Short-Term TSLA Price Movements - 2016

[Julian Cox]

How? By simply fully committing to it. BMW, GM, Nissan sort of dipped their toes down to half their asses ( a half-assed job?).

Look, I fully realize I am oversimplifying it as to how this can be done and minds far superior to my own can figure this out. My main point is that the winds of vehicle electrification is consolidating. Continuing to ignore it will be at their peril.

Your main point is the main point of TSLA bears. My point is that this is an unfounded assumption and that this assumption is false. Not only false but demonstrably so for the sake of think it it through with sufficient clarity.

This is not one of those problems that gets easier to solve the smarter you are. The smarter you are the more you can appreciate that success is not one of the possible outcomes. Take heart, the fact that you can't see how to do it puts you at the top of the class, not at the bottom. Now second guessing that someone else can solve it is not equally smart - that is how you risk ending up paying for the experience along with the Mark Spiegels of this world. The object of following this thread is to have their net worth end up in your portfolio - hence pointing this out.

 

[Julian Cox]

So if we assume that in a few days the majority of ICE vehicles will be obsolete but the majority of drivers won't be able to buy a BEV for several years..

Yes. Absolutely correct.

What will happen to fill the void?? Insane quantities of reservations permitting the company before the end of this year to announce plans to blow away its 500,000 per year assumed target in 2020 backed by insane inflows of capital on insanely favorable terms.

Welcome to Capitalism.

 

[Oil4AsphaultOnly]

Many people share fluffy assumptions about all this, but nobody can answer this question. How??

I think your making an assumption there that BMW and GM won't cannibalize their existing sales without crippling themselves in the process. Like that hiker who cut off his arm with a swiss army life, once the realization is made that the company will die without some self-amputation, all it takes is the will to act. GM's gen2 Volt and Bolt are well received, despite their compromised nature. They won't beat a model 3 in sales, but it will move GM's brand towards electrification without killing themselves in the process. BMW is doing the same thing with their intent to plug-in hybridize their entire line-up.

Both companies still have enough brand-followers to permit them to successfully transition so that they're still viable after 2020 - a little weaker due to lost sales, but alive enough to offer competition to tesla. Thinking that they're doomed and would not be a threat to Tesla in the future is wishful thinking.

Don't get me wrong, SOME current manufacturers (FIAT?) will not survive after 2020, but enough will survive that it won't be easy pickings for Tesla. Come 2018, my money will follow Musk as he'll have no obligations to stay and guide the company.

 

[jhm]

Yes. I know. Tesla's being coal powered was an old argument that is mostly dead. That's why I used it as an example. My point was that since that argument died, has the stock reflected that argument going away?

Here's how that discussion should go:
TeslaTroll: Hey, you know your Tesla is coal powered, right?
TeslaOwner: Sure, how's that working out for your coal stocks?

 

[lango]

Yes. Absolutely correct.

What will happen to fill the void?? Insane quantities of reservations permitting the company before the end of this year to announce plans to blow away its 500,000 per year assumed target in 2020 backed by insane inflows of capital on insanely favorable terms.

Welcome to Capitalism.

This is very important point. If they manage to move fast and produce let's say 800k Model 3 by 2020 versus if they produce 300k-350k which is the current communicated target. The latter would not really hurt any one ICE manufacturer sales all that much but the former will hurt some of them in a big way. The importance of the actual production number assumes that a large number/ratio of people would not wait 3+ years and stand in line for a car and driving their old one too long but that they would buy a Model 3 if they could get it at a normal delivery time.

The smaller production target I think also implies that they would operate with a low cash balance (otherwise the target would be higher) which also would imply that most of the sales will be NA and Norway and some other markets as opposed to be truly global and with ASP over $35k as that makes the most financial sense. And from all of this follows that Model 3 2017-2020 with production rate of 350k in 2020 would be the same type of market shift as S and X before but amplified and creeping down in price range.

An interesting question then is how much capital they need to raise production to 800k+ in 2020 of Model 3? One more GF and one more car factory. Or maybe they just need to extend GF and buy a lot more cells from Panasonic.

