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Long-Term Fundamentals of Tesla Motors (TSLA)
- Thread starter Robert.Boston
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- elon is an ass investing TSLA
For those who don't spend time wandering into the other forums, I highly recommend having a look at this one to get a sense of the incredibly broad appeal of the Model 3. It's also a fun read.
If You're Reserving -what car are you coming from?
If You're Reserving -what car are you coming from?
That's pretty great. When they add the Model Y, the pair will sell a million cars per year. Pretty certain.
A shortened version of the following was posted earlier on the Short-Term Investing Thread.
You might be interested in a Charlie Rose Interview with John Kerry. It is totally off topic so I will shortly post a more extended review on the long-term and macro threads.
John Kerry; Tina Brown
Despite nearly forty years teaching about foreign policy, with some direct practice at the microbe level within the Federal policy bureaucracy, I learned a lot from Kerry.
Rose often annoys me with his questions but most of the time in this program they are spot on. Rose asked what foreign leaders think of our elections today. Kerry reluctantly responded but gave one example of the dangers others perceive. One candidate suggested the North Korean problem could be solved if we gave the nuclear weapon to South Korea and Japan. “That can’t happen.”
The most interesting to an academic theorist was his observation in the last century most international politics was about state actors. Now with a few contrary examples, which he listed—Russian Ukrainian hotspots (I would add our aborted effort at nation building in Iraq)—non-state actors recently show they have and will continue to dominate the bulk of international relations problems in this century. He then launched into a very humane and civilized listing of the causes of terrorism, his concern about the widespread examples of poor governance, the ghettoizing of Muslims in the so-called advanced western countries, widespread corruption, and poverty. Social media coalesces this discontent with the status quo into very real threats almost everywhere.
Social media and international relations? That sounds like an interesting 21st century course in politics among nations.
Kerry was quite firm in support of Obama as Charlie Rose battered him unsuccessfully with questions the great-unwashed use to cut down the president. Nonetheless, he was not defensive.
For example, on the macro thread I have firmly criticized Obama for drawing a red line in Syria over use of chemical weapons. The president should never draw a red line and then not be prepared to go to war if necessary when it is violated. Without defensiveness, Kerry pointed out there were backchannel communications among the administration and both Russian and Iranian authorities on this issue, including direct communication between Obama and Putin over the problem, until they agreed upon an alternative which Putin could take credit for! There was a mutual interest of Iran, Russia, and the U.S. to see a broader reduction in all of Syria’s chemical arms lest they fall into terrorist hands.
Is Trump that sophisticated at negotiation?
There are other examples woven into this interview of negotiations with adversaries over Syria.
My second exposure to education about international relations occurred when I took a graduate seminar in theories of international politics from the great “power theorist” Hans Morgenthau who was moonlighting at Harvard one summer.
IR wonks will remember Morgenthau, George Kennan, and other prominent practitioners and academics were writing about the need for a more confrontational “power” approach to international threats in the post World War II period. Their view was contrary to the focus during the interwar period on “idealism” or peace through international law and organization. However, professor Morgenthau always said there was a moral element to his theory: it must assure the outcome is expedient. Eventually at the height of the Vietnam War he held a press conference at the Pentagon announcing he would no longer consult for the Defense Department because the Vietnam War was inexpedient.
Somewhere in one of his books, or in the class, I can’t remember, he said something to the effect when monarch’s ruled countries dynastic ties between rivals had a moral characteristic. Relations between states headed by persons could have moral accountability. To illustrate, Barbara Tuchman says somewhere in The Guns of August that Kaiser Wilhelm cursed on hearing of Russian mobilization, “if grandmother were alive, this never would have happened.” Grandmother was Queen Victoria.
Just as social media has the deleterious effect of compounding terrorist ambitions, swift communication in our age can also make transparent, because secret, communication among world leaders more effective. My view of Obama went up because of this interview as the Syria/chemical weapons discussion shows. Kerry also hinted at personal communication channels in many negotiations underway with world leaders. His approach is very similar to what Roger Fisher and others have called getting to yes.
This familiarity adds at least a personal element to diplomacy redolent of the morality possible in the personal relations of monarchs in ages past. Kerry, for example, has spent hours talking with Putin. At one point Rose interrupted when he spoke about finally being able to negotiate with the Iranians. He clarified diplomatically, something to the effect; it was hard finding someone who had enough clout to be able to talk with us about a settlement.
Another point was asking Kerry to assess what was his most important accomplishment, “the Iran nuclear deal?” Kerry responded that was a matter for future historians. I’m not a historian but I have nodding acquaintance with diplomatic history. I would rank him with Jefferson and Charles Francis Adams, our “Minister” to the Court of St. James, not at the rank of Ambassador since we were such an unimportant country. (For you wonks: Adams kept the British neutral during our civil war.)
A prominent arms control theorist in academia lamented of his experience working in the White House, “I kept looking for the adults who were in charge. There were none.”
