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  • Tesla-Daimler Hedge: What Does It Mean? [View article]
    Reel Ken,
    I am surprised that you don't even mention a remote possibility that Daimler is protecting their ownership stake from dilution when this summer Tesla will likely have to raise more cash to finish the Model X implementation.
    Dec 27, 2013. 02:04 PM | Likes Like |Link to Comment
  • Tesla-Daimler Hedge: What Does It Mean? [View article]
    Achilz,
    "What they really would like is a seat on the Tesla Board, and ultimately, control."

    Daimler has had a seat on the Tesla board for some years now. Currently it is: Herbert Kohler—Vice President E-Drive and Future Mobility at Daimler (Wikipedia)

    Daimler owns or has stock in 14 companies, one of them Tesla (4.7%). Daimler wants a stake in the US market and to that end has chosen to help Tesla (coinciding with divestiture of Chrysler). To read too much into this ownership is a mistake.
    Dec 27, 2013. 02:00 PM | 2 Likes Like |Link to Comment
  • Analyzing The Logic Of Tesla Bears [View article]
    Peter,
    Your long history of personal attacks without facts is equally tiring. Your (and other Tesla fans) constant projection that Elon Musk has super human management and engineering abilities that will solve every problem is the absurd assumption. Elon Musk NEEDS the Daimler relationship for Tesla to succeed. I don't see that as a bad thing for Tesla or the stock. The fact that Daimler has recently reiterated their support for Tesla is good for all. From an investment view point I would watch the quality of the Daimler/ Tesla partnership as a proxy on Tesla's medium term prospects.
    Dec 15, 2013. 11:08 AM | 1 Like Like |Link to Comment
  • Analyzing The Logic Of Tesla Bears [View article]
    Siddharth,
    "Niche market because the car is heavy? "

    Tesla will be a niche market because it will be very difficult to grow beyond their chosen niche of two initial vehicles. We still have no idea how successful the Model X will be, but it looks like it will at least match the Model S.

    To grow Tesla needs a talented workforce, capital/ plant, and a supplier network. My comment about borrowing engineering ideas and talent from Daimler points out that contrary to "common wisdom" Tesla does not have the talent to put a full car together. It does not matter how much Silicon Valley water Tesla drinks they will not have that capability in the medium term. This is not a personal attack on Tesla but a reality of the complexity of the auto industry. Porche had to partner with Volkswagon for this reason (and probably others). Likewise Volvo and Saab could not survive without access to Ford and GM's parts bin and engineering. Also, many of the suppliers that Tesla uses are Daimler suppliers. Many auto suppliers are closely aligned with one or two major manufacturers and you need alliances with those major manufacturers to gain access. Check out the regular reporting of auto alliances at Wards Auto World.

    If Tesla does solidify it's relationship with Daimler along the lines of the Volkswagon/ Porshe alliance, that would relegate Tesla to a premium EV niche. Tesla would not be allowed to compete head-on with the parent products. Daimler would get ZEV credits and could claim EV status without offending existing customers.
    Dec 15, 2013. 09:21 AM | Likes Like |Link to Comment
  • Analyzing The Logic Of Tesla Bears [View article]
    Siddharth,
    "even I know that SUVs are more profitable than cars"

    In some circumstances that may be true, but certainly not all. You would need to be an insider to know that. And then you would be fired for talking about it on this forum. SUV's are not uniformly cash cows and some bring the wrong clientele into the showroom.

    If all SUV's are cash cows why did Ford cancel the Excursion? The Cadillac Escalade has seen volume drop by more than half in the past five years. Think it is just as profitable as before?

    As for the Porsche Cayenne, yes it is their largest unit sales product. That may mean total earnings from that product line are the largest but it does not follow that it is their highest margin car. The Cayenne only sold 15,545 units in 2012. It is hard to make much money on that volume (less than Tesla). Since these margins are trade secrets perhaps you could share with us how you "know" the margins of SUV's?
    Dec 14, 2013. 08:50 PM | Likes Like |Link to Comment
  • Analyzing The Logic Of Tesla Bears [View article]
    Peter,
    " I believe the numbers were production increase from 800 to 1000 cars per week for an additional $25-50M. "

    You believe wrong. Facts are way better than beliefs when it comes to investing. Tooling alone increased $47M in the past nine months (10-Q, page 14). Just below that table Tesla acknowledges that depreciation doubled from Q3 2012 vs. Q3 2013. That tells me that they added a lot of equipment this year trying to get the plant up to speed like the fancy battery pack install station Elon trotted out this summer.

