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Robert.Boston

Robert.Boston
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  • Why Does Tesla Not Appear In The Detroit Auto Show Press Conference Schedule? [View article]
    What you are assuming, @Dmitry, is that the production line was sitting idle whilst engineers tinkered with the D's seat. I think it far more likely that the factory kept producing the RWD Model S instead, for which there is a substantial book of orders. Deliveries won't be affected much. The place this will pinch is on the financials: the ASP won't be as rich, so the GM will be down.
    Dec 12, 2014. 09:43 AM | 3 Likes Like |Link to Comment
  • Why Does Tesla Not Appear In The Detroit Auto Show Press Conference Schedule? [View article]
    For the record, P85Ds are already at service centers being prepped for delivery (http://bit.ly/1usV7w5) and at least one owner is scheduled to pick his up tomorrow (12/12 http://bit.ly/1usV8Ad ).
    Dec 11, 2014. 03:44 PM | 1 Like Like |Link to Comment
  • Why Does Tesla Not Appear In The Detroit Auto Show Press Conference Schedule? [View article]
    None of those points make sense to me:
    > "a lot of competition"? Anything with two power systems (electric and gas/diesel) is substantially more complicated, more costly, and compromised on performance, so that rules out nearly everything on the market as real competition to Tesla. Audi is making the right noises, but they're skating to where the puck is today; by the time they release an <$100k sedan with 400km of range, Tesla will have the Model 3, Model X, and an updated Model S.
    > Fuel-cells? Really? Who is paying for the massive hydrogen fueling infrastructure those will need? And the PR challenge when we see the first explosion of hydrogen on a roadway...not happening.
    > Who's buying battery-only cars? Any family with 2 cars could easily replace one of those with a battery-only EV. I agree there are use cases where battery-only doesn't make sense as the sole vehicle.
    > How will Tesla finance its portion of the Gigafactory? They've already done a secondary offering and convertible bond float -- both very successfully -- that fully cover Tesla's costs.
    > Daimler and Toyota selling their shares? They had both earned good returns, but the fluctuation of value of these substantial assets was killing their quarterly earnings reports. Neither company changed its strategic business relationship with Tesla, only its stock holdings.

    The case for the stock going higher depends on continued growth in Tesla's production capacity. Every car they build is sold before the components are even purchased (which is another reason why Tesla can achieve such good gross margins), so what's holding down sales today is production, not demand.
    > One part of this "more production" story is how quickly the Model X goes into production, because we know from statements by Tesla that the Model X will have its own production line.
    > A second part is the gigafactory. Tesla claims that that is ahead of schedule, and the photographs people are taking of the site certainly shows massive construction. The gigafactory will increase production capacity and decrease costs, which is necessary for:
    > The third, really critical piece, which is the Model 3. As important as the Model S's success was to the company's survival, the success of the Model 3 will determine whether Tesla's ~$30bn valuation is plausible. If Tesla is going to sell nothing more than "rich people's toys" then the stock is grossly over-valued. If it can deliver a <$40k >200mile EV that outperforms the BMW 3-series, then the stock is grossly undervalued. Today's stock price is basically a barometer of how much weight people give to the credibility of this Model 3 promise.
    Dec 11, 2014. 03:34 PM | 2 Likes Like |Link to Comment
  • Recent Tesla Developments And Their Implications Going Forward [View article]
    But you ignore the fact that Tesla delivered every car it could produce. The reason for the 2,000 car miss is simple: Tesla took twice as long to retool the plant in July as it had planned, and when a line is running at full capacity, lost production can't be made up.

    Feel free to criticize Tesla for not being able to get its factory running on time; I think that points to some inadequate planning and poor logistics that is troubling. But I don't see how we can infer anything about *demand* from a shortfall in *production*.
    Nov 24, 2014. 01:16 PM | 2 Likes Like |Link to Comment
  • Recent Tesla Developments And Their Implications Going Forward [View article]
    The "cheapest form of transportation" is powered by your muscles: walking.

