Clprenz
Member
Obviously Tesla Put the journalist they hired last month to craft this: http://www.teslamotors.com/blog/fair-price It is pretty well written, I like being kept in the loop like this.
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FredTMC
Model S VIN #4925
TSLA $180. TSLA showing a lot of strength today with a China Press release. Pricing for China speaks to mgmt comments about testing depths of MS demand and planning for big growth in 2014
callmesam
Member
Krugerrand
Meow
It's not 'new' news. Elon Musk said a long time ago that the Supercharger Network would cover the world. What's 'new' is that there's a shift by many of not taking him seriously to realization of 'Holy crap, he REALLY is going to do what he said!' There's a lot of slow learners out there and many still haven't grasped what's happening and what's going to happen.
It feels like there a lot of positive catalysts on deck:
1) Analysts will absorb good-ness of the China news. The market has seemed slow to respond to things lately. This "fair pricing" notion is a game changer, favoring volume and adoption over some gouging profit. This provides some China market distinction and blanks out anyones' fear of demand drying up.
2) NHTSA "good" report, 80-90% chance.
3) Cross country supercharger network
3.1) Elon scheduling summer trip with the kids (the announcement will be a positive catalyst, I am worried about the trip itself. One flat tire and boom, stock down 10%)
4) Q4 earnings announcement goodies: (the pre-announcement means that they have more good news in the bag, per the chatter on this board)
4.1) Good sales volume (announced)
4.2) Good Q4 profit margins, which is why volume is up.
4.3) Good 2014 outlook (this might be a negative if they sandbag.)
4.4) China, China, China. Something about order rates. It wouldn't take much, even an unofficial comment about first week reservations or a rate, or "china will be bigger than NA in 2014".
4.5) Supply constraint news. I think this was a big negative in the Q3 results. Any reveals about battery supply being much better is huge.
4.6) Model X news. I think this is where they will bury the bad news, that it is late. But from a biz perspective, if they have demand for the S it doesn't really matter. The release of the X will just swap capacity from 100% S to some mix of S/X. Inasmuch as they have similar ASP, the X will only help drive demand which isn't a priority now. For this reason I have never loved the X, it is really only necessary to allay fears that TM is a one trick pony.
5) New factory capacity plan that is excellent(I am boycotting the term Giga-factory, it doesn't seem to add any meaning and it's annoying). What is important is not a magic factory, but a plan to get to the forecasted large scale production of the Model E on schedule. That might be a cell factory, it might also be a CAR factory since their curent fremont build-out frankly seems optimized for flexibility and getting up quickly, and not for super efficiency. I look at the Fremont factory as a prototyping line with 20-40k annual runrate, which is a fantastic asset, but they need an optimized factory. Look for this to be two solutions, some new cell capacity and CAR capacity. This may not be the same factory or in the same country. Both need to be solved.
Potential negatives:
1) Bad NHTSA report (10-20% chance). I think there is zero chance of a materially negative finding, but a 10-20% chance of "something" recall-flavored that the market would take to be bad.
2) Bad factory capacity plan. Anything that involves doing a secondary offering first and doing other stuff later, or sounds like that would be perceived as a dilution, and after they have claimed that they will self-finance. Or doing what Elon did at the last conf call, which is say they have lots of problems that only new capacity will solve but not having a plan to offer. The plan needs to be clear in terms of what will be bought, spent, the new capacity and then $$$happy$$$profit$$$. Better yet if they can pick up mothballed factories on the cheap making the pricetag look cheap as well.
3) A death. While unreasonable, this Force majeure risk has been hanging over the stock from day one, who knows when it will come. I think the statistics are such that we are neither overdue nor early for such a thing. This may ironically be good for the stock, in that people may broadly understand an ordinary auto fatality (which are of course everyday occurrences) was bound to happen and may spur a relief rally if the stock fails to drop. It may be that a fatality may be perversly viewed with less fear than an impressive auto fire. The former is a common risk well understood by drivers, the second feels new(but is not).