 

[Hogfighter]

I think the production rate and amount of capital raise is very important. If they manage to move fast and produce let's say 800k Model 3 by 2020 versus if they produce 300k-350k which is the current communicated target. The latter would not really hurt any one ICE manufacturer sales all that much but the former will hurt some of them in a big way. The importance of the actual production number assumes that a large number/ratio of people would not wait 3+ years and stand in line for a car and driving their old one too long but that they would buy a Model 3 if they could get it at a normal delivery time.

The smaller production target I think also implies that they would operate with a low cash balance (otherwise the target would be higher) which also would imply that most of the sales will be NA and Norway and some other markets and with ASP over $35k as that makes the most financial sense. And from all of this follows that Model 3 2017-2020 with production rate of 350k in 2020 would be the same type of market shift as S and X before but amplified and creeping down in price range.

An interesting question then is how much capital they need to raise production to 800k+ in 2020 of Model 3? One more GF and one more car factory. Or maybe they just need to extend GF and buy a lot more cells from Panasonic. In either case Fremont will not be enough.

All this talk about raising more capital to fund faster growth infers that money is the only thing stopping Tesla from growing much faster than the planned 50% per year. Growing above that pace is very precarious for a number of reasons.....infrastructure, experience, and quality control to name just a few. I for one don't think it would be wise to grow faster than 50%.

 

[lango]

All this talk about raising more capital to fund faster growth infers that money is the only thing stopping Tesla from growing much faster than the planned 50% per year. Growing above that pace is very precarious for a number of reasons.....infrastructure, experience, and quality control to name just a few. I for one don't think it would be wise to grow faster than 50%.

Yeah, it depends to a degree how the growth happens. I think they can manage one extra factory. But things like service centers and SuperChargers also have to grow in tandem.

 

[austinEV]

Here's how that discussion should go:
TeslaTroll: Hey, you know your Tesla is coal powered, right?
TeslaOwner: Sure, how's that working out for your coal stocks?

TeslaTroll: Hey, you know your Tesla is coal powered, right?

Me: Sigh. That is not true, but lets put aside the electricity mix that includes substantial hydroelectric, wind and solar in many parts of the country. And most domestic power is generated from natural gas which is much cleaner than coal. But let's take you at face value. My car is powered by coal.

So. Freaking. What.

I didn't say this car was emission free or impact free. Tesla buyers are buying an excellent car. I don't actually have to prove to you or anyone that it is better for the environment. By bringing that up you are arguing a strawman; that I was making that claim. If I was driving a BMW 7 series you would not have said "Hey, you know your BMW is powered by gasoline, right"?

But ok, lets talk impact. My dirty-coal powered EV is powered by domestic coal, produced by hard working Americans in West virginia, burned in remote power plants with stack scrubbers and emissions regulation. What is your car fueled by? Gasoline, refined oil from petro-dictator states who's wealth indirectly funds radical islamic terrorism? And your emissions are out the tailpipe directly into city centers and the lungs of vulnerable citizens. Good job, gas is awesome you have shown me how dumb I am.

 

[sunhelm]

Sure, in hindsight they should have bought them, but even that decision wasn't clear cut. 50M was a lot of money for an unproven company doing something that BB probably felt they could do too.

And therein lies the rub: the risk of obsolescence is hard to predict until it's too late. Blockbuster's story, like Kodak, ended in similar fates.

 

[jhm]

So if we assume that in a few days the majority of ICE vehicles will be obsolete but the majority of drivers won't be able to buy a BEV for several years... What will they do? Pay lots of money in repairs as their car starts to fall apart? Take a bus? Who will step in to fill the void? What number of reservations will cause upheaval of our financial system? This reminds me of Y2K.

My wife and I have already faced this. We really wanted to replace an older Chevy Malibu with a Tesla. Our three choices were: make due until Model 3 comes out, lease a Leaf until the Model 3 comes out, or buy a Model S. We'll be getting that Model S this weekend. Had that not been a financial option for us, we probably would have simply held the Malibu until Model 3.

