Short-Term TSLA Price Movements - 2015

[anticitizen13.7]

Tesla Factory Tour 2015 - YouTube

This was posted to Reddit, 17:50 mark is his mention of the X. Highly secretive to be sure...

I'm hoping that some day we will know why all this secrecy had to be maintained.

I don't completely buy the "Osborne Effect" argument, because (1) The type of customer who buys an SUV is very different from the type of customer who buys a Sport Sedan and (2) A few people here at TMC mentioned that they were waiting on an X reveal to decide whether to go with a Model S instead. I won't re-hash the folding seat arguments, but the lack of information on the X's cargo capacity may have held up some people from ordering an S.

 

[RobStark]

I also do not share your opinion that leadership in EV drivetrain technology is going to be the deciding factor for shared mobility services.

Right, being the low cost provider is not the determining factor.

Best current website/app and best current autonomous software will be the the determining factor.

 

[MartinAustin]

I don't completely buy the "Osborne Effect" argument...

Apologies in advance for long post. The Osborne Effect argument is very real IMO. Here is why they are doing absolutely nothing to publicize Model X (apart from their spartan Model X web page), and even, increasing incentives to prospective buyers to choose Model S instead.

Tesla have a cashflow plan, and they have to keep a very close eye on cashflow. If they go all out publicizing the Model X (and this could be done very effectively for relatively little money), reservations will go through the roof. At the same time, people who were possibly going to buy a Model S will not buy one... they'll just keep what they've got and wait for their Model X to be produced in 2016.

As you may know Tesla currently sink a lot of the profits they make from current Model S sales into 1) Gigafactory, 2) Model 3 design, 3) Model X production ramp-up, 4) Supercharger installation. This causes the massive profit they make to vaporize and be replaced by that small GAAP loss each quarter.

Tesla have to very carefully manage the income from Model S sales and the expenditures on these other things. It's a delicate balance.

It the all-singing, all-dancing Model X rushes in, guns a-blazing and shouting "Leeroy Jenkins!!!" (gamers' reference), it would surely dent the income from Model S sales. Confirmed Model S reservation holders who are waiting that relatively short amount of time for their car to show up, might cancel, losing their $2500 deposit, but reserving a Model X, and in doing so, Tesla would not get the very large balance of the car price that's needed to meet the cashflow plan.

Also, if you visit the factory right now, you'll see Tesla has a very highly-trained workforce producing lots of Model S cars each week, highly profitably. Model X on the other hand is being produced very slowly and will not generate bags and bags of profit for a while - even if the high-priced Signature cars are first off the line. It would be very dumb to focus on Model X too early.

And, If production of Model X until "early 2016" is fully all reserved, no publicity is needed until then. Early customers' cars will produce the "guarantee" that later reservation holders need to stick around. This timespan probably fits nicely with the production ramp needed to turn Model X into the cash cow we all know it can be. After that, they can turn the heat off Model S.

Lastly, the risk of encountering the Osborne Effect isn't limited to Tesla. Leaf and Volt sales are down, and have been down for a while, and the reason for both is broadly judged to be the arrival of next-generation cars which has been on the horizon for a while. That right there is a living breathing demonstration of the Osborne Effect.

 

[anticitizen13.7]

It the all-singing, all-dancing Model X rushes in, guns a-blazing and shouting "Leeroy Jenkins!!!" (gamers' reference), it would surely dent the income from Model S sales. Confirmed Model S reservation holders who are waiting that relatively short amount of time for their car to show up, might cancel, losing their $2500 deposit, but reserving a Model X, and in doing so, Tesla would not get the very large balance of the car price that's needed to meet the cashflow plan.

I disagree with the premise that a Model X announcement would significantly impact Model S sales.

Model S is a sedan. Model X is an SUV. These are different market segments serving different customers with different requirements.

Model X has EPA range of 240 miles when equipped with a 90 kWh battery. Model S has somewhere around max 286 miles of range when equipped with a 90 kWh battery (270 range * 1.06 as stated on Tesla website).

Model X is taller and not nearly as sleek and sporty as Model S. My observation here at TMC is that plenty of people think the Model X is ugly and would not consider buying one over Model S. Others don't think the S has enough space and haven't bought an S because they need the room of the X.

Is someone who put $ down on a Model S suddenly going to cancel and chose the (arguably)uglier, lower range vehicle? Not unless they have a reason, like needing more interior space, in which case they would have reserved an X anyways.

Lastly, the risk of encountering the Osborne Effect isn't limited to Tesla. Leaf and Volt sales are down, and have been down for a while, and the reason for both is broadly judged to be the arrival of next-generation cars which has been on the horizon for a while. That right there is a living breathing demonstration of the Osborne Effect.

This is not a convincing argument because you are talking about the next-generation of Leaf and the next-generation of Volt.

