Below $260 is a level I had previously marked as a time to add to a position. Not sure Im pulling the trigger just yet!
I acquired my first tranche three years ago. It was a significant amount, by my standards. A year later, it had more than doubled but I did not sell. Last year, during the Model 3 delayed ramp, the stock was beaten back into the 250s. I picked up a small additional amount of Tesla at that time. Also at that time, I decided not to buy any more under any circumstances. A few days ago, I picked up quite a bit more Tesla at $267. lol! At this point, my blended price is right around $200 but Tesla is not my best stock. If the stock goes to $400 tomorrow, it would probably be my best stock in the last three years but just barely. Growth stocks are the darlings of traders but they do not treat investors, like myself, well. By the way, everything that is happening right now is great for investors. GF3 construction is rocking. They have about 40% of the roof structure complete for phase 1. They are literally working around the clock to build this factory. I estimate the odds of vehicles being produced in this factory, at low scale, in 2019 at 80%. Meanwhile, energy projects are moving forward at record pace. Energy products were starved for cells over the last year but they are now rocking at a whole new, much higher, scale of production. I expect Q1 will be the only quarter in 2019 that is not profitable for Tesla. In 2020, attack news articles are going to have a far more difficult time gaining mind share as Tesla passes the million vehicle per year mark.
Lol. I just had a look at some new pics. GF3 roof construction is closer to 20% complete. The images I had seen previously had a perspective that made it appear more complete than it is. Still, the pads are poured, the columns are in, and the roof is being welded on. In a few weeks, the skeleture of the building will be receiving cladding.
I have not been following that story, obviously its priced in at this point, but what are the longer term repercussions for their EV offerings?
I already sound like a fanboy. It's about to get worse. However, here goes.... The only EV builders that are approximately profitable are Tesla and a couple of Chinese automakers. In Tesla's case, the cars have funded the other operations, even energy storage, but that will start to change in a major way this year and I expect Tesla profit to be dominated by energy storage over time, even as they lower prices in that industry. Battery cost has been driven down, industry wide, but Elon indicates Tesla is now below $100/KWh at the pack level. The next closest number I've heard is $250/KWh at the pack level that everyone else seems to be citing. Audi flat out dismisses Tesla's claims on battery cost. Decide who you believe. Audi also projects they will be able to get their cell cost down to $114 / KWh in the future. That's not pack cost. That's cell cost. Bottom line is, nobody can compete with Tesla. Tesla knew they had to build the largest battery manufacturing facility in the world in order to make EVs practical in an unincentivized world. They now have about as much battery manufacturing capacity as the rest of the world combined. Perhaps a bit more but there is no clear line of site here so I can only approximate. Other companies are going to go through a similar, but smaller, blood bath as they ramp EV production. They are going to be swimming in red ink. Tesla has already walked across those hot coals. GM is already losing money on their EV platforms. They purchased their EV technology from LG who is pretty competitive but they are a four generations behind and more expensive than Tesla's battery platform. Hyundai has an advantage in this area, as they are using a Samsung battery platform. Samsung is only two generations behind Tesla. Notice I write "Tesla", not Panasonic. Tesla is using their own chemistry. I think Hyundai will be the next major player to be profitable in an unincentivized world. Toyota are partnering with Panasonic so they will be on equal footing with Hyundai. Long term, I expect Hyundai to do better than Toyota but there are so many variables, this is mere speculation. Meanwhile, Tesla's second megafactory where they will construct batteries, packs, and cars, is about 10% complete. These days, the EV industry is down to who can catch up to Tesla. They've spent the last decade telling us how the time is not yet here while Tesla has been building cars that people love. Even people who have problems with their Teslas, and that's almost all owners, respond to polls indicating they are pleased with their vehicles and would continue to prefer the Tesla brand in the future. In order to catch Tesla, other builders are going to have to attack the battery problem. They are going to have to find a way to eliminate cobalt, as Tesla has. They are going to need to find a way to prove longevity. Teslas seem capable of doing 500K miles and still having 80% pack capacity. Newer Teslas are expected to be even better, once enough time goes by that a statistically significant quantity of current cars can make it to 500K miles. In the absence of incentives, Tesla stands alone.
