Author Topic: Is Tesla a good investment?  (Read 14713 times)

thd7t

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Re: Is Tesla a good investment?
« Reply #50 on: March 30, 2018, 09:05:35 AM »
So, I'm pretty opposed to individual stock picking, but I find Tesla interesting.  However, I think that they're a young enough company that they don't have enough cars on the road/batteries on the wall/ships in space/loops underground to know when they'll hit the kinds of major speed bumps that other manufacturers have.  However, they have had a fair sized recall this week (123k vehicles) and I suspect that this will act as a good test of their infrastructure, particularly as they are based on a storefront model and are probably serviced in fewer places.

ColoradoTribe

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Re: Is Tesla a good investment?
« Reply #51 on: March 30, 2018, 10:35:23 AM »
Also - this was announced two days ago, before your "prediction" ;)

https://www.popularmechanics.com/cars/g19605464/best-cars-2018/

Yes, I know, guess my attempt at humor and smiley face went unnoticed.

CCCA

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Re: Is Tesla a good investment?
« Reply #52 on: March 30, 2018, 01:20:33 PM »
@ColoradoTribe:  I agree EVs will do great things. However, Tesla has to still be around to benefit from that.

They have built amazing cars. They have big dreams for the future. I personally want them to be successful, I want to be able to buy a used Model 3 in the future. I want to be able to have solar with a battery back up. The problem is that investors have been pumping up the stock based on the dreams of what Tesla 'could be,' and not what it is today. Expectations have been set unrealistically high and Tesla has borrowed money based on those expectations.


Quote
Five years from now it will not matter whether it took them an extra six months to get production up to 5k/week.

Actually, in reality, it might matter a lot. It could be the difference between Tesla producing 1 million cars/year in 5 years VS bankruptcy within 12 months. Tesla will need more funding soon. Bond investors don't live in the clouds, they don't trade based on dreams of what could be in 5-10 years. Bond investors like results, and they like those results printed on boring balance sheets and cash flow statements. If Tesla doesn't increase Model 3 production, FAST, like really FAST, then the next time they issue bonds they might not find willing investors. Tesla isn't Apple or Google, or even Ford. Those companies have cash on hand. They can handle shocks. They can recover from mistakes. Tesla is running on borrowed money and broken promises. Many great companies have fallen prey to big dreams... and too much leverage.

People have been predicting Tesla's imminent bankruptcy and demise for as long as I've been following the company/stock. I bought more common shares today and will sleep well tonight. Those aligned against this company and its disruption (not you personally) know that once the model 3 ramp is complete that Tesla becomes profitable and this narrative goes away, so they're milking it one last time. I see indication that the model 3 ramp has picked up to 1500 - 2000/week the past week or two. They'll likely hit 2500/week in the first of Q2, in plenty of time to satisfy bond investors. There was a chance of Tesla failing in the early going, the chances of such a failure now are very low IMO. We'll know for sure in a few years.


Sure people have predicted bankruptcy before but past performance cannot be extrapolated forward.  This is clearly make-or-break time for Tesla.  In the past investors have bailed them out, by giving them more cash.  However, given that this is what the company has been shooting for, the high-volume, mass market EV, if they can be successful in ramping up production (and have enough demand) then they should be okay.  If not, they may go bankrupt in the next 1-12 months. 


However, even if they are successful at their ramp up, the main remaining potential worry that I see is that they will likely not be a top-5 automaker and thus cannot justify their market cap.  Once they stop being a company valued on future potential and our desire to see a sustainable transportation future but on actual sales and revenue and profits and reliability and all the other boring stuff that most blue chip companies are judged on, then I see it as unlikely that their sales will be similar to the big car makers.  Remember all the other guys are bringing out EVs and PHEVs too and that car buyers are notoriously picky about their cars in terms of brand, design, model, style, etc. . .  Teslas, despite their cool factor, are not for everyone. Just like Priuses or F-150s or Camrys or Accords aren't.

I think you way over simplify how easy it will be for the ICE manufacturers to turn to EVs, while maintaining their ICE production. Its hard to serve tow master. I would also point out that Tesla's biggest advantage is not their cars per se, its there ability to produce enough batteries for mass produce EVs. Unless I missed it, Ford, and GM do not have a gigafactory to mass produce the Lithium Ion batteries.

As far as valuation, the stock price will almost always stay ahead of the valuation for disruptive growth companies. THat's okay with a buy and hold strategy. Tesla is no longer a "car company", it's an energy and transportation company. As I mentioned above, Tesla is tackling grid scale battery backup/stabiliztion, residential battery storage, commercial trucking, solar roofing shingles, manufacturing automation, self-driving cars, and more. Will Tesla hit a home run with all these, no, but chances are they'll succeed on multiple fronts.

I suggest, instead of going back and forth and likely not change either of our opinions, let's make some predictions and see what happens. Here are my predictions for 2018. Tesla will finish the year:

With at least one, possibly two profitable quarters
Sell over 250,000 vehicles (S, X, M3), which would be 150% YOY growth
Stock price over $400


PS - I also predict the M3 will be named Popular Mechanics 2018 Car of the Year :)
https://www.popularmechanics.com/cars/g19605464/best-cars-2018/


Sure, sounds like fun. 
I predict Tesla won't sell 100,000 model 3's this year (and I think that will be very impressive and a win for them if they get close to 100k ).  Remember that they were shooting for 500k this year. 
I think TSLA won't end the year over $300, and there's a decent chance it'll go below $200 this year.


Remember there were only 200k EVs and PHEVs sold in the US in 2017.  It's not as if there was a supply issue for these vehicles.  It takes time for consumers to become aware of and wrap their minds around the changes that driving a plug-in car entails.  It's not a switch that happens overnight. 

DavidAnnArbor

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Re: Is Tesla a good investment?
« Reply #53 on: March 30, 2018, 01:47:12 PM »
I hope Tesla becomes the catalyst for positive transformative change.

Mr Mark

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Re: Is Tesla a good investment?
« Reply #54 on: March 31, 2018, 11:25:31 PM »
I hope Tesla becomes the catalyst for positive transformative change.

I really think Elon Musk has changed the game. The problem for Tesla is that he was so successful, now 'real' car companies are piling into EVs. Companies that know how to mass produce quality cars.

Once Toyota, Ford, GM, VW, and the coming Chinese wave of EVs get rolling, I think Tesla has a huge problem.  Not only are Tesla struggling to make their delivery targets of a measly few 100,000 cars / yr, they are still burning cash like crazy loosing huge amounts of money. Ford alone make over 30 times as many cars per year as Tesla while making billions in profits.

Tesla may transition to become a successful niche luxury EV brand (like Porsche is for ICV), but I wouldn't touch their stock with a bargepole.

TomTX

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Re: Is Tesla a good investment?
« Reply #55 on: April 01, 2018, 08:34:21 AM »
I hope Tesla becomes the catalyst for positive transformative change.

I really think Elon Musk has changed the game. The problem for Tesla is that he was so successful, now 'real' car companies are piling into EVs. Companies that know how to mass produce quality cars.

Once Toyota, Ford, GM, VW, and the coming Chinese wave of EVs get rolling, I think Tesla has a huge problem.  Not only are Tesla struggling to make their delivery targets of a measly few 100,000 cars / yr, they are still burning cash like crazy loosing huge amounts of money. Ford alone make over 30 times as many cars per year as Tesla while making billions in profits.

Tesla may transition to become a successful niche luxury EV brand (like Porsche is for ICV), but I wouldn't touch their stock with a bargepole.

Perhaps. I really think the Chinese (BYD, etc) are the only ones other than Tesla taking BEVs seriously.

Example: The Chevy Bolt has long waiting lists in several countries (ie, the entire 2018 allocation is waitlisted and they aren't listing for 2019) but production so far in 2018 is actually less than the average for 2017. Loafing along at ~300 cars per week, despite starting production about a year before Model 3.

By contrast, people are complaining that Model 3 production probably isn't 5x (or 10x) as high right now at 2,500 or 5,000 cars per week.

GM is supposed to be the mass market volume production expert. I wish they would show some signs of actually doing so though.

We should get some actual updated production numbers for both in the next few days (quarterly for Tesla, March for GM)

ChpBstrd

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Re: Is Tesla a good investment?
« Reply #56 on: April 01, 2018, 03:04:40 PM »
I hope Tesla becomes the catalyst for positive transformative change.

I really think Elon Musk has changed the game. The problem for Tesla is that he was so successful, now 'real' car companies are piling into EVs. Companies that know how to mass produce quality cars.

Once Toyota, Ford, GM, VW, and the coming Chinese wave of EVs get rolling, I think Tesla has a huge problem.  Not only are Tesla struggling to make their delivery targets of a measly few 100,000 cars / yr, they are still burning cash like crazy loosing huge amounts of money. Ford alone make over 30 times as many cars per year as Tesla while making billions in profits.

Tesla may transition to become a successful niche luxury EV brand (like Porsche is for ICV), but I wouldn't touch their stock with a bargepole.

Perhaps. I really think the Chinese (BYD, etc) are the only ones other than Tesla taking BEVs seriously.