    Tesla seems to have decided against predicting their capital outlays since they announced $200M in plant improvements in Q4 2013. The tooling for the Model X will more than drain available cash by mid-year 2014. The auto business burns capital like no other.
    Dec 14, 2013. 08:22 PM | Likes Like |Link to Comment
  • Analyzing The Logic Of Tesla Bears [View article]
    John,
    "The Model S has one of the lowest drag coefficients of any car ever made!"

    With your background you are surely aware that drag force is also the product of velocity squared and area. The bigger car often has a larger frontal area that easily negates the improvement in the coefficient which is measured in the second decimal. In laymans terms the drag force of the Tesla S and BMW 3 would probably be very close at highway speeds. It would be interesting for Tesla to repost their new drag numbers now that they are raising the car. A large percentage of drag is from the underbody where the Model S has a distinct advantage with a smooth battery case. Still, the increased distance to ground will increase the drag coefficient.

    At highway speeds the drag coefficient simply is not a huge deal.

    As for the increased regen energy I believe it is a moot point if you are arguing whether big or small EV's matter for saving energy. And of course the second law comes into play. As you alluded to the overall energy returned will be proportional on a small or large car.
    Dec 14, 2013. 07:34 PM | Likes Like |Link to Comment
  • Analyzing The Logic Of Tesla Bears [View article]
    JRP,
    "Guess why? Hint, it has to do with profits. "
    If you want to know what vehicles have the least profit in them check out the vehicles that were cancelled by manufacturers in the last downturn. GM probably cancelled the most car lines and several entire SUV lines were given the axe. Ford ditched the Excursion.

    So I give up. What data do you have that the most money is made on SUV's? Factory margin is deceiving in the auto business, despite Elon Musk's contrary focus. Many SUV's that have better margins are sold in relatively low volume and rely on other bread and butter product lines for components and shared manufacturing facilities. That means that the SUV cannot exist without the high volume product line and the total real earnings (not percent) can be less for SUV's than the higher volume product line. That is why seemingly high margin vehicles are discontinued in a downturn.
    Dec 14, 2013. 04:22 PM | Likes Like |Link to Comment
  • Analyzing The Logic Of Tesla Bears [View article]
    John,
    I am not making a case against ICE cars. I am making a case for Tesla remaining a niche market player and thus limiting profit and stock price.

    Eventually it will be understood that in order to save energy in a global sense simply abusing some new found efficiencies as an excuse to make a bigger, faster cars will not be enough. Clearly Mr. Musk chose his market wisely (premium high performance). It has allowed him the luxury of not having to worry about weight. The US (and China) will soon need to start moving more towards an energy lifestyle closer to the rest of the world. That will dictate smaller EV's with less range. I did not make this up. Just look at all the major manufacturers. This is what they are building because, I feel, they know that is where the market is headed too. Tesla is talking about the Gen III being another premium luxury car thus limiting the market. I don't see how Tesla gets to even 250,000 vehicles/ year. This forum seems to think that the major auto execs "don't get it". Alan Mulally (Ford CEO) is considered to be one of the best executives in the US. I think he knows where he is going and it is not the Tesla route.
    Dec 14, 2013. 03:49 PM | 1 Like Like |Link to Comment
  • Analyzing The Logic Of Tesla Bears [View article]
    JRP,
    "SUV's as a segment are very profitable"

    The SUV class has grown to include everything from very car-like vehicles to 5,000 lb truck chassis vehicles. I have never seen public information about profit margins by line. If you have access I would be very interested. I think that you make such a broad statement about profit as to be useless in evaluating the Model X.
    Dec 14, 2013. 10:39 AM | Likes Like |Link to Comment
  • Analyzing The Logic Of Tesla Bears [View article]
    Siddharth,
    Your responses and your bio indicate that you are very unfamiliar with capital intensive manufacturing stocks. You claim expertise in tech stocks but regardless of wishes Tesla is in the heavy capital manufacturing business, not the tech business.