A patient viewer comes away after this interview confident that the adults are in charge. Perhaps even Putin is an adult on some issues and that’s an admission coming from a self-professed “extinguished professor of Soviet Government and Foreign Policy.”
You might be interested in a Charlie Rose Interview with John Kerry. It is totally off topic so I will shortly post a more extended review on the long-term and macro threads.
John Kerry; Tina Brown
Despite nearly forty years teaching about foreign policy, with some direct practice at the microbe level within the Federal policy bureaucracy, I learned a lot from Kerry.
Rose often annoys me with his questions but most of the time in this program they are spot on. Rose asked what foreign leaders think of our elections today. Kerry reluctantly responded but gave one example of the dangers others perceive. One candidate suggested the North Korean problem could be solved if we gave the nuclear weapon to South Korea and Japan. “That can’t happen.”
The most interesting to an academic theorist was his observation in the last century most international politics was about state actors. Now with a few contrary examples, which he listed—Russian Ukrainian hotspots (I would add our aborted effort at nation building in Iraq)—non-state actors recently show they have and will continue to dominate the bulk of international relations problems in this century. He then launched into a very humane and civilized listing of the causes of terrorism, his concern about the widespread examples of poor governance, the ghettoizing of Muslims in the so-called advanced western countries, widespread corruption, and poverty. Social media coalesces this discontent with the status quo into very real threats almost everywhere.
Social media and international relations? That sounds like an interesting 21st century course in politics among nations.
Kerry was quite firm in support of Obama as Charlie Rose battered him unsuccessfully with questions the great-unwashed use to cut down the president. Nonetheless, he was not defensive.
For example, on the macro thread I have firmly criticized Obama for drawing a red line in Syria over use of chemical weapons. The president should never draw a red line and then not be prepared to go to war if necessary when it is violated. Without defensiveness, Kerry pointed out there were backchannel communications among the administration and both Russian and Iranian authorities on this issue, including direct communication between Obama and Putin over the problem, until they agreed upon an alternative which Putin could take credit for! There was a mutual interest of Iran, Russia, and the U.S. to see a broader reduction in all of Syria’s chemical arms lest they fall into terrorist hands.
Is Trump that sophisticated at negotiation?
There are other examples woven into this interview of negotiations with adversaries over Syria.
My second exposure to education about international relations occurred when I took a graduate seminar in theories of international politics from the great “power theorist” Hans Morgenthau who was moonlighting at Harvard one summer.
IR wonks will remember Morgenthau, George Kennan, and other prominent practitioners and academics were writing about the need for a more confrontational “power” approach to international threats in the post World War II period. Their view was contrary to the focus during the interwar period on “idealism” or peace through international law and organization. However, professor Morgenthau always said there was a moral element to his theory: it must assure the outcome is expedient. Eventually at the height of the Vietnam War he held a press conference at the Pentagon announcing he would no longer consult for the Defense Department because the Vietnam War was inexpedient.
Somewhere in one of his books, or in the class, I can’t remember, he said something to the effect when monarch’s ruled countries dynastic ties between rivals had a moral characteristic. Relations between states headed by persons could have moral accountability. To illustrate, Barbara Tuchman says somewhere in The Guns of August that Kaiser Wilhelm cursed on hearing of Russian mobilization, “if grandmother were alive, this never would have happened.” Grandmother was Queen Victoria.
Just as social media has the deleterious effect of compounding terrorist ambitions, swift communication in our age can also make transparent, because secret, communication among world leaders more effective. My view of Obama went up because of this interview as the Syria/chemical weapons discussion shows. Kerry also hinted at personal communication channels in many negotiations underway with world leaders. His approach is very similar to what Roger Fisher and others have called getting to yes.
This familiarity adds at least a personal element to diplomacy redolent of the morality possible in the personal relations of monarchs in ages past. Kerry, for example, has spent hours talking with Putin. At one point Rose interrupted when he spoke about finally being able to negotiate with the Iranians. He clarified diplomatically, something to the effect; it was hard finding someone who had enough clout to be able to talk with us about a settlement.
Another point was asking Kerry to assess what was his most important accomplishment, “the Iran nuclear deal?” Kerry responded that was a matter for future historians. I’m not a historian but I have nodding acquaintance with diplomatic history. I would rank him with Jefferson and Charles Francis Adams, our “Minister” to the Court of St. James, not at the rank of Ambassador since we were such an unimportant country. (For you wonks: Adams kept the British neutral during our civil war.)
A prominent arms control theorist in academia lamented of his experience working in the White House, “I kept looking for the adults who were in charge. There were none.”
A patient viewer comes away after this interview confident that the adults are in charge. Perhaps even Putin is an adult on some issues and that’s an admission coming from a self-professed “extinguished professor of Soviet Government and Foreign Policy.”
