Short-Term TSLA Price Movements - 2014

[chickensevil]

I totally agree that the ASP of the model three will be much higher than $35,000. I assume Adam Jonas already knows this. I would be very disappointed if that was some kind of shocking revelation to him.

It wasn't stated by the OP that he said it was the ASP... It was stated as the starting price... which basically means that the ASP wouldn't end up much different from the current MS since this is really only a price drop by about 15k. This would put the Model 3 at the BMW 5 series level... NOT the 3 series... which is what they have said repeatedly, that they would be comparing with.

 

[FrozenCanuck]

It wasn't stated by the OP that he said it was the ASP... It was stated as the starting price... which basically means that the ASP wouldn't end up much different from the current MS since this is really only a price drop by about 15k. This would put the Model 3 at the BMW 5 series level... NOT the 3 series... which is what they have said repeatedly, that they would be comparing with.

Yeah, exactly - this is why I want to read his full report. I hate media summaries of them because most of the journalists (even financial journalists) do not understand the stock market or sell side analysis. I want to read it myself to see his justification for this view. Because I know that if I were in his shoes I'd never get away with writing such a prediction and providing no backup explanation.

I think the guy must be smokin' something, personally. But I realize I could be wrong, missing data, etc. I always like to understand bear arguments (even though he's technically still a bull, this is bearish to OUR thesis)

 

[Noble Ninja]

http://www.teslamotors.com/sv_SE/forum/forums/morgan-stanley-report-tesla

That's a link to the report. I'd like to put emphasis on this (quoted from the report):

Price target reduced to $290 from $320; we are buyers at these levels.

Whether or not the pullback in Tesla's share price to under $200 was brought on by a decline in the price of oil or not, we believe market expectations for Tesla's ability to use the Model 3 to penetrate the mass market is in a healthier alignment today than just 2 or 3 months ago.

There has been a lot written about how Tesla's advancement of electric mobility can make the internal combustion engine 'obsolete' in just a few years. We firmly disagree and don't need such an outcome to make Tesla a good investment today. We can justify nearly 50% upside to Tesla shares without having to make such an implied bet on breakthroughs in the cost/benefit of electric propulsion.

 

[MartinAustin]

Starting prices of BMW 3-series range from $32K to $50K - check here -

Build Your Own BMW - BMW North America


I imagine that if you add some options to that $50K BMW ActiveHybrid 3 model, you could get it over $60K or more.

I think we've got a pretty clear understanding from Tesla over the last couple of years that the "$35K" refers to a stripper/starting price model. (and it could be anything from $34,990 to $35,990 IMO)

It should be very easy to get the Model 3 up to $50K. All the people who normally spend $40K-$80K on cars (a lot which would be BMW 3's) but have ruled out the earlier Tesla models, will flock to the Model 3, and its average selling price could therefore easily be $50K, just as the Model S is at $100K right now.

Adam Jonas can only be referring to the average selling price when he says "$50K." Wouldn't make any sense for him to argue with Tesla insiders (who are designing the damn thing) about the base price... he knows next to nothing about the car.

 

[pGo]

Can you share any links where Tesla is comparing Model 3 with BMW 5 series? I thought they always said to compare it with 3 series.

I am expecting Tesla to release Model 3 like this.
Model 3 - 45KW - 200m range - 35K (supercharging extra - $2000) - 0-60 - 6 seconds
Model 3 - 60KW - 260m range - 40K (supercharging included) - 0-60 - 5.6 seconds
Model 3 - 60KW - Performance - 47K - 0-60 - 4.9 seconds

+ Tech package, and extras.
I am expecting 60KW Model 3 with tech package to be the most selling model with price around $45K. I have doubts if Tesla can sell 500K cars at 55K ASP.

 

[SteveG3]

http://www.teslamotors.com/sv_SE/forum/forums/morgan-stanley-report-tesla

That's a link to the report. I'd like to put emphasis on this (quoted from the report):

Price target reduced to $290 from $320; we are buyers at these levels.

Whether or not the pullback in Tesla's share price to under $200 was brought on by a decline in the price of oil or not, we believe market expectations for Tesla's ability to use the Model 3 to penetrate the mass market is in a healthier alignment today than just 2 or 3 months ago.

