Long-Term Fundamentals of Tesla Motors (TSLA)

[Curt Renz]

Can anyone explain this price action? Going steadily downwards, against the NASDAQ, on very low volume. This on a background of strange Adam Jonas pronouncements, divesting from major holders, and the occasional very large lot coming out of nowhere, like the one today around 11:52.

I feel like the poker player trying to understand who the sucker is, and I don't like the feeling.

Ford is dragging down the automaker sector following its earnings report. During its conference call Ford said it had broken down a Model S and could build one if it wanted, but has no current plans to do so. Also today, Porsche indicated it is in the formulation stage of developing a competitor to the Model S.

Of course Elon said he would welcome the other automakers getting serious about electric cars. It would inspire more consumer interest in electric cars and validate Tesla's position.

Meanwhile, how would these other manufacturers obtain sufficient numbers of battery packs? The Tesla Gigafactory?

 

[anticitizen13.7]

Just saw this article come out about Porsche building an electric car to compete with Tesla. In the medium term, I think it's good more traditional auto companies are hopping on the EV bandwagon as we'll get to critical mass for the ICE car death spiral sooner. Maybe it's headline reaction causing the price drop.

Porsche to take on Tesla with electric version of all-new model | Autocar

This is interesting news. Major points from the article:

• secret five-door is planned to form part of a new dedicated fifth model range set to slot into the German car maker’s line-up beneath the Panamera,
• While conventional combustion engine versions of the new mid-sized Porsche model are set to take on established luxury class rivals such as the BMW 5-series, an advanced battery-powered variant is tasked with challenging the Model S on both performance and range

If this vehicle is in the initial stages of planning as stated in the article, it could be 3-5 years before it goes on sale.

The fact that this vehicle is apparently designed around an internal combustion engine means that it likely won't be optimized for an electric powertrain. If a car is designed to accommodate a gasoline engine, fuel tank, exhaust system, and transmission, that is going to affect the internal configuration. Trying to shoehorn a battery pack and electric motor into the car after the fact results in compromises.

Battery costs and lack of a Supercharger network are hurdles for Porche, just as they are for Ford (mentioned in another thread that Ford claimed it could build a competitor to the Model S).

It's one thing to design a car. It's quite another thing to get the ecosystem in place to support that car.

 

[AlMc]

This is interesting news. Major points from the article:

• secret five-door is planned to form part of a new dedicated fifth model range set to slot into the German car maker’s line-up beneath the Panamera,
• While conventional combustion engine versions of the new mid-sized Porsche model are set to take on established luxury class rivals such as the BMW 5-series, an advanced battery-powered variant is tasked with challenging the Model S on both performance and range

If this vehicle is in the initial stages of planning as stated in the article, it could be 3-5 years before it goes on sale.

The fact that this vehicle is apparently designed around an internal combustion engine means that it likely won't be optimized for an electric powertrain. If a car is designed to accommodate a gasoline engine, fuel tank, exhaust system, and transmission, that is going to affect the internal configuration. Trying to shoehorn a battery pack and electric motor into the car after the fact results in compromises.

Battery costs and lack of a Supercharger network are hurdles for Porche, just as they are for Ford (mentioned in another thread that Ford claimed it could build a competitor to the Model S).

It's one thing to design a car. It's quite another thing to get the ecosystem in place to support that car.

Yes. I think the 'big boys' are starting to show a little fear of TM. It is easy to talk about a car rivaling the S and quite another thing to come out with one. The EV revolution vs ICE is just getting started.

 

[anticitizen13.7]

I just looked at Porche's monthly sales in North America, and I can understand why they might be very concerned:

http://press.porsche.com/news/release.php?id=883

Porche sold 450 Panameras, and 1196 Cayenne SUVs this past September. The lower volume, high cost car manufacturers are the first ones who are going to see (or already are seeing) their marketshare captured by Tesla. The entry level Panamera starts at around 78k, right in Tesla territory.

If a company like BMW loses a lot of 6 and 7 series sales, it probably doesn't hurt their bottom line nearly as much, because the 1, 3, 5 and related coupes sell in huge numbers. For Porche, the defection of buyers to Tesla could pose an immediate existential threat.