Really, this is nearly counterpoint to Julian's hypothesis that used ICE cars will lose value. Yes, they will lose value, but that does not imply a glut of used cars. If the average new car buyer held onto their car an extra year or so until they could replace it with a compelling EV, then new ICE sales suffer from the wait, but there is not a glut of used ICE to flood the market. Specifically, if one needs a bridge car until they go electric and new ICE cars are depreciating rapidly, then for many families the economic choice will be hold the used car a little longer.

On the supply side, if the waiting list for a Model 3 is more than 12 months in 2020, then it will have no problem getting financing for expanding its manufacturing capacity. Supply will ramp up to meet demand. So on the demand side, I do think it comes down to a willingness to wait about a year or less. Most new car buyers can make do for such a length of time.

 

[techmaven]

How? By simply fully committing to it. BMW, GM, Nissan sort of dipped their toes down to half their asses ( a half-assed job?).

Look, I fully realize I am oversimplifying it as to how this can be done and minds far superior to my own can figure this out. My main point is that the winds of vehicle electrification is consolidating. Continuing to ignore it will be at their peril.

Worst than that.. they actively screwed the electrification movement in many obvious and non-obvious ways. The biggest non-obvious way is Nissan and Mitsubishi's insistence on using CHAdeMO in the U.S. It was readily apparent that 200 amp DC EVSE's were an evolutionary dead end, even in 2009. These companies all pay futurists to project what things could/should/would be like 5, 10, 20 years into the future. Clearly long range battery electric vehicles would need 300-400 amp DC charging at real world rates above 100 kW for reasonably road trip cadence. Further, they all have read the various papers on mass electrification and what that means for the grid. The obvious conclusion is that long range BEVs would have to charge from the grid at off peak times in order to even out the duck curve and avoid loading up the grid at inopportune times. They can all calculate how much battery would be necessary to drive 200+ miles (55-60 kWh for a small sedan, 80+ kWh for a SUV) and how long that would take to charge overnight - 8.25 kW for 60 kWh in 8 hours. That means J1772 standard amperage needs to be 40 amps to cover that most common use case. As the electrification movement went further, obviously the J1772 standard would have needed to be extended to at least 60A.

Therefore, CHAdeMO should never have been introduced to the U.S. They could have gotten together with GM, VAG, Ford, and others to hammer out a real 400A L3 charging standard in 2010. But no, they didn't. Further, SAE/GM/Ford/VAG went on to establish a CCS standard that was also woefully inadequate. Anyone that looked at the long term consequences and needs for electrification would have seen what is necessary and Tesla did just that. There is a reason why the single on-board charger was 40A at the start. There's a reason why Superchargers started at 90 kWh and wiring was designed for over 300A.

By introducing half-assed, half-baked products that they really didn't want to build, they could stall a movement that they didn't really want in the first place. Or at least, electrification would have taken far longer and relegated to a small eco-niche. It would have gone according to plan if not for Tesla.

 

[geneclean55]

Looks like someone purchased over 40,000 shares during after-hours trading - more than half the total volume.
Could that be considered unusual activity?

 

[Fallenone]

Looks like someone purchased over 40,000 shares during after-hours trading - more than half the total volume.
Could that be considered unusual activity?

I wouldn't place much emphasis on it. It's 1% of daily volume.

 

[sub]

Enjoying the back and forth between Julian and jhm. Techmaven reminded me however of the importance of the charging network. Even if the bolt was an identical copy of the model 3, the supercharging network makes the model 3 Infinitely more attractive.

This has to be brought into the conversation, both sides have made good points regarding ICE companies ability to transform (or not) to BEV, but without a charging network they are selling hobbled cars regardless of the distance on one full charge.

I leased the i3 to get to the model 3. I refuse to ever buy another ice vehicle, hoping to be rid of our current vehicle within 3 years with two model 3's. I'll keep my old landcruiser for sentimental reasons since it will have little to no value, it will be driven maybe 1000 miles a year.

