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- Tesla shares, along with energy stocks have followed crashing oil prices.
- Tesla's business and product strategy may insulate it from the effects of cheaper oil and gasoline.
- Lower oil prices could portend the end of the age of oil, but cheap oil and gasoline could end Tesla if its performance car strategy fails.
- Tesla shares have fallen from a high of $291.42 in September to the $205 range, a drop of 30%.
- By a wide range of metrics, Tesla remains considerably overvalued.
- A whole host of problems will hold Tesla back.
- Although Tesla is a great company that offers a unique brand, this does not justify its current valuation.
- The recent selloff of Tesla Motors might be providing us with the opportunity to buy an excellent business at a fair price.
- A business is excellent if it has an enduring competitive advantage.
- Tesla's economic moat is owed to technical, business and human factors.
- In this article, I present each of the three factors and show that several aspects often overlooked by the majority of investors are fundamental pieces of Tesla's economic moat.
The One Variable That Will Determine Tesla's Future
- The one significant area where Tesla’s competitors have not announced the intent to compete is the long-distance road-trip charging network.
- If Tesla is left alone to offer this functionality, it will have an enduring advantage.
- If Tesla’s competitors spend the money to build a competitive long-distance road-trip charging network, Tesla’s remaining advantage will be gone.
- So what will Tesla’s competitors do? Time is running out.
Tesla: Implications Beyond The Electric Car Industry
- Tesla's true potential may not lie in its electric car business, but rather its future battery business.
- The Gigafactory has far-reaching implications that extend to all the way to the Utilities market.
- Tesla's union with SolarCity could drastically disrupt the electric power industry.
Leshi Is Moving Into Electric Vehicles: Negative Implication For Tesla
- Chinese software company Leshi is working on a new EV.
- Initial model could compete against TSLA in China in pricing and features.
- Leshi is looking to move beyond TV and STB. EVs may present a unique opportunity.
- Solid state batteries have been cited as a possible replacement for current lithium ion batteries.
- Solid state batteries for automotive applications are not currently feasible.
- Development of solid state batteries is a high risk effort that may never pay off.
- As such, they pose no threat to Tesla or the Gigafactory.
Cheap Oil May Affect 'Green Vehicle' Sales, But Probably Won't Affect Tesla Motors Sales
- Oil prices probably won't affect demand for Tesla Vehicles.
- BMW may have a big problem.
- The supply glut in oil may be a very good thing for Solar Power.
- Automatic lane change is dangerous and probably illegal without rear radar.
- According to a leading autonomous vehicle engineer, no radar currently in the market is useful for automatic lane change.
- The company has a history of announcing and then forgetting major features and projects.
Why Does Tesla Not Appear In The Detroit Auto Show Press Conference Schedule?
- Breaking with tradition, Tesla doesn’t appear on the Detroit Auto Show Press Conference schedule for January 12-13.
- Last year, Tesla preannounced positive December quarter sales at that event, after which the stock immediately skyrocketed.
- I interpret this to mean the December quarter is extremely back-end loaded and therefore likely on the weak side.
- Tesla was also expected by some to show either the future Model X and/or Model 3 cars at the Detroit Auto Show.
- However, showing one or both of those models would risk “Osbourneing” sales of the current Model S.
- There is yet another massive threat emerging for Tesla.
- This threat has little to nothing to do with demand or competition and everything to do with a choice Tesla made.
- Tesla's bet on its gigafactory creates a significant risk that an emerging technology might wipe it out.
How Tesla Motors Conforms To A 'Low R-Squared' Investing Philosophy
- With an R-Squared of 10.49%, the returns of Tesla Motors are highly uncorrelated with the price movements of the S&P 500.
- For the period 2011-14, Tesla's returns have been significantly higher than the calculated expected return of 0.08%, yielding a Jensen's Alpha of 0.24%.
- When compared to General Motors, Toyota and Ford, the beta values for all four companies are at a similar range.
- The Model 3 selling price is expensive for Indian consumers. The Indian government will find it difficult to subsidize the Model 3.
- Tesla will need investment to establish charging stations across India.
- The Indian electric car market isn't lucrative and declining crude oil prices will further weaken the market.
- Tesla electric cars are different than those coming from established carmakers - and this will continue to be the case for years to come.
- Differing business models constrain legacy carmakers' ability to directly and effectively compete against Tesla.
- Tesla is not threatened by PHEVs and hybrids because Tesla cars compete against high-end, high performance internal combustion engine (ICE) cars, not "electrified" versions.