    Your claim that higher volumes will simply lead to lower unit costs is not always true at these low volumes. You would have to know about in-house component capacities and Tesla has been very careful to not say anything specific about their bottle necks. It is likely that in the near future cap ex growth will exceed unit production growth and therefore will continue to put pressure on margins. It is interesting that Musk has successfully focused everyone's attention on Gross Margin where depreciation is not considered. Very clever, that Musk. Still in the end depreciation must be accounted for and that will hold down margins and ultimately stock price. Earnings must increase to support, let alone increase, the stock price.
    Dec 14, 2013. 10:35 AM | Likes Like |Link to Comment
  • Analyzing The Logic Of Tesla Bears [View article]
    JRP,
    Simple physics. A 4,700 lb hog takes twice the energy to accelerate as a 2,350 lb small car. Period.
    Dec 14, 2013. 10:26 AM | Likes Like |Link to Comment
  • Analyzing The Logic Of Tesla Bears [View article]
    JRP,
    1) Blast to drive means it is a very high energy hog. Acceleration and range have made the Model S one of the heaviest sedans on the planet. That is not bad but will relegate it to niche market status.
    2) Tesla's 18650 pack would not be that hard to replicate. Other more experienced manufacturers have all chosen different battery designs. BTW, Tesla has no battery patents, only battery pack construction, and those are probably not worth much with the recent fires.
    3) Explain why a Mercedes design chief sat on the Tesla Board during the Model S design and then was replaced by another MB exec after design was completed? Explain why Daimler transferred HVAC patents to Tesla? You may snicker, but cabin temperature control is one of the hardest engineering problems in a car. Looks like Tesla was struggling with that. Explain why Daimler received more $ in stock for than their cash investment? Because the design was in-kind payment.
    5) "Tesla can build G3 today" - Actually they can't. Not even at the price they are targeting. I am not convinced that enough 18650 cells can fit in the floor pan of a BMW 3 to get the same performance. Also, Tesla will need $2B+ to get the Gen III into production. And Elon will have to borrow another $500M at least to get the Model X tooled up. The car game sucks capital and it is not clear how long Mr Musk can keep borrowing without delivering profit.
    6) The Model X more profitable? How do you double the motor costs and increase battery and chassis cost and still make more money (which is nearly zero now on a GAAP basis)?
    Dec 9, 2013. 04:32 PM | 2 Likes Like |Link to Comment
  • There Is Safety In Disruption: A High-Level Tesla Valuation [View article]
    JRP,
    You missed James' original point about electrification. He is right about the thermodynamic argument. In the end you are spending a lot of time arguing about details of efficiency that few on this investing web site are equipped to evaluate properly. All of these arguments begin with the assumption that we must have cars and the only two choices are ICE vs. electric. The symposium that Rik pointed out did in fact have those assumptions.
    Dec 9, 2013. 04:12 PM | Likes Like |Link to Comment
  • There Is Safety In Disruption: A High-Level Tesla Valuation [View article]
    Daniel,
    "Let me ask you, what price do you think a major auto maker would pay for the Tesla brand, patents, and engineering expertise (software, automotive, robotic & systems)?"

    As for brand, in the past quarter century there have been at least a half dozen new brands created (Lexus, Infinity, Audi, Saturn, Hummer). OK, so they don't all work out but it probably did not cost $15B for to develop those brands,

    I keep hearing about the value of Tesla's patents but no one ever names "the" valuable patent. The fact is that all of the manufacturers have EV patent portfolio's equal to Tesla's. The only value is possibly for some limited cross licensing deals. With recent fires the biggest part of their portfolio (battery packs) has taken a big dive in value.

    As for "robotic & systems", Tesla uses the same Kuka robots that half the industry uses. The other half uses Fanuc robots. All of Tesla's manufacturing technology is off-the-shelf from established industry vendors.
    Dec 2, 2013. 10:03 PM | 3 Likes Like |Link to Comment
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