Along with the Model S refresh, Tesla has introduced a new Wall Connector, with daisy chain capability for up to 4 chargers on a single circuit. This new charger supports up to 80 amps and is priced similarly ($500-550) to 32 amp J1772 chargers. Seems like a clue to Tesla's ambitions for L2 charging, and how they will go about meeting the goal Elon mentioned of greatly expanding the destination charger program in the Model 3 reveal. Cheaper units, and easier/cheaper shared wiring seems like they should heavily promote these units for parking garages and other locations in the destination charging program. Existing locations could potentially add additional chargers to their existing circuits, allowing more cars to charge. Do any other chargers have this capability?
My feeling is that we have hit a whole new level with regards to long term potential of tesla. A few years ago we should have been happy to be "competitive" with regards to EVs at the time of the model 3 launch, now it is clear that tesla has a massive, massive lead with regards to EVs in the 2016-2019 timeframe.
Beyond that the company is well ahead of any competitor with regards to GF or supercharger infrastructure and has established themselves as the leader in luxury and performance EVs.
To me the valuation question now becomes one of size of disruption of the current ICE marketplace vs. number of cars built.
I think model 3 launch has shown that the demand is basically limitless - question becomes one of who can supply.
Beyond that the company is well ahead of any competitor with regards to GF or supercharger infrastructure and has established themselves as the leader in luxury and performance EVs.
To me the valuation question now becomes one of size of disruption of the current ICE marketplace vs. number of cars built.
I think model 3 launch has shown that the demand is basically limitless - question becomes one of who can supply.
Ticking off boxes:
Model S, X, and pending 3 to round out the fleet--check
(Promised future Y and possible P--pick up; future product line is expandable).
AutoPilot, OTA updates--check
(New software features and autonomy. Greater capacity for fleet learning, etc...)
Supercharging capacity (Highway, long trips)--check
(Obviously will continue to develop stations and improve charging capacity)
Additional daisy chaining HPWC capacity (Increased capacity for Destination charging, apartments, work, etc...)--chk
(Personally love this, as I believe depending on how this works, it will really boost capacity for local charging which will increase EV adoption and take the strain off the super chargers, hopefully).
Power wall back-up (provide stable dependable power irregardless of grid strain)--check
Needs:
Greater service center build outs in less urban areas...
(Possible franchise options?)
Overcome legislative hurdles to allow greater access to markets blocked by dealer franchise laws...
Increase spare parts availability...
Potential:
AutoPilot and Autonomous driving for potential taxi/ride share market. Additional "rental" income.
Greater partnership capability with other automakers can provide extra income/market capacity (Tesla powered Ford F-150, I can put this in TMC, I'm sure I'd get lynched in a Ford forum)...
Supercharger network can ultimately be "rentable" to other EV carmakers and provide additional revenue stream.
I'm sure there are other things I cannot think of right now, but in summary:
Long-term fundamentals are EXCELLENT.
Model S, X, and pending 3 to round out the fleet--check
(Promised future Y and possible P--pick up; future product line is expandable).
AutoPilot, OTA updates--check
(New software features and autonomy. Greater capacity for fleet learning, etc...)
Supercharging capacity (Highway, long trips)--check
(Obviously will continue to develop stations and improve charging capacity)
Additional daisy chaining HPWC capacity (Increased capacity for Destination charging, apartments, work, etc...)--chk
(Personally love this, as I believe depending on how this works, it will really boost capacity for local charging which will increase EV adoption and take the strain off the super chargers, hopefully).
Power wall back-up (provide stable dependable power irregardless of grid strain)--check
Needs:
Greater service center build outs in less urban areas...
(Possible franchise options?)
Overcome legislative hurdles to allow greater access to markets blocked by dealer franchise laws...
Increase spare parts availability...
Potential:
AutoPilot and Autonomous driving for potential taxi/ride share market. Additional "rental" income.
Greater partnership capability with other automakers can provide extra income/market capacity (Tesla powered Ford F-150, I can put this in TMC, I'm sure I'd get lynched in a Ford forum)...
Supercharger network can ultimately be "rentable" to other EV carmakers and provide additional revenue stream.
I'm sure there are other things I cannot think of right now, but in summary:
Long-term fundamentals are EXCELLENT.
Don't underestimate the value of having a very aggressive, agile and growth oriented organization that is behind all these actions. Even if Tesla had nothing but was what it is now from that perspective, they'd still be worth a lot.
"March Was The Most Abnormally Hot Month Ever Recorded On Earth" - BuzzFeed News
March Was The Most Abnormally Hot Month Ever Recorded On Earth
March Was The Most Abnormally Hot Month Ever Recorded On Earth
Saudi Arabia's Tesla Roadmap
This link has been floating around on a few other threads, and from an environmental perspective, it's great.
As a Tesla investor, it worries me. As much as I love Tesla and think they are leaps and bounds ahead of anyone else, I'm unsure how much *technological* edge they have over anyone else, at least with regard to Tesla Energy. I feel like a big chunk of Tesla's current position is first-mover advantage, and just being the farthest along in scaling things out.
But everyone in the world is working to make better batteries. Does tesla really have better ones? I doubt it, and they've stated that they're scraping together $5b to build a factory for an economy of scale play (with some money spent on battery R&D, but with not nearly as much emphasis).