 

[BriansTesla]

Enjoying the back and forth between Julian and jhm. Techmaven reminded me however of the importance of the charging network. Even if the bolt was an identical copy of the model 3, the supercharging network makes the model 3 Infinitely more attractive.

This has to be brought into the conversation, both sides have made good points regarding ICE companies ability to transform (or not) to BEV, but without a charging network they are selling hobbled cars regardless of the distance on one full charge.

I leased the i3 to get to the model 3. I refuse to ever buy another ice vehicle, hoping to be rid of our current vehicle within 3 years with two model 3's. I'll keep my old landcruiser for sentimental reasons since it will have little to no value, it will be driven maybe 1000 miles a year.

I am really enjoying this conversation. What I really want to know is where Tesla's competition will come from. I know it will appear, but from where?
Elon has given fair warning and every opportunity. The cards are dealt, the bets are placed but Tesla holds all the aces and has gone all in!

 

[jhm]

Enjoying the back and forth between Julian and jhm. Techmaven reminded me however of the importance of the charging network. Even if the bolt was an identical copy of the model 3, the supercharging network makes the model 3 Infinitely more attractive.

This has to be brought into the conversation, both sides have made good points regarding ICE companies ability to transform (or not) to BEV, but without a charging network they are selling hobbled cars regardless of the distance on one full charge.

I leased the i3 to get to the model 3. I refuse to ever buy another ice vehicle, hoping to be rid of our current vehicle within 3 years with two model 3's. I'll keep my old landcruiser for sentimental reasons since it will have little to no value, it will be driven maybe 1000 miles a year.

Actually I'm not really concerned about how or whether Tesla will disrupt the auto industry. Not all will survive, but not all are doomed either. So that not my thing to sort out. What fascinates me is how quickly the oil industry will peak and enter perpetual decline. Remember that not all film camera makers went out of business because of digital photography, but film manufacturers like Kodak found that for no lack of film cameras nearly no one wanted to buy and develop film anymore. Traditional automakers we have to decide for themselves if they truly want to become digital auto makers, but oil forced out of energy markets in due time.

I believe that traditional will largely try to cope with change by offering hybrids, and this will be devasting to the oil industry. First, consider non-plug-in hybrids. These can nearly double mpg over their conventional counterparts. So something like 50 to 60 non-plug-in hybrids can displace 1 million barrels per day. Working against this are the CAFE standards that allow OEMs to use hybrids to enable sales of gas guzzlers, but as a competitive strategy against Tesla, they will have to penetration the gas guzzler world with hybrids. I believe this is already happening. Next, they will offer up plug-in hybrids. These enable customers to enjoy nearly all the convenience and fueling cost savings as a BEV without the infrastructural limitations real or imagined. Additionally, production can be scaled up with minimal battery capacity. Plug-ins that get 30 to 40 miles per charge should do a pretty effective job of displacing oil demand. Perhaps about 30 million will offset 1 mbpd of demand. Finally, full range battery electric vehicles will need about about 5 times as many kWh per car as plug-in hybrids. And about 25 million are needed to displace 1 mbpd of oil demand.

So plug-in hybrids represent the shortest path to the oil apocalypse. About 100 million new cars will be sold annually. 100 BEVs would require at least 6000 GWh of batteries. But 100 PHEVs would require only about 1200 GWh. So if the world grows the battery supply at 50% per year, then we can get to 100M PHEVs per year 4 years earlier than 100M BEVs. Now 100M PHEVs will displace about 3.3 mbpd while 100M BEVs knocks out 4 mbpd. So BEVs are needed for the ultimate elimination of oil from autos, but 30M plug-ins are sufficient to push oil into structural decline.