Model X is not the next generation of Model S. They aren't even in the same product category. Do Honda Accord sales fall when Honda introduces a new Honda Pilot? No.

Also, the LEAF arguably sucks in its current incarnation (low range, somewhat slow), and the Volt has some annoying issues, including a cramped cabin and stupidly designed touch controls. Customers of these cars will hold out for the next generation because the future generation promise to remedy some annoying traits of the current generation.

Model S in its current form is so good that it broke the Consumer Reports scoring scale.

Also, if you visit the factory right now, you'll see Tesla has a very highly-trained workforce producing lots of Model S cars each week, highly profitably. Model X on the other hand is being produced very slowly and will not generate bags and bags of profit for a while - even if the high-priced Signature cars are first off the line. It would be very dumb to focus on Model X too early.

And, If production of Model X until "early 2016" is fully all reserved, no publicity is needed until then. Early customers' cars will produce the "guarantee" that later reservation holders need to stick around. This timespan probably fits nicely with the production ramp needed to turn Model X into the cash cow we all know it can be. After that, they can turn the heat off Model S.

It's fair to say that Model X may have some negative impact on Model S sales, but it's probably already happening, given the news media coverage of the start of Model X configuration. There is a small % of people who want the latest product no matter what, but I don't think that's more than a tiny portion of Tesla customers. Most people don't buy an 80-100k car without putting thought into it.

I'm of the opinion that the vast majority of buyers aren't buying Model S out of ignorance of the existence of Model X. They are buying Model S because it suits their needs. Those who need more space than the S are already holding out for the X.

- - - Updated - - -

There is one scenario where I concede that the Osborne Effect could have greater impact:

If Model X is presented with electronics (like a massively more powerful Autopilot Sensor Suite, or faster & higher-resolution interior LCD control/instrument panels) that far outclass what Model S ships with today, that could cause some Model S reservation holders to delay, in the hopes of receiving updated hardware in a future updated Model S that has the same electronic features as Model X.

I remember how upset some customers were almost a year ago when some people got Autopilot senors and others ordered their cars just a bit too early.

 

[doggusfluffy]

There is one scenario where I concede that the Osborne Effect could have greater impact:

If Model X is presented with electronics (like a massively more powerful Autopilot Sensor Suite, or faster & higher-resolution interior LCD control/instrument panels) that far outclass what Model S ships with today, that could cause some Model S reservation holders to delay, in the hopes of receiving updated hardware in a future updated Model S that has the same electronic features as Model X.

I remember how upset some customers were almost a year ago when some people got Autopilot senors and others ordered their cars just a bit too early.

Isn't there also some consensus there will be a Model S refresh too? The main distinction I think between your viewpoints is how Tesla communicated the configuration specs of the Model X to existing reservation holders. Most people think potentially angering their customers is bad for business...unless you're Comcast!

Crowds line up to try electric vehicles at Bellingham show | Bellingham Herald

The Tesla presented no such hassle, Ingram said. On a trip to a Tesla rally in Custer, S.D., the recharges every 300 miles or so were a breeze.

“You’d plug in at the charger, you’d go to the restaurant next door, you’d order a sandwich and a Coke,” Ingram said. “Just about the time the plate hits the table, the car sends you a text message saying, ‘I’m done. Come get me.’”

 

[vgrinshpun]

Right, being the low cost provider is not the determining factor.

Best current website/app and best current autonomous software will be the the determining factor.

Are you joking?

• No website/app and best autonomous software will fix the total lifetime cost disadvantage of an ICE based autonomous shared mobility (not even mentioning functional disadvantages like compromised safety due to inferior response time of an ICE drivetrain or inferior traction in inclement weather conditions)
• No website/app and best autonomous software will fix disadvantage in cost/range/charging infrastructure for an inferior EV.

Leadership in core technology - i.e. EV propulsion - will be the determining factor.

 

[Crowded Mind]

Model X invitations to configure are up to at least Signature #313 per the model X TMC forums.

 

[doggusfluffy]

Model X invitations to configure are up to at least Signature #313 per the model X TMC forums.

And a new 250 mile range estimate to add to the intrigue.

Finally...some fun Tesla news. Easter Egg.
Instagram

 

[schonelucht]

Right, being the low cost provider is not the determining factor.

No it won't. The car market is highly competitive. Whatever price is available to Tesla is available to a number of competitors within a small enough margin that it won't be decisive.

Best current website/app and best current autonomous software will be the the determining factor.

I would appreciate it if you don't put words in my mouth. Network effect and social presence will be the deciding factor.

This stuff is decidedly not short term however so I won't elaborate in this thread anymore, feel free to take up the debate in the long term market thread.