Example: The Chevy Bolt has long waiting lists in several countries (ie, the entire 2018 allocation is waitlisted and they aren't listing for 2019) but production so far in 2018 is actually less than the average for 2017. Loafing along at ~300 cars per week, despite starting production about a year before Model 3.

By contrast, people are complaining that Model 3 production probably isn't 5x (or 10x) as high right now at 2,500 or 5,000 cars per week.

GM is supposed to be the mass market volume production expert. I wish they would show some signs of actually doing so though.

We should get some actual updated production numbers for both in the next few days (quarterly for Tesla, March for GM)

Is this a sign, perhaps, that producing EVs is for whatever reason inherently harder than an ICE vehicle?

Or a sign that key resources are in short supply (e.g. cobalt?).

Travis

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Re: Is Tesla a good investment?
« Reply #57 on: April 01, 2018, 03:25:15 PM »
I hope Tesla becomes the catalyst for positive transformative change.

I really think Elon Musk has changed the game. The problem for Tesla is that he was so successful, now 'real' car companies are piling into EVs. Companies that know how to mass produce quality cars.

Once Toyota, Ford, GM, VW, and the coming Chinese wave of EVs get rolling, I think Tesla has a huge problem.  Not only are Tesla struggling to make their delivery targets of a measly few 100,000 cars / yr, they are still burning cash like crazy loosing huge amounts of money. Ford alone make over 30 times as many cars per year as Tesla while making billions in profits.

Tesla may transition to become a successful niche luxury EV brand (like Porsche is for ICV), but I wouldn't touch their stock with a bargepole.

Perhaps. I really think the Chinese (BYD, etc) are the only ones other than Tesla taking BEVs seriously.

Example: The Chevy Bolt has long waiting lists in several countries (ie, the entire 2018 allocation is waitlisted and they aren't listing for 2019) but production so far in 2018 is actually less than the average for 2017. Loafing along at ~300 cars per week, despite starting production about a year before Model 3.

By contrast, people are complaining that Model 3 production probably isn't 5x (or 10x) as high right now at 2,500 or 5,000 cars per week.

GM is supposed to be the mass market volume production expert. I wish they would show some signs of actually doing so though.

We should get some actual updated production numbers for both in the next few days (quarterly for Tesla, March for GM)

While GM might be having EV production problems similar to Tesla, they're still selling thousands other cars to stay profitable while they work out whatever issues they might be having.

TomTX

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Re: Is Tesla a good investment?
« Reply #58 on: April 01, 2018, 07:23:52 PM »

Is this a sign, perhaps, that producing EVs is for whatever reason inherently harder than an ICE vehicle?

Or a sign that key resources are in short supply (e.g. cobalt?).
Notionally an EV should be simpler.

Cobalt per se shouldn't be enough to prevent production (there is cobalt, though prices have gone up) - securing a sufficient supply of batteries at an appropriate cost may well be an issue. Apparently Tesla's main cause of the slow ramp was battery pack production (they had plenty of cells on hand, the problem was assembling cells into packs with new automation not working right)

Going forward, cobalt should be less of an issue - almost all the cell manufacturers using a cobalt lithium chemistry are going to low-cobalt versions.

HermanCain

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Re: Is Tesla a good investment?
« Reply #59 on: April 01, 2018, 07:38:36 PM »
I would like to add to you people who are considering factors like commodity shortages, etc:

Tesla has one advantage other car companies don't have: connection to an industry (tech) who also, coincidentally, has much to gain from better batteries. The absolute key is battery technology. Tesla may come to have an edge in the technology (on some fundamental chemical level, manufacturing trade secrets, etc). If other automakers can't replicate this, they have a competitive advantage and their share premium would mean something.

On the other hand, there are a lot of "cult" investors. People who blindly believe what the CEO says (who I would not like to malign; he used his platform to convert skeptical country club republicans into electric-fans, I have seen this first-hand).

The stock, if I remember correctly, shot up twice: once after the success of the model s (from 3 billion to 30 billion) and again to around 60 billion. I believe the second rise might signify a fundamental breakthrough. Remember, there are a LOT of smart technologists (this means more than just someone who makes apps) in the bay area--semiconductors, etc. were refined here. Batteries are firmly in their camp. Innovation has to come from Silicon/Lithium Valley. Behind all of the noise of the technology industry, there ARE people actually discovering important things (I don't actually know if this is the case; I have relatives in the upper echelons of the industry who tell me a lot of vaporware exists, especially any life sciences done by consumer electronics companies). But I pray someone with the resources is working on these damn batteries, and that means taking big risks.

A few years ago, Tesla was just a car company willing to put big industry-standard 18650 batteries in cool-looking cars for educational purposes. If they have a battery other car companies don't, it's a different game.

Mr Mark

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Re: Is Tesla a good investment?
« Reply #60 on: April 01, 2018, 10:21:17 PM »
I would like to add to you people who are considering factors like commodity shortages, etc:

Tesla has one advantage other car companies don't have: connection to an industry (tech) who also, coincidentally, has much to gain from better batteries. The absolute key is battery technology. Tesla may come to have an edge in the technology (on some fundamental chemical level, manufacturing trade secrets, etc). If other automakers can't replicate this, they have a competitive advantage and their share premium would mean something.

On the other hand, there are a lot of "cult" investors. People who blindly believe what the CEO says (who I would not like to malign; he used his platform to convert skeptical country club republicans into electric-fans, I have seen this first-hand).

The stock, if I remember correctly, shot up twice: once after the success of the model s (from 3 billion to 30 billion) and again to around 60 billion. I believe the second rise might signify a fundamental breakthrough. Remember, there are a LOT of smart technologists (this means more than just someone who makes apps) in the bay area--semiconductors, etc. were refined here. Batteries are firmly in their camp. Innovation has to come from Silicon/Lithium Valley. Behind all of the noise of the technology industry, there ARE people actually discovering important things (I don't actually know if this is the case; I have relatives in the upper echelons of the industry who tell me a lot of vaporware exists, especially any life sciences done by consumer electronics companies). But I pray someone with the resources is working on these damn batteries, and that means taking big risks.

A few years ago, Tesla was just a car company willing to put big industry-standard 18650 batteries in cool-looking cars for educational purposes. If they have a battery other car companies don't, it's a different game.

I saw something along these lines, that last year Tesla had locked up some pretty amazing R&D being done at a Canadian University, focused on tweaking the battery formula. With traces of exotic elements they could significantly impact battery life by avoiding the lithium dendrite formation problem, and had combined that with advanced battery testing technology.

Whether that's worth the huge Tesla premium the stock holds right now (even after the correction) is a great question that the OP's query seems to swing on. Certainly there are some big bears short selling the stock like crazy.

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Re: Is Tesla a good investment?
« Reply #61 on: April 02, 2018, 06:46:44 AM »
I hope Tesla becomes the catalyst for positive transformative change.

I really think Elon Musk has changed the game. The problem for Tesla is that he was so successful, now 'real' car companies are piling into EVs. Companies that know how to mass produce quality cars.

Once Toyota, Ford, GM, VW, and the coming Chinese wave of EVs get rolling, I think Tesla has a huge problem.  Not only are Tesla struggling to make their delivery targets of a measly few 100,000 cars / yr, they are still burning cash like crazy loosing huge amounts of money. Ford alone make over 30 times as many cars per year as Tesla while making billions in profits.

Tesla may transition to become a successful niche luxury EV brand (like Porsche is for ICV), but I wouldn't touch their stock with a bargepole.

Perhaps. I really think the Chinese (BYD, etc) are the only ones other than Tesla taking BEVs seriously.

Example: The Chevy Bolt has long waiting lists in several countries (ie, the entire 2018 allocation is waitlisted and they aren't listing for 2019) but production so far in 2018 is actually less than the average for 2017. Loafing along at ~300 cars per week, despite starting production about a year before Model 3.

By contrast, people are complaining that Model 3 production probably isn't 5x (or 10x) as high right now at 2,500 or 5,000 cars per week.

GM is supposed to be the mass market volume production expert. I wish they would show some signs of actually doing so though.

We should get some actual updated production numbers for both in the next few days (quarterly for Tesla, March for GM)
What is your source of production at ~300 cars per week?  Based on a quick scan of dealer lots around me, there is no shortage of Bolts and the sales nosedive that occurred in 2018 (compared to late 2017) is likely due to the end of a promotion offering employee pricing.

And, to repeat an earlier post: Bolt production was never designed for the volumes of the Model 3 and the investment into manufacturing was significantly less.  You're comparing apples to oranges and disparaging GM despite the fact that it looks like their factory has run at 100% of designed capacity while Tesla is still at a fraction of theirs.

GM delivers more cars in a month than Tesla does in a year while turning a profit.  Talking negatively about their manufacturing capabilities while praising Tesla just makes you look silly.

DavidAnnArbor

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Re: Is Tesla a good investment?
« Reply #62 on: April 02, 2018, 08:20:55 AM »
I easily purchased a Chevrolet Bolt in mid-December 2017, and I absolutely love the car!!! I got the "Everyone is an Employee GM Discount" along with another 3,500 in discounts.

