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Logical Thought

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  • Rousing upgrade on Tesla Motors from Stifel Nicolaus [View news story]
    >>The investment firm walked away impressed from a factory tour and sees a run rate of 1,000 units per week by the end of the year as achievable.<<

    Um, aren't they supposed to deliver 13,000 cars in Q4? Wasn't the factory supposed to have a run-rate of 1000 cars/week shortly after reopening (as it was already doing 800/week before it closed)? How is this anything new, except perhaps a lowering of expectations?
    Sep 2 09:08 AM | 1 Like Like |Link to Comment
  • Tesla Charges China EVs With Unicom Tie-Up [View article]

    Did you read the news story about this? The 400 chargers will work at 1/16th the rate of the Superchargers; i.e., they must be 240v/40amp chargers. Here, I will help you; first read the news story:

    Then do the math: a Supercharge takes 20 minutes for half a charge. 20 x 16 = 320 minutes. 320 minutes = 5.3 hours.

    Sorry if "the math" gets in the way of "the story" but eventually all story-stock bubbles fall captive to "the math" so you may want to be aware of it.
    Sep 2 07:51 AM | 1 Like Like |Link to Comment
  • Tesla Charges China EVs With Unicom Tie-Up [View article]
    >>These 400 chargers are slow chargers, not rapid DC chargers. It will take hours to charge at these stations.<<

    To be precise, just HALF a charge will take over five hours (unless of course you have to first wait five hours for someone ahead of you to get HIS half charge).
    Sep 2 07:00 AM | 1 Like Like |Link to Comment
  • Tesla: Emotionally Charged [View article]
    >>So the hard facts we have are the young start-up, TSLA, is hitting gross margins above what other established companies can reach. This is partially accounting practices, but not a sole by-product of them.<<

    No, it's SOLELY the practice of them. Tesla takes its "dealership hit" on the op-ex line rather than the COGS line (as do other manufacturers by selling cars to their dealers at a 10% discount and then letting the dealers bear the cost of operating the dealerships). If you don't adjust for both this and Tesla's aforementioned avoidance of engineering costs in COGS you're making a completely MEANINGLESS comparison between Tesla and other auto makers. If you want to play it Tesla's way then you have to compare operating margins rather than gross margins, in which case last quarter Tesla's ran negative 8% while BMW's ran +11%. Without doing it this way you're producing a meaningless comparison.
    Sep 1 05:09 PM | 3 Likes Like |Link to Comment
  • Tesla: Emotionally Charged [View article]
    Musk himself said they're only targeting 15% gross margins on the Model 3... Of course, if those are "Musk defined" margins then the more honest number may only be in the high single-digits.
    Sep 1 08:13 AM | Likes Like |Link to Comment
  • Tesla: Emotionally Charged [View article]

    I was really referring to the author of the article and not you there (as I know your eye is a skeptical one), and yes it's accurate as I've reviewed the financial statements of every major automaker. I've discussed this issue in depth in other comment threads; here's an example:
    Sep 1 07:57 AM | 4 Likes Like |Link to Comment
  • Tesla: Emotionally Charged [View article]
    No, Tesla doesn't have gross margins of 25%. Unlike any other auto maker (or, for that matter, manufacturer) Tesla includes no model-specific engineering costs on its COGS line; if it did its gross margins would be in the teens. Once again, an author is accepting a Tesla-myth without any fact-checking.

    In fact, for those of you who insist that Musk never bullshits, could you please explain this statement from the last conference call: "...the Model S in production today is at least a few hundred pounds less than that in the start of production." The earliest production model I can find tested and weighed was Car & Driver's Signature Edition P85, which weighed in (containing every available option, including a pano roof and rear-facing seats) at 4785 pounds. ( The current unoptioned base weight (according to the web site) is 4647 pounds and that's with smaller wheels, no sunroof, basic seats and sound system, etc., but as that figure may never have been updated here's a March 2014 build with smaller wheels and no rear seats (but with a 20-pound titanium undershield) showing a weight of 4640 pounds: So if you adjust for the undershield and thus start at 4620, then add rear-facing seats and 21" wheels you probably go up by 150 pounds right there, bringing it to within 15 pounds of the original test weight.

    So Musk keeps slinging the bs and (only for now) no one in the media or on the sell-side ever seems to challenge it... only for now.
    Sep 1 07:34 AM | 6 Likes Like |Link to Comment
  • A Big Concern For Tesla In China [View article]
    Thanks for your opinion on my short position-- it's an interesting switch from your normal focus almost entirely on engineering issues. I guess bull markets will do that to people.
    Aug 31 10:29 AM | 2 Likes Like |Link to Comment
  • A Big Concern For Tesla In China [View article]

    The press release says they'll operate at 1/16th the rate of a Supercharger. Are you reading a different press release?
    Aug 31 09:32 AM | 4 Likes Like |Link to Comment
  • A Big Concern For Tesla In China [View article]
    So you have to work within a short distance of the cellphone store and then leave work midday to go get your car. To what percentage of Tesla owners will this be applicable? Let's be really optimistic and say this deal sells a total of 1000 more cars on which Tesla makes a gross profit (under its own misleading definition of such) of $25 million less $5 million for its installation cost contribution. So a one-time shot of $20 million of total additional gross profit (i.e. a figure on which you can't "put a multiple" because it's "one-time") added around $1 billion to Tesla's market cap on Friday. It really feels like early 2000 all over again, doesn't it?
    Aug 31 09:30 AM | 9 Likes Like |Link to Comment
  • A Big Concern For Tesla In China [View article]
    If one takes that press release at face value, the deal is for just 20 Superchargers plus 400 chargers attached to cellphone stores that will take over five hours (i.e., 1/16th of a Supercharger) to provide just half of a battery charge. Can someone please explain what the Tesla owner is supposed to do during those five hours? Should he buy one identical cellphone per hour, or maybe five different ones? Or should he get lunch for half an hour and then buy 4.5 cellphones? And how many plugs will be at each location? If someone's out of juice, does he have to wait five hours for the car ahead of him before he can recharge? Or maybe 10 hours if the guy ahead demands a full charge?