 

[chickensevil]

If companies are only *just now* starting to be concerned with Tesla then it is already too late for them. Consider this, it took Tesla 4 years to show a prototype car that was shoehorned in from an "ICE" platform, and another 2 years to make it reality. Then it took 4 years to build a car from the ground up into the Model S. If the competition is only just now realizing that they need to do something re:Model S.... then they are anywhere from 4 years to 10 years from bringing that car to market... even at that, I doubt they will be able to compete with Tesla's price, like we are seeing with the new i8 Concept (and that isn't even full electric).

I am still not worried... if Tesla was standing still then we might have an issue. But I suspect that by the time 4 years rolls around and they release their "200 mile car" Tesla will be releasing a 400+ mile car for the same (if not better) price.

My estimation is that Tesla will be able to hold their lead over the competition for *at least* another 10-15 years.

 

[callmesam]

I just looked at Porche's monthly sales in North America, and I can understand why they might be very concerned:

http://press.porsche.com/news/release.php?id=883

Porche sold 450 Panameras, and 1196 Cayenne SUVs this past September. The lower volume, high cost car manufacturers are the first ones who are going to see (or already are seeing) their marketshare captured by Tesla. The entry level Panamera starts at around 78k, right in Tesla territory.

If a company like BMW loses a lot of 6 and 7 series sales, it probably doesn't hurt their bottom line nearly as much, because the 1, 3, 5 and related coupes sell in huge numbers. For Porche, the defection of buyers to Tesla could pose an immediate existential threat.

Porsche has sold 35366 cars YTD. Tesla won't sell more cars that Porsche this year, but will pass them in 2015. And once the MX is available . . .

 

[dha]

Porsche has sold 35366 cars YTD. Tesla won't sell more cars that Porsche this year, but will pass them in 2015. And once the MX is available . . .

Remember you're comparing Porsche North America vs. Tesla global. Tesla won't pass Porsche in 2015 for North American deliveries.

 

[vgrinshpun]

I just looked at Porche's monthly sales in North America, and I can understand why they might be very concerned:

http://press.porsche.com/news/release.php?id=883

Porche sold 450 Panameras, and 1196 Cayenne SUVs this past September. The lower volume, high cost car manufacturers are the first ones who are going to see (or already are seeing) their marketshare captured by Tesla. The entry level Panamera starts at around 78k, right in Tesla territory.

If a company like BMW loses a lot of 6 and 7 series sales, it probably doesn't hurt their bottom line nearly as much, because the 1, 3, 5 and related coupes sell in huge numbers. For Porche, the defection of buyers to Tesla could pose an immediate existential threat.

Even more telling, considering that they are proclaiming the goal of taking on Models S, to look at Panamera sales in US. In the first full year of production for Model S (2013) Panamera sales plummeted from 7614 to 5421 - an almost 30% drop (Porsche Panamera Sales Figures - GOOD CAR BAD CAR). The same year Model S sold 22,442 cars outselling Panamera more than 4 to 1, while being in approximately the same price range. Pathetic showing for storied German brand IMO.

Their problem is that they are incapable of thinking in NOT in an ICE company terms. The engineering success of Model S was defined by starting from clean sheet of paper and optimizing car architecture to take full advantage of EV platform. This was highly necessary approach, as battery technology was merely advanced to make it into the compelling EV with compelling range. The adoption of an ICE platform just would not have cut it. Enter strategic geniuses from Porsche - they are planning to take Model S head on by coming up with a car that would have a shared platform between an electric and ICE variants! The sea will part to let another amphibian out! The truth is, in order to compete with Model S they will need to shed ALL hints of an ICE thinking and go all in with an "A" engineering team focused on optimizing the platform around purely electric car. Anything else is destined for a spectacular failure.

Interestingly, Autocar article about Porsche challenge to Model S, made reference to partnership with Audi, which is "in the throes of finalizing its first ever electric car, the R8 e-Tron". We are hearing about R8 e-thron, another half-baked effort based on an ICE car, for many years. According to the same Autocar, it was originally to be four motor all-wheel drive weighting 1600kg, then two motor rear wheel drive with weight going up to 1780kg, with 0 to 60 in 4.2 sec, priced above Audi R8 ICE variant. No wonder we still do not see R8 e-Tron sports coupe on sale on the floor of your friendly Audi neighborhood dealership - looks like that this sports coup was crashed even before entering market - by a 5-7 people five door family car, that matches this sports car performance, while costing less, and being actually useful as an everyday car. Oh wait, while Audi still "finalizes" the sports coup design, Tesla just put out a "D" variant of a family electric car that makes performance of the e-tron sports coup look like chopped liver, to borrow a phrase from well known around here but somewhat idiosyncratic analyst.