I hope Tesla will have success in production, Bloomberg has a Tesla 3 production tracker:  https://www.bloomberg.com/graphics/2018-tesla-tracker/

CorpRaider

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Re: Is Tesla a good investment?
« Reply #63 on: April 02, 2018, 09:21:54 AM »
Can any other retail types get a quote on the TLSA bonds?  I'm not seeing them via my brokers (not the convertible ones). 

I personally have a target price (range) where I may be interested (using GM as a comp) but it is a lot lower.  Might do a post if it gets within hailing distance.

I wouldn't short it because Sergey and Larry were already reportedly interested in buying it out back in the day and that was before he built arguably one of the more valuable brands in the world.
« Last Edit: April 02, 2018, 09:24:58 AM by CorpRaider »

Scandium

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Re: Is Tesla a good investment?
« Reply #64 on: April 02, 2018, 09:43:23 AM »
I remember thinking of throwing a few thousand into tesla stock years ago, just for fun. But I wasn't sure if it would go anywhere. It was ~$30/share. So yes Tesla would be great, fantastic investment in 2012! It's already up 10x. Can it do that again? Only thing that has changed is that they are loosing even more money, and now struggle to produce a different car.

Answer to your question: I have no idea. I suppose my guess is no since I still haven't bought a single share.

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CCCA

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Re: Is Tesla a good investment?
« Reply #66 on: April 02, 2018, 01:30:10 PM »
tesla-making-2000-model-3s-per-week

https://www.reuters.com/article/us-tesla-deliveries/tesla-making-2000-model-3s-per-week-report-idUSKCN1H91IC

Is it bad to point out that achieving a "rate" of 2000/week is potentially the same as saying we made 20 cars in one hour (assuming a 100 hour work week, with shifts)?  The statement doesn't say that they made 2000 cars in one week.  (I can run at a 2 hr marathon pace, but don't ask me how long I can keep it up for).  :)

Anyway, hopefully they are working through their issues and cranking out more cars to satisfy their customers.  I've seen a couple of model 3s around town here the last couple of days.   
« Last Edit: April 02, 2018, 01:32:27 PM by CCCA »

HermanCain

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Re: Is Tesla a good investment?
« Reply #67 on: April 02, 2018, 01:40:47 PM »
I would like to add to you people who are considering factors like commodity shortages, etc:

Tesla has one advantage other car companies don't have: connection to an industry (tech) who also, coincidentally, has much to gain from better batteries. The absolute key is battery technology. Tesla may come to have an edge in the technology (on some fundamental chemical level, manufacturing trade secrets, etc). If other automakers can't replicate this, they have a competitive advantage and their share premium would mean something.

On the other hand, there are a lot of "cult" investors. People who blindly believe what the CEO says (who I would not like to malign; he used his platform to convert skeptical country club republicans into electric-fans, I have seen this first-hand).

The stock, if I remember correctly, shot up twice: once after the success of the model s (from 3 billion to 30 billion) and again to around 60 billion. I believe the second rise might signify a fundamental breakthrough. Remember, there are a LOT of smart technologists (this means more than just someone who makes apps) in the bay area--semiconductors, etc. were refined here. Batteries are firmly in their camp. Innovation has to come from Silicon/Lithium Valley. Behind all of the noise of the technology industry, there ARE people actually discovering important things (I don't actually know if this is the case; I have relatives in the upper echelons of the industry who tell me a lot of vaporware exists, especially any life sciences done by consumer electronics companies). But I pray someone with the resources is working on these damn batteries, and that means taking big risks.

A few years ago, Tesla was just a car company willing to put big industry-standard 18650 batteries in cool-looking cars for educational purposes. If they have a battery other car companies don't, it's a different game.

I saw something along these lines, that last year Tesla had locked up some pretty amazing R&D being done at a Canadian University, focused on tweaking the battery formula. With traces of exotic elements they could significantly impact battery life by avoiding the lithium dendrite formation problem, and had combined that with advanced battery testing technology.

Whether that's worth the huge Tesla premium the stock holds right now (even after the correction) is a great question that the OP's query seems to swing on. Certainly there are some big bears short selling the stock like crazy.

What comes to mind in my opinion is a Q/A John Doerr gave at UC Berkeley where he touted some of the battery technology in the pipeline.

The bears shorting the stock are only looking at the numbers in my opinion, and not looking at the huge enthusiasm for the vehicles, the huge pre-orders, and the technology behind EVs.

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Re: Is Tesla a good investment?
« Reply #68 on: April 02, 2018, 01:57:36 PM »
I wonder what warranty costs are for Tesla.  I've been looking over reviews by owners (who love their cars) and started to notice that many of them have had the drive unit replaced (motor) under warranty, sometimes more than once.  Same for battery packs.  Same for the transmission unit that cannot be repaired, only replaced.  Those with lots of miles (one guy with 250k miles on a Model S) have had to pay for replacements.  Outrageous prices, to the point where it's become a reasonable decision to scrap the car. 

If I need an engine/transmission/drive axle/door handle for my Subaru, I know I can get it reasonably easy for somewhat reasonable money from a junkyard.  Tesla?  Not so much.

ender

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Re: Is Tesla a good investment?
« Reply #69 on: April 02, 2018, 09:09:31 PM »
TSLA is having a bad month here. Itís down almost 30% and it seems like the bad news and negative sentiment is piling up. Canít tell if itís just a blip and will rebound or itís on its way down further.


I always thought it was a little weird how high up Tesla got in terms of market cap considering the relatively low their revenue was to the other manufacturers they were "worth more than." I mean, Ford had a net income over half the total revenue of Tesla in 2017. That Tesla is valued in the same league seems a bit strange to me.

Having worked in manufacturing, too, it's one thing to make a relatively low volume high end premium item. It's an entirely different story to make mass produced commodity items, which is what the Model 3 is more akin to.

Scandium

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Re: Is Tesla a good investment?
« Reply #70 on: April 02, 2018, 09:29:47 PM »



The bears shorting the stock are only looking at the numbers in my opinion, and not looking at the huge enthusiasm for the vehicles, the huge pre-orders, and the technology behind EVs.

The bulls touting the stock are not looking at the numbers in my opinion, just looking at the hype .

CCCA

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Re: Is Tesla a good investment?
« Reply #71 on: April 02, 2018, 09:52:46 PM »
The bears shorting the stock are only looking at the numbers in my opinion, and not looking at the huge enthusiasm for the vehicles, the huge pre-orders, and the technology behind EVs.


This thread and these sorts of responses to criticism of Tesla is crystallizing in my mind the issue I have with Tesla.  Though I have been critical of Tesla, I, along with most everyone here, would like Tesla (the company) to do well.  I want them to be successful in mass producing their cars and continue to help bring about EVs as a mainstream product.  However, there's that view of Tesla and then there's Tesla (the stock), which I feel has no business being valued where it is (at this point).

The most obvious question I have is what is the value of the the company (and stock) based on some sort of fundamental analysis?  If we weren't anchored to a price around 200-400 dollars per share (because that's it's recent history) and I were to present to you a description of a company that had the same metrics as Tesla, what is the market cap that you would come up with.  A car company (that may have some proprietary technology, though that's debateable) that is selling 5000-10000 cars per month and hopes to sell 300,000-500,000 in a year or two. I think a market cap between 10-20 billion seems reasonable. You can be optimistic about the where the company is going relative to where it is now (i.e. I think they'll sell 10x cars in 3-4 years) but still be pessimistic about where the stock price should be relative to where it is now (maybe it should be 1/2 the value it is). 

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Re: Is Tesla a good investment?
« Reply #72 on: April 03, 2018, 12:04:37 PM »
I've been a Tesla investor for about 4 years now and TSLA stock comprises about 5% of our net worth. My earliest stock purchases were made around $180/share.  Tesla has been a good long term investment thus far and I believe it will continue to be so for years to come. In the grand scheme, for a long-term investor, the slow Model 3 ramp is really inconsequential.  Five years from now it will not matter whether it took them an extra six months to get production up to 5k/week. We saw similar delays with the Model X and Model S ramps and both cars are leaders in there respective luxury classes with extremely high customer satisfaction and ratings.

The bottom line is electric vehicles have several key advantages over ICE vehicles. I have been a Nissan Leaf owner since 2013.

Nearly silent electric motor, most of what you hear is simply road noise.
Instant torque and superior acceleration.
No motor oil, gas, transmission fluid, radiator, etc. and very few moving parts mean reduced maintenance costs and the electric drive train can easily last 500k+ miles because you no longer have the wear and tear brought about by extreme heat and friction
Refuel at home overnight using a 110 or 220 outlet. I use a 110 outlet in my garage.
You can produce your own transportation fuel with solar panels (I've had a PV system since 2007)

Those saying that established ICE car manufacturers will simply crush Tesla are missing the point. Part of Elon's plan was to force the established majors to get serious about their EV offerings, and that is starting to happen. I suspect some will see the light too late and go bankrupt, some will go on to sell millions of EVs. Tesla doesn't need to dominate this new market. Even a 5% world market share would make Tesla wildely profitable. One also needs to consider that for the foreseeable future the supply of batteries will be the limiting factor in scaling EV production. I'm not aware of another domestic car manufacturer with plans to build a battery gigafactory like the one Tesla and Panasonic have outside Reno Nevada. That is a serious moat, along with the supercharger network. It doesn't matter how many EVs you can build if you don't have the batteries to support that production.

