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- Tesla has emerged as a prime candidate for short sellers.
- Federal Reserve, Department of Energy and state-level tax policies will work in tandem to support the Tesla business model and the stock's performance.
- Tesla is a poor candidate for short sellers who may find themselves caught up in a squeeze.
- However, conservative investors should consider avoiding Tesla stock altogether.
- Oil continues to plunge, making Tesla less and less appealing to those wishing to save money on gas.
- The company's stock is trading at a large multiple despite a market that seems unsure of itself.
- We lower our price target from $210 to $185.
- I've already written on how Tesla being an early leader in a supposedly high-growth market (EVs) is no guarantee of victory.
- Lack of barriers to entry in the EV marketplace, together with no sustainable advantages for Tesla support this claim.
- In this article, I explore the opposite - whether there might be one thing where Tesla really might have an advantage over other automakers.
- 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.
Mon, Oct. 6, 12:21 PM
- Tesla Motors (TSLA +2.8%) will announce a series of automated driving upgrades to the Model S at an event scheduled for Thursday, sources tell The Wall Street Journal.
- Tesla is expected to have its own self-driving car model within five to six years.
- Last week, there was quite a buzz over a tweet from Elon Musk that alluded to a 'D" announcement.
- There's still the issue of the "something else" Musk hinted about. Automotive News thinks a certified pre-owned sales service could be in the works.
- Previous: Let's talk about the D.
Fri, Oct. 3, 8:06 AM
- Panasonic (OTCPK:PCRFY) says it has set up a company in the U.S. to handle its lithium-ion battery production
- It's not a surprise that the startup will be located in Sparks, Nevada where Tesla Motors (NASDAQ:TSLA) is setting up its gigafactory.
- The Japanese electronics giant will fund Panasonic Energy Corporation of North America with $5M in capital.
- Details on the total investment Panasonic plans to make in the gigafactory haven't been released.
- PR from Panasonic (.pdf)
Thu, Oct. 2, 8:02 AM
- Shares of Tesla Motors (NASDAQ:TSLA) move higher in early trading after CEO Elon Musk teases on an October 9 announcement from the company involving a D.
- There's plenty of guesswork focused on if the D is a new model class or an update.
- Speculation on the D: 1) An entirely new model. 2) An all-wheel drive Model S. 3) A Model S with some self-driving capabilities. 4) A Chinese version of the Model S with a long wheelbase.
- TSLA +2.8% premarket to $246.89.
Thu, Oct. 2, 2:10 AM
- "About time to unveil the D and something else," tweets Tesla's (NASDAQ:TSLA) Elon Musk with an accompanying photo displaying an Oct. 9 date.
- Just what either of those entail is still unknown, although Musk has previously suggested that the third generation of Teslas would involve both the long-awaited "budget" sedan and an SUV smaller than the Model X.
- TSLA +0.4% premarket
Wed, Oct. 1, 3:14 PM
Mon, Sep. 29, 6:48 PM
- Global Equities reports some 85 kWh Tesla Model S (TSLA -0.5%) units sporting the car's Tech Package now support driver assistance (inc. lane departure) and speed assist features, as well as parking sensors. The firm speculates Mobileye (MBLY +7.1%) is providing the driver-assistance tech.
- Tesla's site doesn't yet mention the features under its listing for the Tech Package. However, a manual for the latest update to the Model S' software (Version 6.0) does mention lane departure and speed assist systems, and notes each relies on a windshield-mounted camera. Moreover, Tesla has said "some Model S [units] being delivered in North America" now come equipped with the features.
- Mobileye rallied three weeks ago after Elon Musk stated Tesla will offer a car with elements of a self-driving system in 3 years, and will "use sensors and sub-components from many companies." Musk added a fully self-driving car could arrive in 5-6 years.
Fri, Sep. 26, 10:26 AM
- Tesla Motors (TSLA +0.2%) says it opened its 200th Supercharger station in Oxnard, California.
- The EV automaker now has 114 stations in the U.S. in addition to the 66 operating in Europe and 20 in Asia.
- The Supercharger network is expected to be a major selling point for Tesla next year with 98% of the U.S. population slated to be in a coverage area.
Wed, Sep. 24, 9:17 AM
- Demand for Tesla Motors (NASDAQ:TSLA) Model S vehicles is strong in China, according to Goldman Sachs analyst Patrick Archambault.
- The analyst pegs reservations and down payments at close to 4K as of the middle of September.