 

[sub]

I'm with MartinAustin on this one, Tesla is most concerned with a slow down in model S sales right now, not the loss of a few model X orders or a few grumpy customers. It keeps being said that one is a sedan and one is a CUV but these are not ICE models of which you have numerous choices of each. There are 2 EV's IMO that can be used as a primary car and both are made by Tesla. If you want to go full EV, choose one.

Take away the extra passenger/cargo space and the falcon doors and the model X isn't that different from the Model S. It can be argued that the Model S is a better looking vehicle (I would agree) and will perform better with longer range.

I believe the 2nd row seat outrage will disappear once Tesla does the full reveal. However, all the speculation could be just what Tesla was hoping for, pushing people to the S just a bit longer. Once model X production ramps up it won't matter what the ratio of X/S is as long as they are selling 1500-2000 a week into 2017 at which point all focus will start turning to model 3. I'm guessing stock price will be significantly higher at that point than it is currently.

 

[RobStark]

No it won't. The car market is highly competitive. Whatever price is available to Tesla is available to a number of competitors within a small enough margin that it won't be decisive.

The very mature ICEv market is very competitive with no real differentiators.

Tesla has the GF and a moat of technological advantage.

The price and availability of Teslas to Tesla Shared Mobility Services will be cheaper than to Uber Lyft etc.

Network effect and social presence will be the deciding factor.

That is even more ridiculous than the reasons I presupposed.

Network effect and social presence filters the bovine feces and eventually spreads the truth about price,product, and service quality.

If Tesla is the best and cheapest, as I am very confident it will be, then that reality is what will spread through network effect and social presence.


Elon Musk and Tesla will not have a problem being heard.

 

[anticitizen13.7]

I'm with MartinAustin on this one, Tesla is most concerned with a slow down in model S sales right now, not the loss of a few model X orders or a few grumpy customers. It keeps being said that one is a sedan and one is a CUV but these are not ICE models of which you have numerous choices of each. There are 2 EV's IMO that can be used as a primary car and both are made by Tesla. If you want to go full EV, choose one.

Take away the extra passenger/cargo space and the falcon doors and the model X isn't that different from the Model S. It can be argued that the Model S is a better looking vehicle (I would agree) and will perform better with longer range.

Again this is unconvincing.

Model X has higher seating position, far more 2nd row headroom, and towing capability. It is substantially different from Model S.

 

[AlMc]

Again this is unconvincing.

Model X has higher seating position, far more 2nd row headroom, and towing capability. It is substantially different from Model S.

In the debate about Osborne/canabilizing: TM is walking a difficult line. They need to sell/deliver 50K+ vehicles this year. To do this they have to be producing off line #2 at the rate of 1,500+ vehicles for the 12 weeks (will get some time off for the holidays..so 12 weeks)...probably more like 1,600-1,700/week (average). The ramp on X will *probably* hit some glitches. If people hold off on ordering the S or X waiting to see what features it may have this may slow down overall 'sales'. To add to the dilemma: If the X has features that people assume will be put into S 2.0, people who want the S may hold off on their order until those features become available. If the X does not meet people's expectations about towing ability or 'utility space' (folding seats) but has many great features (more sensors/AP possibilities) that will go into S 2.0.....watch out....People sitting on the sidelines before ordering to see if TM addresses the 'utility space' concern in the X or releases S 2.0.........

This scenario may play out...and may not....But, I think an investor's worry is not as simple as 'the S and X are different enough that it plays to two different populations'.

 

[Gerardf]

Delivery times as per the website ( Website wait times for delivery change - Page 55 ) are already on December for everywhere except NA. I even read about some delveries in The Netherlands already being estimated as Jan-2016.

Also, as-per the wait times pages, Q4 will be the first quarter for Dual motor deliveries to RHD counties. There should be a nice backlog of D-deliveries for UK, HK and Australia and these will surely help a lot in in enabling the production and delivery jump in Q4. I assume by now Tesla should be confident these RHD-D cars can indeed be produced and delivered in December.


Thus around Sept 29 could very well be exactly when Tesla has filled the Q4 production pipeline with enough MS and MS-RHD orders to hit at least 50k for 2015, even with a very low number of Model-X.

 

[aznt1217]

Again this is unconvincing.

Model X has higher seating position, far more 2nd row headroom, and towing capability. It is substantially different from Model S.

I have no idea how this cannibalization argument came about. I agree 100% with your sentiment. There really is no convincing needed. One is an SUV... and one is a sedan. That should be it. Where sub is getting this mutually exclusive choose one deal, I have no idea and it makes no sense. Not everybody wants an SUV. Some people want cars and don't need an SUV for the people hauling.

