Thoughts on TESLA

[aja8888]

Yessir! Gas guzzling SUV's are in expansion mode all over the planet:


NY Times article (from eroscott's thread above):

https://www.nytimes.com/2018/03/03/climate/suv-sales-global-climate.html

It’s the car of the future. It’s taking off in markets all over in the world.

The electric vehicle? Hardly. It’s the S.U.V., the rugged, off-road gas-guzzler that America invented and the world increasingly loves to drive.

Spurred by rising incomes and lower gas prices, drivers in China, Australia and other countries are ditching their smaller sedans for bigger rides at a rapid pace. For the first time, S.U.V.s and their lighter, more carlike cousins known as “crossovers” made up more than one in three cars sold globally last year, almost tripling their share from just a decade ago, according to new figures from the auto research firm JATO Dynamics.

Looks like some countries will need more gas stations!

S.U.V.s are also less likely to go electric soon. There are technological hurdles to powering a larger car with batteries, and the perception among many automakers remains that drivers of S.U.V.s value power and performance, and don’t want to be constrained by the range anxiety of battery-powered cars.

 

[oneill225]

Yessir! Gas guzzling SUV's are in expansion mode all over the planet:
Looks like some countries will need more gas stations!

Buy some Ford stock and see how that works out. You can't lose.

 

[NW-Bound]

It will be interesting to see what happens to US sales of Tesla cars now that the tax credit is phasing out. Is there any scenario under which someone in the US would place an order for a car today, the first day of the reduced credit? I would think if they were ready to buy a Tesla they would have completed the purchase by last night.

I received a call from my Tesla rep yesterday. Out of pure curiosity I called him back to ask if I could really take delivery of a car by the end of the day. I told him I wanted a Black LR RWD. He had one in stock within ten miles of my house. I only would have considered it if they took my Lexus as a trade in. They wanted me to upload all of the information on my Lexus to their web site so they could make me an offer, but they told me it would be based on the valuations on cars.com. I took a quick look at the appraised value and it was so low that I decided to forget about it. But if it wasn’t for the trade I could have purchased another Tesla before year end. They were willing to stay open until midnight to complete the sale. That’s some serious motivation.

I’m hoping to see some incentives later this year to motivate those of us who waited.

Thanks for sharing.

I am not a car enthusiast, and never contemplate buying Tesla shares, but get so much drawn in by all the drama that I will have to watch to see what unfolds.

I find myself follow the news on Tesla a lot more than on stocks that I do own. Or is it because Tesla and Musk are on the Web headlines all the time? All that tweeting to get free PR is working. Musk is no fool.

 

[Mr. Tightwad]

Yessir! Gas guzzling SUV's are in expansion mode all over the planet:


NY Times article (from eroscott's thread above):

https://www.nytimes.com/2018/03/03/climate/suv-sales-global-climate.html



Looks like some countries will need more gas stations!

My Model X weighs 5100 pounds...I'd say thats pretty large

 

[Mr. Tightwad]

Why should the government try to get people to buy one car over another?

Some people think the government should not be trying to change people's behavior.

Because the government thinks ICE cars are causing greenhouse gases to pollute the Earth. Whether driving a Santa Fe or a Prius actually is destroying the Earth, is something I am never going to know. I do know ICE cars stink when they drive past me. And when I say government, one type of government specifically feels this way. That group is not the group I "root" for, overall. But I do like the vehicles that group likes.

As for changing behavior: as NW stated, encouraging marriage, children, house buying and now EV buying is nothing new for governments.

 

[Midpack]

Not sure how much simpler maintenance costs could be for my ICE vehicle. It's 2+ years old, I've only had to change oil twice, one of those was free. Replaced front windshield wipers. That's it for 2+ years. My last vehicle, basically same thing. Turned in at 3 years, it too was only oil changes, front wipers and air cleaner (that I did myself for $8). And thinking back, car before that was also only oil changes and wipers.

Do a search, there are plenty of articles comparing the lifetime cost of maintaining an ICE vs EV. Two or three years isn’t the life of a car - last time I looked the average age of ICEs on the road was over 11 years. I specifically mentioned the first five years, and longer. Leasing new cars every 2-3 years lowers maintenance costs, but costs of ownership are pretty high for other reasons vs long term ownership.

There’s certainly more to maintaining an ICE than oil changes. How about AT fluid, coolant, spark plugs, brakes (regens run twice as long), timing belts, starters, alternators - I could go on an on. Some things like tires and wiper blades will be a wash. There’s generally less maintenance cost on an EV vs ICE. The offset is when the EV battery pack needs to be replaced, expensive. but the studies I’ve read suggest that’s still less in the long run. Read up a little if you’re really interested...

