Short-Term TSLA Price Movements - 2016

[AudubonB]

One has to conclude that the lack of CapEx is affecting one or multiple of the following:

1. Supercharger build-outs
2. Service center build-outs
3. Gigafactory spending
4. Model 3 production

The case for CapEx affecting Superchargers is perhaps born out in two ways

1. They're behind on their own map
2. They recently changed their supercharger policy (to mitigate local congestion)

-- Gigafactory slowdowns are OK under the assumption that they'll have enough capacity to drive their TE and Model 3 production. They don't need excess.

Hopefully we get more clarity at the end of the quarter.

But are those points valid?

1. From supercharge.info, everything looks pretty good, I think. Those data points are pretty conclusive as to no slowdown:

2. And regarding the Gigafactory, the latest drone flyover suggests spectacular growth (ref. Electrek, Teslarati or somewhere here for visual). The next good info should come first week of January, as far as I know.

 

[vgrinshpun]

Here is a treat. Well done Tesla, go get them to change their opinion!

Tesla Hosts Lobby Group Shunned by Ford Over Climate Stance

Tesla Motors Inc. is hosting a party for a conservative lobbying group whose opposition to climate-change initiatives has driven Google, Ford Motor Co. and several oil companies to drop their membership.

Tesla, a clean-energy tech company that makes electric vehicles and is moving into solar panels on rooftops, is not a member of the American Legislative Exchange Council. It is nonetheless hosting a reception for a new ALEC venture at its Washington, D.C. showroom Thursday evening, blocks away from the site of the organization’s three-day policy summit.
________

Tesla’s decision to open its D.C. showroom for the ALEC partygoers raised eyebrows among oil, gas and electric companies that are members of the group and are already skeptical of its new Energy Innovation Project, funded in part by the environmentally minded ClearPath Foundation. ClearPath and its founder, entrepreneur Jay Faison, are dedicated to persuading conservatives to fight climate change and support clean energy. And in a previous role at another organization, the head of ALEC’s Energy Innovation Project, Sarah Hunt, opined in favor of carbon taxes as "a more elegant, cost-efficient way to reduce greenhouse gas emissions."
____________________

Mike McKenna, a Virginia-based GOP strategist and energy lobbyist, said he fears Tesla’s involvement -- however limited -- and the creation of the Energy Innovation Project "will both lead to unfortunate deterioration of what has been a very strong focus at ALEC -- keeping energy affordable and abundant and trusting consumers more than government."

The move comes as some conservatives -- including lawmakers on Capitol Hill and lobbyists involved in ALEC -- worry about growing support for putting a price on carbon dioxide emissions, particularly if Congress overhauls the tax code. Several large integrated oil companies, including Exxon Mobil Corp., now support a revenue-neutral carbon tax, which could be a potent replacement source of revenue if lawmakers try to lower the overall corporate tax rate.

 

[Rarity]

Re capital expenditures, see the Q3 conference call at 19:18. Musk and JB address it. No numbers provided, but it does provide good color about back-end loading the supplier capex for Model 3.

 

[Alketi]

But are those points valid?

1. From supercharge.info, everything looks pretty good, I think. Those data points are pretty conclusive as to no slowdown:View attachment 204370
2. And regarding the Gigafactory, the latest drone flyover suggests spectacular growth (ref. Electrek, Teslarati or somewhere here for visual). The next good info should come first week of January, as far as I know.

Audobon, I agree the Gigafactory appears to be progressing nicely, at least at the construction level, though we don't know about the interior equipment. And, good point about the Superchargers. So, what other options exist for the deferred CapEx? Doesn't that imply the deferment is coming from Service Centers and/or Model 3 production plans?

 

[esk8mw]

I appreciate the lively discussion regarding how reduced capex will be received, but I respectfully disagree that it will be uniformly negatively received.

