Thoughts on TESLA

[eroscott]

Well, let's look at the whole picture then. US electricity is also "artificially" (?) low. The US average residential rate in 2018 was 13 cents per KWH. Germans paid 33 cents. That's about 2.5 times as much. As their gasoline is "only" 2.3 times the US price (per your chart), any fuel cost advantage a Tesla enjoys in the US is >smaller< in Germany than it is here. Electricity costs in the rest of the EU are about double those in the US, so this will drive up the cost of "filling up" an EV relative to the US.

So one example of the highest of almost every country?!? That's tricky. Charts I've seen show every country lower than Germany! And you use the value in the whole country of Germany at a single point in time is your proof? Seriously? You are talking about the past and not reading current information.

Every modern country is more progressive to solar and wind than the USA for utilities and for residential installations. These solar prices have changed dramatically in the past few years. Just do a few searches on this. It is crazy how it is changing. Example: https://www.greentechmedia.com/articles/read/major-solar-pv-markets-are-emerging-worldwide

Again electricity is really the only 'fuel' getting cleaner and cheaper every year. Example article just from yesterday:
Idaho sets record low solar price as it starts on shift to 100pct renewables | RenewEconomy
https://reneweconomy.com.au/idaho-s...s-it-starts-on-shift-to-100-renewables-38566/

State utility Idaho Power has agreed to buy 120MW of power from a future solar project in the state’s south at a cost of US 2.175¢/kWh – a potentially record-low cost for solar power in the US

____________ _____________ ___________________ ______________________
Quick search on some countries less than Germany. Some of the countries below have a lot more vehicles than the USA does too.

 

[eroscott]

US gas prices artificially low ? Try gas prices artificially high in other nations.

US gas prices in most states.
: cost of crude oil, refining, road taxes , profit, and in places like California where I live, bogus low carbon fuel fees ( subsidies to electric vehicle programs)

Except for souvren petroleum refiners in the middle east, everyone else pays the same for crude and has approximately the same refining practices.

How are US prices artificially low ?

I'm going to guess that you are just pulling my leg as there is so much information out there on this and how easy it would be for you to find. I'll leave that research to you.

 

[kcowan]

I'm sure what you meant is that those participating in this thread have an obligation to keep it civil to avoid shutting it down.

That would be the best outcome for sure. That would imply that the children will be good in the playground without adult supervision. Let us all hope!

 

[Totoro]

The cost of gasoline is high in Europe, but electricity is also more expensive there. For example, a kWh costs around €0.30 in Germany, which is about 3x the average cost in the US.

Most countries in Europe are around €0.20 per kWh. If you have your own solar panels, much less (€0.10 to €0.15 since there are no network costs or taxes to consider). In the Netherlands I would drive for about 4 cents / km electric, or 11 cents / km with gasoline (E95). For reference: That's a Volkswagen Polo of 2017, compact car.

In Germany that would be about 6 cents electric vs. 9 cents gasoline, unless you have solar panels (<3 cents / km).

Since fuel is about 1/3rd of your total cost (assuming a newish car), saving roughly half of that on fuel means -15% on your total cost. Electric cars cost about 30% more today vs. a similar ICE, mostly due to the battery. So net they still cost about 15% more. Before subsidies.

That's why I'm saying we are nearly at breakeven costs without subsidies, and very soon will be. It's already reflected in lease car prices around here.

 

[ERD50]

....

Again electricity is really the only 'fuel' getting cleaner and cheaper every year. ...

And as I've pointed out before, it's is almost entirely not relevant to EVs. EVs present additional demand on the grid. So even if we get to, say 80% RE (and we are a long, long way from that), it doesn't matter. We didn't exceed 100%, so the added demand for that EV causes a fossil fuel plant to run a little harder. There is no other place for that electricity to come from.

Until we have a regular reliable excess of RE on the grid, that can be timed to the charging of EVs, those EVs are running almost exclusively on fossil fuel. There is no magic way around that. Averages don't matter to this.

