Short-Term TSLA Price Movements - 2016

[aznt1217]

Now if we can just get to posts that say DaveT and Nigel are buying we will have called the 'bottom':biggrin:

Might as well bring back sleepyhead while we're at it

 

[AlMc]

Might as well bring back sleepyhead while we're at it

and CapOp; He saved me a ton of $ when I first came to the forum for an information source for investing in TSLA.

 

[The Blue Owl]

You know the mood is dark when people start summoning the demons!

 

[dakh]

The real question is will this level of volatility remain once people stop freaking out about Model X, once Energy product prove themselves, Model 3 is revealed etc.

 

[eloder]

The real question is will this level of volatility remain once people stop freaking out about Model X, once Energy product prove themselves, Model 3 is revealed etc.

You bet it will. I imagine it won't stop until investors get the idea that there's not a "Tesla killer" out there, and that EVs just eat mostly away at ICEs rather than EVs eating each other.

 

[Papafox]

The real question is will this level of volatility remain once people stop freaking out about Model X, once Energy product prove themselves, Model 3 is revealed etc.

The answer is of course YES, but sooner than most think. What we're fighting right now is poor media accuracy, which is in turn causing investors to be unnecessarily fearful.

For example, we've heard Elon's word from Paris last weekend that Model X production will be equal to Model S production sometime in the 2nd quarter and that production continues to accelerate. We've heard from forum members who have taken recent factory tours and although they are not at liberty to share details, they have all indicated a plan to hold onto their stock. We see Model X signature deliveries to our own forum members and see lots of evidence of other deliveries. We've heard that production Model Xs are nearing delivery. So, many of us have gone from fearful of Model X rampup on this forum to underwhelmed but no longer fearful. Unfortunately, in recent days a few analysts have released lowered price targets or begun coverage on a negative note, and cited Model X rampup concerns. Then the various business news services rehash these analysts concerns for a couple weeks. The angst we TMC forum members have felt in prior weeks are now being felt by my investors, even though the situation really is looking better these days. There's simply a time delay caused by sloppy journalism.

Speaking of sloppy journalism, check out this piece.
The author cites 3 reasons to be concerned about TSLA 4Q ER:
1) Rising SG&A and R&D costs pose risk to 2016 EPS
2) Expect downside to +75% y/y deliveries in 2016
3) Stationary storage headwinds persist

Let's look at each one:
1) Rising SG&A and R&D costs pose risk to 2016 EPS
While Buddyroe has been lamenting the slow pace of supercharger installations in Q1, analysts figure Tesla is working at breakneck speed. As for R&D costs, in a previous ER CC, Musk and company laid out clearly that R&D expenses would be decreasing in 2016.
2) Expect downside to +75% y/y deliveries in 2016
So, who is expecting 75% growth in 2016? Nobody expects every quarter to be as big a jump over the previous year's as Q4 2015 was over Q4 2014. This journalists expectations are out of touch with what can be done with 1700 vehicles/week produced, and maybe a bit more. Further, he lists the slow Model X ramp, which has a bit of merit, but then he mentions the introduction of the Chevy Bolt this year. Does he really believe that people in the market for a premium sedan or premium SUV would be lured away by a Bolt? The Bolt has its value, don't get me wrong, but it is a car that appeals to an entirely different type of buyer. The author must look at EV sales as a pool in which all EVs compete against other EVs, instead of realizing that Tesla's Model S is primarily competing against ICE premium sedans, stealing that show, and Model X will do as well at stealing the show in the premium SUV market. Once an EV has 200+ miles range, a suitable supercharger network, and autopilot, it can compete extremely effectively against ICE vehicles.
3) Stationary storage headwinds persist
I will agree with the author that as far as I can see, Telsa Energy has probably been expanding production at slower than originally-guided speed. That said, the author goes into a discussion about the limited value of the Powerwall. You and I know that the Powerwall is small potatoes compared to the utility and commercial-grade product of TE. The official opening of the gigafactory in April will put the focus initially on Tesla Energy products. Expect good things.

The solution for inaccurate journalism? The ER and CC on Feb 10. Don't miss it.

 

[lango]

The answer is of course YES, but sooner than most think. What we're fighting right now is poor media accuracy, which is in turn causing investors to be unnecessarily fearful.