 

[bobandsherry]

Do a search, there are plenty of articles comparing the lifetime cost of maintaining an ICE vs EV. Two or three years isn’t the life of a car - last time I looked the average age of ICEs on the road was over 11 years. I specifically mentioned the first five years, and longer. Leasing new cars every 2-3 years lowers maintenance costs, but costs of ownership are pretty high for other reasons vs long term ownership.

There’s certainly more to maintaining an ICE than oil changes. How about AT fluid, coolant, spark plugs, brakes (regens run twice as long), timing belts, starters, alternators - I could go on an on. Some things like tires and wiper blades will be a wash. There’s generally less maintenance cost on an EV vs ICE. The offset is when the EV battery pack needs to be replaced, expensive. but the studies I’ve read suggest that’s still less in the long run. Read up a little if you’re really interested...

You could go on, but by an large you are thinking of ICE cars of yesteryear. Modern ICE cars don't typically need much maintenance for most of the items you mention for a long time, think 100,000 miles or more, e.g. AT Fluid, coolant, spark plugs, brakes, timing belts, starters and alternators.

While I find that rotating a car every three year via leasing, my best friend keeps his cars longer. He has 10 year old Explorer and 5 year old Escape that has yet to need any of the things you mention, exception is brakes for the Explorer and tires for both.

 

[Ready]

I am not a car enthusiast, and never contemplate buying Tesla shares, but get so much drawn in by all the drama that I will have to watch to see what unfolds.

I’m not a car enthusiast either. I’m a technology enthusiast. I don’t think of my M3 as a car. It’s a giant computer with wheels.

 

[oneill225]

Buying Opportunity

Tesla stock is taking an 8% hit due to missing 4Q estimates by a small margin. Buy on the dip if you think EVs are about to take-off.

 

[bobandsherry]

Tesla stock is taking an 8% hit due to missing 4Q estimates by a small margin. Buy on the dip if you think EVs are about to take-off.

Guess them missing 4Q explains why they were pushing last minute deliveries so hard, including foregiving the 2019 lease payments for those who leased a new vehicle. But more to the story than just missing the # of deliveries.

The company also announced that it's cutting prices on all of its models by $2,000 to help offset a reduction in federal tax credits for drivers who buy electric vehicles. The $7,500 federal tax credit for electric cars was cut in half as of Tuesday.

I'd guess that reducing their margins by $2k per vehicle is more driving the price down. Also indicates that the true market value of the vehicle is $2K less than what it was selling for just a couple days ago and now needs to find way to stimulate sales. I just wonder how the demand curve has changed from last month to this month given the push by Tesla to get vehicles out the door to try and hit their target and consumer's that may have rushed to take delivery before the tax credits expired. So either Musk has to find a way to trim $2K out of producing the cars (mostly in labor) or Tesla's margins will be taking a pretty significant hit.

That said, I think Musk will do whatever it takes to get the stock to $360 in time for their convertible bonds to be called in March. If he doesn't, well then consider the 8% haircut very minimal to what will happen to the stock price if they can't convert those bonds to equity and have to pay out nearly $1 billion in cash.

And if people think that EV's are ready to take off, then there are other companies that one could invest in, Tesla isn't the only game in town.

 

[oneill225]

And if people think that EV's are ready to take off, then there are other companies that one could invest in, Tesla isn't the only game in town.

Not really. Tesla is still way ahead of other EV manufacturers in battery production and technology. Most of their competition are making press releases, not cars. In 2019, the EV market will be dominated by Tesla.

No guts, no glory.

 

[Midpack]

Tesla stock is taking an 8% hit due to missing 4Q estimates by a small margin. Buy on the dip if you think EVs are about to take-off.

Kinda sad when you step back and look at their results. But that's the way of stock prices in the short term, all about estimates and meeting them - and fundamentals usually get way out of whack along the way. Creates opportunities for traders, but doesn't necessarily reflect the long term value.

Overall deliveries in the fourth quarter reached 90,700 vehicles, more than 8 per cent higher than its previous all-time record-high. This amounted to a total of 245,240 vehicles for 2018, which Tesla said was almost as many vehicles delivered as it had achieved in all prior years combined.

"For most automotive groups these would be very impressive numbers – almost tripling the number of vehicles you deliver in just one year is no mean feat, and Musk and his team deserve a huge amount of credit," said Nicholas Hyett, an equity analyst at Hargreaves Lansdown.