In fact, EVs hurt our goals of getting to 100% RE on the grid. Add say 10% demand from EVs, and that makes the current RE% a lower part of the total. We need that extra RE just to get back to where we were.

State utility Idaho Power has agreed to buy 120MW of power from a future solar project in the state’s south at a cost of US 2.175¢/kWh – a potentially record-low cost for solar power in the US

And that's great for now. But to get to 100% of RE, we need storage. Now add the cost of storage to that, and the cost of the energy lost in conversion, and let's see where the costs fall.

-ERD50

 

[Texas Proud]

I hadn't dug below the headlines before I saw eroscott's post, but I knew the Tesla news was bad as he resorts to the usual 'deflect' with "but... China!" and "but... 2020!" and "but... New Factories!" . And then Ready with "but... Model Y!".

I'll skip the delivery disappointment for now, and focus on production. I think production is where the really bad news is. Hiccups in deliveries to new markets might be expected, but why were production numbers so low? Q1-2019, 77,100 vehicles produced, when Q4-2018 production was 86,555 vehicles? How do you call a 10% drop "growth"? How is this the "exponential growth" that has been talked about by the fans (OK, a negative exponent?)?

Before this gets blamed on the delays in shipping to new markets, let's think about that. Why not shift sales to the US when these delays are being seen?

Well, Occam says it is because US demand is just not there. There have been other signs, all deflected by fan exclamations of "EU!", "China!","new factories!".


Back to deliveries - I said that hiccups in deliveries to new markets might be expected. So what does this say about Tesla? They didn't anticipate these hiccups? Why the heck wouldn't you start out with small shipments to the new markets, work out any kinks, then ramp up as things get worked out? Again, Occam says it is because US demand is just not there. It also points to some incompetence of the Tesla leaders for making these Q1 delivery predictions without accounting for the risks in starting up a new market. What else have they failed to anticipate? Is this really what a company with a solid future looks like?

-ERD50

Just want to make a comment on deliveries.... why should there be any hiccups? It is not like cars are not being shipped around the world.... it is a huge amount of shipping... all they had to do was tap into that market and get their shipping done right to begin with... not try and build their own system (this is me guessing, could be wrong)...

 

[ERD50]

Just want to make a comment on deliveries.... why should there be any hiccups? It is not like cars are not being shipped around the world.... it is a huge amount of shipping... all they had to do was tap into that market and get their shipping done right to begin with... not try and build their own system (this is me guessing, could be wrong)...

Well, I'll cut them some slack on one hand - they are new to this, and especially if they were using a new systems, hiccups are not uncommon.

But OTOH, why didn't they test out this system and work out the bugs before they committed this sort of volume, and ended up missing their promises, and producing and delivering fewer cars than in the previous quarter? That's negative growth.

The only answers I have is that: A) they are a poorly run company to not test this system, and B) they had no choice, as demand dried up in the US for cars they could break even on. Or a combo.

-ERD50

 

[Hamlet]

Just want to make a comment on deliveries.... why should there be any hiccups? It is not like cars are not being shipped around the world.... it is a huge amount of shipping... all they had to do was tap into that market and get their shipping done right to begin with... not try and build their own system (this is me guessing, could be wrong)...

Saying you are having trouble delivering the vehicles sounds a whole lot better than saying that demand for the vehicles has dropped dramatically.


One of the great unknowns with Tesla is what their steady state demand will be. They had a huge amount of pent up demand because they are selling a new product and couldn't make enough cars to meet that demand. It appears that right now they are able to build more cars than they can sell.


It may be that Q1 is a dip due to the end of the tax credit and that Q2's numbers will be higher due to more consumer interest in EVs in general and Tesla's in particular.