So if traditional automakers respond to Tesla with PHEVs, that is fine by me. That is sufficient to take oil down. Is this the smartest path for surviving the threat from Tesla? I'll let others opine on that. In my opinion, the key thing for Tesla to do is to bring models to market that compete with the highest margin conventional vehicles. Cutting margin on the money makers will force automakers out of the compliance game. They will have to offer higher efficiency vehicles to stay in business. Gas guzzlers need to be driven out of the market first. Ludicrous speed and the Model X are strategic hits into gas guzzler territory. This is how I see Tesla driving sustainable transport.

 

[geneclean55]

The price action over the next few days will be very interesting. TSLA took maximum advantage of the oil price and stock market rally in the absence of much TSLA specific material news (the delayed x ramp being the obvious exception). Now that the oil price and stock market rally have leveled off for the moment, it will be enlightening to see if the impending Tesla specific events can keep the stock in an upward trajectory.

 

[Ukland Wombat]

on topic: this thread itself

I do not want to be rude, but your posts have made me start to hate this thread. I do not find the wombat related commentary amusing, nor do I find your unfounded fantasies about the future useful. You asked that forum members refrain from blocking you.. I'm trying. I also appreciate you FINALLY starting a new thread about this ridiculousness. Unless you have something to add that is based on real information, please refrain from filling the forum with your posts. If you insist on continuing, thats your prerogative. But I will block you.

Thanks for biting. I waited a bit for you to collect some likes. It may surprise you that there's a like from me!
It's a win-win, you see, because if you get your likes for the disliking me, then I will get fewer dislikes.

Now in all seriousness, in reply to you, I have the opportunity to make a few points relevant to this thread.
Skip to number 12. right now if short on time...the rest just had to be stated, in case you want to understand.

1. I hated posting my ideas in this thread, but it was the de-facto 'go-to' 'catch all'-thread for investors' discussions.
2. I also hate hiding behind a wombat persona. If it is laboured, tedious and not funny for you, it is much worse for me!
3. You may have noticed that I only use the wombat thing when I am saying something knowingly outrageous. I speak thru my normal persona when I want to be taken (more) seriously. And..
4. I have a very good reason for using this wombat device. It is a differentiator between expertise and non-expertise.
5. The majority of posters here are experts (business, financial, tech, etc).
6. I am not an expert. But I am an investor. I think many guest readers are not experts. Spare a thought for them.
7. A reference to Sleepyhead came up today in the Forum (DaveT Megapost thread). He passed himself off as an expert a few years ago, then drew many followers to another (mainly) solar forum "The Contrarian Investor".
8. Sleepyhead's "expertise" over-excited many investors to buy GTAT which later collapsed into a black hole, losing the unsophisticated investors, who put too much weight on Sleepyheads commentary, a pile of money, judging by the wailing in that forum in the aftermath.
9. I would feel awful if anybody became over-excited and made a losing bet on my outrageous fantasy scenario.
10. Hence the clumsy differentiator....I hate it too. I'm not burning to say anything that whacky again, so I don't need to use it.
11. If some decide to comment in the "What if ..." thread I started, well they already know it's whacky so I can use my normal persona in discussion...a huge relief to me, I can assure you.


12. With the above explanations out of the way, sorry but they had to be stated, you give me an opportunity to make a small observation (this is why I gave you a like!) that may be of interest to a few readers, and I admit probably very few.
13. Your post quoted above is instructive because it tells me you are not one of them... dismissive of my ridiculousness.
14 It tells me that you are 100% certain that no mini-powerall plug and play type product will come with M3.
15 I can tell you that I am almost 100% certain that you are right!
16 But here's the thing. If the unlikely occurs, an investor might want to pause to weigh up the consequences.
17 The consequences of this outlier scenario are so enormous (IMHO) that it should be weighted accordingly.
18. You seem sure you are right. I am almost sure you are right...which leads on to how I think (sorry but I need to say it)...
19. I find it instructive to imagine starting always from the extremes, the absurdities, to see if there might be any truth to discover when the decks have been swept clear of "received wisdom" if you like. If my idea survives that genesis, and it excites me sufficiently, I will try to knock it down with knowledge dug from within my own little universe. If that hasn't killed it, I will solicit the opinion of those more expert than myself. In that spirit I posted comments.
20. There are many off topic discussions in the short term thread, much of it very interesting but too ephemeral to survive in a thread of its own, catalysed by prolific posters, such as Julian who is very valuable in agreements and disagreements.
21. My outlier of an idea is perhaps on topic (I think you enjoy 100% certainty so its off topic to you). Not to worry, it is ephemeral too, so it will be gone by the weekend. But because its consequences are so massively out of proportion to its likelihood, some readers may want to run it thru their minds... just in case. I won't comment on that subject in this thread again (only in my What if... thread. Anyone want to bite?).