Which to me means that someone like Saudi Arabia or Apple, both of which have $5b (or $100b) laying around ready to deploy, could play the scaling game much more aggressively than Tesla, and at the very least give them a run for their money if not beat them to the punch.
This link has been floating around on a few other threads, and from an environmental perspective, it's great.
As a Tesla investor, it worries me. As much as I love Tesla and think they are leaps and bounds ahead of anyone else, I'm unsure how much *technological* edge they have over anyone else, at least with regard to Tesla Energy. I feel like a big chunk of Tesla's current position is first-mover advantage, and just being the farthest along in scaling things out.
But everyone in the world is working to make better batteries. Does tesla really have better ones? I doubt it, and they've stated that they're scraping together $5b to build a factory for an economy of scale play (with some money spent on battery R&D, but with not nearly as much emphasis).
Which to me means that someone like Saudi Arabia or Apple, both of which have $5b (or $100b) laying around ready to deploy, could play the scaling game much more aggressively than Tesla, and at the very least give them a run for their money if not beat them to the punch.
adiggs
Well-Known Member
The way I see it (and what guides my investing decision in Tesla), the basis of what makes Tesla different and so much better than the other car makers isn't the particular technology they are using. It is generally the case that if you define your competitive advantage in terms of today's technology, then your advantage is fleeting at best.
And as you point out, if the advantage is defined in terms of capital being deployed to scale up cell and pack manufacturing - well then there are a lot of people with a lot more money they can deploy.
If either of these are what somebody sees and is using as the basis for investing in Tesla, then both of these look fleeting and easily replaced / available to others.
For me, what I see that is so different about Tesla is their vision and approach to this market. It's squishy, but I would say it's the vision and the culture of the company - the vision to accelerate the advent of sustainable transportation, and the focus on building great cars that happen to be electric that vision requires. The vision and the culture makes it nearly impossible for Tesla to NOT build the Gigafactory in Nevada, while the other visions / culture in the car industry make it nearly impossible for other car manufacturers TO build their own Gigafactory.
The day I click into an article talking about how BMW (or Mercedes, or Toyota, or GM, or whoever) is talking about how the company is selling out on full function, excellent EVs, including excellent utility for the individual vehicle markets, huge quantities of battery production capacity, and a clear and deep commitment to obsolete their ICE technology in favor of this new thing - that is the day that Tesla's differentiation may be coming to an end (at least for me).
More precisely, that is the day when Tesla may be matched competitively, and then I have something to compare with Tesla to decide which investment (if either), I prefer.
I'm excited GM is planning to build 30k Bolts - but it doesn't change my view of GM as a competitor of Tesla (I see them today as a dead dinosaur that hasn't realized its dead, and fallen over yet).
In my view of the world, the only enduring source of competitive advantage is the culture you have. Or enduring source of competitive disadvantage
Tesla has the appetite for change and learning and experimentation that I believe to be vital for success in the information economy, while the rest of the car makers are working from an industrial revolution paradigm of economic success. That paradigm is losing to the information economy paradigm, and it makes for a particularly large and excellent long term investing play, as I still don't see evidence of the "competition" taking the change in their industry really seriously yet.
Evidence they are serious would include:
- what they say publicly (something like "EV is the future, and we are selling out internally in our organization structure, R&D, and capital deployment plans on that future").
- the vehicle concept designs they show (are they weird mobiles intended to be built in small numbers)
- the vehicles they make available for sale. Are EV's they sell available broadly in the US, or in the CARB states? (Serious vs. compliance)
I see evidence today of growing discomfort in the auto industry. I don't yet see evidence that companies have deeply internalized how the world is changed, and how they can leap ahead and push that change along even faster. Today I only see evidence of how they will catch up with Tesla-5-years-ago, and how they will drag their feet as slow as possible to continue milking their current business.
Interestingly - Innovator's Dilemma suggests that the other car makers may even experience a local peak in profitability while their business is disappearing underneath them, further diminishing their desire to make the big changes they need to be making. Further delaying the start of the big changes, and increasing the likelihood that the big changes will come too late and result in bankruptcy. I expect a lot of auto manufacturer bankruptcy over the next 10 years.
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And as you point out, if the advantage is defined in terms of capital being deployed to scale up cell and pack manufacturing - well then there are a lot of people with a lot more money they can deploy.
If either of these are what somebody sees and is using as the basis for investing in Tesla, then both of these look fleeting and easily replaced / available to others.
For me, what I see that is so different about Tesla is their vision and approach to this market. It's squishy, but I would say it's the vision and the culture of the company - the vision to accelerate the advent of sustainable transportation, and the focus on building great cars that happen to be electric that vision requires. The vision and the culture makes it nearly impossible for Tesla to NOT build the Gigafactory in Nevada, while the other visions / culture in the car industry make it nearly impossible for other car manufacturers TO build their own Gigafactory.