The truth is, anybody who is trying to make tentative entry into EV space using ICE shared platform should not have even remote hopes to compete head to head with Model S. They can only HOPE to compete with Model S if they put an "A" engineering team, backed by huge investment and set a goal to desighn pure electric car, with the whole architecture optimized for electric platform. On a face of it, Porsche is not doing this, so they might take on BMW 5 series, NOT a Model S.

 

[stoebs]

Was the 22,442 Model S sold in 2013 a global sales number or a US sales number? IIRC, it was global. Do you have access to the Panamera global sales for that year? I'm not disputing your premise...I agree with it 100%; I just want to make sure it's a true apples to apples comparison.

 

[Robert.Boston]

Agreed, @green1 and @jhm. I think Tesla's on the right track here, but then again I don't really like "cloud computing". Centralizing everything isn't scalable; not even Google has, or can plausible supply, enough computing capacity to run every car on the US roads. And, as soon as there is any road construction, accident, or other event, the car has to have enough internal capacity to cope with the unexpected condition by itself (or fall back to the driver, but that's not part of Google's vision). Why not simply use this "local smarts" all the time?

Tesla is being sensitive to its customer base, too. I think few Tesla owners would be happy being unable to control the car (as Google had originally proposed). Instead, providing an option for the car to manage itself under many (but not all) circumstances meets a lot of our needs, at very low cost and without having to give up anything.

 

[Robert.Boston]

Just saw this article come out about Porsche building an electric car to compete with Tesla. In the medium term, I think it's good more traditional auto companies are hopping on the EV bandwagon as we'll get to critical mass for the ICE car death spiral sooner. Maybe it's headline reaction causing the price drop.

Porsche to take on Tesla with electric version of all-new model | Autocar

Here's the key phrase that tells me that this will end badly for Porsche:

While conventional combustion engine versions of the new mid-sized Porsche model are set to take on established luxury class rivals such as the BMW 5-series, an advanced battery-powered variant is tasked with challenging the Model S on both performance and range in what has developed into an increasingly important global market for electric cars in recent years.

The Model S is great in no small part because it was built from the ground up as an EV. If Porsche is building a car with an EV drivetrain as an option, it loses all those engineering advantages because the ICE variant has to be able to work. And I'm betting that, even if they do release this EV, that the dealers will mostly steer people to the ICE variant, with its higher long-term potential for repair dollars. "Oh, but you might run out of charge!"

Regardless, with the benefit of hindsight, the mid-day dip appears to have been a passing fad. Basically a flat day for TSLA, even while the overall market did pretty well.

 

[RobStark]

Was the 22,442 Model S sold in 2013 a global sales number or a US sales number? IIRC, it was global. Do you have access to the Panamera global sales for that year? I'm not disputing your premise...I agree with it 100%; I just want to make sure it's a true apples to apples comparison.

Global 2013 Model S 22,442 Porsche Panamera 22,032

Porsche has a slightly wider distribution network. :wink:

Record-breaking unit sales boost profit, but are exclusivity and technology leadership at risk?

 

[stoebs]

Global 2013 Model S 22,442 Porsche Panamera 22,032

Porsche has a slightly wider distribution network. :wink:

Record-breaking unit sales boost profit, but are exclusivity and technology leadership at risk?

Thanks for that link Rob. That puts things into a lot more perspective. So globally...Model S sold at almost a 1:1 ratio to the Panamera last year. It's definitely worth noting that Panamera sales were down 24% (29,030 -> 22,032) from the year before; I'm pretty sure that I'm not alone in thinking that Model S had a lot to do with that decline. I would expect the ratio this year to be more like 3:2 in favor of the S.

The article talks about the Porsche goal of selling 200,000 total units globally by 2018, and that they are ahead of schedule to reach that goal. IIRC, Elon mentioned something on the order of 150-200k combined units of Model S/X around the same timeline (prior to Gigafactory and Model 3 ramp up where we go to 500k units by 2020).

As an aside, just this morning I was next to a brand new Panamera e-hybrid on the freeway. It was so new it still had the temp tags instead of a license plate. I really wanted to flag the driver down and ask what their motivations were to purchase that vehicle. A 60D or and S85 has equal/better performance, and if comparing options, would almost always be cheaper, or at least equal in price (but far less expensive to fuel). On the island of Oahu, a 60 is more than enough range for any conceivable trip you could want to make.