- - - Updated - - -

In the debate about Osborne/canabilizing: TM is walking a difficult line. They need to sell/deliver 50K+ vehicles this year. To do this they have to be producing off line #2 at the rate of 1,500+ vehicles for the 12 weeks (will get some time off for the holidays..so 12 weeks)...probably more like 1,600-1,700/week (average). The ramp on X will *probably* hit some glitches. If people hold off on ordering the S or X waiting to see what features it may have this may slow down overall 'sales'. To add to the dilemma: If the X has features that people assume will be put into S 2.0, people who want the S may hold off on their order until those features become available. If the X does not meet people's expectations about towing ability or 'utility space' (folding seats) but has many great features (more sensors/AP possibilities) that will go into S 2.0.....watch out....People sitting on the sidelines before ordering to see if TM addresses the 'utility space' concern in the X or releases S 2.0.........

This scenario may play out...and may not....But, I think an investor's worry is not as simple as 'the S and X are different enough that it plays to two different populations'.

This is more of the issue. How will Tesla handle the production switching between the two models. We honestly don't know. We know there are two lines. Will they run in parallel? Will one be dedicated to the X and one to the S? No idea.

The real jitters all of the X are really because we have not seen it yet (in its entirety) and there is much FUD being flung around. Sept 29 is not far.

 

[Krugerrand]

Again this is unconvincing.

Model X has higher seating position, far more 2nd row headroom, and towing capability. It is substantially different from Model S.

It does not matter if you are convinced or not. The fact remains, people ARE cross shopping the S and the X, and you need only read this forum to know that. Some people have specifically stated such things as, 'if the X seats don't fold, I'll change my order to an S.' There were people who reserved an X because they needed/wanted AWD. When the S became available with AWD, they switched their reservations from an X to an S.

There is only one long range BEV on the market and there's about to be two, both are being made my Tesla. So if you want a long range BEV that can tow, you'll get an X regardless of folding seats or headroom. If you want a long range BEV that has maximum longitudinal cargo space, you'll get the S. And so on...

In the ICE world there is little cross shopping because there are hundreds of variants to choose from. In the long range BEV market (with Supercharger Network, with OTA updates, with high performance metrics etc...) there are exactly two options, so people WILL cross shop until the number of variants is such that they don't have to.

 

[doggusfluffy]

It does not matter if you are convinced or not. The fact remains, people ARE cross shopping the S and the X, and you need only read this forum to know that. Some people have specifically stated such things as, 'if the X seats don't fold, I'll change my order to an S.' There were people who reserved an X because they needed/wanted AWD. When the S became available with AWD, they switched their reservations from an X to an S.

This is exactly the point at least that I've been trying to make. Had Tesla released more info, been just a little less secretive about the X seating and towing for the month of limbo from the 'configurator' to unveiling...maybe those potential customers would know whether the X meets their needs and be able to buy the Model S today. Due to the indecision you mention...they are wait and see...which means not ordering anything for the month. If that makes sense...that and the poor communication inherent in the secrecy is just poor strategy assuming your intent was to generate Model S sales and not hold people in limbo for a month.

Now, I don't know their actual reasoning of course. I used to be more comfortable giving them the benefit of the doubt. I'm here every day and I was blindsided by the lowered guidance, seat supplier delays, design delays or whatever that decimated my portfolio...so I'm trying to verify as much information as possible before I'm no longer an investor... due to insolvency. :smile:

 

[sub]

It does not matter if you are convinced or not. The fact remains, people ARE cross shopping the S and the X, and you need only read this forum to know that. Some people have specifically stated such things as, 'if the X seats don't fold, I'll change my order to an S.' There were people who reserved an X because they needed/wanted AWD. When the S became available with AWD, they switched their reservations from an X to an S.

There is only one long range BEV on the market and there's about to be two, both are being made my Tesla. So if you want a long range BEV that can tow, you'll get an X regardless of folding seats or headroom. If you want a long range BEV that has maximum longitudinal cargo space, you'll get the S. And so on...

In the ICE world there is little cross shopping because there are hundreds of variants to choose from. In the long range BEV market (with Supercharger Network, with OTA updates, with high performance metrics etc...) there are exactly two options, so people WILL cross shop until the number of variants is such that they don't have to.

Exactly, thanks for taking my point one step further by pointing out this exact thing (cross shopping) is happening right here on TMC. My preference would be a Model S after a small refresh (never liked the nose cone). I have no need for another SUV and an EV won't work due to towing distance right now, not capacity. Towing distance is an issue in my ICE also (MPG drops significantly) but there are not enough superchargers in the area I tow to make it work. I will be scheduling a Model X test drive as soon as they are available however.

 

[doggusfluffy]

Car bosses talk China, Tesla battle and luxury SUVs

Müller said it will decide by the end of the year whether to put the concept car into production and said that this car would be "better than everybody in the market".

"We are proud of Tesla as a competitor, we accept that but Porsche always wants to do it better," Müller told CNBC.

 

[uselesslogin]

So anyway, seats still don't fold but Tesla has provided some renderings apparently.
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