All in all, I feel like some of this good news is priced in, but maybe 50-60%. I see much more chance for upside than downside, and that upside may not be priced into the stock/options.
1) Analysts will absorb good-ness of the China news. The market has seemed slow to respond to things lately. This "fair pricing" notion is a game changer, favoring volume and adoption over some gouging profit. This provides some China market distinction and blanks out anyones' fear of demand drying up.
2) NHTSA "good" report, 80-90% chance.
3) Cross country supercharger network
3.1) Elon scheduling summer trip with the kids (the announcement will be a positive catalyst, I am worried about the trip itself. One flat tire and boom, stock down 10%)
4) Q4 earnings announcement goodies: (the pre-announcement means that they have more good news in the bag, per the chatter on this board)
4.1) Good sales volume (announced)
4.2) Good Q4 profit margins, which is why volume is up.
4.3) Good 2014 outlook (this might be a negative if they sandbag.)
4.4) China, China, China. Something about order rates. It wouldn't take much, even an unofficial comment about first week reservations or a rate, or "china will be bigger than NA in 2014".
4.5) Supply constraint news. I think this was a big negative in the Q3 results. Any reveals about battery supply being much better is huge.
4.6) Model X news. I think this is where they will bury the bad news, that it is late. But from a biz perspective, if they have demand for the S it doesn't really matter. The release of the X will just swap capacity from 100% S to some mix of S/X. Inasmuch as they have similar ASP, the X will only help drive demand which isn't a priority now. For this reason I have never loved the X, it is really only necessary to allay fears that TM is a one trick pony.
5) New factory capacity plan that is excellent(I am boycotting the term Giga-factory, it doesn't seem to add any meaning and it's annoying). What is important is not a magic factory, but a plan to get to the forecasted large scale production of the Model E on schedule. That might be a cell factory, it might also be a CAR factory since their curent fremont build-out frankly seems optimized for flexibility and getting up quickly, and not for super efficiency. I look at the Fremont factory as a prototyping line with 20-40k annual runrate, which is a fantastic asset, but they need an optimized factory. Look for this to be two solutions, some new cell capacity and CAR capacity. This may not be the same factory or in the same country. Both need to be solved.
Potential negatives:
1) Bad NHTSA report (10-20% chance). I think there is zero chance of a materially negative finding, but a 10-20% chance of "something" recall-flavored that the market would take to be bad.
2) Bad factory capacity plan. Anything that involves doing a secondary offering first and doing other stuff later, or sounds like that would be perceived as a dilution, and after they have claimed that they will self-finance. Or doing what Elon did at the last conf call, which is say they have lots of problems that only new capacity will solve but not having a plan to offer. The plan needs to be clear in terms of what will be bought, spent, the new capacity and then $$$happy$$$profit$$$. Better yet if they can pick up mothballed factories on the cheap making the pricetag look cheap as well.
3) A death. While unreasonable, this Force majeure risk has been hanging over the stock from day one, who knows when it will come. I think the statistics are such that we are neither overdue nor early for such a thing. This may ironically be good for the stock, in that people may broadly understand an ordinary auto fatality (which are of course everyday occurrences) was bound to happen and may spur a relief rally if the stock fails to drop. It may be that a fatality may be perversly viewed with less fear than an impressive auto fire. The former is a common risk well understood by drivers, the second feels new(but is not).
All in all, I feel like some of this good news is priced in, but maybe 50-60%. I see much more chance for upside than downside, and that upside may not be priced into the stock/options.
Thanks Austin. Nice summary and I agree with your positives and negatives and your feeling that about 50% of the positive catalysts are already built into the price. I do feel that there are some key resistance points coming up, especially the AH in the mid 190s and again at $200. These are as much psychological as real.
Would be interested in a 'technical chart' person giving his/her take on the technical. Thanks
Would be interested in a 'technical chart' person giving his/her take on the technical. Thanks
Norse
Active Member
Great post AustinEV! I would also like to add that other country are improving their EV incentives, like Russia, Belarus and Kasakhstan(250 mill people). They are removing all duties on EVs from February.