Tesla hasn't done this before. They may have vastly overestimated what capex would be for bringing M3 to market initially. Remember, the guidance was given under a different CFO a long time ago (before Elon's obsession with manufacturing efficiencies and Jason's obsession with capital efficiency) and has been maintained throughout. GGF used to be considered a gating item for M3, these days Elon says the GGF is not on the critical path - it's just needed for the huge volumes. It would be very easy for them to say "remember when we thought it was 3.5 billion? It's going to be 2.5 billion (numbers made up). Oh, and everything is staying exactly on track."

I don't see how that can be spun negatively. They seem keen on giving updates re: development too. Remember, last time they were testing subsystems? At the next call they might give more credible evidence, i.e., that they have been testing prototypes for x months or whatever. If they are silent on M3 progress (which they've never been) or refuse to comment then I'll be nervous.

Why the sudden focus on how permabears view the move? By definition, anything will be spun negatively:

- Capex meets guidance: Time for a cap raise! Cash burn! Lose money on every car sold!
- Capex above guidance because M3 is shipping earlier than expected: Elon is lying! Cash burn, cap raise, no discipline etc.
- Capex under guidance, M3 guidance maintained: Elon is lying! Car is delayed! Can't meet goals! Everyone is going to buy a Bolt!

I know the stock is down, but I'm not going to let the permanently negative investors frame the way I think about this company.

 

[Value Ev]

I've always been baffled by all the Tesla negativity here in the U.S., from all directions. I see Tesla as a true American success story. One that all of us, no matter our sociopolitical beliefs, should be extremely proud of. It saddens me to see politicians from the entire spectrum, financial "experts," and the media spew nothing but FUD.

You should distinguish between people who want Tesla to fail and people who believe Tesla could do a lot better, has a lot of risk and they have concerns.

The same thing goes with "FUD". Are Consumer Reports ratings FUD? Here, they weren't when they got the 103 rating, but certainly was when the reliability ratings came out.

There is so much hyper sensitivity here, that any negative comment is quickly labeled FUD. I get that can happen in a fanboy forum, but this is supposed to be a short-term investment forum.

It is so easy for this forum to become an echo chamber of like-minded people repeating the same like-minded results with the only arguments being totally one-side and superficial ("Tesla is the best". "No! Tesla is the super best!"). Here in the U.S. we recently learned what happened when people get into an echo-chamber and didn't understand alternative viewpoints, as painful as those viewpoints may be.

 

[larmor]

About the only risk here is the service centers, and this may actually hinge on how the car is made. If it is put together in a modular way, repairs will be easy. Again, this is really for long term projections.

What short termers should ponder in the next day to week, how many 100kwh batteries can they make? And why can't they make them faster...

 

[AudubonB]

1. From supercharge.info, everything looks pretty good, I think*.

*I should have asterisked that, as per the following conversation I had with a Memphis, TN colleague last night:

Lord Vetinari:
Hey! Congratulations on getting your very own Supercharger today!
I'm sure Paxson will get one....soon.
And now I need to look up what that last word means.

Memphian:
"Soon" - something that happens in a short period of time, except in Alaska. There it means the day after the Pope's first son is bar mitzvahed.

 

[ggr]

But are those points valid?

1. From supercharge.info, everything looks pretty good, I think. Those data points are pretty conclusive as to no slowdown:View attachment 204370
2. And regarding the Gigafactory, the latest drone flyover suggests spectacular growth (ref. Electrek, Teslarati or somewhere here for visual). The next good info should come first week of January, as far as I know.

The takeaway from this graph would seem to be that the growth of superchargers is linear. Given exponential growth of the rest of the business, I would hope they will ramp it up more in future. (This is not quite true; the graph doesn't show that newer superchargers tend to have more stalls, and older ones are getting more stalls added. But still not growth that matches the number of vehicles.)

 

[doctoxics]

In an article published this morning (What Tesla Motors, Inc. Is Saying About Model 3 -- The Motley Fool), Dan Sparks quoted Elon from the Q3 conference call:

"I think it's worth emphasizing that for Model 3, but the Model 3 system is designed so that -- the whole manufacturing supply chain system is designed so that the faster Model 3 production grows, the faster Tesla's cash balance grows. ... So the net effect is that instead of growth being a capital consumer, growth is a capital producer."