However, it is also possible that most of the people who are really interested in owning a Tesla in the US at these prices have already bought one in the last year or two and that they are going to have trouble continuing to sell at these levels. Going into the new markets will help, but if steady state demand in markets is a lot lower than initial demand, it is possible that Tesla is going to have a whole lot of capacity to build cars that they won't be able to sell.

 

[eroscott]

Author Bio: Shankar Narayanan is the editor of 1redDrop.com. Has an MBA from Kent State University and an engineering degree from Madurai Kamaraj University. He has been an active contributor to top financial sites like SeekingAlpha and GuruFocus, and has a penchant for talking business, finance, and technology.

Title: Tesla Sales Down For Q1 2019, But The Situation Is Far From Dire
https://insideevs.com/tesla-sales-down-q1-2019-dont-panic/

 

[indiajust]

With regard to maintenance issues for electrics, I offer my brother's experience in CA with his Nissan Leaf. He has a charging pad and solar panels on the house.

Bought Leaf, drove for 8 years, traded for new Leaf. No tires, no brakes, no maintenance, no gas stations. Buy, use, trade.

Granted, he has 330 days of full sun a year, slow traffic, and his usual drives/commutes all within range, rarely needs heat or ac. And he is a generally pokey driver.

Still, he has enjoyed an automotive magic carpet ride. Almost a decade with exactly one transaction for transportation.

I can see nervous parents getting this for their kids in college or for first cars, the same way Honda's were in the 80's and 90's.

 

[oneill225]

Competition?

In the wake of Tesla's 1Q slow-down, I think it is worth reminding many that Tesla is the far-away leader in EV production and sales around the world. As an investor, this seems like a great company to invest in (short or long-term) if you believe that:

1. EV sales will continue rapid growth year after year;
2. ICE vehicles are becoming obsolete;
3. Tesla has no serious near-term (1-2 years) competition;
4. Governments will continue to favor EV over ICE (for the environment);
5. EVs offer superior performance, at a lower cost, with less maintenance;
6. Battery tech will continue to improve while getting cheaper (increasing range, charge time, and safety).
7. Autonomous driving is just over the horizon.

Who can beat Tesla and when will it happen? A new Tesla plant in China will start producing Model 3's in China before the end of the year. That will be followed, in 2020 with the sale of the new Model Y. Tesla bears minimize Tesla's competitive advantage while speculating that they are about to implode due to mismanagement by Musk. Wishful thinking on their part.

 

[eroscott]

... Germans paid 33 cents. ...

...For example, a kWh costs around €0.30 in Germany, which is about 3x the average cost in the US. ...

Most countries in Europe are around €0.20 per kWh. If you have your own solar panels, much less (€0.10 to €0.15 since there are no network costs or taxes to consider). In the Netherlands I would drive for about 4 cents / km electric, or 11 cents / km with gasoline (E95). For reference: That's a Volkswagen Polo of 2017, compact car.

In Germany that would be about 6 cents electric vs. 9 cents gasoline, unless you have solar panels (<3 cents / km).

Since fuel is about 1/3rd of your total cost (assuming a newish car), saving roughly half of that on fuel means -15% on your total cost. Electric cars cost about 30% more today vs. a similar ICE, mostly due to the battery. So net they still cost about 15% more. Before subsidies.

That's why I'm saying we are nearly at breakeven costs without subsidies, and very soon will be. It's already reflected in lease car prices around here.

Thank you for your local expertise. In regards to your lease car prices around there ... are you saying the leases are getting cheaper or there are better overall deals (less down, more miles, less monthly payments, ?) because of the cost of driving electric vs driving on gas?