The day I click into an article talking about how BMW (or Mercedes, or Toyota, or GM, or whoever) is talking about how the company is selling out on full function, excellent EVs, including excellent utility for the individual vehicle markets, huge quantities of battery production capacity, and a clear and deep commitment to obsolete their ICE technology in favor of this new thing - that is the day that Tesla's differentiation may be coming to an end (at least for me).
More precisely, that is the day when Tesla may be matched competitively, and then I have something to compare with Tesla to decide which investment (if either), I prefer.
I'm excited GM is planning to build 30k Bolts - but it doesn't change my view of GM as a competitor of Tesla (I see them today as a dead dinosaur that hasn't realized its dead, and fallen over yet).
In my view of the world, the only enduring source of competitive advantage is the culture you have. Or enduring source of competitive disadvantage
Tesla has the appetite for change and learning and experimentation that I believe to be vital for success in the information economy, while the rest of the car makers are working from an industrial revolution paradigm of economic success. That paradigm is losing to the information economy paradigm, and it makes for a particularly large and excellent long term investing play, as I still don't see evidence of the "competition" taking the change in their industry really seriously yet.Evidence they are serious would include:
- what they say publicly (something like "EV is the future, and we are selling out internally in our organization structure, R&D, and capital deployment plans on that future").
- the vehicle concept designs they show (are they weird mobiles intended to be built in small numbers)
- the vehicles they make available for sale. Are EV's they sell available broadly in the US, or in the CARB states? (Serious vs. compliance)
I see evidence today of growing discomfort in the auto industry. I don't yet see evidence that companies have deeply internalized how the world is changed, and how they can leap ahead and push that change along even faster. Today I only see evidence of how they will catch up with Tesla-5-years-ago, and how they will drag their feet as slow as possible to continue milking their current business.
Interestingly - Innovator's Dilemma suggests that the other car makers may even experience a local peak in profitability while their business is disappearing underneath them, further diminishing their desire to make the big changes they need to be making. Further delaying the start of the big changes, and increasing the likelihood that the big changes will come too late and result in bankruptcy. I expect a lot of auto manufacturer bankruptcy over the next 10 years.
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Because of the rate of change in heavy industry, Tesla has years of advance notice any potential competitor is coming along. It takes 3-5 years to build a Gigafactory, or equivalent. An established auto maker can repurpose an existing plant, but there would be rumors swirling when the plant closes down for an extended period and auto makers are generally open about what they are building in what plants. A new start up would have to build their own factory which is also lilely to take 3-5 years.
I think one of the reasons the big automakers aren't jumping into EVs with both feet is they are waiting for the perfect battery chemistry to come along. Or at least that's a convenient excuse they can use while dragging their feet.
I'm sure the Gigafactory is built with evolving battery chemistry in mind. I'm sure Tesla is planning to retool the factory as needed. Additionally, any major advancements in battery chemistry are going to have a 10 year lead time from breakthrough to production. The only scenarios where Tesla doesn't get its hands on this new technology first or about the time many other car makers can are the slim cases where a car maker invents it themselves and keeps it from everyone else. Car makers are putting R&D money into battery research, but 90%+ of new battery technology research is done outside the car makers' control.
Tesla also has another advantage to rely on. They have built up a huge base of institutional knowledge around EVs nobody else has. These are things the company does that aren't written down, it's just the community of people doing it knows it and passes it on to newer employees from working with them. One of these things Tesla knows is battery management technology (software and hardware). Other companies are working on it, but Tesla appears to be the leader and they are just getting better.
Tesla is better poised to take advantage of a new advancement in battery tech. Their battery support engineering team know all the upsides and downsides of battery tech and know how to the get the most out of a battery without damaging it. They may have to formulate a new approach with an all new battery tech, but knowing more about the ins and outs of the previous generation gives them a leg up in developing something for the next generation. Especially at Tesla where the corporate culture is all based on revolutions as opposed to a well established company where people get rewarded to doing things the GM Way or the VW Way rather than thinking outside the box.
Yeah, the EV side of things I'm not so worried about. Competitor car makers are screwed in several ways and totally Tesla should be building the gigafactory regardless of if others are building similar factories. And they'd be fools not to plan for chemistry changes, of course.
The Tesla Energy side of things though is what looks more precarious to me. I think they have a far less defensible position with it, especially because Apple already needs lots of batteries and by all indications is about to need a lot more for their car. Saudi-Aramco knows the writing is on the wall, is accustomed to being a huge energy supplier to the world, and is accustomed to mobilizing lots of highly trained engineers on huge infrastructure projects. Both have the financial resources to significantly out-scale Tesla and undercut them on battery price with GFs of their own.
Of course, we currently know very little about Tesla Energy. But we know that renewables installations are increasing at a rapid pace and bypassing the development of traditional grid infrastructure in many places. Energy storage could end up being the bigger story that comes out of EVs, and I think it's far from certain that Tesla will be a leader in it. I'm honestly unsure how Tesla plans to support a battery storage business -- it seems like the GF's capacity is already spoken for with the Model 3, so it seems like storage would be a side project for them for a while.