Lastly, Tesla is no longer just an EV company. To date, they are moving into the following areas:

Commercial trucking with the Tesla Semi, which has seen impressive deposits from several giants in the industry
Solar Roof Shingle/Panels
Grid-scale battery storage (see South Australisa grid back-up)
Autonomous Cars
Factory Automation Technology

Each of these alone could be a very profitable stand alone business. I'm not saying Tesla will come to dominate all these sectors, but I like investing in a company that is creating its own electrified ecosystem (production, storage, transportation) and has several avenues to profitability.

Tesla is one of the most shorted stocks in history. That can be frustrating at times as an investor, but it will also set-up a nice (2nd) short squeeze once the Model 3 ramp is confirmed and revenue from the Tesla energy side of the ledger ramps.

Is Tesla a sure thing? Of course not, no single stock is a sure thing, and Tesla is certainly on the higher risk side. Majorty of our investments are in broad based index funds.  For me its simple.  EVs are the future. Once scale is achieved, these cars will be cheaper to own, more fun to drive, easier to maintain, and are better for the planet.  Tesla is best positioned to lead and profit from this revolution.  I am prepared for the consequences if I'm wrong. At this point, I'm well up on my inititial investment and despite the prognostications of the shorts, the stock will never go to zero.  This is not an internet startup. There are physical plants and other tangible assets.  Absolute worst case would be a buy-out.

This is not investing advice.  Do your own research and invest only what you are prepared to lose. I'd suggest starting with a test drive.

Where did you saw that Cost of that option ?? I donīt think that one TSLA CALL in 2020 costs just 78usd, even in the stockīs healthy days or days without volatility....

lemonlyman

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Re: Is Tesla a good investment?
« Reply #73 on: April 03, 2018, 12:19:48 PM »
Tesla is the only automaker whose production and revenue are growing exponentially. Revenue and production will double again this year. 2000 Model 3s right now is a 100,000 car run rate plus 100,000 they already sell in S and X, and Model 3 production is going to grow the rest of the year. That's nearly $25 billion this year in revenue along with their energy business. That puts them at about 20-25% of the revenue of giants like Ford and GM after only 9 years of releasing their first car. They're in high growth mode. Where that ends, I don't know, but giants in industry fall all the time.

In financial terms, the stock is way overvalued, but the market is the market. You can't say X should be worth Z because of a ratio. Markets aren't rational. Casio and Rolex are both watches.

ender

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Re: Is Tesla a good investment?
« Reply #74 on: April 03, 2018, 02:40:58 PM »
Tesla is the only automaker whose production and revenue are growing exponentially. Revenue and production will double again this year. 2000 Model 3s right now is a 100,000 car run rate plus 100,000 they already sell in S and X, and Model 3 production is going to grow the rest of the year. That's nearly $25 billion this year in revenue along with their energy business. That puts them at about 20-25% of the revenue of giants like Ford and GM after only 9 years of releasing their first car. They're in high growth mode. Where that ends, I don't know, but giants in industry fall all the time.

In financial terms, the stock is way overvalued, but the market is the market. You can't say X should be worth Z because of a ratio. Markets aren't rational. Casio and Rolex are both watches.

They are also gambling they can ramp up production of electric cars faster than other car manufacturers can develop cost comparable electric cars.




Telecaster

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Re: Is Tesla a good investment?
« Reply #75 on: April 03, 2018, 02:55:58 PM »
Tesla is the only automaker whose production and revenue are growing exponentially. Revenue and production will double again this year. 2000 Model 3s right now is a 100,000 car run rate plus 100,000 they already sell in S and X, and Model 3 production is going to grow the rest of the year. That's nearly $25 billion this year in revenue along with their energy business. That puts them at about 20-25% of the revenue of giants like Ford and GM after only 9 years of releasing their first car. They're in high growth mode. Where that ends, I don't know, but giants in industry fall all the time.

In financial terms, the stock is way overvalued, but the market is the market. You can't say X should be worth Z because of a ratio. Markets aren't rational. Casio and Rolex are both watches.

The other thing that is growing rapidly is the amount of money they are losing, which is growing quite a bit faster than the revenues.  At some point you have to make money, and the trend is in the wrong direction. 

TomTX

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Re: Is Tesla a good investment?
« Reply #76 on: April 03, 2018, 05:16:05 PM »

What is your source of production at ~300 cars per week?  Based on a quick scan of dealer lots around me, there is no shortage of Bolts and the sales nosedive that occurred in 2018 (compared to late 2017) is likely due to the end of a promotion offering employee pricing.

https://insideevs.com/monthly-plug-in-sales-scorecard/

Note that when I posted, the March numbers were not available.

Add January + February, divide by 8.5 = 306 per week.

Quote
And, to repeat an earlier post: Bolt production was never designed for the volumes of the Model 3 and the investment into manufacturing was significantly less.  You're comparing apples to oranges and disparaging GM despite the fact that it looks like their factory has run at 100% of designed capacity while Tesla is still at a fraction of theirs.

GM delivers more cars in a month than Tesla does in a year while turning a profit.  Talking negatively about their manufacturing capabilities while praising Tesla just makes you look silly.

Did I disparage GM in that post? Really? I suggest you re-read.

"GM is supposed to be the mass market volume production expert. I wish they would show some signs of actually doing so though."

This was in the context of other manufacturers not taking EV production seriously.

Your posting seems to totally support what I said. GM delivers more cars in a month than Tesla does in a year, yet didn't design the Bolt line for larger volumes nor work to ramp.

Hmm. Seems to totally agree with my premise that GM is not taking EVs seriously. They COULD produce more EVs, yet continue to fail to do so.

BTW, that Bolt production is shared with the Sonic. GM could readily shift production mix to be heavier on Bolt output.

March production was up slightly, bringing 1Q to an average rate of 336 Bolts per week. My original ~300 actually still stands (one significant digit)

TomTX

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Re: Is Tesla a good investment?
« Reply #77 on: April 03, 2018, 05:25:07 PM »
tesla-making-2000-model-3s-per-week

https://www.reuters.com/article/us-tesla-deliveries/tesla-making-2000-model-3s-per-week-report-idUSKCN1H91IC

Is it bad to point out that achieving a "rate" of 2000/week is potentially the same as saying we made 20 cars in one hour (assuming a 100 hour work week, with shifts)?  The statement doesn't say that they made 2000 cars in one week.  (I can run at a 2 hr marathon pace, but don't ask me how long I can keep it up for).  :)

Anyway, hopefully they are working through their issues and cranking out more cars to satisfy their customers.  I've seen a couple of model 3s around town here the last couple of days.   

Apparently they have worked through the initial issues and did a full week at that rate, with the same output expected to continue going forward.

That said, I still don't own any Tesla stock, other than whatever fraction of VTI they have.

DavidAnnArbor

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Re: Is Tesla a good investment?
« Reply #78 on: April 03, 2018, 08:14:57 PM »
At the Detroit Auto Show, the Chevy Bolt was able to be viewed. Compared with all the other electric cars including the very expensive Mercedes and BMW electric models the Bolt was by far the best electric car I saw - the longest range, and overall good styling. However, Tesla had no presence at the auto show so I couldn't really compare the Model 3 with the Bolt.

ColoradoTribe

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Re: Is Tesla a good investment?
« Reply #79 on: April 03, 2018, 10:49:29 PM »
Tesla is the only automaker whose production and revenue are growing exponentially. Revenue and production will double again this year. 2000 Model 3s right now is a 100,000 car run rate plus 100,000 they already sell in S and X, and Model 3 production is going to grow the rest of the year. That's nearly $25 billion this year in revenue along with their energy business. That puts them at about 20-25% of the revenue of giants like Ford and GM after only 9 years of releasing their first car. They're in high growth mode. Where that ends, I don't know, but giants in industry fall all the time.

In financial terms, the stock is way overvalued, but the market is the market. You can't say X should be worth Z because of a ratio. Markets aren't rational. Casio and Rolex are both watches.

The other thing that is growing rapidly is the amount of money they are losing, which is growing quite a bit faster than the revenues.  At some point you have to make money, and the trend is in the wrong direction.

Tesla has a healthy profit margin on every car they sell.  Tesla is not "losing" money.  Tesla is plowing revenue back into the business to grow the supercharger network, develop the next line of vehicles (Model Y and Tesla Semi), ramp battery production, etc.  This rapid growth does take a ton of investment, but Tesla is committed to rapid growth. If Tesla stopped growing today, they would have a nice profitable luxury EV business. That's not the mission.  That said, Tesla will likely achieve profitability in the 3rd quarter, once they are churning out the higher end Model 3s at 4k+/week for an entire quarter. 
« Last Edit: April 03, 2018, 10:52:25 PM by ColoradoTribe »

Telecaster

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Re: Is Tesla a good investment?
« Reply #80 on: April 03, 2018, 11:51:58 PM »

Tesla has a healthy profit margin on every car they sell.  Tesla is not "losing" money.  Tesla is plowing revenue back into the business to grow the supercharger network, develop the next line of vehicles (Model Y and Tesla Semi), ramp battery production, etc.  This rapid growth does take a ton of investment, but Tesla is committed to rapid growth. If Tesla stopped growing today, they would have a nice profitable luxury EV business. That's not the mission.  That said, Tesla will likely achieve profitability in the 3rd quarter, once they are churning out the higher end Model 3s at 4k+/week for an entire quarter.