Seemed to be a lot of publicity for electric cars at teh Geneva Auto Show. Google search on auto show: https://www.google.com/search?q=Geneva+auto+show+electric+cars

Early March there were articles pointing out how German car makers are stepping up their Electric car investments. Examples:

Title: German automakers will spend $45 billion on electric vehicles over the next three years
https://www.businessinsider.com/german-automakers-spend-billions-electric-vehicle-technology-2019-3

Title: German industry to invest $68B in EVs, automation in next 3 years
https://www.autonews.com/automakers-suppliers/german-industry-invest-68b-evs-automation-next-3-years

Google search: https://www.google.com/search?q=german+car+makers+going+electric+vehicles​

 

[oneill225]

Top Gear Story

An quick and entertaining video from BBC Top Gear that looks at the Tesla factory, a road trip, and Model Y unveiling:

https://insideevs.com/top-gear-tesla-marathon-model-y-model-3-more/

 

[bobandsherry]

As an investment TSLA has fallen way short for a growth stock. Past 1 year, despite being leader in EV and all the growth in production and sales the the stock is down 11%. The S&P for same period is up 11%.

Going back 5 years TSLA is up 29%, at same time S&P is up 53%. Other growth stocks have skyrocketed during this time. FB up 194%, AMZN up 498%, and NFLX up 700%.

And then compare TSLA to the big automaker dinosaur GM, TSLA has fallen short in every time period, 1 day, 1 week, 1 month, YTD, 1Yr, 3yr and even 5yr. Crazy to think as investor you would have been better rewarded investing in GM.

I guess TSLA is like the old Chicago Cubs, wait till next year.

 

[braumeister]

As an investment TSLA has fallen way short for a growth stock.

TSLA's chart since this thread was started:

 

[Totoro]

3. Tesla has no serious near-term (1-2 years) competition;

Volkswagen, Kia and Nissan all are. Tesla's lead might be 1 year, certainly not 5. Volkswagen alone is going to build millions of EVs per year, starting 2020.

7. Autonomous driving is just over the horizon.

Consensus currently puts it at earliest 10 to 20 years, and Tesla is not leading.

Who can beat Tesla and when will it happen

The odds aren't good that Tesla will end up in a sustainable winning position, but who knows.

 

[bobandsherry]

TSLA's chart since this thread was started:
View attachment 31135

Not sure what that chart is, but it's not TSLA (or at least not tied to the start date of this thread or today's price) as you show there's been growth. On 4/4/17 TSLA closed at $303.70, today (currently) trading at $275.70 (down 9.2%).

Over that same period, the dinosaur known as GM is up about 20% (12% in price and 8% in dividend payout). And BTW, S&P was up over 20% as well.
** correction - I looked up the adj close on Yahoo Finance of GM on 4/4/17 and based on that GM is up about 24.5% with dividends.

 

[Totoro]

In regards to your lease car prices around there ... are you saying the leases are getting cheaper or there are better overall deals (less down, more miles, less monthly payments, ?) because of the cost of driving electric vs driving on gas?

The price difference between a decent range EV (Hyundai Kona 64 kwh) and an equivalent gas/diesel car is shrinking fast because EVs prices are dropping (gas leasing is slightly rising). Terms are unchanged.

Just configured a Hyundai kona for my use (30k km/year) and the lease rate for the electric is 650 eur/month vs. gasoline 550 eur/month ex. VAT. Both have exactly the same lease conditions. Prices exclude fuel.

Fuel costs would be ~250 per month (gas) vs. ~120 per month. So the electric is actually cheaper. That's excluding fiscal stimulus, assuming mostly home charging at retail prices.

 

[oneill225]

TSLA's chart since this thread was started:
View attachment 31135

Short-sighted. Amazon stock bounced around under 100 for over ten years before the company started to gain traction around 2010.

During that time investment "experts" decried their lack of profit while they built-out a vast infrastructure. Those experts were dead wrong and the rest is history. A similar stock price pattern existed for Microsoft and Apple during their first decade.

Dominating a new marketplace takes time and it can be tough to pick the winners. After ten years, Tesla is now emerging as one of the winners in the race to transition from ICE to EV.

For all of you who wished you had invested in Amazon, Apple, Microsoft, etc...before they took-off, here is your chance with Tesla.