The Tesla Energy side of things though is what looks more precarious to me. I think they have a far less defensible position with it, especially because Apple already needs lots of batteries and by all indications is about to need a lot more for their car. Saudi-Aramco knows the writing is on the wall, is accustomed to being a huge energy supplier to the world, and is accustomed to mobilizing lots of highly trained engineers on huge infrastructure projects. Both have the financial resources to significantly out-scale Tesla and undercut them on battery price with GFs of their own.
Of course, we currently know very little about Tesla Energy. But we know that renewables installations are increasing at a rapid pace and bypassing the development of traditional grid infrastructure in many places. Energy storage could end up being the bigger story that comes out of EVs, and I think it's far from certain that Tesla will be a leader in it. I'm honestly unsure how Tesla plans to support a battery storage business -- it seems like the GF's capacity is already spoken for with the Model 3, so it seems like storage would be a side project for them for a while.
dc_h
Active Member
The oil industry is a very, very different business from the battery business. The oil biz is mostly a mining and refining business whereas the battery business is a major manufacturing business with many steps from raw material to final product.
The oil biz is also very capital intensive with very few employees where any kind of manufacturing requires more employees. If you look at some of the top companies on the Fortune 500 big manufacturing companies like Boeing and GE have over 100,000 employees where oil companies like Exxon-Mobil and Standard Oil have about 15,000 to 20,000 worldwide. The oil business had billions invested in infrastructure, but a very small number of people maintaining that infrastructure. One of the criticisms of the Keystone Pipeline is that it would only create about 20 long term jobs once it was built.
Saudi Arabia has a very small population of native Saudis. Most of the people doing the grunt work there are contract labor from other countries. They have trained a cadre of highly skilled oil professionals to run Aramco's operations, but very few native Saudis would do manufacturing work. If the Saudis invest in a battery factory, it's going to be somewhere other than Saudi Arabia. They aren't fans of China, so likely locations would be South Korea, Japan, or the US.
If they start an electric car company they would probably place it in California like a lot of the other start ups. If they do move in that direction, they are starting from scratch at least 5 years behind Apple and at least 10 years behind Tesla. They have the cash to throw at it and it might be a good investment for them, but it would likely help the US economy in the long run. There would be little overlap between Aramco and the Saudi car company though beyond Aramco being a potential investor.
Johan
Ex got M3 in the divorce, waiting for EU Model Y!
I posted some stuff after having seen DaveT's talk with jesselivenomore and I thought I would post it as a more coherent post here, and if there's maybe some of the points that warrant discussion further it could be done here in this thread.
1. Everyone waiting in lines were really early adopters. No main stream adopter, however early in the main stream, takes day off work to stand in line in the cold. Everyone acknowledges this, bulls and bears. So if we can all agree that there are "early adopters" well then guess what, we have also agreed that the while be a huge future demand boom as the main stream adopters kick in.
2. The current valuation of TSLA is based on models that look in to the future. To do this the models take in to account mainly information from Tesla about how they see their future growth, revenue and profit. Then the model discounts/modifies Tesla's own valuation of its future based on other inputs (such as the level of faith in that Tesla will be able to do what they are setting out to, based on the macro environment, politics etc.) and calculates a valuation of the future. And the valuation of the future becomes exactly the valuation of today as shown in the stock price. The stock market in total is the ultimate sum of all the valuation models out there.
3. A capital raise would be a very, very bullish signal and will of course change our future valuation of Tesla, thus also our current valuation (which is a direct result of the valuation of the future). A capital raise going mainly toward increasing Model 3 production is very bullish. It will increase reservations in Model 3 - a lot more adopters will come in when they understand that they can get a Model 3 earlier. It feels better getting in line at number 400k when you know that there was just an increase in production volume which, even if the launch of Model 3 can't be moved closer, means you will get your particular car faster now than before the production increase was announced.
4. If someone on this forum, looking backwards in time, has been able to confidently out-trade a buy-and-hold strategy then you have just proven that you up until now have been able to take all the information about Tesla and incorporate it in to your price model (I'll call this your "weighing" of the stock) better than the stock market as a whole during this time period. The only way you can beat the market is to outsmart it, if we're not talking about one lucky trade or something. So there's no reason for you to stop trading TSLAif the results are still showing that you're good at trading TSLA. If you get bad results in your trading repeatedly, well then you probably stop trading since it would imply you've lost your edge with TSLA.
5. Short interest is definitely a technical variable, part of TA and not value investing. The fundamental valuation of TSLA isn't changed by the short interest. But the short interest figure does tell us a lot about the psychology surrounding TSLA, the cultural influences, political etc. And it's an important technical indicator when understood, i.e. as long as we are sure that the shorts are wrong in the way they're understanding TSLA (i.e. we the longs are still understanding them better), we should be happy the short interest is high as it signals we still have the information advantage arbitrage.