The logic is so tortured I can hear it screaming.  Tesla is spending vastly more than it is making.  The loses are increasing much faster than income. 

By any reasonable standard, GAAP, common sense, or simply eye-balling the cash drawer, Telsa is losing money hand over fist. Now, maybe that's the plan.  And maybe it will pay off in the end.   But Tesla is losing huge amounts of money, and they are losing it at an increasing rate. 

And by the way, back in 2016 Musk said Tesla would be profitable in 2017, instead Tesla racked up its biggest losses ever.  Color me skeptical about the 3Q profits. 




DavidAnnArbor

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Re: Is Tesla a good investment?
« Reply #81 on: April 04, 2018, 08:15:59 AM »

Tesla has a healthy profit margin on every car they sell.  Tesla is not "losing" money.  Tesla is plowing revenue back into the business to grow the supercharger network, develop the next line of vehicles (Model Y and Tesla Semi), ramp battery production, etc.  This rapid growth does take a ton of investment, but Tesla is committed to rapid growth. If Tesla stopped growing today, they would have a nice profitable luxury EV business. That's not the mission.  That said, Tesla will likely achieve profitability in the 3rd quarter, once they are churning out the higher end Model 3s at 4k+/week for an entire quarter.

The logic is so tortured I can hear it screaming.  Tesla is spending vastly more than it is making.  The loses are increasing much faster than income. 

By any reasonable standard, GAAP, common sense, or simply eye-balling the cash drawer, Telsa is losing money hand over fist. Now, maybe that's the plan.  And maybe it will pay off in the end.   But Tesla is losing huge amounts of money, and they are losing it at an increasing rate. 

And by the way, back in 2016 Musk said Tesla would be profitable in 2017, instead Tesla racked up its biggest losses ever.  Color me skeptical about the 3Q profits.

It's really no different than the Amazon model of growth, with lots of losses in the beginning.

ColoradoTribe

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Re: Is Tesla a good investment?
« Reply #82 on: April 04, 2018, 08:30:24 AM »

Tesla has a healthy profit margin on every car they sell.  Tesla is not "losing" money.  Tesla is plowing revenue back into the business to grow the supercharger network, develop the next line of vehicles (Model Y and Tesla Semi), ramp battery production, etc.  This rapid growth does take a ton of investment, but Tesla is committed to rapid growth. If Tesla stopped growing today, they would have a nice profitable luxury EV business. That's not the mission.  That said, Tesla will likely achieve profitability in the 3rd quarter, once they are churning out the higher end Model 3s at 4k+/week for an entire quarter.

The logic is so tortured I can hear it screaming.  Tesla is spending vastly more than it is making.  The loses are increasing much faster than income. 

By any reasonable standard, GAAP, common sense, or simply eye-balling the cash drawer, Telsa is losing money hand over fist. Now, maybe that's the plan.  And maybe it will pay off in the end.   But Tesla is losing huge amounts of money, and they are losing it at an increasing rate. 

And by the way, back in 2016 Musk said Tesla would be profitable in 2017, instead Tesla racked up its biggest losses ever.  Color me skeptical about the 3Q profits.

If you do not understand or acknowledge the difference between investing revenue to build out infrastructure and conitune R&D and losing money because it costs more to make your product than you can sell it for, I'm not sure what to say.  It's a fact that Tesla has positive margins on every car it sells. A modern car/eneregy company capable of eventually making a million cars a year does not materialize overnight and does not materialize at all without significant upfront cost/investment. This is not twisted logic, just economics 101. You have to spend money to make money, no business is profitable on day one. Some have longer ramps to profitablity. Even a lemonaide stand has to first buy the lemons. The larger and more complex the business, the longer the ramp to profitability, but also the bigger the upside (see Amazon).

Proud Foot

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Re: Is Tesla a good investment?
« Reply #83 on: April 04, 2018, 08:48:33 AM »

Tesla has a healthy profit margin on every car they sell.  Tesla is not "losing" money.  Tesla is plowing revenue back into the business to grow the supercharger network, develop the next line of vehicles (Model Y and Tesla Semi), ramp battery production, etc.  This rapid growth does take a ton of investment, but Tesla is committed to rapid growth. If Tesla stopped growing today, they would have a nice profitable luxury EV business. That's not the mission.  That said, Tesla will likely achieve profitability in the 3rd quarter, once they are churning out the higher end Model 3s at 4k+/week for an entire quarter.

The logic is so tortured I can hear it screaming.  Tesla is spending vastly more than it is making.  The loses are increasing much faster than income. 

By any reasonable standard, GAAP, common sense, or simply eye-balling the cash drawer, Telsa is losing spending money hand over fist. Now, maybe that's the plan.  And maybe it will pay off in the end.   But Tesla is losing spending huge amounts of money, and they are losing spending it at an increasing rate. 

And by the way, back in 2016 Musk said Tesla would be profitable in 2017, instead Tesla racked up its biggest losses ever.  Color me skeptical about the 3Q profits.

If you do not understand or acknowledge the difference between investing revenue to build out infrastructure and conitune R&D and losing money because it costs more to make your product than you can sell it for, I'm not sure what to say.  It's a fact that Tesla has positive margins on every car it sells. A modern car/eneregy company capable of eventually making a million cars a year does not materialize overnight and does not materialize at all without significant upfront cost/investment. This is not twisted logic, just economics 101. You have to spend money to make money, no business is profitable on day one. Some have longer ramps to profitablity. Even a lemonaide stand has to first buy the lemons. The larger and more complex the business, the longer the ramp to profitability, but also the bigger the upside (see Amazon).

I changed Telecaster's quote above to express my sentiment about the company.  They are plowing money back into R&D and infrastructure but have a massively negative cash flow if you remove the financing cash flows. In my opinion they need to continue to ramp up the production and revenues to decrease their operating losses so they can continue to obtain financing to continue operations. It would be interesting to see what Tesla does if they are unable to find someone to underwrite any new stock or bond issues. 

ChpBstrd

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Re: Is Tesla a good investment?
« Reply #84 on: April 04, 2018, 04:22:38 PM »
I might have more confidence if Elon Musk was focused instead of attempting to launch a dozen businesses at once.

Travis

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Re: Is Tesla a good investment?
« Reply #85 on: April 04, 2018, 04:45:12 PM »

Tesla has a healthy profit margin on every car they sell.  Tesla is not "losing" money.  Tesla is plowing revenue back into the business to grow the supercharger network, develop the next line of vehicles (Model Y and Tesla Semi), ramp battery production, etc.  This rapid growth does take a ton of investment, but Tesla is committed to rapid growth. If Tesla stopped growing today, they would have a nice profitable luxury EV business. That's not the mission.  That said, Tesla will likely achieve profitability in the 3rd quarter, once they are churning out the higher end Model 3s at 4k+/week for an entire quarter.

The logic is so tortured I can hear it screaming.  Tesla is spending vastly more than it is making.  The loses are increasing much faster than income. 

By any reasonable standard, GAAP, common sense, or simply eye-balling the cash drawer, Telsa is losing spending money hand over fist. Now, maybe that's the plan.  And maybe it will pay off in the end.   But Tesla is losing spending huge amounts of money, and they are losing spending it at an increasing rate. 

And by the way, back in 2016 Musk said Tesla would be profitable in 2017, instead Tesla racked up its biggest losses ever.  Color me skeptical about the 3Q profits.

If you do not understand or acknowledge the difference between investing revenue to build out infrastructure and conitune R&D and losing money because it costs more to make your product than you can sell it for, I'm not sure what to say.  It's a fact that Tesla has positive margins on every car it sells. A modern car/eneregy company capable of eventually making a million cars a year does not materialize overnight and does not materialize at all without significant upfront cost/investment. This is not twisted logic, just economics 101. You have to spend money to make money, no business is profitable on day one. Some have longer ramps to profitablity. Even a lemonaide stand has to first buy the lemons. The larger and more complex the business, the longer the ramp to profitability, but also the bigger the upside (see Amazon).

I changed Telecaster's quote above to express my sentiment about the company.  They are plowing money back into R&D and infrastructure but have a massively negative cash flow if you remove the financing cash flows. In my opinion they need to continue to ramp up the production and revenues to decrease their operating losses so they can continue to obtain financing to continue operations. It would be interesting to see what Tesla does if they are unable to find someone to underwrite any new stock or bond issues.

Whether Tesla is losing or investing, they appear to have more money going out than coming in at the moment.  As you stated in your last sentence, if they're not running an overall profit, then somebody has to feed them the capital to do whatever it is semantically that they're doing.  How long that "someone" will continue to do so is the primary point of discussion.

