Short-Term TSLA Price Movements - 2016

[BobSk]

Maybe I am missing something? When the US set up incentives to help EVs, we didn't exclude foreign manufactures. Why Germany sets up rules in a clever way to exclude Tesla? VW only ruined one company's image, this new event will change my view toward the country.

 

[BornToFly]

Maybe I am missing something? When the US set up incentives to help EVs, we didn't exclude foreign manufactures. Why Germany sets up rules in a clever way to exclude Tesla? VW only ruined one company's image, this new event will change my view toward the country.

The base price needs to be under 60,000 Euro. Tesla could do a "German edition" for 59,999. Want seats in that car? That will be 10,000.... LOL.

 

[Julian Cox]

Three things to bear in mind:

1. For a car to be eligible, the manufacturer of that car has to take part in supplying half of the incentives
2. There are no Tesla cars available in Europe under € 60K before 2019, when M3 will start to be delivered
3. The EV incentive includes plug-in hybrids

Ha! If Tesla wants to it can afford to play this game and stuff them on their own home field.

All it needs to do to break even on the deal without giving a special advantage to Germans at Tesla's expense is to offer German customers a percentage of autonomous driving service fees that Tesla collects from the use of their cars with an implied 2000 Euro debt to pay off in temporarily reduced customer profit percentage until that debt is repaid.

 

[schonelucht]

One of the negotiating points could be reduction from the list price of $470 if a taker is willing to pay up front (using their financing!) for the supply of TE products throughout 2017. For example, at the negotiated price of $350/kWh, to pick a number from the Oncore study, that payment would be $1.75B on 5GWh worth of PowerPacks/PowerWalls, with as much as $1B of it being net profit.

Seeing is believing. If there really is a market to be had at that margin, Tesla would be mad not to do a capital raise pronto, finance themselves, charge the full price and do it today instead of over a period of 2 years. Cost of capital for Tesla is exceedingly cheap and certainly much cheaper than giving away half of a potential super margin on a product that's essentially in the bag. Also, if there really were these kind of players willing to drop a cool $1B of pure profit in Tesla's coffers then as a shareholder in the blink of an eye, I'd really like them to convince Panasonic to switch over the Japan production to the Powerpack chemistry and drop producing cars altogether.

I am willing to be convinced by facts but at this point I don't see the price hike as necessarily a sign of the market willing to bear that price (the bull case) rather than the costs of goods somehow is higher than expected (the bear case). Hopefully the analysts will once again ask for details on Tesla Energy and the executives will actually answer instead of remaining relatively vague as they did up till now.

Here is what I think : that the sunk costs of R&D, tooling setup, selling overhead and what not on their TE products is way higher than originally expected. So while their costs of goods may be $190/kWh and plummeting, they need to really charge a higher price to ever hope to recoup some of their investments on TE. The remarkable path of the powerwalls/packs as a commercial developement up to today supports this view. They were announced way out in front, originally suggested to be sold direct to consumers but in the end only to middle men, the product line up changed drastically a full year later without any proper explanation and even before any product was shipping outside of test setups Elon was talking about needing to do a 2.0 version for which the company never ever explained why that's actually needed. All that points to a reality that, once they got going developing for real, turned out to be completely different than from what they planned. Such diversions can be very costly in R&D or even tooling setup if your fast-firing boss decides to invest heavily for a product that's scrapped 12 months later without shipping a single unit like the backup Powerwall.

Full disclosure : I am a bear on Tesla Energy and I really would like Tesla to focus on cars only which is where I think they have so many more 'firewalls' towards their competitors in terms of features and technology that, in the end, it's going to guarantee the best return on investment for their money. For me energy storage through batteries and especially at utility scale is quickly going to become a commodity product in which all the big industrial players will launch themselves should it ever become the market it promises to turn out. There will be little to no advantage buying Tesla's solution over anyone else's. I also don't see such a market developing rapidly with the exceptions of some localities like Hawai. Germanies grid copes just fine with a lot more solar/wind than anyone else's so the technical need just is not there (yet).