    Oh, you want a car, do you? The per-mile cost of driving an EV is lower than the per-mile cost of driving on natural gas or diesel. The math is simple: an EV uses about 0.3 kWh/mile, and a kWh costs about $.15, so the fuel cost is about $0.05/mile. If your car gets 50 mpg and you pay $3/gal for fuel, that's $0.06/mile. Most people in the world get worse mileage (e.g. US) or pay more for fuel (e.g. EU).

    I'm not even going to start on rebutting the government subsidies part. Tesla repaid all its loans, with interest; all the other US automakers took much bigger handouts and haven't repaid that cash.
    Nov 24, 2014. 01:11 PM | 10 Likes Like |Link to Comment
  • Recent Tesla Developments And Their Implications Going Forward [View article]
    I'm not sure how building a factory to supply your company's needs is a "delusion." Capitalism doesn't have a magic wand that creates stuff when it's demanded. Some company perceives that demand, builds a factory, hires and trains workers, then builds and ships the product. If you're running a business, you can't just depend on "someone" to supply your long-run needs, particularly if your needs are projected to exceed total world supply of something.
    Nov 24, 2014. 01:03 PM | 8 Likes Like |Link to Comment
  • Recent Tesla Developments And Their Implications Going Forward [View article]
    Elon Musk explicitly stated that there would be no capital raise in 2015. Next capital raise would occur (if at all) to fund Model 3 tooling.
    Nov 24, 2014. 12:57 PM | 4 Likes Like |Link to Comment
  • Recent Tesla Developments And Their Implications Going Forward [View article]
    I didn't see Tesla claiming that it was automating the decision to change lanes, only the process. As long as the human is responsible for deciding when to change lanes (a decision which can be informed by the blind-spot detector), I don't see a problem with Tesla's existing monitor suite.

    That said, Daimler has a clear lead in this area, allowing fully automated lane changes without human decisions. Not something that I'm interested in, but I suppose some might.
    Nov 24, 2014. 12:56 PM | 3 Likes Like |Link to Comment
  • Tesla's Q2 Goes Down To The Wire As Well [View article]
    The author makes the rookie mistake of confusing supply and demand. Tesla is supply constrained; it is making Model Ss as quickly as it can (and working to speed up production as rapidly as possible), and each and every one of these cars is spoken for months ahead of time. The sales figures in any given market do NOT, therefore, tell us about demand in that market; rather, we learn what portion of the limited supply Tesla chose to allocate to that market.

    The author also conveniently ignores the news today that Tesla has notified Model X reservation holders that production dates are on target for deliveries beginning late this year. This is the next market for Tesla and represents a significant increase in the potential sales. SUV/Cross-over vehicles are an commercially important market segment, particularly in the US. Moreover, once the Model X is delivered with its AWD system, look for an AWD Model S, which will further bolster demand.

    Tesla remains the only auto manufacturer in the world for whom unsold inventory (including inventory at dealerships) is effectively zero. (Perhaps a few bespoke manufacturers like Rolls Royce are in the same position.) As long as this is true, delivery numbers tell us nothing important about the company's value.
    Jun 17, 2014. 12:05 AM | 9 Likes Like |Link to Comment
  • Tesla Motors hires top exec away from Renault-Nissan [View news story]
    This senior position has been vacant since George Blankenship retired last year. George, you'll recall, had this role first at Apple, where he created the Apple store concept -- which explains the deja vu moment when you walk into a Tesla store. Same mall, same design components, and the world's highest-tech iPad accessory.

    This is a good move, provided that Sproule holds the course that George laid out. I'd worry, though, if he thinks that the communications and marketing of traditional auto manufacturers is "the right way".
    Mar 12, 2014. 04:08 PM | 4 Likes Like |Link to Comment
  • Evidence Of Peaked Model S U.S. Deliveries Continues To Pile Up [View article]
    What a bizarre article. Tesla is selling every car it makes, even before it comes off the line. Tesla is accelerating production, and therefore accelerating sales.