For example, we've heard Elon's word from Paris last weekend that Model X production will be equal to Model S production sometime in the 2nd quarter and that production continues to accelerate. We've heard from forum members who have taken recent factory tours and although they are not at liberty to share details, they have all indicated a plan to hold onto their stock. We see Model X signature deliveries to our own forum members and see lots of evidence of other deliveries. We've heard that production Model Xs are nearing delivery. So, many of us have gone from fearful of Model X rampup on this forum to underwhelmed but no longer fearful. Unfortunately, in recent days a few analysts have released lowered price targets or begun coverage on a negative note, and cited Model X rampup concerns. Then the various business news services rehash these analysts concerns for a couple weeks. The angst we TMC forum members have felt in prior weeks are now being felt by my investors, even though the situation really is looking better these days. There's simply a time delay caused by sloppy journalism.

I have followed the forums and I have yet to see any solid evidence of production ramping up to a torrent as oppose to a trickle. There has been a delivery here or there and dates promised. But dates in the past has not been followed up upon, there is still quite a few people that had delivery window in 2015 that has not received their vehicles.

To just take some examples, there were reports from the (I think it was called meet the Model X event) a week or so ago that mentioned a ratio of 1:10-1:15 Model X to Model S on the line. There was also someone that received an air cargo Model X to Qatar that mentioned the seals looks like they had been cut with knives or razors. The seals and alignment on the Falcon Wing Doors was mentioned in a previous call from Elon as being a problem they had to solve, although it was not a major problem.

What would be solid evidence? I think a big increase in people saying their car is in production or someone doing a factory tour or visits the factory can verify the line has a lot of Model X on it.

As a side not, I waited to pull the trigger on my purchase of Tesla shares until the first signatures got their vehicles, I assumed that was the start of mass production but it wasn't, so now I am waiting on the real mass production to start.

I think this is really important so would be cool if people that know more would share.

 

[jhm]

See the revisions and citations I added to the post.

Also, just a guess, but it would probably be more difficult for Obama to implement a carbon tax during his remaining time in office. A carbon tax is harder for politicians to understand, and would be further reaching, and therefore by definition harder for Republicans to support, or for him to implement using his executive power.

Also, slight reminder, Reagan was a republican.

Mods: I think my original post and the responses from people might need its own thread, to avoid confusion. I hope some legal experts and people who know more than I do will shed their views on the Presidents authority to use his executive power to impose a fee on oil.

This will very materially effect demand for oil and capital that can be invested in companies investing in Electric Vehicles, and clean technology such as Tesla Motors and SolarCity.

Thanks, I took a look at those extra materials. If this is an importation fee, that's a horse of a different color.

So the US produces about 9.1 million barrels per day and imports another 10.2 mb/d. An importation fee of $10 per imported barrel would be a huge boon to domestic producers. The price of domestic oil could rise $6 to $10. That is, domestic producers would earn say $40/b while importers sell at $30 plus $10 fee.

So consumers would face paying about 14 to 24 cents more per gallon. This would be tolerable considering that devastating job losses in the oil sector could be reversed to so extent.

The revenue to the federal government would come from the fee directly, about $37B per year, and from corporate and personal income taxes on domestic oil, about $8B per year. Moreover, public assistance for displaced workers can be avoided as well.

The downside to this is that it may perpetuate overinvestment in domestic oil production at a time when it is best to scale back. It may be even more painful on the domestic industry as the fee is scaled back. Domestic producers would have poured billions into economically unneeded oil wells and infrastructure with little hope of recouping the cost over the next 20 years. This action can perpetuate the glut well into 2020, while causing additional harm to US oil exporting trade partners. Would this fee be applied evenly to all exports or would it exclude Canada, Mexico and other favored trading partners? There are international politics implications to each country impacted or not.

So for me this is a toss up. There are some domestic advantages to this, but I think it could prove short sighted. From a climate change and energy transition point of view, I think we want to let this glut play out as is. The oil investment world needs to see that very little oil is worth investing in. It's becoming not worth drilling for. But proping up domestic producers at the expense of trade partners we isolate our economy and artificially stimulate unneeded drilling and all the environmental damage that entails in our country. It's time to move on from oil, not to coddle domestic producers.

 

[postpast]

As for R&D costs, in a previous ER CC, Musk and company laid out clearly that R&D expenses would be decreasing in 2016.

I don't see how this is possible. Almost all of the R&D, production line design, Supplier sourcing, prototype building, and testing for the Model 3 will have to take place this year if Tesla has any hope of releasing it next year.

For context; Chevy had put over 2 million miles on 50 fully production spec prototypes over a year before production. At the start of last year they had over 1000 engineers working just on the Bolt.

If Tesla has hopes to sell at a larger scale, they are going to have to invest even more.