Edit : sorry for the long post that in the end should have been placed in the long term market outlook thread. If a mod would like to move it, please do so.

 

[PaulusdB]

Maybe I am missing something? When the US set up incentives to help EVs, we didn't exclude foreign manufactures. Why Germany sets up rules in a clever way to exclude Tesla? VW only ruined one company's image, this new event will change my view toward the country.

You're right. On the face of it, this can be seen as unallowed government aid to the German car manufacturers. We'll have to see if the EU will allow for this to be implemented without Renault (and Nissan, Toyota, etc.) participating.
Then again, notably France and Germany are exempt of EU interventions. For historical reasons, I guess.

 

[lango]

Seeing is believing. If there really is a market to be had at that margin, Tesla would be mad not to do a capital raise pronto, finance themselves, charge the full price and do it today instead of over a period of 2 years. Cost of capital for Tesla is exceedingly cheap and certainly much cheaper than giving away half of a potential super margin on a product that's essentially in the bag. Also, if there really were these kind of players willing to drop a cool $1B of pure profit in Tesla's coffers then as a shareholder in the blink of an eye, I'd really like them to convince Panasonic to switch over the Japan production to the Powerpack chemistry and drop producing cars altogether.

I am willing to be convinced by facts but at this point I don't see the price hike as necessarily a sign of the market willing to bear that price (the bull case) rather than the costs of goods somehow is higher than expected (the bear case). Hopefully the analysts will once again ask for details on Tesla Energy and the executives will actually answer instead of remaining relatively vague as they did up till now.

Here is what I think : that the sunk costs of R&D, tooling setup, selling overhead and what not on their TE products is way higher than originally expected. So while their costs of goods may be $190/kWh and plummeting, they need to really charge a higher price to ever hope to recoup some of their investments on TE. The remarkable path of the powerwalls/packs as a commercial developement up to today supports this view. They were announced way out in front, originally suggested to be sold direct to consumers but in the end only to middle men, the product line up changed drastically a full year later without any proper explanation and even before any product was shipping outside of test setups Elon was talking about needing to do a 2.0 version for which the company never ever explained why that's actually needed. All that points to a reality that, once they got going developing for real, turned out to be completely different than from what they planned. Such diversions can be very costly in R&D or even tooling setup if your fast-firing boss decides to invest in a tooling setup for a product that's scrapped 12 months later without shipping a single unit like the backup Powerwall.

Full disclosure : I am a bear on Tesla Energy and I really would like Tesla to focus on cars only which is where I think they have so many more 'firewalls' towards their competitors in terms of features and technology that, in the end, it's going to guarantee the best return on investment for their money. For me energy storage through batteries and especially at utility scale is quickly going to become a commodity product in which all the big industrial players will launch themselves should it ever become the market it promises to turn out. There will be little to no advantage buying Tesla's solution over anyone else's. I also don't see such a market developing rapidly with the exceptions of some localities like Hawai. Germanies grid copes just fine with a lot more solar/wind than anyone else's so the technical need just is not there (yet).

Edit : sorry for the long post that in the end should have been placed in the long term market outlook thread. If a mod would like to move it, please do so.

Even at very low margin it is very good for Tesla shareholders because the market will value Tesla based on P/S ratio just as they did with Amazon.

 

[Julian Cox]

One of the very strong candidates for the white swan event is TE financing the Model 3 ramp. The $250/kWh --> $470/kWh move along with the reveal of cost being below $190/kWh for automotive applications (whatever it translates to for the cost for stationary applications) were the hints.

About 1/7th of the GF is built in Phase I, with the cell production slated for the end of this year. The MS/MX battery needs will be satisfied using cells from Japan. So the question is, where is the 2017 production of the GF Phase I cells (whatever it is - up to 5GWh) will go to? That would be BES, with up to $470/kWh - $133/kWh = $327/kWh available as a gross margin (depending on final negotiated price).

One of the negotiating points could be reduction from the list price of $470 if a taker is willing to pay up front (using their financing!) for the supply of TE products throughout 2017. For example, at the negotiated price of $350/kWh, to pick a number from the Oncore study, that payment would be $1.75B on 5GWh worth of PowerPacks/PowerWalls, with as much as $1B of it being net profit.

Then build Phase II of GF so another 5GWh or so worth of cells are available for the initial production ramp of Model 3, while GF Phase I continues to pump TE products, supplying up to $1B of net profits per year.

-----------------EDIT-----------------
Looks like Julian clarified his own hint, beat me to it.

Hide the money mode it is.

Indeed however this I think will be enough to prove to anyone that they don't need any help. There will be plenty of room for accelerator funding.

I also think they may get some sweet funding offers from national bidders to set up capacity beyond the US on whatever terms Musk points at.

Like sure if you want Tesla to put factories here give me $5 billion on top of paying for the factory and I'll think about it assuming of course Tesla gets a 100% equity stake in the new factory with no strings attached. Then we'll hire your countrymen and ship products from your tax jurisdiction otherwise you can just import our products from your neighboring country that has offeerd all of this but only a $4 billion sweetener.

That kind of thing.

 

[Drax7]

i like how the german minister meets with Elon in public, and Elon tells him a carbon tax is the most effective way to
electrification, and then he goes and designs a program to incentivize only german evs. Same stupid
leadership there as elsewhere.

 

[Julian Cox]

Seeing is believing. If there really is a market to be had at that margin, Tesla would be mad not to do a capital raise pronto, finance themselves, charge the full price and do it today instead of over a period of 2 years. Cost of capital for Tesla is exceedingly cheap and certainly much cheaper than giving away half of a potential super margin on a product that's essentially in the bag. Also, if there really were these kind of players willing to drop a cool $1B of pure profit in Tesla's coffers then as a shareholder in the blink of an eye, I'd really like them to convince Panasonic to switch over the Japan production to the Powerpack chemistry and drop producing cars altogether.

I am willing to be convinced by facts but at this point I don't see the price hike as necessarily a sign of the market willing to bear that price (the bull case) rather than the costs of goods somehow is higher than expected (the bear case). Hopefully the analysts will once again ask for details on Tesla Energy and the executives will actually answer instead of remaining relatively vague as they did up till now.

Here is what I think : that the sunk costs of R&D, tooling setup, selling overhead and what not on their TE products is way higher than originally expected. So while their costs of goods may be $190/kWh and plummeting, they need to really charge a higher price to ever hope to recoup some of their investments on TE. The remarkable path of the powerwalls/packs as a commercial developement up to today supports this view. They were announced way out in front, originally suggested to be sold direct to consumers but in the end only to middle men, the product line up changed drastically a full year later without any proper explanation and even before any product was shipping outside of test setups Elon was talking about needing to do a 2.0 version for which the company never ever explained why that's actually needed. All that points to a reality that, once they got going developing for real, turned out to be completely different than from what they planned. Such diversions can be very costly in R&D or even tooling setup if your fast-firing boss decides to invest heavily for a product that's scrapped 12 months later without shipping a single unit like the backup Powerwall.

Full disclosure : I am a bear on Tesla Energy and I really would like Tesla to focus on cars only which is where I think they have so many more 'firewalls' towards their competitors in terms of features and technology that, in the end, it's going to guarantee the best return on investment for their money. For me energy storage through batteries and especially at utility scale is quickly going to become a commodity product in which all the big industrial players will launch themselves should it ever become the market it promises to turn out. There will be little to no advantage buying Tesla's solution over anyone else's. I also don't see such a market developing rapidly with the exceptions of some localities like Hawai. Germanies grid copes just fine with a lot more solar/wind than anyone else's so the technical need just is not there (yet).

Edit : sorry for the long post that in the end should have been placed in the long term market outlook thread. If a mod would like to move it, please do so.

I think you have missed something significant. Tesla's battery products are much more like the cars than I think most people can understand.

They are effectively an OTA networked fleet of machines that deal in the commodity of energy instead of the commodity of driven mileage. They are no dumb replacement for an oil tank that just stores electrons instead of oil.

They have all sorts of features like extraordinary acceleration and network learning effects compared with legacy technologies - and that those technologies an never compete with. Basically you have a combination of a spinning reserve and a peaker plant that costs nothing to spin and can hit peak power in a milisecond - and can shunt reserves around the grid at net $0 cost without paying teams of people to figure it out 24/7.

 

[schonelucht]

They are effectively an OTA networked fleet of machines that deal in the commodity of energy instead of the commodity of driven mileage. They are no dumb replacement for an oil tank that just stores electrons instead of oil.

Whereas OTA firmware updates, data gathering and remote control provide a firewall feature in cars simply because competitors don't have it, this is simply not true for energy. I already had a OTA networked device, part of a fleet, in my home that deals in the commodity of energy (not just electricity btw but also other forms of energy) a full year before TE was announced and I actually was a late mover on it in my country. It's simply not a unique firewall feature in the same way because the competition is already there.

 

[austinEV]

Seeing is believing. If there really is a market to be had at that margin, Tesla would be mad not to do a capital raise pronto, finance themselves, charge the full price and do it today instead of over a period of 2 years. Cost of capital for Tesla is exceedingly cheap and certainly much cheaper than giving away half of a potential super margin on a product that's essentially in the bag. Also, if there really were these kind of players willing to drop a cool $1B of pure profit in Tesla's coffers then as a shareholder in the blink of an eye, I'd really like them to convince Panasonic to switch over the Japan production to the Powerpack chemistry and drop producing cars altogether.

I am willing to be convinced by facts but at this point I don't see the price hike as necessarily a sign of the market willing to bear that price (the bull case) rather than the costs of goods somehow is higher than expected (the bear case). Hopefully the analysts will once again ask for details on Tesla Energy and the executives will actually answer instead of remaining relatively vague as they did up till now.

Here is what I think : that the sunk costs of R&D, tooling setup, selling overhead and what not on their TE products is way higher than originally expected. So while their costs of goods may be $190/kWh and plummeting, they need to really charge a higher price to ever hope to recoup some of their investments on TE. The remarkable path of the powerwalls/packs as a commercial developement up to today supports this view. They were announced way out in front, originally suggested to be sold direct to consumers but in the end only to middle men, the product line up changed drastically a full year later without any proper explanation and even before any product was shipping outside of test setups Elon was talking about needing to do a 2.0 version for which the company never ever explained why that's actually needed. All that points to a reality that, once they got going developing for real, turned out to be completely different than from what they planned. Such diversions can be very costly in R&D or even tooling setup if your fast-firing boss decides to invest heavily for a product that's scrapped 12 months later without shipping a single unit like the backup Powerwall.

Full disclosure : I am a bear on Tesla Energy and I really would like Tesla to focus on cars only which is where I think they have so many more 'firewalls' towards their competitors in terms of features and technology that, in the end, it's going to guarantee the best return on investment for their money. For me energy storage through batteries and especially at utility scale is quickly going to become a commodity product in which all the big industrial players will launch themselves should it ever become the market it promises to turn out. There will be little to no advantage buying Tesla's solution over anyone else's. I also don't see such a market developing rapidly with the exceptions of some localities like Hawai. Germanies grid copes just fine with a lot more solar/wind than anyone else's so the technical need just is not there (yet).

Edit : sorry for the long post that in the end should have been placed in the long term market outlook thread. If a mod would like to move it, please do so.

Here is my take on the price hike for powerpacks: They just needed a different starting price. The customers for these are placing large orders with buyers whose job it is to secure favorable pricing. So they cannot (as they were) lead with their best price. They literally marked it up so they could negotiate down. They aren't getting this new price, but they had to increase it to guarantee they at least got the old price. My opinion.

 

[ggr]

I've been thinking about the difference between Tesla Motors and Tesla Energy. We now have confirmation that the cost of battery packs for the cars has gone down, and yet we see that the price of stationary storage has gone up, significantly. What is the difference?