    Tesla's sales numbers in California reflect only a decision about how many vehicles to allocate to the US market. As a shareholder, I'm happier to see sales pick up elsewhere: as new neighborhoods see Model Ss, demand improves further.

    [Disclaimer: I am long TSLA.]
    Feb 15, 2014. 06:36 PM | 9 Likes Like |Link to Comment
  • Tesla Bulls: Be Careful What You Wish For [View article]
    Remember, though, that Tesla also bought warrants when it sold those convertible bonds, which eliminates the dilution effect.

    Tesla has stated that the Gen III build-out can be done with internally generated cash. The "giga-factory" for batteries would require a cash infusion, but not necessarily dilution in the sense that the value of the company also rises, as does future EPS.
    Feb 12, 2014. 09:08 AM | 1 Like Like |Link to Comment
  • Tesla Set To Take Down $200 [View article]
    Some interesting news over the weekend that points to strength for Tesla and should help support the run up to $200.

    1. One of Tesla's suppliers, Hota, revealed that Tesla has accelerated purchases to 4000 units/month. http://bit.ly/1oaAVyv While there probably isn't an exact one-to-one link between these parts and new cars built, the acceleration of Tesla's orders is itself a good sign that production is accelerating above the 6,900/quarter pace of Q4.

    2. China has extended rebates for EVs, which will help Tesla's new launch in that country. http://reut.rs/1oaAXq0

    3. The US and EU have apparently reached a trade deal that would eliminate the 10% tariff on US cars imported to the EU. http://reut.rs/1fQxPvN This will make Tesla more price competitive in the EU and/or allow it to realize higher gross margins on sales there.

    I'm very glad that I'm long TSLA, not short!
    Feb 10, 2014. 09:23 AM | 6 Likes Like |Link to Comment
  • Stationary Energy Storage: Pipe Dream Or Lead-Pipe Cinch? [View article]
    John: the opportunity for real value of a storage-based solution in California is even worse than you discuss. Your calculations look at the retail tariff. Retail tariffs are artificial constructs that tell us very little about actual economics. Instead, I recommend that you look at wholesale prices; these tell you what the true commodity price of power is at any time, at any location on the grid. The California ISO posts all this data. For example, in 2012, the average wholesale price of electricity is only $0.035/kWh (http://bit.ly/1ku3ffH Figure E.1). That same report shows that 2012 summer on-peak wholesale energy prices were $40/MWh, with off-peak prices at $25/MWh (Figures E.3, E.4). While these are averages, these numbers suggest that storage could earn only about a $15/MWh margin. To be generous, let's double that on the theory that storage operators could buy at the lowest hours and sell at the highest hours. I'm also conveniently ignoring (for the sake of conservatism) that the summer on-peak/off-peak margins are higher than any other season.

    So what does this tell us about the true underlying economics of storage? If a storage array can earn $30/MWh per day, then it earns about $10,000/MWh per year. Let me assume that your $1,500,000/MWh-installed storage cost overstates actual cost by a factor of 2 (again, to be conservative). This suggests that a battery-based storage system would earn a revenue stream of approximately 0.7% per year. Conservatively. Even if I'm wrong by a factor of 10, this is a poor investment.
    Jan 10, 2014. 07:10 PM | 6 Likes Like |Link to Comment
  • Does Tesla Have A Communication Issue? [View article]
    I think the first premise of your article is wrong: no public company, including Tesla Motors, has a responsibility (legally or ethically) to inform investors of every potentially material event. The law requires only that, if a company chooses to make such a disclosure, that it do so simultaneously to all investors. It's pure speculation that Tesla leaked word of the NHTSA investigation selectively.

    That said, I agree with your broader point: Tesla isn't doing a great job communicating. Even if Tesla isn't obliged to discuss the NHTSA investigation or departures of senior executives, they should have. Why? To control the news cycle. Tesla is looking reactive when it should be proactive. At current stock prices, investors are buying into a vision of a company (rather than the current financials). If Tesla doesn't project a strong, reliable image to the market, that vision starts getting cloudy.
    Nov 25, 2013. 10:33 AM | 4 Likes Like |Link to Comment
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