Thanks for your input AustinEV. I would like to ask, though, why you think Model X will be delayed. I think Elon said in an interview on the same day as the NAIAS that Model X should start being delivered early 2015 and ramping up in H2 2015. As for the term "giga-factory" -- I believe that was the phrase Elon used to refer to it in the Q3 conference call (I could be wrong on that).
I am not TA genius (which I think is being really good a palm-reading) but it seems bullish: The moving averages have been passed over with gusto, the logical resistance points should be 181 (pre Q3 announcement) and 195 (ATH, pink line). The stock HAS sloped up prior to just about every announcement, with some recent cases of sudden pullback ahead of time, like the week of the announcement. The ADX is bullish and increasing in strength to be noteworthy. The williams is overbought but it was like that most of last year. The RSI is not yet overbought. The rising days have been on higher volume, and that one slightly red day was even the low volume day. The pullback the week of earnings is probably a good time to buy stuff, but that price might be a drop from 210 to 200...
I literally haven't decided what my play here is. Naked calls are expensive.
Wanted to post this here also
Musk Says China Possible Top Market for Tesla - Bloomberg
For Tesla, “it could be as big as the U.S. market, maybe bigger. I don’t want to get overexcited about it,” Musk said. “Even without building there locally, it’s always going to be the second-biggest market after the U.S.”
Musk Says China Possible Top Market for Tesla - Bloomberg
For Tesla, “it could be as big as the U.S. market, maybe bigger. I don’t want to get overexcited about it,” Musk said. “Even without building there locally, it’s always going to be the second-biggest market after the U.S.”
Lots of juicy bits of info from this article.
“Elon Musk said sales of electric Model S cars in China should match U.S. levels as early as next year, with demand from the world’s largest auto market eventually requiring a local plant.”
“Musk, Tesla’s billionaire co-founder and chief executive officer, will travel to China in late March to inaugurate company’s entry there, he said in a phone interview today.”
"For Tesla, 'it could be as big as the U.S. market, maybe bigger. I don’t want to get overexcited about it,' Musk said. 'Even without building there locally, it’s always going to be the second-biggest market after the U.S.'"
“If all goes well, Model S shipments to China can match U.S. sales by 2015, Musk said. ‘It’s not my firm prediction -- it’s more like a low-fidelity guess.’”
“‘They’re basically calling us huge idiots for not ripping off customers in China.’ Musk said. ‘I don’t think ripping off customers is a good long-term strategy.’ Foreign companies have come under scrutiny in China for their pricing practices, with state broadcaster China Central Television producing reports accusing companies from Tata Motors Ltd.’s Jaguar Land Rover to Starbucks Corp. of overcharging consumers in the country.”
“To eliminate tariffs and potentially qualify for Chinese incentives for non-pollution autos, Tesla must produce there, he said. Long-term there’s no question we’ll have a factory in China,” he said. ‘There is an argument for having that be our first major factory outside the U.S.’”
On the Model X delay, just gut feeling. They have been too quiet. I think they are likely to find some real headaches with that door design. I bet they are also putting overall, more man-hours on the design of the car than they did on the Model S. I have an S as my daily driver, and while I love it I swear all of the design decisions were "this will get to market fast, let's call it a feature". For the X, I think they will strive to include all the thoughtful choices they skipped on the S. Because they have the option of delaying it (in my opinion), and they haven't provided interesting milestones since the prototype reveal, I feel like they are still tinkering. And it is LATE to be tinkering. In short, I have no data to back that up.
I don't like "giga-factory" for these reasons:
1) it means a billion factories...
2) people instantly turned it into a symbol of magic-capacity-solver. I *think* Elon was talking about a big car factory, but the chatter started to talk about a big battery factory, and those have been used interchangeably every since. Those are two very distinct production problems. They might have the same roof, but they are two operations.