- Tesla enjoys a long-term strategic competitive advantage that allows Tesla to attack existing high-end, high-margin market segments while avoiding direct competition.
- As the market comes to fully appreciate Tesla's strategic advantage, company valuation will increase and shareholders will see gains.
Tue, Oct. 21, 4:52 PM
- Daimler (OTCPK:DDAIF) has sold its 4% stake in Tesla (NASDAQ:TSLA), and terminated the share-price hedge it started in 2013. The sale will "result in a cash inflow of around $780 million" for the Mercedes parent.
- Daimler affirms it will continue sourcing the powertrain for its Mercedes B-Class Electric Drive from Tesla - development work is now complete - and keep cooperating on "current projects."
- Tesla's value has risen a bit since Daimler originally acquired a 9.1% stake back in '09.
- TSLA -1.3% AH.
Tue, Oct. 21, 2:54 PM| 150 Comments
Fri, Oct. 17, 10:45 AM
- A blog post from Tesla Motors (TSLA +2.3%) calls out politicians in Michigan for last-minute changes to a bill which effectively limit the automaker's ability to sell directly to the public in the state.
- The updated bill didn't see any public debate or commentary before ending up on the Governor's desk.
- Under the harsh terms of the late amendment, Tesla can't even operate a gallery to showcase models in the home state of the Big Three.
Wed, Oct. 15, 1:46 PM| 50 Comments
Tue, Oct. 14, 9:26 AM
- Research firm IHS is out with teardown analysis of the electronics inside a 2013 Tesla Motors (NASDAQ:TSLA) Model S.
- Perhaps the biggest surprise was the amount of design work the EV automaker did on its own to customize the model's features.
- As expected, there's plenty of chips from Nvidia (NASDAQ:NVDA), while Innolux and Japan Display Inc. (Sony, Toshiba, Hitachi) are also prominent.
- What to watch: The comprehensive teardown puts IHS a step ahead of some Tesla watchers. A cost breakdown of the parts could be upcoming.
Mon, Oct. 13, 11:30 AM
- Tesla Motors (TSLA -4.7%) slips lower again in an ongoing reaction to last week's D-announcement from the EV automaker.
- As noted by Wired, the slide in TSLA lines up fairly close to the post-Musk tweet run-up.
- Credit Suisse is out with a positive note in defense of the EV automaker.
- The investment firm has increased confidence that Tesla will reduce its battery costs and thinks the Model X will be highly competitive in the premium SUV segment.
Fri, Oct. 10, 9:24 AM
- Tesla's (NASDAQ:TSLA) dual-motor, all-wheel drive, P85D features plenty of advanced driver-assistance features, enough so that it's declared to have an autopilot mode. Model S cars produced over the last two weeks also have the hardware to support the features, some of which likely rely on Mobileye's (NYSE:MBLY) systems.
- Ars Technica: "[Tesla's] hardware includes forward-looking radar, image-recognition cameras, and 360-degree ultrasonic sonar. All these gizmos will give the Model S the ability to read speed limit signs and cruise at whatever the road's limit happens to be, along with the ability to automatically change lanes when a driver indicates with the car's turn signal. The updated autopilot package will also include standard driver assistance tools like lane departure warnings, adaptive cruise control, and automated braking."
- However, the P85D is a high-end car: Prices range from $105K-$120K. Dual-motor Model S units will sell for $71K-$85K. The release of a mass-market Tesla remains a future event.
- Previous: Tesla adds driver-assistance features; Mobileye a likely supplier
- Update: Deutsche says Mobileye is the supplier for Tesla's camera-based systems.
Fri, Oct. 10, 8:13 AM
- Tesla Motors (NASDAQ:TSLA) trades lower after introducing the new versions of the Model S last night.
- The 60D and 85D version of the Model S feature all-wheel traction, while the EV automaker says the P85D is the fastest accelerating 4-door car ever.
- Early reaction: Automobile analysts have had a largely favorable reaction to the unveiling so far. The new automated driving system features from Tesla impress, particularly the forward-looking radar which can see through snow and fog. Skeptics still wonder if the Model S enhancements will drive sales higher or push the company into the mass-market segment.
- TSLA -6.0% premarket to $241.68.
Fri, Oct. 10, 4:26 AM
- Tesla (NASDAQ:TSLA) CEO Elon Musk last night unveiled a dual-motor high-end Model S vehicle, which will be able to travel 275 miles on a single charge and accelerate from 0-60 miles per hour in 3.2 seconds - the same as the McLaren F1.