 

[NW-Bound]

I’m not a car enthusiast either. I’m a technology enthusiast. I don’t think of my M3 as a car. It’s a giant computer with wheels.

What I expect out of my car is to be able to drive it from point A to point B safely, and in comfort. When a computer can drive the car for me safely, then I will welcome it.

 

[oneill225]

Kinda sad when you step back and look at their results. But that's the way of stock prices in the short term, all about estimates and meeting them - and fundamentals get way out of whack along the way. Creates opportunities for traders, but doesn't necessarily reflect the long term value.

Yes and no. I agree that the stock will continue to be volatile. This is why I will continue to buy on the dips and sell on the highs, but I am also holding onto a portion for the longer-term. I think they are turning a corner from speculative to established.

 

[Chuckanut]

IMHO, the extended life we are seeing in modern automobiles of all types is another plus in the war against pollution and waste. Like many of you I remember the times when a car turning 100,000 miles was a big deal. Also the time they added the extra digit for hundred-thousands to the odometer.

A recent article I read indicated that most EV batteries still hold about 90% of their original capacity well after 160,000 miles. But, we must take into account that EV and hybrid cars do not use all their capacity, but have a reserve on the high and low ends. The reserve helps keep the charging/discharging activity in an area that causes very little stress to the battery. As the battery gets older the reserve shrinks to fill in the 'gaps'. But, if the car still runs well at 200,000 miles what does it matter how they do it? I doubt if most Prius and Telsa drivers with well over 150,000 miles on the car care that much as long as the system works and does not prematurely end the useful life of the vehicle.

See below for an interesting discussion on battery tech:

https://cleantechnica.com/2018/08/26/the-secret-life-of-an-ev-battery/

What if the battery management system charged only up to, say, 80%, and kept 30% in reserve, but displayed this as 100% from zero. Say this provided a range rating of 100 miles (160 km). Then, however, as the battery lost capacity, say the system charged it up to 90% and kept 20% in reserve? You would not be aware that your battery had lost any capacity at all, because your instruments would still be displaying the virtual battery as 100% from zero, with the same range as before. That is a secret way that electric vehicle manufacturers could make it appear that your EV battery has lost no capacity when, in actual fact, it has.

 

[eroscott]

Tesla stock is taking an 8% hit due to missing 4Q estimates by a small margin. Buy on the dip if you think EVs are about to take-off.

Not by much and Europe and China sales start next month. Record month otherwise. Price dropped by $2k to offset some of the Fed Credit of $7.5->$3.75

 

[gstillson]

I could see Tesla taking over the automobile market at some point. They are very modern in manufacturing and philosophy, producing what the consumer wants.

We could be looking at Tesla in 10 years and saying, man, it sure has grown a lot and is looking a bit pricey at $500B market cap but they have little competition.


I would rather buy shares in SpaceX though.

 

[bobandsherry]

Not really. Tesla is still way ahead of other EV manufacturers in battery production and technology. Most of their competition are making press releases, not cars. In 2019, the EV market will be dominated by Tesla.

No guts, no glory.

You are probably right on Telsa dominating, but they are trading a huge multiple. The $2K drop in price just squeezes their margins and profits further. And does this mean as the next layer of federal tax incentives rolls off that Tesla will have to further squeeze their margins?

So, with today's drop, how much gut's are you showing with a purchase? Money talks and BS walks...

 

[Midpack]

I could see Tesla taking over the automobile market at some point. They are very modern in manufacturing and philosophy, producing what the consumer wants.

We could be looking at Tesla in 10 years and saying, man, it sure has grown a lot and is looking a bit pricey at $500B market cap but they have little competition.

I would rather buy shares in SpaceX though.

You might want to double check that item. Even the Model 3, their latest design, is very poorly designed from a manufacturability POV, and they've had to throw way more labor into manufacturing than they expected.

I have no doubt they will get better, hopefully quickly, but for now...

He thinks Tesla is light years ahead of the competition when it comes to the electronics side of things — as you would expect from a Silicon Valley company — but its design and manufacturing skills are still stuck in the 20th century. He believes the very design of certain parts of the car, and the way components work together, betrays a serious lack of experience with automotive engineering. A careful analysis of industry best practices could dramatically slash the body’s cost and weight. Less weight would also benefit the car’s usable range.