Patrick584

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Re: Is Tesla a good investment?
« Reply #86 on: April 04, 2018, 08:04:42 PM »
Tesla is a good investment if you invest 0.15% of US equity portfolio. You will have about the same expected return as the market if you pick stocks, but a major deviation from market cap weighting carries a risk of greater volatility. If you want to pick stocks for fun, you should enter a kids stock market game.

ender

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Re: Is Tesla a good investment?
« Reply #87 on: April 06, 2018, 06:38:24 AM »
If you do not understand or acknowledge the difference between investing revenue to build out infrastructure and conitune R&D and losing money because it costs more to make your product than you can sell it for, I'm not sure what to say.  It's a fact that Tesla has positive margins on every car it sells. A modern car/eneregy company capable of eventually making a million cars a year does not materialize overnight and does not materialize at all without significant upfront cost/investment. This is not twisted logic, just economics 101. You have to spend money to make money, no business is profitable on day one. Some have longer ramps to profitablity. Even a lemonaide stand has to first buy the lemons. The larger and more complex the business, the longer the ramp to profitability, but also the bigger the upside (see Amazon).

Most manufacturing companies don't just aim for the level of sales that Tesla is aiming for though. A slower ramp up is far more sustainable for business growth.

It's possible Tesla will succeed at this. It's also possible they won't.

Having worked as a manufacturing engineer before, the challenges Tesla is facing for ramping up production are definitely non-trivial and ones that companies which have been around much longer and actually running at a profit have difficulties with, too.

KBecks

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Re: Is Tesla a good investment?
« Reply #88 on: April 06, 2018, 07:10:42 AM »
I do not follow Tesla stock closely and am not invested in the company.  That said, Tesla stock is volatile.  You have to know that going in and you have to have the stomach to see your shares rise and fall and rise and fall. 

You need to consider your long term investing strategy and how Tesla fits in.  Is this a small, speculative fun money fling, or do you intend to build a significant position in the company?  The other question is -- is Tesla the very best company with the best prospects for you? 

It sounds like you are thinking of gambling, and that's never a good idea.

Lastly I will offer that Amazon's story is not over, and there are many companies out there to learn about and follow.  Personally I would not start out with a big story stock.  I know a lot of Tesla investors and it is an intriguing company.  Take your time and be careful.

Buffet's #1 rule of investing -- Never lose money.   Rule #2 is Never forget rule #1.  How confident are you in the stock's success?

Best wishes!

TomTX

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Re: Is Tesla a good investment?
« Reply #89 on: April 06, 2018, 08:56:58 AM »
I might have more confidence if Elon Musk was focused instead of attempting to launch a dozen businesses at once.

Apparently there is only so much Elon that the average person can take in a work environment. He's a workaholic. He works full time at Tesla, full time at SpaceX and dabbles in everything else. He's repeatedly said that The Boring Company is a hobby that takes 2-3% of his time. If a billionaire industrialist wants to have a hobby of digging tunnels instead of digging in the garden, who am I to judge?

alanB

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Re: Is Tesla a good investment?
« Reply #90 on: April 06, 2018, 10:12:39 AM »

Is this a sign, perhaps, that producing EVs is for whatever reason inherently harder than an ICE vehicle?

Or a sign that key resources are in short supply (e.g. cobalt?).
Notionally an EV should be simpler.

Cobalt per se shouldn't be enough to prevent production (there is cobalt, though prices have gone up) - securing a sufficient supply of batteries at an appropriate cost may well be an issue. Apparently Tesla's main cause of the slow ramp was battery pack production (they had plenty of cells on hand, the problem was assembling cells into packs with new automation not working right)

Going forward, cobalt should be less of an issue - almost all the cell manufacturers using a cobalt lithium chemistry are going to low-cobalt versions.

Has anyone seen The Adventures of Buckaroo Banzai Across the Eighth Dimension?
"What's that thing made of?"
"Cobalt and electricity!"

Cobalt is abundant enough, but unfortunately mostly comes from the DRC.  Those little kids are not digging it up fast enough, sheesh we are trying to save the world here ;P  (satirical)

Trying to predict what will happen in battery technology in the near future is even tougher than predicting what will happen to Tesla.  I think the one thing everyone can agree on is that someone will solve this problem, since the reward is many billions of dollars.

DavidAnnArbor

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Re: Is Tesla a good investment?
« Reply #91 on: April 06, 2018, 05:42:11 PM »
I'm happy that the Vanguard Total Stock Market index includes some Tesla.

genesismachine

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Re: Is Tesla a good investment?
« Reply #92 on: April 09, 2018, 01:06:37 PM »
Those who say there's a good chance of bankruptcy for Tesla, please share your short position. I see options for sale where if Tesla goes bankrupt before Jan 17, 2020, you could multiply your money by ~10x. Certainly if you think there's a 70% chance of bankruptcy, please feel free to buy those. I will teach you how if you'd like.

But my suspicion (and this is the problem with online forums in general) is that those who support Tesla have skin in the game while those who are so very very negative have no skin in the game at all - but please prove me wrong!

Disclosure: I hold 300 shares of Tesla, which is roughly ~15% of my net worth depending on the day.

Here's some food for thought for those who say other manufacturers will crush Tesla:
1. Batteries: Tesla's battery production in 2019 will likely exceed world production in 2016. Battery production issues alone will constrain total electric vehicle production possible
2. Dealerships: Dealerships anti-sell electric cars. They do not usually have more than 1 charging station to charge electric cars. Where will they get the money to install more? Their sales staff are not trained on electric cars. Dealerships make 2/3rds of their money from maintenance, so each electric car they sell will cannibalize their business model.
3. Charging network: While there are more non-Tesla charging stations out there, they are on a dozen different networks all with different payment methods. Plugshare helps to unify some of these issues. However, most non-Tesla charging stations have only one or two bays. They are frequently out of service, and there is no way to check status remotely. They cannot be relied upon. Also, their speeds are very inconsistent - a CCS fast charger could be capable of 40kW or 150kW for example. There is no unified way to look this info up.
4. Lack of true competition: The only Tesla competitor right now is the Chevy Bolt. This is a $40k electric Chevrolet Sonic - a gas car that costs ~$15k. The Tesla Model 3 competes with a BMW 3-series - a gas car that costs ~35-80k. GM loses ~$10k per Bolt, and the design is done by LG - not GM.
5. Lack of incentive: Most US car manufacturers are Truck and SUV manufacturers. For example, last month Ford produced more F-series pickup trucks (~80k) than all of their cars combined (~55k). They are talking about reducing production on their cars because of limited profitability.
6. Innovator's Dilemna: All of this is covered in 'The Innovator's Dilemna'. This is the same reason why Walmart did not create Amazon. IBM did not create Microsoft. Horse companies did not create cars. This type of transformational shift causes companies to retreat upmarket to their most profitable cars - not to try to challenge an unprofitable product. So Ford for example may choose to stop making cars (which aren't that profitable anyways) and focus on their profit centers (SUVs/Trucks), rather than invest money from those profit centers into 'unprofitable' electric cars. Doing otherwise will require a good explanation to shareholders (aka people who care mostly about short term earnings and dividends) - the same shareholders who have the power to fire the CEO.

There is a huge difference between selling a few thousand electric cars a month to enthusiasts and building a profitable business selling millions per year to the mainstream public. This transformational shift will be a lot more difficult for existing automakers than people currently appreciate. The mainstream buyer is not going to pay $40k for a Chevy Sonic.

sherr

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Re: Is Tesla a good investment?
« Reply #93 on: April 09, 2018, 03:39:47 PM »
4. Lack of true competition: The only Tesla competitor right now is the Chevy Bolt. This is a $40k electric Chevrolet Sonic - a gas car that costs ~$15k. The Tesla Model 3 competes with a BMW 3-series - a gas car that costs ~35-80k. GM loses ~$10k per Bolt, and the design is done by LG - not GM.

I'm not a Tesla bear, but this I think is not quite right. Tesla's competition right now is the entire automotive market, not just the long-rage BEV-only market.

Even if we ignore gas cars, the Chevy Volt seems to be a well-regarded plug-in hybrid, not to mention the Prius. Plug-in hybrids also completely negate the Dealership and Charging Network points you made.

We're also seeing an enormous wave of PHEV and BEV models being announced for the 2019 model year, and that will probably only accelerate in later years. For Tesla's valuation to make sense you're pretty much betting that they can successfully scale and innovate faster than the entire rest of the auto industry combined. Which they may, and their battery manufacturing is certainly an asset, but I don't think it's obvious that a Tesla victory is the only path forward.

I would love to own a Tesla. But if I'm going to buy another car I need one that has room for at least 3 carseats, and the Model X is a ~$100k car. That's an awful lot of money. What do you want to bet that some other make will come out next year or the one after that makes a minivan or suv for half of that? Could I really opt for the premium Tesla option if there was something else available? Or, since this is the MMM forums, why not a $10k used minivan and save the other $90k for gas? And if I, a Tesla fanboy, will probably never own one, then why would the hoards of Average Joes?