    I look forward to the follow-up press release explaining this; however, erring on the side of caution I won't hold my breath while doing so.
    Aug 31 09:07 AM | 13 Likes Like |Link to Comment
  • Tesla: The Short Squeeze, Rather Than Short, Of The Decade? [View article]
    The current cost of borrow for TSLA is approximately 0.38% a year which is hardly indicative of a "short squeeze." Also, it's institutional investors and not (supposedly) long-term retail investors who own almost all of this company's free trading float. You can easily see that here:

    Potential near-term catalysts for this stock to be severely repriced are:

    1) A big demand-led miss (supply is longer an excuse) of the 13,000 cars needed to be sold in Q4 in order to hit guidance. If it turns out that actual quarterly peak Model S demand turns out to be say, 10,500 cars including China, leading into...

    2) A huge guidance take-down (to say 8000 cars/quarter including China) for Q1 and Q2 as people avoid the "S" while awaiting the "X"...

    ...then that will be enough for a number of institutions to lighten up by quite a bit.

    3) The realization by institutional investors that there *is* in fact real competition arriving on a one to three-year horizon (initially more plug-in hybrids and then a number of longer range PEVs). I've spoken to at least one mutual fund holder of this stock who genuinely had no idea what else was out there and upcoming, and unlike many of the retail investors on this board who have a highly defensive "head in the sand" mentality, this guy's knowledge gap was simply due to "inadequate homework." As a realization of the true competitive landscape sinks into institutional holders' heads, they'll realize that TSLA is worth nowhere near its current $38 billion and doesn't have a prayer of being so if one uses reasonable forward projections combined with a realistically high discount rate. I'm not going to reopen nor engage in a valuation debate here-- my point is a belief that the institutional holders of the stock will take a step back from the hype and momentum and do some realistic math, and then look to start exiting before their fellow "size holders" do, and this could happen at ANY time.

    4) Finally, at some point (that longs never see coming) story-stock bubbles get repriced very quickly with no single apparent catalyst, as what happened during the spring of 2000. Perhaps in this case it will simply be the end of QE between now and late-October, or maybe it will be an "unknown unknown." When a stock is priced beyond perfection something seemingly innocuous can turn out to be the pin that pops the bubble.

    Regardless of whether or not you want to short this, staying long despite thinking that it's grossly overvalued (or even worse, because one lacks the analytical tools to come up with ANY realistic valuation) sounds to me like a recipe for disaster, but I guess that's what makes a market.
    Aug 31 07:38 AM | 9 Likes Like |Link to Comment
  • Tesla: $421 Or $36? Pick Your Scenario [View article]
    Panasonic is initially only spending $200 million on the Gigfactory... You don't think that if a bunch of orders come in from BMW it won't spend several hundred million more elsewhere? Nissan has plenty of capacity, and LG, Samsung and the Chinese are dead serious about this too and all of them have far deeper pockets than Tesla.

    As for the S vs X: there's a limited crowd for $100,000 electric cars and most new buyers will just choose the X instead.

    Okay, clearly this is another case of someone thinking Tesla is "very special" and my thinking that it's a bug that will slam into the auto industry windshield (or will have to remain just a high-end niche), so if you don't believe the commitment of Tesla's competitors (easily found with a quick Google search) then we may as well end the conversation.
    Aug 28 07:34 PM | 2 Likes Like |Link to Comment
  • Tesla: $421 Or $36? Pick Your Scenario [View article]
    The auto industry is vastly more capital intensive and competitive than the smartphone industry. For example, Apple spends approximately 3% of revenues on R&D while BMW (despite being over 20x Tesla's size in revenue) spends over 6% while Tesla is currently spending over 15%. To put this another way, BMW *alone* spent almost $6 billion last year on R&D and it's just ONE car company-- THAT'S the kind of thing Tesla will have to compete with. For capex Apple spends around 4% of revenue while BMW spends almost 9% and Tesla is currently spending around 25%. Again, to put that into context, BMW *alone* spent almost $9 billion last year on cap-ex. And according to Wikipedia there are over 150 car brands in the world while I doubt there are more than 20 smartphone brands.
    Aug 28 06:45 PM | 1 Like Like |Link to Comment
  • Tesla: $421 Or $36? Pick Your Scenario [View article]

    >>Tesla already has a huge moat...<<

    No, I don't think it does. Panasonic will sell to anyone, as will LG, Samsung, BASF and the Chinese. Nissan will have a 150-mile Leaf out in 2016 (probably for $35,000) and at the same time GM will have a 200-mile car and Audi will have a couple of 250-mile cars, while BMW will have the i5 and possibly the i7. Meanwhile, conventional & plug-in hybrids get better and better and provide a real alternative to range (and charge-time) limited electric cars. And, oh yeah, Tesla has open-sourced all of its patents. So where's Tesla's moat for, say, the year 2017 and beyond? (It doesn't exist.)

    >>...X will not steal from S. It will effectively double the sales potential for Tesla. Most people who want SUVs don't want sedans...<<

    A vast number of people (I'd say the vast majority) bought the "S" because it was the only 200-mile electric car available and the coolest new thing at the country club. Once they can have the "X" (which is more practical for the local and regional travel for which an electric car is almost exclusively used) they'll dump the "S" like a hot potato.
    Aug 28 04:51 PM | 3 Likes Like |Link to Comment