- Dubbed the P85D, the sedan will have "auto-pilot" software that includes self-parking.
- Tesla plans to start shipping the car in December.
- The launch presumably reveals what Musk meant when he cryptically tweeted about a "D" last week.
Thu, Oct. 9, 1:26 PM
- Credit Suisse adds Tesla Motors (TSLA -0.4%) to its Top Picks list.
- Analysts Dan Galves thinks the EV automaker's competitive advantages are sustainable.
- He forecasts near cost-parity for Tesla with IC-powered vehicles by 2017 at which point the company could see margins widen or lower prices on models to grab market share.
- CS has a $325 price target on TSLA. Previous: D-day arrives for Tesla Motors
Thu, Oct. 9, 7:44 AM
- Tesla Motors (NASDAQ:TSLA) is due to make an announcement today at 10:00 p.m. EDT from the Hawthorne Airport in California.
- Most analysts expect the EV automaker will announce details on a new all-wheel drive version of the Model S and unveil some self-driving capabilities.
- Shares of Tesla are up 1.4% to $263.00 in premarket action.
Wed, Oct. 8, 1:53 PM
- The EPA says the fuel economy of 2013 models sold in the U.S. averaged 24.1 mpg, up half a mpg from the prior year's model.
- The modest 2.1% improvement is below the pace called for by some environmental groups and just a fraction of what would be needed to keep pace with the government's target for a 54.5 average mpg for the 2016 model year.
- A higher mix of SUV and truck sales offset technology gains by automakers.
- Related stocks: GM, F, TM, OTCPK:FIATY, HMC, OTCPK:NSANY, TSLA, OTCQX:VLKAY, OTCPK:DDAIF, OTC:HYMLF, OTCPK:BAMXY, OTC:KIMTF, OTCPK:MMTOF, TTM, OTCPK:SZKMY, OTCPK:FUJHY, HMC, FCA.
Wed, Oct. 8, 8:31 AM
- Sales of electric vehicles in the U.S. aren't keeping pace with the broader market, according to data compiled by Cowen Research.
- Sales of EVs rose 1% Q/Q in Q3.
- On a market share basis, EVs account for 0.7% of sales this year while hybrids are at 2.9%.
- Models with lithium batteries account for a higher percentage of EV sales than nickel-based batteries, notes Cowen.
- Related stocks: OTCPK:NSANY, TM, HMC, TSLA, GM, OTCPK:BAMXY, OTCPK:MMTOF.
Wed, Oct. 8, 7:50 AM
- Fiat (OTCPK:FIATY) CEO Sergio Marchionne thinks there is room in the industry for a merger to create an automaker bigger than Toyota.
- Marchionne might be the man for the job after helping guiding the acquisition of Chrysler from Daimler and pushing Fiat through a complicated transaction to create Fiat Chrysler Automotive (NYSEARCA:FCA).
- Morningstar analyst Richard Hilgert agrees that the auto industry may see more M&A activity due to the needed economies of scale to compete.
- Automaker stocks: GM, F, TM, OTCPK:FIATY, HMC, OTCPK:NSANY, TSLA, OTCQX:VLKAY, OTCPK:DDAIF, OTC:HYMLF, OTCPK:BAMXY, OTC:KIMTF, OTCPK:MMTOF, OTCPK:PEUGF, OTC:RNSDF, TTM, OTCPK:SZKMY.
Tue, Oct. 7, 11:36 AM
- Expect Tesla Motors (TSLA -0.6%) to debut an all-wheel drive version of the Model S on Thursday at a company event, says Re/code.
- The technology developed for the dual-motor (the "D" from Musk's tweet) could also be utilized with the Model X SUV.
- Self-driving capabilities for the Model S are still expected to be part of the announcement from Tesla tomorrow.
Tue, Oct. 7, 2:38 AM
- Panasonic's (OTCPK:PCRFY) initial investment in Tesla Motors' battery factory will amount to "tens of billions" of yen, says Chief Executive Kazuhiro Tsuga.
- Tesla (NASDAQ:TSLA) founder Elon Musk said in July that he expected Panasonic to contribute 30%-40% of the battery factory’s total cost, which is likely to reach $5B. Tesla will cover about half the amount.
- Tsuga also announced that his company would find it desirable for rates to remain stable, and that the dollar rising as high as ¥120 would be "excessive."
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