The case against Tesla

Steve Jobs didn't.

 

oh bother...if i had any tesla stock, i'd get while the gettin's good.

 

Absolutely!
The thing is, GM, Audi, Toyota, BMW,etc could have crushed Tesla like a bug if they had simply build the Roadster before Tesla did.
They could have possibly put Tesla out of business if they had built a Model S before Tesla did.

Now, it is to late. Tesla is self sufficient at this point and would be just fine producing at Porsche levels.

It isn't just about the car now though. Tesla has the largest (by power delivered) DC fast charger network in the world.
They are building battery packs for home use.
They are building up service centers with the directive that they are to cover their own costs, but make no profit.

If at all possible, I will always give Tesla my business because I don't have to deal with auto dealers, and I'm not alone.
I don't doubt that both the second generation Leaf and Chevy's Bolt will get to market first.
I don't believe them getting to market first will damage Tesla as it would have with their first two cars.

 

I've been hearing people say that since the stock hit $30.
Not saying you aren't right, just saying that I see a lot more upside to come.

 

Hey, this is PriusChat . . . we're the early adopters:

Bob Wilson

 

First there are lots of shorters out there. They have lost a ton of money over the last 2 years, but every momo stock must come down, and they hit a down trend, now they think they are geniuses, and want to push it to zero. They like to brag, but they keep quiet how far they are down.

Texas is one of the states where NADA is fighting Tesla. The campaign contributions (er bribes) come from 2 billionaire toyota dealers. Tesla's model does threaten their profits. Dealers make money on the haggle and drag, and the public doesn't like it. If telsa's fixed pricing and bev model take off, there is not only less maintenance revenue, it's doubtful that toyota will provide them with good cars in the category, as they are focused on california only fuel cell vehicles. Still for at least a decade bevs will only be a tiny portion of the texas market (its much less ideal than california, with heat and long distance trips) so I doubt they really are threatened. They just don't like this upstart billionaire making more money then they are.

 

There are lots of short sellers out there, that have been putting out FUD forever. I thought the financials were quite good when I read them, but I am an invester, that has followed the company for awhile. We had a negative earnings suprise, which probably temporarily took the stock down as Tesla should have guided it lower at least 2 weaks ago when they knew December deliveries.

Last quarters production was better than expected, and margins were good, but the quarter before production was down because of a longer than expected plant shutdown. That was mostly reflected in the price of the stock, but Tesla delivered fewer cars in the quarter than than they guided, 31,655 versus 33,000. The extra cars produced are counted as inventory (cost) hurting profits in the quarter but were delivered in January, which should make the current quarter more profitable. As a long term investor, who really cares whether profit is realized in one quarter or the next, but ... Tesla management should have broke out the news earlier. They had plenty of orders for these cars, but made them so late in December, they couldn't deliver them. Wall Street loves tesla, and the last 2 times it needed cash, they raised it at lower rates than the shorters thought. New bonds should be easy for tesla to offer to finish the giga factory and model 3.

More troubling is the China situation, which had already sent the stock to 212. If they can't fix it then the valuation is too high. Tesla has a great management team, and I think they will fix it, but doing business in china is not like doing business in North America, and they may need new personnel to fix sales there. Or you can bet against the team. The shorters a year ago predicted tesla wasn't going to even sell 20,000 cars last year. There are a lot less risky plays than tesla, and I can see people taking profits, but still I think it is foolish to be short and bet against the company.

 

I can't see Elon Musk riding it downhill for long. If he sells out his interests, it's a sign that someone else has taken the lead in the marketplace. I don't think Tesla has the loyal cadre fans that kept Apple alive through it's dark times.

 

"Even if Tesla crashed and burned a decade from now, Musk already got the EV ball rolling, and I believe we're seeing the beginning of the end for gas-only cars."

That's what I thought about Toyota's hybrid drive train. It was going to spread from the Prius throughout the lineup until you couldn't buy an ICE only car. It seemed the fastest and easiest way to boost the CAFE average. Still hasn't happened.

When Musk says he believes Tesla is overvalued and that Tesla isn't going to be profitable before 2020 comments from "the press" range from "why did he say that?" to "as the CEO he shouldn't say that".

IMO, Tesla's situation in China is being misinterpreted. Their first issue is that the Chinese don't like imports. GM doesn't import cars into China. GM's cars are built in China with a Chinese partner. Second, the Chinese incentives don't apply to Tesla so their cars are much more expensive compared to the EVs made in China. Third, the Chinese government is now targeting "corruption". Some of this attention is politically focused. One sign of "corruption" could be indulgent spending. Buying a Model S in this environment could be like waving a banner saying "Investigate Me!" in front of the authorities.

I don't care how wonderful the cars are, Tesla is not going to get anywhere in China until they learn how to play the game and agree to follow the rules. The day Tesla forms a joint venture with BYD (as an example) is the day when Elon will be hailed like "Number One Son".

Elon can't sell out. He has options he can't exercise for years.

 

JimN, nice China summary.

But the Toyota Hybrid approach did affect the Camry and the Avalon. Know people who have both and are very pleased. Does it make as much sense in the CUV and Mini-van weight segments?

 

and the hylander and some lexus.

 

But the ICE only versions didn't disappear.

 

hybrids are kicking @RSS in Formula One - to the point you won't win if you're not part of the new game.


.

 

+1

And it won't happen for plug-ins anytime soon, and for hsd hybrids in probably forever. What Tesla wants to do is sell 500,000 cars in 2020, which amounts to only 0.5% of the global market. Most of these will be in the US and China, so maybe 1.25% of those markets. Say other plug-ins hit 3x tesla, we will get to 5% in 2020 in those markets, and in 2021 plug-ins will likely outsell hybrids without a plug. Japan and Europe will likely have lower percentages unless they change the regulatory and subsidy environments.

2020 should not be a surprise to anyone. In non Gaap we already have had profitable quarters, and 2015 should be a profitable year. Development spending will be high for model 3 and giga factory for the next 3 years as they get production up and running, that kills any possibility of gaap profits. If the model 3 sells well, then it will take a lot of cash to to increase production and build sales channels, so that takes care of 2018. 2019 IMHO is that there is even more growth, if tesla doesn't have sales grow as fast as musk thinks gaap profitability will come in 2019. We have netflix and amazon as models of how much money it takes to grow rapidly, and tesla needs more physical buildings than those companies

Imports are about 3% of the chinese market (~20M cars) and growing. The german's lead with expensive bmws and mercedes. That is plenty of a market for tesla to sell tens of thousands of model S and Xs. For example the mercedes S class sold 33 thousand in 2012. Mercedes and BMW simply understand the Chinese market better than tesla. Yes to get to 500,000 cars in 2020 tesla will likely need a chinese car and a chinese battery plant. Labor costs, and government way of business makes it necessary for very high sales, but that isn't tesla's problem today. Chinese government would probably be happy with a gigafactory partnered with panasonic, or lg, or jc, placed in china. I don't think byd can produce to tesla's quality standards.

when you are that rich you can afford to sell out, but I think Musk is really driven to change transportation , and that means he's in it for another decade.