 

[Fallenone]

Well I think it will be hard but not impossible. Comparing with GM Bolt is not very appropriate either. Tesla has the experience with S (and X if that matters) to begin with while Bolt is an almost total new experience for GM (EV1 team was ditched long ago), so Tesla has some advantage in the RND for this mass market EV to begin with. Plus, they have been allocating resources on the 3 in 2015 and maybe before. To what extent we don't know.

I don't see how this is possible. Almost all of the R&D, production line design, Supplier sourcing, prototype building, and testing for the Model 3 will have to take place this year if Tesla has any hope of releasing it next year.

For context; Chevy had put over 2 million miles on 50 fully production spec prototypes over a year before production. At the start of this year they had over 1000 engineers working just on the Bolt.

If Tesla has hopes to sell at a larger scale, they are going to have to invest even more.

 

[Yodi]

Hmm...are you sure it even exists? It might just be a picture of your impossible to build vehicle that you'll get to see. But if it's a real X, take an umbrella. Wouldn't want you to get wet when those FWD don't open fast enough or don't open at all! Oh wait, you're in the Poconos...the doors will be frozen shut no doubt! Mostly though, I suspect your vehicle doesn't exist and they'll try and hard sell you an S from that vast inventory lot they've got out back because we all know demand for those have gone down the drain. :wink:

Elon, on his speech in Hong Kong ,mentioned about update for MX regarding heavy rain. He said they already work on the update and it's function will be to open the FWD on 50-60% and use it like umbrella... just saying

 

[sundaymorning]

Elon, on his speech in Hong Kong ,mentioned about update for MX regarding heavy rain. He said they already work on the update and it's function will be to open the FWD on 50-60% and use it like umbrella... just saying

This is good to know. btw the poster you are responding to was using humor in light of the X delay and all the FUD. Now that production is starting to be back to business as usual I suspect we'll get a bump. Kruggar is long Tesla. Welcome to the forum, hope to see more of you.

 

[vgrinshpun]

Why would power companies want TSLA to fail? EV's are going to be one of the few things that will actually increased per capita electrical consumption. A high capacity EV driving lots of miles can use as much electricity as a single family home. I have actually been adding some utilities to my portfolio for the long run because I think EV's are a tremendous boon to them.

Ever cheaper and better Powerwalls and Powerpacks coupled with cheaper and better solar panels would be quite problematic for all the installed fossil fuel powered generating capacity currently owned by the power companies.

And the transmission and distribution grid becomes nonessential as well.

Not according to Elon Musk. In his view the end game is that world total energy production which is roughly split in three equal parts: heating, transportation, and electricity can be replaced by solar, with about third of total required solar generation being grid connected. This leaves current requirement for power grid capacity roughly intact. Grid will require modernization, but grid infrastructure will not be stranded. Fossil generation infrastructure eventually will be.

I did not say that the transmission grid becomes stranded. It will be used. But it's utilization will be much smaller. Moreover, 1.2 billion people currently live without access to a power grid. Electrification will come to these people, distributed energy will leapfrog the grid. Thus, the grid is nonessential. It may be nice to have where it is already paid for, but it is nonessential to the expansion of eletrification.

Another way to look at this is that virtually all power flowing through transmission lines is coming from remote utility scale .generators. We call them centralized, but in actuality they are remote to where the load is. What happens as Utility scale generation declines, say, by a third? The transmission lines get used a third less as well. So the transmission system has 50% more capacity than needed. The question of who pays to maintain this surplus capacity becomes really contentious. The current business model for most utilities is that the cost gets recaptured from ratepayers whether the capacity is needed or not. This model breaks down as ratepayers defect from the grid to avoid paying for things they actually use quite little of. So the utilities need to be very careful to down scale capacity. They definitely should not be making the assumption that ratepayers can be counted upon to willingly pay for excess infrastructure.

I was posting in response to the conversation regarding the currently existing transmission and distribution network owned by utilities. I agree that for developing areas of the world without currently existing transmission and distribution network there is realistic path forward to electrification based on solar and perhaps microgrids.

However, existing transmission and distribution networks in industrially developed nations will remain essential, because for various reasons distributed solar will be providing minority (less than one third per Elon Musk - listen starting from about 19:10) of total solar generation, while the remaining more than two thirds of solar generation will need to be "utility form" centralized, grid connected generation.

My point is that assumption that growth in solar generation will render grid unnecessary or non-essential is not realistic because it ignores that, as pointed out by Elon and JB, both total energy generated by utilities and independent power producers (IPP) will grow, and distributed solar will be ultimately limited to about one third of all solar installations.

