm currently reading a book on effective techniques for communication numbers and I've had to force myself to not actually read the fictional reports of Vaporware Corporation as the formatting is the relevant part. I locked into to the green as some sort of comparison to the above number and didn't think to add as the legend suggested it was an estimate.

That said, I'm glad to be getting something out of this book.

I've also always wondered (and will now search for a thread on it) if Tilburg indirectly facilitates more production by eliminating some steps from the Freemont factory?

 

[Auzie]

Tesla's forward thinking has shown that today does not equal tomorrow in the Teslaverse. Is there land to expand the factory? Are there nearby sites with or without buildings that could be acquired? Are the train tracks that feed the factory still direct-line operable to other regions?

I would be surprised if all the future volume, as projected by Sal, comes out of NUMMI plant. One possible scenario is that half the volume comes out of NUMMI plant and the rest comes out of one plant in EU and one in Asia. Perhaps critical parts (or protected technology) only will come from NUMMI plant.

Sal's projections as tabled seem realistic to me. My only reservation is regarding projections of future share prices as tabled. I am not convinced that there is such predictable relationship between the share price and fundamentals, or in other words there may be many other factors that will have significant influence on share price that are not captured in the table.

 

[DaveT]

I just wrote a reply ripping Sal's projections (as way overly inflated), but I just deleted it cause I want to think about it some more.

In the mean time, I'm wanting to ask those who think the numbers are reasonable... How do you see Sal's estimate of 300k Model S/X in 2019 as reasonable? Especially since Elon already gave some very different projections (Tesla Motors Inc (TSLA) Envisions Selling Around 500K Units: Long Term)

 

[TSLAopt]

I just wrote a reply ripping Sal's projections (as way overly inflated), but I just deleted it cause I want to think about it some more.

In the mean time, I'm wanting to ask those who think the numbers are reasonable... How do you see Sal's estimate of 300k Model S/X in 2019 as reasonable? Especially since Elon already gave some very different projections (Tesla Motors Inc (TSLA) Envisions Selling Around 500K Units: Long Term)

Good point DaveT, but I think ultimately by 2019, if we get that gigafactory built by then, demand will determine the amount of Model S/X produced (not supply, like this year, next year, and maybe even the year or two after that). I dont have any numbers to support but i am pretty sure Model S/X will continue to be the best luxury cars (and safest which we know is important as well) by far in their price range and will reach a larger audience locally and globally each year. Just look at California to start, Model S is already outselling other luxury cars by far, this is a sign of what is coming globally, CA has a little bit of a head start to the rest of the US and the rest of the US has a little head start to Europe and Asia as well. Right now I would reasonably see demand is probably 40-60k globally per year if there was only a wait of 2-3 weeks of when you order to when you get it (ie. with the 2-3 month+ wait i bet demand is 20-30k right now based on Elons comments from Q2, maybe more after all the recent press). Within 2 years I imagine the demand will be there for at least 100-200k Model S/X globally and within 3-4 years I'm hoping production can catch up to the growing demand which could easily by 300k or more globally by then, just for the Model S/X. If this is true, imagine the wait list odor the Model E at that time (my is mouth watering).

also must realize, there are more and more millionaires each day in the global economy, especially as economic conditions remain good/stable and we don't have another major recession/depression like in 2008. By 2019 I would not be surprised if there were 50-100% more millionaires in the world (much coming from China) than there are today...not that millionaires are the only ones buying the Model S but it gives an idea to the growing wealth and number of people that can afford a Model S growing, especially the young people out of college with good jobs that want one now but can't afford it.

 

[mrdoubleb]

Well I also do not think 300K is reasonable. For comparison, BMW is the king of the hill when it comes to sales in the premium segement, but wikipedia says the made something like 60k of the 7 series in 2012.

However, I also do not understand why every analysis seems tot hink Model X sales will be lower or at most the same as Model S. Certainly in the US, whenever i go there all I see is pickups and SUVs. I would think the X will do rather well in the domestic market, I would not be suprised if it became a higher seller than the S. BMW annually produced 100k+ of the X5 for the past 3 years.

 

[kevin99]

Dave, keep your thoughts coming. I will invite Sal to reply here.
It is the crowd sourcing makes us better investors. As the old chinese saying goes, the more you debate on the truth, the clearer it gets.

 

[tslafan123]

How do you see Sal's estimate of 300k Model S/X in 2019 as reasonable? Especially since Elon already gave some very different projections (Tesla Motors Inc (TSLA) Envisions Selling Around 500K Units: Long Term)

I addressed Model S and X potential size in the other thread (hint: it's much larger than most people think):
Mature state projections for Model S, X, Gen-3 and beyond - Criticisms by anyone are welcome and appreciated.

I find it very unlikely that Tesla will top out at 500K units. Especially given that he already talking about putting up more factories in Europe and Asia.
Tesla CEO Weighs Europe, Asia Plants for Mass-Market Car - Bloomberg

 

[StapleGun]

I find it very unlikely that Tesla will top out at 500K units. Especially given that he already talking about putting up more factories in Europe and Asia.
Tesla CEO Weighs Europe, Asia Plants for Mass-Market Car - Bloomberg

Exactly. Tesla is not going to slow down at 500k, it's just the furthest target they've publicly stated at this point. I don't think they ever stated a goal over 20k per year for the Model S until quite recently. Looking at this 2011 powerpoint, they never go higher than 20k, and they estimated 10-15k for Model X.

Also consider Elon's long-term goal/bet of more than 50% of new cars being electric (by 2033 I think?). It's obvious that stopping at 500k is not going to get anywhere near that goal.

 

[borat99]

How does the $7500 credit phase-out actually work? Will the 200,000th car delivered be the last one to receive that credit?

By the way, @kevin99, would it make sense to make this available on Google Drive or something so the latest version is always available?

 

[sleepyhead]

How does the $7500 credit phase-out actually work? Will the 200,000th car delivered be the last one to receive that credit?

By the way, @kevin99, would it make sense to make this available on Google Drive or something so the latest version is always available?

Every car delivered in US in the same quarter as the 200,000th car delivered in the US will get the same $7500 credit. The next quarter I think it goes down to $3750 and then $1875 in the quarter after that.

 

[borat99]

Every car delivered in US in the same quarter as the 200,000th car delivered in the US will get the same $7500 credit. The next quarter I think it goes down to $3750 and then $1875 in the quarter after that.

Thanks, @sleepyhead. Will have to keep that in mind. I eventually want to buy a 4-door Tesla sedan but wishfully waiting for something between Model S and Gen III both size- and price-wise.

@kevin99, I just realized that you didn't create this analysis spreadsheet. Just ignore my previous comment. :tongue: