I think Tesla wants to get the Model S production fine tuned. The designed may be modified to make manufacturing efficient. Supply chain to be optimized. Then they will apply those lessons to finalizing Model X design and manufacturing. In the near future, the Supercharger deployment will be the game changer... drive demand big time.
Anybody who has not been in manufacturing will have a hard time understanding that Model S and X costs will drop significantly as fixed costs are absorbed and economies of scale achieved.
Elon nailed the shorts alright. It was no accident. He lowballed expectation for Q1, then cut costs, moved product out the door and got some GAAP profits. Ambiguous about a secondary. Result was the shorts got whacked as the stock rose. After the stock took off, Elon raises money! Thank you, shorts, for the $1.1B gift.
The shorts only got themselves to blame. Their trade was too one sided, with short interest at nearly 50% of the float. It helps when you got Goldman Sachs on your side. Very slick!
It does not pay to bet against Elon Musk. The hedge funds need to realize this and cover their remaining short positions and joint the Tesla party. Investing is about making money, not some religious crusade.
temagami, comparing with how long much it cost ($$$B in today's money!) and the time it took for Standard Oil, Texaco, etc to deploy the oil, refinery, gas station infrastructure, etc, the SC deployment is paradigm shift as well as a disruptive technology. Unlike any other tech like natural gas, hydrogen fuel cells, there is not need to spend $$$ for everyday charging. Just $500 will take the 240V from the washer/dryer to the garage... good for overnight charging, enough for most of owners.
$50M is peanuts compared what it would cost just to build one methane cracker at a natural gas plant to produce Hydrogen, then liquify and transport the product to the filling stations. Same with natural gas that needs to be compressed to 5000 psi for autos and liquified for long haul trucks. Need special training and HAZMAT precautions.
Mass SC deployment will be the catalyst for Model S+X mass deployment.
Tesla has priced the supercharger option at $2,000 with the 60 KW-hr battery, and it is included with the 85 KW-hr battery. Let us assume that Tesla is going to deploy 200 SC station nationwide- with 6 chargers each. Each station costs $250,000. Total cost over 2 years = $50M. In the next 2 years, Tesla could sell 50,000 Model S+X, though I think they will exceed that number.
Average Supercharger Capital Cost/Car = Total Cost of Superchargers/Number of cars sold in 2 years
= 50,000,000/50,000 = $1,000/car
If 3% of the cars use the SC/day in the highway, that is 50,000x3%= 1,500 cars. Each charge should be about 50 KW-hr on the average. At 12 cents/KW-hr that is $6/car or $9,000/day or $3.3M/year. Alternately, it would mean about $60/car/year or $600/10 years, approximately.
The Supercharger deployment certainly makes economic sense and Tesla can add sites and chargers every year. It will also be marketing with the big Tesla signs at the Supercharger sites. Now that Tesla has $800M, I expect Elon Musk to deploy SCs in significant quantities.
Last number is 27.5M shares short of a may be 65M available float on 4-30. After that, the shorts may have thrown the towel and based on the huge volume, I would guess the short interest is around 15+M shares.
Now that Elon has $800M in cash, he can spank the remaining shorts anytime he wants! Supercharger deployment for $25M? Model X for $200M? Anybody wants to short still?
Have you met any of these money managers? Many are clueless. Just play the quant game and can not beat the SP-500. They just churn accounts to make % on OPM. Same with account reps, stock brokers, financial planners. They just peddle funds to make money on loads and fees.
Meh! The Aluminum air battery does not make sense. It will take additional space (Frunk?) and need periodic replacement at a service center. Tesla is better off spending $50M on 200+ Superchargers nationwide. May do a tie in with hotel and restaurant chain for 240V charging... another $25M nationwide. Later Tesla will have 500 mile batteries.
Elon has $800M after paying off the DOE loan. He is going to be on a tear. Anybody shorting could get their head handed over to them!
Range will be a non-issue with Superchargers. Most of the time you just charge at home. Price? Well, that is not for everybody - yet!
Got to look at the manufacturing business model, economies of scale at TSLA and suppliers. Meanwhile, technology is evolving. With a 500 mile battery BMW, Audi 7/8, S500 will look antique. Gas hog anybody?
Individual investors typically do not short stocks. Especially a hard to get stock like TSLA where the cost is 20-50%/year! Besides a significant margin account, need a relationship with an institutional broker that will search for shares to borrow, and they do not do it for a few shares. What individual investors typically do is buy put options.
I suspect it is mostly paid shills like interns, or folks hired indirectly that post persistent negative stories, persistently. I imagine it is a way to make money from home. The bad part is that they have betting against Helicopter Ben lately. Shorts used to be smart... but seems they all piled on the same stocks like SCTY, TSLA, SODA, etc. Tesla still has a relatively hi short interest at 17% of the float.
Tesla now will have $1.3B in cash. After paying off DOE, they will have about $800M in cash. Elon Musk now has maneuvering room. He can deploy 200 Superchargers nationwide at $250k/6 charger highway sites, costing $50M. That will drive demand significantly as range anxiety will be nearly eliminated, especially with numerous city chargers sprouting.
Model X factory investment ($200M) could accelerate. However, I suspect that Tesla wants to optimize Model S factory and supply chain, before starting on Model X. I think that Model X design will be refined, especially those falcon wing doors.
With $800MB in cash, Elon Musk has the initiative.
Tesla has strategic competitive advantages over ICE and other BEV that will enable the company to achieve significant growth over the next few years. Any bean counter just looking at the balance sheet and income statement is missing what is going on. They key advantages are:
1. Management and technical skills - The company with no prior experience, designed Model S and went on to win Consumer Reports award of 99/100. No other car company has done that with their first mass production model. Elon Musk has an impressive track record of success... Zip2, PayPal, SpaceX, Solar City and now Tesla. Nothing like the bean counters who ran GM to the ground.
2. Technology - Model S, X are designed from the ground up to be BEV with batteries at the bottom, Al frame. The electric motor coupled with the inverter is simply genius. I have never seen any kind of induction electric motor with this kind of performance, size, etc. Try to read on EMF, the tech before shorting the stock. The design is now being optimized to make it easier to manufacture and tighten the tolerances. The battery optimization is the best. Tesla has patents and trade secrets in this area. Nobody comes close.
3. Factory - There are a lot of automated factories around. Tesla build one with multitasking robots and processes, Ideal for BEV. Not possible with ICE autos. Another $200M and they will be able to produce Model X. Huge economies of scale will take place as production scales up. Yes, battery costs will fall over time slowly in the near term, until disruptive tech arrives.
4. Supercharger - Tesla will be able to deploy this proprietary tech nationwide at 200 sites on the highways, with about $50M... "free charging". Of course, most folks can charge at home as well. It took John D. Rockefeller + Big Oil $Bs in today $ to achieve the same with gasoline. Much cheaper $/mile.
5. $1.1B - After paying off DOE, Elon Musk will have $800M cash left. Git some popcorn, sit down & enjoy.
ddeboy, I could not agree more. Now that Tesla has $800M in the bank after paying off the DOE loans.
The market, especially the shorts are underestimating significantly the the scalability of the Tesla technology, management ability to execute and the demand for the Tesla autos. Gen III potential is being ignored.
Tesla designed Model S from scratch, built a flexible automated robotic manufacturing plant. Not only its production is sold out, but the Consumer Reports rated the car 99/100 which it has not done in years. Now Tesla raised $1.1B. They will use $200M to produce Model X. Demand will be driven by Supercharger deployment. They could easily sell 100,000 Model S/X worldwide.
Where the shorts and Wall Street is underestimating the potential is on the earnings side. Tesla will be benefit from huge economies of scale with its automated factory, since it manufactures most of the components. They will get standard industry pricing of the rest of the stuff like tires, HVAC, etc.
500 mile battery + SC will drive demand for Model S+X. Simple math says Tesla will make $1B net after tax in a couple of years. Give a PE of 25 (Gen III yet to come) and figure out the price/share.
Thanks to the shorts, Tesla has raised $1B. After paying the DOE loan, Tesla will have $700M in cash. What do you think Elon is going to announce in the next weeks?
- Supercharger deployment all over the US (200 stations each with 4-6 chargers). SC in Europe, Japan, China
- Model X factory expansion costing $200M.
- Sales and Service centers expansion.
Mass production will drive costs down and will be passed to the consumer. 85 KW-hr Model S/X will got $65k with extras. Guess what? No buying gasoline. No oil changes. No brake changes. No messing with timing belts, fan belts, radiator fluid changes, pumps, mufflers, U-joints. clutches, gear box, automatic transmission. etc. Getting ripped off by repair shops. Telsa will outsell in the hi end MB, BMW, Audi, etc worldwide.
Tesla has raised over $1B. That will allow it to deploy Model S and Model X worldwide:
1. Model S design is being modified to make it easier to manufacture, including the components. It will tighten tolerances and accelerate assembly. They could do 2 shift and produce 50,000 cars/year. Should happen by 2014. May be spend an extra $50M.
2. Model X manufacturing is going to cost only $200M since it will use common components with Model X. Experience with Model S will enable Tesla to simplify manufacturing and assembly. I expect Model X sales to exceed Model S. Just like Porsche Cayenne sales are 3x Panamera. They could produce 50,000 Model X/year.
3. Supercharge deployment can take place quickly. At $250k/6 stations they could deploy 200 sites in the US; 100 sites in Europe; 50 sites in Japan; 50 sites in China. Total cost=$100M.
4. They could add 100 service centers in the US, 30 in the EU, 10 in Japan, 10 in China. Total 150 centers. Total cost = $200M including loaners.
5. Deploy the 500 mile battery sooner than later for the price of the 85 KW-hr battery. With economies of scale drop the price of the base Model S/X 85 KW-hr to $65k with tech package, leather, SC use.
Elon Musk and the Tesla management team has executed to near perfection, including marketing, design, manufacturing, raising capital. They won several awards including from Consumer Reports! If they sells 100,000 cars, they could make $1B net after taxes. Wall Street will assign a hi PE. $30B or $200/share. That is even before Gen III.
Tesla will have raised $1B in cash. After paying off the government $450M, plus $50M for hedging, etc. they will have plenty of money. Spend $50M for SC deployment. Model X factory another 250-300M additions to Model S. With 2 shifts they could produce 100,000 vehicles/year at an ASP=80,000. With economies of scale that is 25% gross margins or $2B. Can Elon do this? He is not playing, put $100M of his own money, Most CEOs want to cash out and this guy is the opposite.
The market, especially the shorts, are totally underestimating the prospects of the company.