Tesla has been around for about 10 years. 2018 was their first mass production year and the numbers for 2019 will be even higher. Competitors are scrambling to come out with a better product, but none have been able to, so far.

 

[aja8888]

^^^^^^ You can't compare Tesla (stock) with Apple or Microsoft as they are different industries. Traditionally, auto companies have slim margins vs software and high tech gadgets.

I case you haven't figured it out, stock prices are primarily about earnings.

 

[eroscott]

TSLA's chart since this thread was started:
View attachment 31135

As Tesla doesn't make very many cars and is just now getting into the phase of their more mass market cars. I think this type of chart is more telling. They have to build, sell, then reinvest in building the next car to get them toward their goal -- various types of mass market cars.

The Model 3 is hitting it's stride and will stabilize some based on tax credits but having more SR and SR+ available will help in the USA. Plus they are moving them international now. And obviously once China's GF3 starts putting them out that will be telling.

This chart is missing the last 2 quarters.

 

[bobandsherry]

Short-sighted. Amazon stock bounced around under 100 for over ten years before the company started to gain traction around 2010.

Let's put things into perspective. You do remember that Amazon was originally a book seller, right? And started by selling out of Bezo's garage, right? Then got into selling music and videos and then grew into selling video games. And then into other consumer goods, home improvement, toys, etc.

But since you want to infer that the two are similar in their growth periods....

Let's compare what Amazon did vs. their competition, Barnes and Noble and Walmart. As this chart shows, clearly Amazon stock price blew away the competition's stock performance. The dip in 2002 is when Amazon started to get into the AWS platform, a significant change in their business model and stock price dropped but still outperformed the competition.



As I already shared, TSLA hasn't been able to outperform their competition (GM) during the past 5 years. So TSLA has fallen well short of what AMZN did with it's competition.

 

[Totoro]

Also, Amazon had negative working capital effects and scales much easier.

 

[oneill225]

Let's put things into perspective. You do remember that Amazon was originally a book seller, right? And started by selling out of Bezo's garage, right? Then got into selling music and videos and then grew into selling video games. And then into other consumer goods, home improvement, toys, etc.
But since you want to infer that the two are similar in their growth periods....
Let's compare what Amazon did vs. their competition, Barnes and Noble and Walmart. As this chart shows, clearly Amazon stock price blew away the competition's stock performance. The dip in 2002 is when Amazon started to get into the AWS platform, a significant change in their business model and stock price dropped but still outperformed the competition.
As I already shared, TSLA hasn't been able to outperform their competition (GM) during the past 5 years. So TSLA has fallen well short of what AMZN did with it's competition.

Cherry picking.

The trend I am highlighting is a long initial period of relative stagnation (punctuated with periods of volatility) followed by market domination and years of large stock price gains.

My contention is that Tesla is nearing the end of the stagnation phase and that they are about to enter the large gains phase.

 

[Aerides]

1. EV sales will continue rapid growth year after year;
2. ICE vehicles are becoming obsolete;
3. Tesla has no serious near-term (1-2 years) competition;
4. Governments will continue to favor EV over ICE (for the environment);
5. EVs offer superior performance, at a lower cost, with less maintenance;
6. Battery tech will continue to improve while getting cheaper (increasing range, charge time, and safety).
7. Autonomous driving is just over the horizon.

1 - probably
2 - not in anyone's lifetime on this board. Later model ICE cars run for 20 years nowadays, and the F150 is still selling 1M cars per year. They aren't going anywhere. They will taper, but obsolete is not realistic. Revisit in 10 years
3 - ok not right now
4 - eh, not really seeing that, tax breaks are ending - TBD, and only western countries
5 - ymmv, literally
6 - probably
7 - likely, but more in cities/urban areas, see F150 point above

Full disclosure: Still a damn nice car, very cool, awesome drive, would buy if I were in the market for a nice sedan...and I made $100 selling my Tesla shares last year... woo hoo!