I think the Model 3s really are make-or-break for Tesla. They need to start selling cars priced so that the average person can buy one. And then once they do the cars need to compete with all the other cars at that price-point, you can't assume that the whole population will suddenly become fans of BEVs.

genesismachine

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Re: Is Tesla a good investment?
« Reply #94 on: April 09, 2018, 05:40:32 PM »
I think that was my point though. There is no electric competition to Tesla right now, nor will there be anytime soon. Tesla is competing against gas cars, which is definitely an area with a lot of competition.

The closest parallel I see is actually with Apple. Apple was not the first smartphone maker out there, and nobody thought they would succeed with such a wildly expensive phone. But people bought them.

And yes, there were other phone manufacturers out there that dwarfed Apple. And those competitors eventually did take 80% of marketshare and Apple took 20% - but only at great cost to themselves. As the market shifted towards smartphones, the other manufacturers suffered while Apple flourished.

Today, Apple has virtually all of the profit, and their smartphone business is still worth more than all of their competitor's smartphone businesses combined. In fact, there was an article a while back that said literally their only competitor that was turning a profit was Samsung - and they were just barely turning a profit. Most of their competitors were actually losing money holding onto marketshare.

Tesla doesn't need to come out with a cheap electric car for the masses any more than Apple needs to come out with a cheap smartphone. This is the thing that people just don't seem to appreciate. If Tesla can eventually produce even 5% of car sales worldwide (tending towards the more expensive part of the market), and retain a ~20% gross margin, the company will be worth far more than it is today.

PS - We are assuming the non-car part of their business is worth $0, which is also not accurate in the long term.

thd7t

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Re: Is Tesla a good investment?
« Reply #95 on: April 10, 2018, 06:22:09 AM »
I think that was my point though. There is no electric competition to Tesla right now, nor will there be anytime soon. Tesla is competing against gas cars, which is definitely an area with a lot of competition.

The closest parallel I see is actually with Apple. Apple was not the first smartphone maker out there, and nobody thought they would succeed with such a wildly expensive phone. But people bought them.

And yes, there were other phone manufacturers out there that dwarfed Apple. And those competitors eventually did take 80% of marketshare and Apple took 20% - but only at great cost to themselves. As the market shifted towards smartphones, the other manufacturers suffered while Apple flourished.

Today, Apple has virtually all of the profit, and their smartphone business is still worth more than all of their competitor's smartphone businesses combined. In fact, there was an article a while back that said literally their only competitor that was turning a profit was Samsung - and they were just barely turning a profit. Most of their competitors were actually losing money holding onto marketshare.

Tesla doesn't need to come out with a cheap electric car for the masses any more than Apple needs to come out with a cheap smartphone. This is the thing that people just don't seem to appreciate. If Tesla can eventually produce even 5% of car sales worldwide (tending towards the more expensive part of the market), and retain a ~20% gross margin, the company will be worth far more than it is today.

PS - We are assuming the non-car part of their business is worth $0, which is also not accurate in the long term.
I have bolded what you misremember, here.  Also, Apple did come out with a cheap smartphone.  However, if your argument is just that Tesla is a luxury car brand, then we shouldn't be discussing it too much on this forum!

Car Jack

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Re: Is Tesla a good investment?
« Reply #96 on: April 10, 2018, 08:20:16 AM »
Those who say there's a good chance of bankruptcy for Tesla, please share your short position. I see options for sale where if Tesla goes bankrupt before Jan 17, 2020, you could multiply your money by ~10x. Certainly if you think there's a 70% chance of bankruptcy, please feel free to buy those. I will teach you how if you'd like.

But my suspicion (and this is the problem with online forums in general) is that those who support Tesla have skin in the game while those who are so very very negative have no skin in the game at all - but please prove me wrong!

I'll let the gamblers respond to your challenge.  As a stout 3 fund portfolio guy, I expect that somewhere in my total US market, there's probably some TSLA.  Since there are so many other stocks in the index fund, the fall of TSLA won't hurt me much.  If I were to buy any single stock, it would be BRK.  Why?  It's like a well managed total US stock fund and since it pays no dividends, would cost me zero in tax.

I get that you're a Tesla fanboi.  Nothing wrong with that.  Having enthusiasm over a cool product is nothing bad.  I've always loved light, good handling cars.  I owned a Lotus Elise because of that love.  I didn't buy it because I thought the company was wonderful.  Dany Bahar headed Lotus when I bought my car and not only was he incompetent, he was a total dick and nearly drove the company into bankruptcy.  Tesla needs to do some very well defined tasks to be successful.  They need to scrap the battery pack and go directly to prismatic form cells to fully utilize the space in the pack.  This is the ongoing bottleneck in their production.  They need to figure out how to not have to hand build every battery pack.  They need to learn quality control.  They need to lose some of the complexity for the sake of complexity garbage such as the pop out $900 model S door handles that fail about once a year, the push button electric door exits on the model 3 and the silly pigeon wing doors on the model X.  These are all examples of what the big guys put into prototypes to wow people at car shows but are jettisoned in favor of reliable pieces for production.  I mean really.....what's wrong with a simple loop style external handle on most normal cars.  No stupid electricals to fail, always works, cheap to manufacture, cheap to repair, even Clem down at the Gas n' Go could fix them. 

I've always liked the Model S body shape.  I've also said for a long time that if I wanted to own one, I'd buy one salvage and swap in a Corvette LS engine and rear transaxle (with....of course....a proper manual gearbox).

Telecaster

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Re: Is Tesla a good investment?
« Reply #97 on: April 10, 2018, 08:59:53 AM »
Those who say there's a good chance of bankruptcy for Tesla, please share your short position. I see options for sale where if Tesla goes bankrupt before Jan 17, 2020, you could multiply your money by ~10x. Certainly if you think there's a 70% chance of bankruptcy, please feel free to buy those. I will teach you how if you'd like.

But my suspicion (and this is the problem with online forums in general) is that those who support Tesla have skin in the game while those who are so very very negative have no skin in the game at all - but please prove me wrong!

Disclosure: I hold 300 shares of Tesla, which is roughly ~15% of my net worth depending on the day.

Here's some food for thought for those who say other manufacturers will crush Tesla:
1. Batteries: Tesla's battery production in 2019 will likely exceed world production in 2016. Battery production issues alone will constrain total electric vehicle production possible
2. Dealerships: Dealerships anti-sell electric cars. They do not usually have more than 1 charging station to charge electric cars. Where will they get the money to install more? Their sales staff are not trained on electric cars. Dealerships make 2/3rds of their money from maintenance, so each electric car they sell will cannibalize their business model.
3. Charging network: While there are more non-Tesla charging stations out there, they are on a dozen different networks all with different payment methods. Plugshare helps to unify some of these issues. However, most non-Tesla charging stations have only one or two bays. They are frequently out of service, and there is no way to check status remotely. They cannot be relied upon. Also, their speeds are very inconsistent - a CCS fast charger could be capable of 40kW or 150kW for example. There is no unified way to look this info up.
4. Lack of true competition: The only Tesla competitor right now is the Chevy Bolt. This is a $40k electric Chevrolet Sonic - a gas car that costs ~$15k. The Tesla Model 3 competes with a BMW 3-series - a gas car that costs ~35-80k. GM loses ~$10k per Bolt, and the design is done by LG - not GM.
5. Lack of incentive: Most US car manufacturers are Truck and SUV manufacturers. For example, last month Ford produced more F-series pickup trucks (~80k) than all of their cars combined (~55k). They are talking about reducing production on their cars because of limited profitability.
6. Innovator's Dilemna: All of this is covered in 'The Innovator's Dilemna'. This is the same reason why Walmart did not create Amazon. IBM did not create Microsoft. Horse companies did not create cars. This type of transformational shift causes companies to retreat upmarket to their most profitable cars - not to try to challenge an unprofitable product. So Ford for example may choose to stop making cars (which aren't that profitable anyways) and focus on their profit centers (SUVs/Trucks), rather than invest money from those profit centers into 'unprofitable' electric cars. Doing otherwise will require a good explanation to shareholders (aka people who care mostly about short term earnings and dividends) - the same shareholders who have the power to fire the CEO.

There is a huge difference between selling a few thousand electric cars a month to enthusiasts and building a profitable business selling millions per year to the mainstream public. This transformational shift will be a lot more difficult for existing automakers than people currently appreciate. The mainstream buyer is not going to pay $40k for a Chevy Sonic.

A couple thoughts:   

1. Batteries: - Yes, if no one adds battery capacity.  There are quite a few EV battery manufacturers, I don't see how Tesla has a hammer-lock in this area.  Producing batteries in house might give them an edge financially, but maybe not. 

2. Dealerships: - Point taken about the service model, but Tesla can't own its own dealerships in every state, and legacy brands have several orders of magnitude more dealerships than Telsa.  I grew up in a small town (around 15,000 people).  To this day, there is a Ford, Chrysler, and GM dealership that have been there for decades. 

3. Charging network: - I own an electric vehicle (Nissan Leaf). You are vastly over stating the problems with charging networks. 