Still, the Model 3 is an impressive car. “Anybody that’s in the car industry that ignores (the Model 3) is doing it at their own peril,” Munro says.

https://cleantechnica.com/2018/04/29/munro-tesla-model-3-teardown-report-provokes-tesla/

 

[oneill225]

You are probably right on Telsa dominating, but they are trading a huge multiple. The $2K drop in price just squeezes their margins and profits further. And does this mean as the next layer of federal tax incentives rolls off that Tesla will have to further squeeze their margins?
So, with today's drop, how much gut's are you showing with a purchase? Money talks and BS walks...

I have a Roth IRA that I trade out of for stocks, so no capital gains implications when I trade for the short-term. I am not a day trader (although it happens on some lucky days), but I do trade weekly (with a portion of our portfolio). I have purchased and sold Tesla stock at least a dozen times over the past year and I will continue to do so until I stop making money. Usually, investing $10,000 to $30,000 depending on the cash available and the reason behind the drop. When it pops back 4 or 5% I sell. Lately, however, I am also holding a portion for the longer term. So far, so good.

 

[oneill225]

You might want to double check that item. Even the Model 3, their latest design, is very poorly designed from a manufacturability POV, and they've had to throw way more labor into manufacturing than they expected.
I have no doubt they will get better, hopefully quickly, but for now...
https://cleantechnica.com/2018/04/29/munro-tesla-model-3-teardown-report-provokes-tesla/

Update from July of last year: https://electrek.co/2018/07/16/tesla-model-3-teardown-profitability/

All of this would be more interesting if a current Model 3 was being evaluated instead of those that came off the early production lines.

 

[NW-Bound]

IMHO, the extended life we are seeing in modern automobiles of all types is another plus in the war against pollution and waste. Like many of you I remember the times when a car turning 100,000 miles was a big deal. Also the time they added the extra digit for hundred-thousands to the odometer.

A recent article I read indicated that most EV batteries still hold about 90% of their original capacity well after 160,000 miles. But, we must take into account that EV and hybrid cars do not use all their capacity, but have a reserve on the high and low ends. The reserve helps keep the charging/discharging activity in an area that causes very little stress to the battery. As the battery gets older the reserve shrinks to fill in the 'gaps'. But, if the car still runs well at 200,000 miles what does it matter how they do it? I doubt if most Prius and Telsa drivers with well over 150,000 miles on the car care that much as long as the system works and does not prematurely end the useful life of the vehicle.

See below for an interesting discussion on battery tech:

https://cleantechnica.com/2018/08/26/the-secret-life-of-an-ev-battery/

What if the battery management system charged only up to, say, 80%, and kept 30% in reserve, but displayed this as 100% from zero. Say this provided a range rating of 100 miles (160 km). Then, however, as the battery lost capacity, say the system charged it up to 90% and kept 20% in reserve? You would not be aware that your battery had lost any capacity at all, because your instruments would still be displaying the virtual battery as 100% from zero, with the same range as before. That is a secret way that electric vehicle manufacturers could make it appear that your EV battery has lost no capacity when, in actual fact, it has.

Very plausible. I have been wondering how Tesla batteries' life is so long, compared to other experiences with lithium battery. Even the LiFePO4 (lithium iron phosphate) battery which is regarded as having the longest life of all lithium types loses about 20% after 2,000 charge/discharge cycles between 0-100%.

So, what if Tesla puts in a 130kWh battery, and describes it as 100kWh battery, with the 30kWh kept in reserve for aging? The consumer is not promised something he does not get, and I think it is still fair.

Perhaps, this may also explain why prices of EVs are still seemingly high compared to the claimed production price of the battery itself. The difference is for the reserve capacity.

 

[NW-Bound]

About Tesla's sales in the year-end season that just ended, a Bloomberg article has this:

... Tesla said more than three-quarters of orders for the sedan in the year’s final three months were from new customers, rather than reservation holders. That suggests many consumers are still waiting to buy versions of the vehicle at the long-promised $35,000 sticker price.

 

[oneill225]

EV Driving

An entertaining video that highlights EV driving experiences with the Model 3 and Bolt:

https://insideevs.com/tesla-model-3-vs-chevy-bolt-comparison-video/

 

[Midpack]

Update from July of last year: https://electrek.co/2018/07/16/tesla-model-3-teardown-profitability/

All of this would be more interesting if a current Model 3 was being evaluated instead of those that came off the early production lines.

The video I linked was from October. And we don’t know, but I wonder if this has anything to do with Munro’s change in stance?

https://www.teslarati.com/tesla-model-3-teardown-analysis-sandy-munro-threatened-lawsuit/

The body and chassis manufacturing and labor issues could have been fixed, but that would be much faster than normal. Auto manufacturing retooling is very expensive.