- A key point looking forward for Tesla will be whether or not it can secure EV subsidies for its vehicles in China, notes Archambault.
- TSLA +0.3% premarket
Mon, Sep. 22, 2:01 PM
- Governor Jerry Brown of California has been busy signing bills to help support the electric vehicle industry in the state.
- Brown signed bills to help low-income drivers afford EVs and extend charging networks into new neighborhoods.
- A long-term goal is in place by the state to have 1.5M zero-emission vehicles on the roads by 2025.
- Models which could see a boost from California's latest round of EV-friendly legislation includes the BMW i3, Chevrolet Volt, Tesla Model S, Toyota Prius plug-in, Honda Accord plug-in, Nissan Leaf, Ford Fusion Energi, Ford C-Max Energi, BMW i3, and the Cadillac ELR.
- Related stocks: OTCPK:BAMXY, OTCPK:NSANY, TM, HMC, F, GM, TSLA.
Mon, Sep. 22, 11:47 AM
- JPMorgan reiterates its cautious view and Neutral rating on Tesla Motors (TSLA -4.8%).
- Though the investment firm raises its estimate on deliveries, it believes Tesla's share price is reflecting an even higher rate of Model S and Model X deliveries.
- An annualized Q4 of 2015 run-rate of 73K deliveries still falls well-short of the 100K the market is factoring in, says JP.
Sun, Sep. 21, 5:16 AM
- Fortune magazine profiles Michigan startup Sakti3, backed by GM (NYSE:GM), Itochu (OTCPK:ITOCF, OTCPK:ITOCY) and others. The company is looking to disrupt the power-storage industry using a solid-state lithium-ion battery that it says could double the energy density of today’s lithium-ion technology at one-fifth the cost.
- Tesla (NASDAQ:TSLA) relies on traditional lithium-ion batteries. CEO Elon Musk announced earlier this month he’s building a $5B plant near Reno that experts say could drive kilowatt-hour prices down to $250 from a current $500. Sakti3 claims its batteries will reach $100/kWh.
- But remember that many battery companies before Sakti3 have dazzled in theory only to fizzle in the marketplace; A123 (OTC:AONEQ) and Ener1 (NASDAQ:HEV) ended up bankrupt and sold off to the Chinese and Russians, respectively. "Sakti3’s big challenge is going to be the cost of manufacturing and the yield it’s going to get. It’s great to demonstrate a small battery in the lab, but making batteries bigger and making a lot of them is not trivial," one analyst says.
- Update: The Fortune article linked above, which is the source of this Breaking News brief, asserts Tesla's current battery cost is about $500/kWh. Others peg Tesla's current cost at $270/kWh or lower.
Fri, Sep. 19, 11:49 AM
- Tesla Motors (TSLA -2.2%) will need another $6B in capital to meet its ambitions production plans, advises Goldman Sachs analyst Patrick Archambault.
- The GS report doesn't indicate the investment firm has any advanced knowledge of the direction that Tesla might lean for funding.
- Archambault uses a time frame of 2017 to 2025 for the bulk of his estimate on the shortfall. Tesla hasn't released capital spending projections out that far.
Fri, Sep. 19, 9:15 AM| 110 Comments
Thu, Sep. 18, 3:16 AM
- The Consumer Financial Protection Bureau has put forward a plan to begin supervising the finance units of major car companies, overseeing the 38 largest nonbank lenders in the automotive industry.
- Under the plan, the regulator will scrutinize whether nonbank car-loan providers are discriminating against minorities, using deceptive tactics in marketing loans and following debt-collection laws.
- The new plan would put the finance divisions of major automakers under federal supervision for the first time.
- Related tickers: GM, F, TM, OTCPK:FIATY, HMC, OTCPK:NSANY, TSLA, OTCQX:VLKAY, OTCPK:DDAIF, OTC:HYMLF, OTCPK:BAMXY, KMX
Thu, Sep. 18, 1:41 AM
- Tesla's (NASDAQ:TSLA) Elon Musk says the technology to make self-driving cars will be available in five to six years, although it will take several more years to bring it to market due to regulatory impediments.
- "They will be a factor of 10 safer than a person [at the wheel] in a six-year time frame," says Musk.
- The Tesla CEO also expects the company to start generating strong "free cash flow beginning in Q3 of 2015" and could pay for the construction of its planned gigafactory without additional borrowing.
Wed, Sep. 17, 2:25 PM| 18 Comments
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