4. Lack of true competition: - I would modify this as lack of true competition...yet.  Tesla smartly went after the luxury performance market.  Performance, after all, is where EVs crush ICEs.  But while the Chevy Bolt looks like the Chevrolet Sonic, it performs like a BMW.  So it doesn't have the nameplate cache' but its close to the same thing.  And it is flying off the shelves in Europe (badged as the Opel Ampera).  The entire 2018 production is already sold out.  Speaking of BMW, BMW does have a true EV right now (i3 and i3s).  In the next two years or so Jaguar, Audi, Porsche, Austin Martin, and Mercedes have plans to roll out high-end EVs.  Over the next year or two, Hyundai, Kia, and others will join Nissan, Chevrolet, Peugeot, VW, Fiat, Renault, Smart (already the best selling EV brand in Germany), and Ford on the lower end of the market.  That's not counting Chinese automakers.  That's true competition across the whole spectrum of the market. 

5. Lack of incentive: - Lee Iacocca famously said "Mini cars mean mini-profits."  But that's just as true for Tesla as it is for Ford.  The difference is Ford, GM and Chrysler have conventional SUVs and mini-vans to drive profits.  Tesla doesn't.  Remember, a lot of this is driven by regulation.  Nine states including the huge California market already have ZEV mandates, as do several European countries, and next year China will too.  Manufactures must sell a certain percentage of ZEVs if they wish to be relevant.  That's a pretty good incentive. 

6. Innovator's Dilemna - There is another part of that too.  Just because you are first, doesn't mean you succeed.  The Wright Brothers invented the airplane, but they were never more than a bit player in manufacturing.  The number of airlines that have gone bust is too long to mention.  Most of the major carriers that exist today have been through bankruptcy, some more than once.   Or shoot, look at auto companies.  There were a number of manufactures before Ford or Chrysler entered the business.  Most of them didn't survive.  Or computers.  Commodore and Radio Shack came out with PCs the same year as Apple.  Only Apple survived and then just barely. Or cell phones.  Not very long ago, Nokia and Blackberry completely dominated the market.  Nokia sold to Microsoft and Blackberry is a pale shadow of its former self. 

Point is, being first in the pool is no indicator of success.  I wish you and Tesla the best, but I don't see any moat. 



genesismachine

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Re: Is Tesla a good investment?
« Reply #98 on: April 10, 2018, 10:52:29 AM »
A couple thoughts:   

1. Batteries: - Yes, if no one adds battery capacity.  There are quite a few EV battery manufacturers, I don't see how Tesla has a hammer-lock in this area.  Producing batteries in house might give them an edge financially, but maybe not. 

2. Dealerships: - Point taken about the service model, but Tesla can't own its own dealerships in every state, and legacy brands have several orders of magnitude more dealerships than Telsa.  I grew up in a small town (around 15,000 people).  To this day, there is a Ford, Chrysler, and GM dealership that have been there for decades. 

3. Charging network: - I own an electric vehicle (Nissan Leaf). You are vastly over stating the problems with charging networks. 

4. Lack of true competition: - I would modify this as lack of true competition...yet.  Tesla smartly went after the luxury performance market.  Performance, after all, is where EVs crush ICEs.  But while the Chevy Bolt looks like the Chevrolet Sonic, it performs like a BMW.  So it doesn't have the nameplate cache' but its close to the same thing.  And it is flying off the shelves in Europe (badged as the Opel Ampera).  The entire 2018 production is already sold out.  Speaking of BMW, BMW does have a true EV right now (i3 and i3s).  In the next two years or so Jaguar, Audi, Porsche, Austin Martin, and Mercedes have plans to roll out high-end EVs.  Over the next year or two, Hyundai, Kia, and others will join Nissan, Chevrolet, Peugeot, VW, Fiat, Renault, Smart (already the best selling EV brand in Germany), and Ford on the lower end of the market.  That's not counting Chinese automakers.  That's true competition across the whole spectrum of the market. 

5. Lack of incentive: - Lee Iacocca famously said "Mini cars mean mini-profits."  But that's just as true for Tesla as it is for Ford.  The difference is Ford, GM and Chrysler have conventional SUVs and mini-vans to drive profits.  Tesla doesn't.  Remember, a lot of this is driven by regulation.  Nine states including the huge California market already have ZEV mandates, as do several European countries, and next year China will too.  Manufactures must sell a certain percentage of ZEVs if they wish to be relevant.  That's a pretty good incentive. 

6. Innovator's Dilemna - There is another part of that too.  Just because you are first, doesn't mean you succeed.  The Wright Brothers invented the airplane, but they were never more than a bit player in manufacturing.  The number of airlines that have gone bust is too long to mention.  Most of the major carriers that exist today have been through bankruptcy, some more than once.   Or shoot, look at auto companies.  There were a number of manufactures before Ford or Chrysler entered the business.  Most of them didn't survive.  Or computers.  Commodore and Radio Shack came out with PCs the same year as Apple.  Only Apple survived and then just barely. Or cell phones.  Not very long ago, Nokia and Blackberry completely dominated the market.  Nokia sold to Microsoft and Blackberry is a pale shadow of its former self. 

Point is, being first in the pool is no indicator of success.  I wish you and Tesla the best, but I don't see any moat.

For batteries, Tesla can buy up the battery supply and use them to build energy storage installations. Even if they break even, they can deny the competition battery capacity. I agree that over the long haul, this will not be an issue, but if Tesla can stave off competition for even 5 years, they will be in very good shape. I'm not convinced having in house battery production is going to benefit them in the long run, but in the medium term (10 years), I think it will prove to be the right decision.

Dealerships: Tesla does not need to take 100% market share. Even 5% of the world market would be fantastic.

Charging network: I own a Ford Focus electric, and the charging situation in Portland has been really bad by my experience. Maybe it's location dependent, or maybe I just had bad luck, but I no longer use public charging stations - I use my gas instead car for any trips that may require a charging station.

Lack of incentive: Chevrolet is talking about discontinuing the Sonic, and Ford is discontinuing the Fiesta. Many manufacturers are in similar talks about discontinuing entry level cars and focusing on more profitable vehicles.

As far as comparable cars, it's worth remembering that GM would need to increase their cost on the Bolt to $50k just to break even financially. Then, once the $7500 tax credit goes away, we'll see how many people are willing to buy it. The Bolt is similar to a Tesla Model 3 in the same way that a Toyota Camry is similar to a BMW 3 series.

I'm not a Tesla Fanboy, I have an MSEE and have taken classes in batteries, electric vehicle design and I work in the power industry. My depth of understanding of the topic is much deeper than that. Also, although I could, I would never buy one of their products. Thus why I'm on this forum :)

The biggest problems I see for Tesla are:
- Getting their expenses under control: This is hard to quantify because we don't really know what all Tesla is working on. Their expenditure is very high on R&D, but if that's because they're developing 5 new products, then that's acceptable. If they're developing 1, then that's much less acceptable. I could see a company run by engineers developing a lot of 'pet projects' over time that are interesting but ultimately have no profitable purpose. This problem will only become worse over time.
- It's illegal for them to sell cars in some states, so they have to have a store in the state and sell from another state. This is a real problem for the mainstream buyer
- Their ability to do creative financing (like dealerships routinely do) really limits their mainstream appeal. Tesla has a much higher share of cash/loan buyers than other auto manufacturers. Mainstream buyers prefer leases more. Tesla does not currently have the ability to deliver, let's say 200k leases per year.
- Since their ordering takes place online, it will remain to be seen if the mainstream buyer is ok with 3-6 month waits. My suspicion is that Tesla will need to have some sort of wait period so that they don't cause havoc at the factory. Traditional automakers use the dealerships as this buffer - they can push unwanted cars onto the dealerships for storage and gradually increase/decrease production
- Adding to the previous point, if there were say, an extended slowdown in demand, let's say because of some kind of PR disaster, what happens to their financials? Their profitability is dependent on them producing at near full capacity, so if they start going to 50% capacity for a year, that could spell real problems for them. This is where the uncertainty comes in because selling to die hard Tesla fans is very different than selling to the mainstream - something that they have yet to demonstrate.
- I don't see a path for them to get to say 5 Gigafactories and 5 auto factories without significant capital raises. Once Model 3 production gets to 10k/week, they will have a good amount of cash to work with, but not enough to build those factories in a timely manner. So while they will remain solvent and profitable, their growth may be constrained by the general market conditions. If we go through a credit crunch like in 2008, Tesla growth could be basically on hold for years. This time may give other auto manufacturers the time that they need to catch up as they can fuel new factory construction using their substantial profits.

TomTX

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Re: Is Tesla a good investment?
« Reply #99 on: April 10, 2018, 06:31:27 PM »
They need to scrap the battery pack and go directly to prismatic form cells to fully utilize the space in the pack.  This is the ongoing bottleneck in their production.  They need to figure out how to not have to hand build every battery pack. 

The first part would be stupid, and the last part is already figured out.

Tesla now produces roughly 2,000 Model 3 per week, plus 1500-2,000 (Model S + Model X) per week.

How many Bolts does GM produce in a week? This year so far, looks like maybe 300-400. 

Tesla also offers notably longer range than those prismatic-cell cars. The real problem with those dense close packed prismatic cells is temperature control, which is a major factor in durability. GM seems to have figured it out, Nissan definitely has not. Tesla has it figured out.