There has been a lot written about how Tesla's advancement of electric mobility can make the internal combustion engine 'obsolete' in just a few years. We firmly disagree and don't need such an outcome to make Tesla a good investment today. We can justify nearly 50% upside to Tesla shares without having to make such an implied bet on breakthroughs in the cost/benefit of electric propulsion.

Thanks Ninja... I really recommend reading this link. I've gone from 85% thinking this was gibberish to over 95% thinking so.

As to the Model 3 price... it seems very clear to me he is saying ASP not starting. He does give an ASP starting in 2017, but to me pretty clear that he means beginning ASP when car is first introduced in 2017 rather than the ASP he sees for 2020.

I wouldn't say it's over 99% likely bs unless I read the whole report... but it's probably about 99%. If he really claimed ICE will get 100 mpg in 5 years (much less 2 years) and he really had facts and reason behind that projection, he should be interviewed by the AP and Reuters promptly, and on headlines in papers across the country and websites everywhere with this news in the next day or so. Now, I didn't actually see the 100 mpg claim in his report, so who knows what he actually said... it's just that the idea that ICE cars will generally get 100 mpg in 5 years is extremely improbable, whether he actually made this claim or not.

 

[DJ Frustration]

Adam Jonas is dead right. Tesla may be targeting $30-40k as the starting price. Just like the Model S starts at $71,070, but the Average Transaction Price (ATP) is closer to or greater than $100k.

 

[SteveG3]

This reads like a report designed to back into numbers to support a modest 10% decline in his price target (by backing in, I mean slash Model 3 volume estimates, but mostly make up for that by raising ASP in the model), to either 1) create a great buying opportunity for clients when the stock price is vulnerable to a dip into deeply discounted prices and/or 2) as someone else has suggested, appease others at Morgan Stanley that he's taking action in response to changes in the price of oil for appearance purposes.

One last point, it was Jonas in a very good report starting coverage circa 2011 who clearly was suggesting Model T like impact to what Tesla is doing if they execute (he famously showed a picture of NY city full of horse drawn carraiges in the street c. 1905 and the the same street full of cars a decade or two later)... in this report my he writes that there's nothing like Model T going on with Tesla... seems like he's saying that would take a battery breakthrough we have not yet seen.

If we hadn't seen gibberish from Jonas a few months ago re automated cars and ICE engines starting to improve along Moore's Law, this would have been a rougher morning!

His report may influence the stock when it sinks in, and it may have a continuing impact on propping up the weak case that Tesla needs a breakthrough (he's actually saying EVs need a breakthrough, not Tesla, but it's very likely that will be spun into Tesla needs a breakthrough), but the report has no impact with what Tesla is doing or where it is heading.

 

[JRod0802]

Starting prices of BMW 3-series range from $32K to $50K - check here -

Build Your Own BMW - BMW North America

Just for one more reference point, BMW M3 ("M" being performance, similar to the "P" for Tesla) starts at $62K, although if you click "Build your own", it immediately jumps to $67K.
BMW M Overview - BMW North America


Hopefully Tesla sells a performance version of the Model 3 on day one.

 

[Raffy.Roma]

The stock reached $200. 200 DMA Next.

 

[chickensevil]

Can you share any links where Tesla is comparing Model 3 with BMW 5 series? I thought they always said to compare it with 3 series.

I am expecting Tesla to release Model 3 like this.
Model 3 - 45KW - 200m range - 35K (supercharging extra - $2000) - 0-60 - 6 seconds
Model 3 - 60KW - 260m range - 40K (supercharging included) - 0-60 - 5.6 seconds
Model 3 - 60KW - Performance - 47K - 0-60 - 4.9 seconds

+ Tech package, and extras.
I am expecting 60KW Model 3 with tech package to be the most selling model with price around $45K. I have doubts if Tesla can sell 500K cars at 55K ASP.

Sorry, if I was confusing the issue with my post. I wasn't saying Tesla was actually doing this, just suggesting that a base price on a Model 3 being at 55k would make it more in line with a 5 series. And the whole point was to say that it would be against the very thing that Tesla has said they are trying to target. If they make a 3 series equivalent for 5 series prices then that is going to really hurt their sales volume.