6. Model X is for China! The air filter! The flashy doors! The newly rich mainland Chinese love to show off their riches. This is a different culture than in the EU and US. This is also the reason for the somewhat lukewarm reception of the Model X among Americans and European long time Tesla bulls here on TMC. I myself for example cancelled my reservation because of the seating arrangements in the 2nd and 3rd row, lack of folding 2nd row, problems with transporting skis, and an understanding that the doors are overengineered. That's OK though: the car isn't meant for me. It's meant for newly rich mainland Chinese people. It has barely started to impact China. It could impact China heavily over the next 12 months or so. To conclude that the X has been a semi-failure to Tesla is to jump the gun. We must be patient.
7. When it comes to downside one would think TSLA would be more vulnerable to a recession than your average stock, because it's value is highly dependent on future growth. So traditionally one would think that TSLA would drop more in a recession where future outlook suddenly bleaks. However the already 400.000 pre-orders to Model 3 is a huge protection against this, it's "something tangeable" rather than something fuzzy and it should help Tesla greatly to keep getting access to capital even in a recession.
8. Regarding short squeeze dynamics: Those of us who have been in the stock since early (2012-2013) and rode it up from the $20s or $30s we have already experienced a major major bull run, so it's hard for us to zoom out and see that those days for us, where we were super exited for a bull run from $27 to $38 is just a little blip all the way to the left of the curve, some noise, to most of the market and traders who all got in to Tesla in 2014 and 2015, after it had become an established higher-cap stock. This is why we have a hard time having faith in yet another short squeeze coming, only this one starting from a much higher valuation. But it's coming. One important dynamic in this is that the shorts are misunderstanding the company, thus seeing any further raise in stock price as unwarranted and makes them want to wait for "that unevitable pullback". Well guess what, it's not coming - your (the short's) valuation model is wrong.
1. Everyone waiting in lines were really early adopters. No main stream adopter, however early in the main stream, takes day off work to stand in line in the cold. Everyone acknowledges this, bulls and bears. So if we can all agree that there are "early adopters" well then guess what, we have also agreed that the while be a huge future demand boom as the main stream adopters kick in.
2. The current valuation of TSLA is based on models that look in to the future. To do this the models take in to account mainly information from Tesla about how they see their future growth, revenue and profit. Then the model discounts/modifies Tesla's own valuation of its future based on other inputs (such as the level of faith in that Tesla will be able to do what they are setting out to, based on the macro environment, politics etc.) and calculates a valuation of the future. And the valuation of the future becomes exactly the valuation of today as shown in the stock price. The stock market in total is the ultimate sum of all the valuation models out there.
3. A capital raise would be a very, very bullish signal and will of course change our future valuation of Tesla, thus also our current valuation (which is a direct result of the valuation of the future). A capital raise going mainly toward increasing Model 3 production is very bullish. It will increase reservations in Model 3 - a lot more adopters will come in when they understand that they can get a Model 3 earlier. It feels better getting in line at number 400k when you know that there was just an increase in production volume which, even if the launch of Model 3 can't be moved closer, means you will get your particular car faster now than before the production increase was announced.
4. If someone on this forum, looking backwards in time, has been able to confidently out-trade a buy-and-hold strategy then you have just proven that you up until now have been able to take all the information about Tesla and incorporate it in to your price model (I'll call this your "weighing" of the stock) better than the stock market as a whole during this time period. The only way you can beat the market is to outsmart it, if we're not talking about one lucky trade or something. So there's no reason for you to stop trading TSLAif the results are still showing that you're good at trading TSLA. If you get bad results in your trading repeatedly, well then you probably stop trading since it would imply you've lost your edge with TSLA.
5. Short interest is definitely a technical variable, part of TA and not value investing. The fundamental valuation of TSLA isn't changed by the short interest. But the short interest figure does tell us a lot about the psychology surrounding TSLA, the cultural influences, political etc. And it's an important technical indicator when understood, i.e. as long as we are sure that the shorts are wrong in the way they're understanding TSLA (i.e. we the longs are still understanding them better), we should be happy the short interest is high as it signals we still have the information advantage arbitrage.
6. Model X is for China! The air filter! The flashy doors! The newly rich mainland Chinese love to show off their riches. This is a different culture than in the EU and US. This is also the reason for the somewhat lukewarm reception of the Model X among Americans and European long time Tesla bulls here on TMC. I myself for example cancelled my reservation because of the seating arrangements in the 2nd and 3rd row, lack of folding 2nd row, problems with transporting skis, and an understanding that the doors are overengineered. That's OK though: the car isn't meant for me. It's meant for newly rich mainland Chinese people. It has barely started to impact China. It could impact China heavily over the next 12 months or so. To conclude that the X has been a semi-failure to Tesla is to jump the gun. We must be patient.
7. When it comes to downside one would think TSLA would be more vulnerable to a recession than your average stock, because it's value is highly dependent on future growth. So traditionally one would think that TSLA would drop more in a recession where future outlook suddenly bleaks. However the already 400.000 pre-orders to Model 3 is a huge protection against this, it's "something tangeable" rather than something fuzzy and it should help Tesla greatly to keep getting access to capital even in a recession.