Seems like Elon is saying that if Tesla can get to Model 3 production, they will no longer need to raise more cash, as the Model 3 production ramp will generate an ever increasing cash balance.

 

[Drax7]

You should distinguish between people who want Tesla to fail and people who believe Tesla could do a lot better, has a lot of risk and they have concerns.

The same thing goes with "FUD". Are Consumer Reports ratings FUD? Here, they weren't when they got the 103 rating, but certainly was when the reliability ratings came out.

There is so much hyper sensitivity here, that any negative comment is quickly labeled FUD. I get that can happen in a fanboy forum, but this is supposed to be a short-term investment forum.

It is so easy for this forum to become an echo chamber of like-minded people repeating the same like-minded results with the only arguments being totally one-side and superficial ("Tesla is the best". "No! Tesla is the super best!"). Here in the U.S. we recently learned what happened when people get into an echo-chamber and didn't understand alternative viewpoints, as painful as those viewpoints may be.

Luca understood you .

 

[eloder]

You should distinguish between people who want Tesla to fail and people who believe Tesla could do a lot better, has a lot of risk and they have concerns.

A multi-billion dollar revenue company steadily growing revenue by 40-60%+ a year with 20%+ GMs on its core business definitely can't "do a lot better". Keep those numbers up for just a few more years with no "improvements" and Tesla will become a juggernaut.

Tesla doesn't need to compete with itself and its own potential, it just needs to compete with the other automakers/solar companies/home storage companies out there and the valuations will eventually follow.

 

[Turing]

The volt will probably be production limited where the S won't (effectively for the US I mean) so while I think the Bolt is an excellent vehicle that will definitely sell out I do think Tesla will outsell it with the S in 17.

Even assuming the bolt is excellent all around, what's the point of having a 240 mi range EV with no fast charging network along the interstate? I'd rather have a plugin prius or a volt.

 

[bonaire]

Even assuming the bolt is excellent all around, what's the point of having a 240 mi range EV with no fast charging network along the interstate? I'd rather have a plugin prius or a volt.

The argument needs additional input. Such a driver is someone:
- only has one car in the family
- cannot rent a car (must be 25 yo or older)
- does not have a credit card for a rental for long term drive

The issue is it is hard to say that the Bolt is not acceptable without a wide DCFC network. Simply because a driver may stay within their 80-100 mile radius for 320 days per year and may rent a car for a couple weeks, use the family-truckster for other trips, whatever.

A 200+ mile EV is wonderful for anyone who wants to use it in their region daily - whomever makes it. The DCFC argument is something of a straw-man. but you are right - a Volt adds the "less range anxiety" but fails the binary mind approach. Either-or. Either it is ICE or BEV. However, the Volt offers something of a super-hybrid approach. Drive electrically for days if not weeks, then pick up and drive cross country which then can be "supercharged" at tens of thousands of gas-stations. upon arrival, plug-in again and drive the city area electrically for days more. Volt owners seem happy, as do Tesla owners. The issue is "what works for most"?

 

[bonaire]

In an article published this morning (What Tesla Motors, Inc. Is Saying About Model 3 -- The Motley Fool), Dan Sparks quoted Elon from the Q3 conference call:

"I think it's worth emphasizing that for Model 3, but the Model 3 system is designed so that -- the whole manufacturing supply chain system is designed so that the faster Model 3 production grows, the faster Tesla's cash balance grows. ... So the net effect is that instead of growth being a capital consumer, growth is a capital producer."

Seems like Elon is saying that if Tesla can get to Model 3 production, they will no longer need to raise more cash, as the Model 3 production ramp will generate an ever increasing cash balance.

Growth is not linear. Growth requires:
- once Fremont is at capacity, another one is needed. Big CapEx for small incremental gain for a while.
- once GF1 is at capacity, another one is needed.
- as more units are sold, more company-owed sale and service centers and lots more people needed.