Coincidentally, there was a Sig S about 5 cars in ahead on the freeway. Symbolic, that was :wink:.

 

[Words of HABIT]

Global 2013 Model S 22,442 Porsche Panamera 22,032
Porsche has a slightly wider distribution network. :wink:
Record-breaking unit sales boost profit, but are exclusivity and technology leadership at risk?

Telling statistics from Porche. Worldwide, their Cayenne is outselling Panamera by a ratio of 3.8 to 1. Looking in my own neighbourhood this seems about right, close to four SUVs for every sedan. At current estimated 2014 Model S deliveries of 35k, this puts potential Model X demand at 134k, right now, let's not even talk about next year.

 

[RobStark]

Telling statistics from Porche. Worldwide, their Cayenne is outselling Panamera by a ratio of 3.8 to 1. Looking in my own neighbourhood this seems about right, close to four SUVs for every sedan. At current estimated 2014 Model S deliveries of 35k, this puts potential Model X demand at 134k, right now, let's not even talk about next year.

The over/under is a fall of 25% for Cayenne sales in 2016 from 2014. :tongue:

 

[vgrinshpun]

Was the 22,442 Model S sold in 2013 a global sales number or a US sales number? IIRC, it was global. Do you have access to the Panamera global sales for that year? I'm not disputing your premise...I agree with it 100%; I just want to make sure it's a true apples to apples comparison.

You are right, the 22,442 included sales in NA and Europe; you are also right to agree with my premise 100% :smile:.

As for the numbers to compare, the Panamera global sales should NOT be compared to Model S global sales in 2013, as Model S started delivering in Europe only in August, did not deliver any cars in Asia. In a word, it was not an established global player in 2013.

The proper sales number to consider is NA sales.

So to adjust 5,421 Panameras sold in US, add 328 units sold in Canada, for a total of 5,749.

The European sales for Model D, August through December of 2013 were 240, 1102, 208, 1133, 1263 respectively, for a total of 3,946 units in Europe. So Model S NA 2013 sales were 22,442-3,946 = 18,496. EV Sales: Europe December 2013

So, my apologies for loose treatment of numbers, the MS to Panamera sales in NA should be not 4 to 1, but 3.2 to 1.

In fact, this ratio, IMO, is consistent with what can be expect after Tesla matures into all the world automobile markets by the end of 2015 . We can expect around 60,000 MS sold globally, vs 22,032 for Panamera. So the approximately 3 to 1 ratio will likely hold for global sales as well.

- - - Updated - - -

Global 2013 Model S 22,442 Porsche Panamera 22,032

Porsche has a slightly wider distribution network. :wink:

Record-breaking unit sales boost profit, but are exclusivity and technology leadership at risk?

That is why comparing Global 2013 sales of MS and Panamera is apples to oranges... One needs to look at NA sales for both cars for 2013.

 

[RobStark]

That is why comparing Global 2013 sales of MS and Panamera is apples to oranges... One needs to look at NA sales for both cars for 2013.

You would expect Tesla to have the home court or home highway advantage in North America.

Well save for Texas, Michigan, Arizona, Colorado etc

And Porsche to have the home highway advantage in Germany and Austria if not all of Europe.

In China and Japan Tesla & Porsche will go toe to toe on a neutral field.

BTW Australians may have a little of the Elonmania bug :smile:

 

[vgrinshpun]

You would expect Tesla to have the home court or home highway advantage in North America.

I would agree only if Model S would not have been a brand new car in 2013, the first full year of its sales. So i do not believe that Model S had any home turf advantage over Panamera in 2013.

 

[pz1975]

Porsche sales exactly matched its demand for the year.

Tesla sales did not come close to matching its demand for the year.

Comparing sales is meaningless without taking that into context. If both companies were able to make as many cars as it wanted, Tesla would blow Porsche away (just like it would on a highway).

 

[AudubonB]

Agreed, @green1 and @jhm. I think Tesla's on the right track here, but then again I don't really like "cloud computing". Centralizing everything isn't scalable; not even Google has, or can plausible supply, enough computing capacity to run every car on the US roads. And, as soon as there is any road construction, accident, or other event, the car has to have enough internal capacity to cope with the unexpected condition by itself

And...that's roads just in the USA! Petabytes ain't in it....