 

[postpast]

Well I think it will be hard but not impossible. Comparing with GM Bolt is not very appropriate either. Tesla has the experience with S (and X if that matters) to begin with while Bolt is an almost total new experience for GM (EV1 team was ditched long ago), so Tesla has some advantage in the RND for this mass market EV to begin with. Plus, they have been allocating resources on the 3 in 2015 and maybe before. To what extent we don't know.

Yes, but.. GM has experience building mass market cars at a price, which Tesla doesn't. I think that will be at least the same level of challenge. This is the first time Tesla will have to look at the cents column of parts or put reliability above style or innovation. With Teslas sales and price projections they simply can't afford for parts, production or warranty costs to be even a couple thousand more than projected. Plus the whole reputation of the company will rest of the reliability of the Model 3, to become a mainstream automaker they will have to go above and beyond. They are up againt companies that have produced 100's of millions of cars and can't really afford to learn as they go

 

[Fallenone]

Totally agree with what you said here. Big big challenges for Tesla to push over 10k production rate a year. We'll see how they do it.

Yes, but.. GM has experience building mass market cars at a price, which Tesla doesn't. I think that will be at least the same level of challenge. This is the first time Tesla will have to look at the cents column of parts or put reliability above style or innovation. With Teslas sales and price projections they simply can't afford for parts, production or warranty costs to be even a couple thousand more than projected. Plus the whole reputation of the company will rest of the reliability of the Model 3, to become a mainstream automaker they will have to go above and beyond. They are up againt companies that have produced 100's of millions of cars and can't really afford to learn as they go

 

[postpast]

Totally agree with what you said here. Big big challenges for Tesla to push over 10k production rate a year. We'll see how they do it.

I'm not saying that they can't be mass market. What I am saying is that this year, is the one where you would think they should dump all money available to make sure the Model 3 will be as reliable and trouble free as possible. A millions sq. ft. of machines slamming doors, torturing suspension components and trouble shooting software. If the Model 3 proves that electric cars can be more trouble free and cheaper to run than gas cars; Tesla's future is unlimited. If the Model 3 is fixing customers car problems as they appear, Tesla will remain a compromised and niche choice. Long term, it appears now would be the time for massive R&D.

 

[aznt1217]

Yes, but.. GM has experience building mass market cars at a price, which Tesla doesn't. I think that will be at least the same level of challenge. This is the first time Tesla will have to look at the cents column of parts or put reliability above style or innovation. With Teslas sales and price projections they simply can't afford for parts, production or warranty costs to be even a couple thousand more than projected. Plus the whole reputation of the company will rest of the reliability of the Model 3, to become a mainstream automaker they will have to go above and beyond. They are up againt companies that have produced 100's of millions of cars and can't really afford to learn as they go

GM cars have crap reliability for the most part (everyone I've owned has been horrible). That and the company went bankrupt. Twice. The cars are inherently more reliable due to the simplicity of the drive train.

 

[tinm]

Help us CapOp, you're our only hope.

 

[eloder]

I don't see how this is possible. Almost all of the R&D, production line design, Supplier sourcing, prototype building, and testing for the Model 3 will have to take place this year if Tesla has any hope of releasing it next year.

For context; Chevy had put over 2 million miles on 50 fully production spec prototypes over a year before production. At the start of last year they had over 1000 engineers working just on the Bolt.

If Tesla has hopes to sell at a larger scale, they are going to have to invest even more.

Tesla doesn't need to do the endless battery validation that the Bolt has had to do. At least I doubt they're going with radically new cell/battery pack configurations in the Model 3.

Their hardest challenge I'm sure is getting the price point low enough, and researching on how to do it efficiently and effectively for a mass market pricing level.

 

[lango]

If the Model 3 is fixing customers car problems as they appear, Tesla will remain a compromised and niche choice. Long term, it appears now would be the time for massive R&D.

I don't agree with this. As long as Model 3 has most of the things that Model S/X has as options (AP, Super Chargers, long range, ludicrous performance) it will be compelling enough to offset any lack of execution with respect to the customers. As in, they can make a Model X type of launch and communication and still be fine, and they can also do lousy service and have too little capacity for Super Chargers.

Of course it would be a lot better if they delivered of all of it, but they don't have to. It would still sell all they can produce per year. Just because something is desirable does not mean it would derail the company or the mission if it does not happen.

Eventually they have to deliver quality on that as well, but I think that would be post Model 3 launch, so let's say 2020.