It seems to have already been clarified that the 55k number is the ASP, so *shrugs* I don't know what AJ is getting at here. 170k Model 3 seems really low for 2020 and very pessimistic.

- - - Updated - - -

Just for one more reference point, BMW M3 ("M" being performance, similar to the "P" for Tesla) starts at $62K, although if you click "Build your own", it immediately jumps to $67K.
BMW M Overview - BMW North America


Hopefully Tesla sells a performance version of the Model 3 on day one.

That's my plan. Sell my MS to "side grade" into a top of the line Model 3 Since I couldn't afford the top of the line MS.

I don't see why they wouldn't offer it from day one. It will likely be their "priority delivery".

 

[SteveG3]

Main argument for Morgan Stanley's lowered price target to $290 from $320 is the combination of 1) lower gas prices and 2) rapid improvements in ICE fuel economy (to 100MPG) that is lowering the potential success for Tesla's mass market Model 3.

- - - Updated - - -



Well, you know what the headlines are gonna say. The honest ones say Morgan Stanley lowers price target, but most will say Morgan Stanley downgrade or something like that. Where in fact it's not a downgrade, they maintained the "overweight" rating.

Mulder, thanks for getting the word out early on the content of Jonas' report. That 100 mpg claim for ICE is rather striking. I am wondering if this claim was something you were able to see first hand in his report?

 

[FluxCap]

Here's a tidbit on the latest from Adam Jonas of Morgan Stanley. It's actually quite bullish for me, even though I think he's way way off in a number of areas. I will not post full report, please don't ask (it's full of some bizarre hypothetical assumptions, anyway):

 

[jhm]

Thanks Ninja... I really recommend reading this link. I've gone from 85% thinking this was gibberish to over 95% thinking so.

As to the Model 3 price... it seems very clear to me he is saying ASP not starting. He does give an ASP starting in 2017, but to me pretty clear that he means beginning ASP when car is first introduced in 2017 rather than the ASP he sees for 2020.

I wouldn't say it's over 99% likely bs unless I read the whole report... but it's probably about 99%. If he really claimed ICE will get 100 mpg in 5 years (much less 2 years) and he really had facts and reason behind that projection, he should be interviewed by the AP and Reuters promptly, and on headlines in papers across the country and websites everywhere with this news in the next day or so. Now, I didn't actually see the 100 mpg claim in his report, so who knows what he actually said... it's just that the idea that ICE cars will generally get 100 mpg in 5 years is extremely improbable, whether he actually made this claim or not.

To achieve 100 mpg, ICE vehicles will become more expensive and lower performance. This hastens the time it takes for EVs to reach sticker price parity and dominate on performance. Moreover, low oil prices does not even support this development. Consumers will be more than happy to buy cheap or higher performance gas guzzlers while the price of gas is low. Where are automakers going to get the motivation to develop compelling 100 mpg vehicles? Government mandate?

 

[NigelM]

It's mind boggling to me that anyone thinks there would be a general move in favor of buying gas guzzlers because of a temporary dip in oil prices. The reasons for the TSLA price drop are many and varied, not least of which is that it's always been a volatile stock and probably still will be for the next several years. Something around $200 seems a reasonable level to me right now and I see upside for the future, but I really don't think that oil has much to do with anything Tesla related.

 

[SteveG3]

I have to update my earlier comments... a few news articles have suggested Jonas is substantially raising the price that the Model 3 for will sell for in his model based upon the notion it will have a smaller addressable market and so Tesla will try to maximize revenue with the less price sensitive group within that market. That's from a few articles, no way to know if it's directly in the report. if it is, it's a layer of speculation (higher pricing) based on a layer of speculation (market for Model 3 not big enough for 500K vehicles per year).

 

[hobbes]

When is the fed giving its statement on interests etc. today?

 

[dmunjal]

When is the fed giving its statement on interests etc. today?

11am PST.

 

[ev-enthusiast]

When is the fed giving its statement on interests etc. today?

Very helpful online calendar, as mentioned by other members:
World Economic Calendar

 

[FluxCap]

When is the fed giving its statement on interests etc. today?

A bit more info here.