8. Regarding short squeeze dynamics: Those of us who have been in the stock since early (2012-2013) and rode it up from the $20s or $30s we have already experienced a major major bull run, so it's hard for us to zoom out and see that those days for us, where we were super exited for a bull run from $27 to $38 is just a little blip all the way to the left of the curve, some noise, to most of the market and traders who all got in to Tesla in 2014 and 2015, after it had become an established higher-cap stock. This is why we have a hard time having faith in yet another short squeeze coming, only this one starting from a much higher valuation. But it's coming. One important dynamic in this is that the shorts are misunderstanding the company, thus seeing any further raise in stock price as unwarranted and makes them want to wait for "that unevitable pullback". Well guess what, it's not coming - your (the short's) valuation model is wrong.
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Thanks again to @DaveT and @jesselivenomore for a great discussion.
Since sometimes we lose the forest for the trees, one of the most significant points to me in the discussion was that the 2020 target of 500,000 vehicles will need to be changed to support a capital raise. Assuming the target is raised to 1,000,000 vehicles per year by 2020, which frankly seems conservative since some Model Ys should be in the mix by then, that will obviously dramatically increase the long-term valuation model.
For what it's worth, in addition to underestimating demand for the Model 3, I believe my own expectations on Models X and S have been far too conservative. I believe 200K+ combined X and S units by 2020 is more likely than the 150K estimate I've had in mind and seen others use. In addition to the potential in China highlighted in the discussion, I believe the X is likely to be a huge hit in the US once it gets past its growing pains, and S demand is still experiencing strong growth.
My personal price targets have been for Tesla to increase 5-fold or more by 2020 and 10-20 fold by 2025. I think that would make me an uber-bull by any definition. But oddly enough, the assumptions underlying my thesis so far have proven to be far too conservative. The significant long-term surprises have been to the upside. Interesting times ....
As mentioned in another post, I hope that full autonomy is decoupled from the Model 3 launch entirely. It is completely irrelevant to the success of the Model 3 launch and creates nothing but unnecessary risk. Hubris needs to stay in a timeout : )
Since sometimes we lose the forest for the trees, one of the most significant points to me in the discussion was that the 2020 target of 500,000 vehicles will need to be changed to support a capital raise. Assuming the target is raised to 1,000,000 vehicles per year by 2020, which frankly seems conservative since some Model Ys should be in the mix by then, that will obviously dramatically increase the long-term valuation model.
For what it's worth, in addition to underestimating demand for the Model 3, I believe my own expectations on Models X and S have been far too conservative. I believe 200K+ combined X and S units by 2020 is more likely than the 150K estimate I've had in mind and seen others use. In addition to the potential in China highlighted in the discussion, I believe the X is likely to be a huge hit in the US once it gets past its growing pains, and S demand is still experiencing strong growth.
My personal price targets have been for Tesla to increase 5-fold or more by 2020 and 10-20 fold by 2025. I think that would make me an uber-bull by any definition. But oddly enough, the assumptions underlying my thesis so far have proven to be far too conservative. The significant long-term surprises have been to the upside. Interesting times ....
As mentioned in another post, I hope that full autonomy is decoupled from the Model 3 launch entirely. It is completely irrelevant to the success of the Model 3 launch and creates nothing but unnecessary risk. Hubris needs to stay in a timeout : )
Johan
Ex got M3 in the divorce, waiting for EU Model Y!
I wanted to mention something Chris (jesselivenomore) said in the Google hangout yesterday. He explained that he is a trader who knew next to nothing about Tesla in 2012 and 2013. It wasn't until after the stock had gone up from the 30s to 70 in more or less a straight line that he got interested. Initially, like most traders and fund managers, the thought is to short such a stock since, there's gotta be a pullback right? It has to be overbought, right? Well here is where most investors stopped and have been trading it since, i.e. shorting. While some, including jesselivenomore, took a good look and saw the potential. Chris said the one thing that really caught his attention was when he understood the Supercharging network. The concept of solar powered supercharging included in the price means, in its most distillled essence, that you can drive a Tesla free forever. Just think about it: disregarding wear and tear the car can be driven without fuel cost for an unlimited number of miles. And this is not a scam or a Ponzi scheme - it makes perfect sense through the mechanism of the network being solar powered and through the financial concept of front loading the investment costs (build the network aggressively to drive sales, make everyone pay in advance i.e. include the cost of building the network in to the price of the car thus pass the burden of the investment on to the consumer in advance. It is just such a brilliant concept that too many people are still underestimating.
It took me a little while to get this but I've been saying since 2014 that the SC network and concept is Tesla's most undervalued asset.
It took me a little while to get this but I've been saying since 2014 that the SC network and concept is Tesla's most undervalued asset.
Even with all the current accolades, I think Musk remains the most undervalued asset.
In fairness that's a different level of asset from your discussion. I agree Solar based fuel (SC and otherwise) is perhaps the most undervalued asset. The enormous reduction in maintenance and longevity costs is a close second. The combination is killer!
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