3) It sounds like something Glen Quagmire would say...
I believe the term actually exists precisely because it adds meaning. Elon was talking about needing a capacity of a billion cells a year in order to make Gen 3 work. "Giga" means a billion. So I think that's what he means when he calls it that: a factory which can make a billion cells a year.
Also, on your other point about more car capacity: the Fremont factory used to make 500k cars a year, and I believe that is exactly why Tesla is targeting an annual run rate of 500k cars across all models, so that it can all be done in Fremont. This is why there have been no auto factory expansion plans yet. I believe if Tesla does ever expand factories, they will start running EU and/or Asia factories in ~2020 or thereabouts, so they can get over import tariffs and shipping costs, both environmental and monetary.
And another edit:
Model S options were released ~6 months before the car came out, with tweaks happening closer to release, and that was mainly because so many people had been waiting 2-3 years for the car. Keep in mind they have 11 months or so to deliver. That's quite a bit of time to be tinkering. I'm not too worried. But I would bet on a maximum of triple-digit X deliveries this year. Maybe double.
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11 minute phone interview with Elon.
Musk Says China May Become Top Market for Tesla: Video - Bloomberg
Musk Says China May Become Top Market for Tesla: Video - Bloomberg
JRP3
Hyperactive Member
I'm pretty sure he was talking about a battery factory since he was talking about the need for more cell production than currently exists in the entire world.
Agree, there needs to be cell capacity on the order of billions. Here is a suggestion:
Tesla needs each of:
"Gigacell Factory" -- Something that can produce billions of cells for Model E volume. I actually doubt that Tesla will build this. It will be a joint venture with minimal exposure to TM, is my expectation/hope.
"Big Car Factory"
While the NUMMI factory used to produce 500,000 cars per year, that was a different build out. It was a different factory, essentially. They DO have tons more space, but Elon himself seemed to write off the notion of expanding internally and was thinking ahead to his dream factory. I suspect this is because expanding further in the Fremont facility would be a sloppy affair of placing equipment and stuff in odd places around the factory and having lots of robots moving things around. Like most people I used to take great solace in the unused space in Fremont, figuring they had a way to increase capacity up to 500,000 year. But remember when they were laying out the current Model S line, they were spending Government loan money and had one chance to get the Model S in production. Because they surely optimized the line for low-cost, quick buildout, I think scalability was far down the list of priorities. This seems to have been confirmed by Elon's tired rambling during the Q3 call, where he seems to have written off the Nummi as a serious solution for Model E car capacity. It seems consistent with Elon's personality that he would want to design a really great factory from scratch. If he thought that Fremont was that factory he would have said so. I think Fremont will be used to expand to around 100k, all production for the next few years. Agree that the Big Car Factory might be overseas.
Edit: I concede that he was talking Gigafactory to make batteries during the Q3 call, and spoke of internal expansion to get to 100k/yr. I think the top capacity is much less than 500k/yr though, just due to the design decisions they made, but that is just my theory. So if its 300k/yr with painful internal expansion they would likely be thinking ahead a few years to the Big Car Factory, though Elon definitely didn't say anything like that.
You are right. I am just fretting.
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I think thestreet.com reiterated their sell rating after the China news? Just them trying to spin the news into a negative in attempt to save face as I believe they gave it a sell rating right before this recent run up.
Wow, he actually says "...possibly colluding..." in response to why he thinks car companies are charging so much more for the same vehicles in China.
I was actually thinking the other day how much I like the "giga-factory" term coined by Elon. To me it gets the message across that the battery factory going to be huge (and also the billions of cells produced). And IIRC it was Elon who coined the term when referring to a large-scale battery factory needed to supply Gen3.
For cars, I'd imagine they spread out their factories to overcome import tariffs. China would likely be first, and I wouldn't be surprised to see them break ground in 2015 with a small scale factory in China to build Model S/X but scalable to grow into large production with Gen3.
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