So... if Democrats re-take control of the government in 2020 and restore EV incentives as part of climate action, that will help Tesla short term and hurt Tesla long term. If Republicans remain in control and block all climate action, few of the current automobile manufacturers will be around 10 years from now.
Let's value Tesla using some dead reckoning. Tesla built 350K cars in 2018. They are a little above that now but not a lot. Ford builds about 2.5M vehicles per year and is valued at about $34B. Ford is about 7 times larger than Tesla. That puts Tesla somewhere around $5B, assuming identical margin but it's clear Tesla has better mean average margin to Ford. A year from now, Tesla is expected to be producing at a rate of 750K ~ 1M cars. That would value them between $10~15B. Again, depending on margin. Tesla's fat margin have shrunk significantly recently. Ford's margins will vary with climate law. As long as we ignore climate, Ford will be OK. If Ford has to retool as an EV manufacturer, that will be an unfathomable cost for Ford. It's not certain they can make it. Gigafactory 4 in Germany is expected to come online in late 2022. That's 3 years from now but that, along with GF1 and 3 expansion, will bring Tesla's total deliveries up to about 2M cars. Will other manufacturers be able to get up to speed in 3 years? I'm skeptical. It will take that long to bring Battery manufacturing capacity online. Currently, there is only one new, giant, factory on the horizon. At least, that I'm aware of. There is a lot of talk though so who knows. If that factory were as big as GF1, it could potentially produce enough cells to power 2M cars with dry anode technology. Without dry anode technology, 1M cars or less. Nobody has dry anode technology now but Tesla is close with their Maxwell acquisition. I see Tesla building their own batteries with Panasonic completely gone from that space. That could happen in a couple of years. Surely, that will benefit Tesla's margins. Meanwhile, Tesla has 12,000 supercharger charging points. VW/Audi is talking about huge spending (I've heard $40B) on charging infrastructure. Curiously, they will end up using Tesla PowerPacks to make their system work without blowing up the grid. How much is the SuperCharger network worth? To do that with dead reckoning, we'd have to look at Exon Mobil, or another fuel station network currently in existence. I'll leave that for another day. How much will the Tesla semi program be worth? That's a blank canvas. Somewhere between $0 and $50B, I'd say. Currently, it's at $0. How much will the Tesla solar division be worth (don't forget about GigaFactory 2)? First Solar has a market cap of $5.5B. I estimate Tesla's solar division to be worth somewhere around $1B with reasonable potential of $5B in the next 3 years. How much will Tesla's automated vehicle division be worth? Elon looks at the cars as a platform on which to run transportation as a service in the future. Ignore the talk. The only competitor to Tesla in this space is Waymo. Tesla appears to be ahead but it is not certain they will win this race. Either way, transport as a service could conservatively quadruple the value of Tesla. Did I mention Tesla's GridManager platform? Nobody is discussing it. Analysts are too busy trying to tell us all cars are the same... electric motor, battery, done. They completely ignore all other factors so a Bolt is the same as a Model 3 in nearly all articles and absolutely all equity analysis. They are morons. Power production is a trillion dollar industry. I have no idea how Tesla will do, long term, but I'm not aware of anyone else who doing significant working on integrating renewables into the grid systemically. I'm sure Schneider will give it a go in the future. They have a credible chance against Tesla. Sonnen might give it a shot too. Who knows. Oddly, the next generation of renewables will likely be used to charge huge batteries from people like Tesla. The batteries will be used to smooth the output so renewables can be integrated to a grid similar to base load generation. Two generations out, we are going to need a control system on levels not before devised by humanity. Tesla's GridManager is not currently that platform but it's a seed that could grow into a tree the size of the planet. I'm hot on Tesla but cold on Tesla's solar roof. I don't think the solar roof will be a failure. I just think it will always be a niche product. I also think the margin in the solar industry is going to continue going down. There is too much activity in this industry for it to be profitable to any but the largest players. Tesla will be a large player but I doubt they will make a lot of money here. They did well to outsource solar production to Panasonic. I think Tesla is comfortably worth the current $45B market cap. I don't know if it's worth more than that, as they face considerable risk, but you don't have to use best case scenarios to see 10x increase in Tesla's value within 5 years. Reasonable case scenarios will easily do it. Anyone still reading? lol!