Final salute: Try to imagine on April 01, a human (that you can't see but is somewhere in SW England) who will almost certainly be doubled up, bowing (Japanese style, when the deepest humility must shown) to your greater knowledge and wisdom when it comes to trying to understand the so far unpublicised parts of the secret master plan as it relates to TSLA.

Peace to you Tenable and to all the givers of your likes (I'm one of them).

 

[Julian Cox]

By creating and investing heavily into a new brand-name that is financially independent on the old one and free to eat the lunch of the old one.
E and I teams who are allowed and encouraged to compete with each other and everybody else.

If you were answering an exam paper on the Innovator's Dilemma that would be the textbook answer.

Now let's look at applicability to the auto industry as it actually is.

1. One can only assume that at least some percentage of management across the ICE auto industry is aware of that work and have chosen to ignore its applicability to their situation (for a full decade and more). There are no such advantaged-automotive-backed-startups, not even associated with the Ford, Quandt, Piëch or Toyoda families. The Roadster was sufficient warning for anyone paying attention, let alone the Model S and yet, nothing. I had hoped for Nissan's sake that Faraday Future was one of these, but it turned out that it wasn't. GM interim CEO Dan Akerson spotted the problem (smart guy), said so in public (not quite so smart) and declared he would set up a GM task force to study it - and was promptly replaced as CEO by Mary Barra who clearly has no motive or intention of doing more than her job requires which is to manage the cards she has been played for as long as it lasts, which will be for a good while yet with a nice golden parachute if she is still on the hot seat when the show bursts. GM is not a good candidate to even attempt to save anyway. The inaction of the Ford family is more surprising because it actually offers a window on that family reclaiming the business.

2. Constructing a reverse merger of a sacrificial parent company - especially if it is a public company is not actually all that easy to do. For starters it is very arguably if not definitely a breach of a CEOs fiduciary duty towards the parent company - basically to remove cash, assets and IP from the parent and put it beyond the reach and control of the board and shareholders for the express purpose of trying to assault the value of your own company and picking it up at a later date in a devalued condition - ideally from bankruptcy.

3. There isn't that much value an ICE OEM can put into a priveleged new co. that would give it that much of an advantage over a VC backed startup - let alone an advantage over new EV division of a giant tech company like Apple or Samsung that has both cash and specialist IP of arguably far greater relevance. Nobody at an ICE OEM is capable of replicating Apple CarPlay (let alone Tesla's operating system autopilot and OTA network) while designing and manufacturing the mechanical components of a vehicle represent long-established skill-sets that can be hired on the open market with comparatively little difficulty. ICE OEMs are characterized (due to entrenched competition with one another) as having a giant turnover, high debt and relatively little by way of excess cash and profits. Toyota when I last checked had $48 billion of cash on hand - a world record for an Auto business. Last time I looked Tesla had vastly more days of overheads on hand in the form of cash at bank than any other auto maker by one or two orders of magnitude - and of course Tesla has much greater financial freedom in both percentage of turnover and absolute cash terms to invest in EV and battery related ventures without giving its shareholders a coronary. Flagging a need to divest heavily from ICE business as usual is not the message ICE auto shareholders generally want to hear.

 

[BriansTesla]

Found the answer to the automaker's dilemma at, of all places, Jalopnik!

Why Tesla Needs To Sell The Model 3 Without A Body

Which automaker will step up for a Tesla skateboard.

Now that announcement would really send the SP through the roof!