Tesla has always priced its cars, worldwide, at effectively the same level everywhere, and basically just high enough to make their desired margin without gouging. Tesla Motors has to make money to change the world, and the end goal is changing the world by displacing polluting cars. So price gouging makes no sense.

Tesla Energy, on the other hand, is not directly on the hook for reducing pollution. The energy that is stored still comes from whatever source would normally produce it, with or without attendant pollution. (This is a slight oversimplification, since baseload generation can be more efficient than displaced peaker generation, but if they're both burning natural gas, there's very little difference to the total pollution.) So TE is really an efficiency play. As such, TE is free to try to price its product to maximize profit.

This leads me to believe that there might be a good surprise coming from TE in terms of cash flow and profitability.

 

[tanner]

Here is my take on the price hike for powerpacks: They just needed a different starting price. The customers for these are placing large orders with buyers whose job it is to secure favorable pricing. So they cannot (as they were) lead with their best price. They literally marked it up so they could negotiate down. They aren't getting this new price, but they had to increase it to guarantee they at least got the old price. My opinion.

I feel like this is true.

 

[tanner]

Any thoughts on where the SP is headed today? Think we'll see another green day like yesterday? Also, not sure if this is old Intel but TSLA's average cost for warranty repairs has gone down: High warranty costs reflect Tesla's struggle with quality - still high compared to other manufacturers, because Tesla service is awesome, but down overall.

 

[JRP3]

Tesla Energy, on the other hand, is not directly on the hook for reducing pollution. The energy that is stored still comes from whatever source would normally produce it, with or without attendant pollution.

On the other hand TE could allow greater use of renewables, thereby reducing pollution. Elon did lay out a plan for world wide renewable energy with battery storage.

 

[Krugerrand]

Any thoughts on where the SP is headed today?

Currently looks like down to me, along with the market.

Think we'll see another green day like yesterday?

Depends.

 

[Ulmo]

Tesla Energy, on the other hand, is not directly on the hook for reducing pollution. The energy that is stored still comes from whatever source would normally produce it, with or without attendant pollution. (This is a slight oversimplification, since baseload generation can be more efficient than displaced peaker generation, but if they're both burning natural gas, there's very little difference to the total pollution.) So TE is really an efficiency play. As such, TE is free to try to price its product to maximize profit.

This leads me to believe that there might be a good surprise coming from TE in terms of cash flow and profitability.

Technically, I think TE is on the hook for reducing pollution, since home solar storage and wind+solar buffering mass scale storage are both enabling of solar & wind use, and will help flush out hurtful outdated pro-dirty (polluting) "utility generator" business models. But, Tesla may be banking on me being a lone shouter about this by pretending otherwise and raking in the bucks meanwhile. At least this is cash useful to help create the demand side (cars) of solar and wind collection. I'm not hugely upset, as long as the usual battery competition comes into play for TE in 2-5 years, and we can resume incresing collection of solar & wind en masse.

I'm a tiny tiny tiny anecdotal data point, but I wish I could buy the inflated priced TE products today (albeit in the smaller home consumer sizes ~$50K) with guaranteed delivery and installation this FY. I have huge ITC credits I need to generate this FY, and I'd love to cut the cord on old energy utility business on my home. It could even open up some states to move to that otherwise would gouge me for solar (e.g. BH's Nevada).

As pointed out by others below and something I withheld as a bull (yes, my potential stock position coloring my comments) was the comment that the Tesla.com price for PowerPacks was a negotiating point. They even have the contact info right there if you dial anything up to the max.

 

[tanner]

Currently looks like down to me, along with the market.



Depends.

Currently looks like down to me, along with the market.



Depends.

The good news at least is that oil is up and looks like we've found a good support range.

 

[doctoxics]

Jon McNeill, Tesla president of global sales and service, speaking at the Beijing auto show, said that the annual production capacity for Fremont is now at 600,000 cars.

Tesla knows the one feature that will make it a success in China

 

[jesselivenomore]

CCTVNEWS on Twitter

Not really news.

Tesla head of global sales still in Beijing promoting the Model X. Says looking for an additional factory that "very well may be in China."