- Does one wait for full capacity or do you build secondary gigafactory and Fremont-style plants once the originals hit 70% capacity while within a growth curve? Doing it early costs more because capital must be borrowed ahead of time (ie. the GF1 Bonds in early 2014 are generally gone already even though GF1 is only 1/4 its target size and without its renewable energy sources)
Growth requires a step-up approach. Growth is never linear in most economics-based firms.

I have to say that Elon has "said a lot" and many times, they are not backed up by actual business facts but possibly "long stretches" of hopefulness leading to an agreement among the flock of followers. All the while, the CFO and other company leaders within have to run around and try to make what he said actually happen.

 

[AudubonB]

The takeaway from this graph would seem to be that the growth of superchargers is linear. Given exponential growth of the rest of the business, I would hope they will ramp it up more in future. (This is not quite true; the graph doesn't show that newer superchargers tend to have more stalls, and older ones are getting more stalls added. But still not growth that matches the number of vehicles.)

OH, sure, I hope they ramp it up as well. In fact, no one anywhere has more reason for such hope than I.... <Alaskan "roll eyes" emoticon here>
And I agree that the ratio of stalls to vehicles most likely has been diminishing.
Regardless, my point was to demonstrate CapEx.

...and lastly, Californians are expressly forbidden to whine & moan about quantity of SpCs.....

 

[Value Ev]

A multi-billion dollar revenue company steadily growing revenue by 40-60%+ a year with 20%+ GMs on its core business definitely can't "do a lot better". .

Of course it can. Capital intensive businesses require capital. You just can't wave that requirement away by saying the GM of the core business is great.

20% GM on its core business is terrific. They can do a lot better by keeping that margin and perhaps a lower growth rate without having to invest nearly as much as they have to. At some point margin matters, not just GM.

 

[Papafox]

The takeaway from this graph would seem to be that the growth of superchargers is linear. Given exponential growth of the rest of the business, I would hope they will ramp it up more in future. (This is not quite true; the graph doesn't show that newer superchargers tend to have more stalls, and older ones are getting more stalls added. But still not growth that matches the number of vehicles.)

Good point ggr, but after visiting all the United States in my S during the summer of 2015, my impression was that the majority of supercharger stations are significantly underutilized. The exceptions, of course, are in areas along the east and west coasts where we see lots of concentrations of Teslas. For this reason, I think exponential growth of Teslas will initially require something less than exponential growth of superchargers. That was over a year ago and things are changing, but maybe growth of superchargers in high consentration areas will be enough in the short term. Has anyone here had to wait for a charge at the Lusk, Wyoming site yet?

 

[sunhelm]

The argument needs additional input. Such a driver is someone:
- only has one car in the family
- cannot rent a car (must be 25 yo or older)
- does not have a credit card for a rental for long term drive

The issue is it is hard to say that the Bolt is not acceptable without a wide DCFC network. Simply because a driver may stay within their 80-100 mile radius for 320 days per year and may rent a car for a couple weeks, use the family-truckster for other trips, whatever.

A 200+ mile EV is wonderful for anyone who wants to use it in their region daily - whomever makes it. The DCFC argument is something of a straw-man. but you are right - a Volt adds the "less range anxiety" but fails the binary mind approach. Either-or. Either it is ICE or BEV. However, the Volt offers something of a super-hybrid approach. Drive electrically for days if not weeks, then pick up and drive cross country which then can be "supercharged" at tens of thousands of gas-stations. upon arrival, plug-in again and drive the city area electrically for days more. Volt owners seem happy, as do Tesla owners. The issue is "what works for most"?

So by your definition, the Bolt is not built as a mass market car then since it applies to only a particular use case, not for the everyman/everywoman.

To get elevated for mass consumption, it needs a DCFC infrastructure.

 

[Turing]

A new survey of 1,000 people conducted by the Republican polling firm Public Opinion Strategies illustrates this dynamic. According to the poll, 75 percent of Trump voters support "action to accelerate the deployment and use of clean energy" -- including solar, wind, energy efficiency, and community renewable projects.

This backs up what we already know. Renewables are generally not a partisan issue. Survey after survey demonstrates this fact.
New Survey Shows That Renewable Energy Polls Extremely Well Among Trump Voters