Another industry update: Nissan has planned a 67KWh battery for the 2019 Leaf. It should be here by the fall. I have no idea how expensive the 67KWh battery option will be. I really like the Leaf. Fantastic little city cars. A big battery will make it more useful, although I question how badly I would want to take a road trip in a Leaf.
Tesla up 5 bucks in pre-market trading. Probably not indicative of anything. Check out the GF3 progress between March 17 and April 1, as documented in these satellite photos. March 17 looks like an empty field (but wasn't)... April 1 a factory is begin to take shape. Pilings have been driven. A lot of ground has been covered with concrete. Roof structure is being welded to the structural columns, although it's not that visible in this pic. https://www.buildingtesla.com/compare/Gigafactory 3/
Let me share the perspective of an investor, as I expect this point of view is foreign to everyone following this thread. I bought Tesla at 258 a week ago. This, after deciding not to buy any more about a year ago. I'm up about 20 bucks right now, with no intention to sell for years. The idea of chasing a fast buck is not one I would entertain. The only reason I picked up some more (not a lot) is because my other holdings are doing extremely well and I happen to have a bit of cash sitting around. My hope is, this seed will bare fruit in a decade. I think the stock is priced about right, or maybe a bit low, so I'm counting on growth to improve the valuation. This is no longer a Cinderella story. They are now the 800# gorilla of electric vehicles. Think about the franchise value of Tesla this way: Tesla's announcement of a truck is going to put a huge hurt on Rivian's Truck sales. Most people won't just buy the Tesla but few will buy the Rivian without seeing what Tesla has to offer first. In other words, the business is Tesla's to lose. If it were the other way and Rivian announced a product to compete with Tesla's shipping product, it would not affect sales noticeably. Few companies swing that level of franchise value in any industry. But yeah, I am once again proclaiming I will not buy any more Tesla regardless of price... lol!
I just read a very well analyzed, positive article about Tesla on Breitbart news. I can't seem to find the link....
Tesla to begin installing automated production equipment in gf3 in May. That's 2019, bears. Meanwhile, autopilot continues to pull further into the lead as Tesla announces a relentless stream of ongoing development.
Tesla is a brilliant case study in what motivates the investing media. They are clearly not motivated with the investor in mind. Canaccord just bumped their rating on Tesla to buy based on an analyst driving one and, it turned out, he discovered it's a pretty good car. I'm not making that up. lol! Another analyst on CNBC was citing problems getting GF3 built, was shown pics illustrating tremendous progress, and immediately pivoted to FUD about the model Y. Meanwhile, bears notoriously continue to cite $250 per KWh for battery cells. Tesla indicates they have hit $100 KWh at the pack level. Time will tell who is closer to the truth. It wouldn't blow my mind if Tesla fell short of that stated cost but it would blow my mind if their cost was anywhere near the $250 stated. Suffice to say, I trust Tesla more than I trust any analyst in the industry. Even people who don't believe the climate is changing should be able to objectively see that Tesla is doing an unbelievable job of hyperscaling their young company. On the other hand, even green planet liberals should be able to see there is risk in hyperscaling.
TSLA gapped down pre-market almost 10% so far after announcing disappointing March deliveries. Barrons.com's headline: "Tesla Tumbles Because march Deliveries Missed the Mark...Badly". The short and intermediate term, not so good for TSLA. Long term they've been in a trading range dating back to June 2017 and now wanting to test the demand line of that range at $244.59. I suspect many of the Muskovites (hazy-eyed, news-reading, kool-aide drinking, Musk-believing, do-it yourself fundamental-analyzing members of the stock-holding public) will become fearful and sell once it is taken under that long-term range. Then we'll see how low it will go before the big/smart money steps in to absorb the large supply of shares suddenly coming into the market. Daily bars (last bar pre-market)
Tesla Motors is moving to level 315. There are Tenkan and Senkou Span B. Tesla can push down earlier from Tenkan. But it’s safer to wait for a reversal at 315. We need to see how the weekly bar closes. It looks like Tenkan will be pierced up. Weekly
