Divide Tesla stock by 100 to come up with a realistic valuation.
Tesla could be profitable if it wanted to
- Thread starter HTSS_TR
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Originally Posted By: HTSS_TR
Disclosure: Author of this article owns shares of Tesla Motors, also Motley Fool owns shares and recommends Tesla Motors.
Originally Posted By: The_Eric
Originally Posted By: sciphi
I think the argument is that it's a company that is making capital expenditures now in preparation for future expansion. It's not so much worried about immediate quarterly profits as long-term viability. As someone famous once said, "Ya gotta spend money to make money."
And, less net profit because the gross is plowed back into expanding the business (minus enough to live on) isn't always a bad thing.
Originally Posted By: DoubleWasp
Of course. I mean, look at all of the big money investors in Enron and MCI. Those companies did awesome, right?
Problem is that Elon Musk would never do such a thing like turn lead into gold. I'm a little surprised that you are not concerned with a company that wants to put people like you out of business.
Have you tried to get any service data from Tesla? Be prepared to prove that you live in Massachusetts and then pay more than $3,000 a year for the great privilege.
Musk wants to sell people a Pandora's box you are never allowed to open, where you have to go groveling to his company to keep your car on the road. Don't forget that if you want to use his software to get your car back on the road, you better ask him real nicely first.
Wanted to clarify that when I said "his" software, I mean that Tesla and Musk consider the software that runs the car to belong to them, and under your use by their grace.
Not only does a Tesla routinely modify its own software based on what Elon feels like your car should or should not have on a routine basis (without asking permission or approval for specific changes), buy yes, Tesla can pull the plug on your car at any time.
With regards to service rights; the reason you have to prove that you live in Massachusetts is because Mass if the only state that has a "Right to Repair" law forcing Tesla and all other manufacturers to either make its service information available to the public.
Elon has decided to punish the people of Mass by charging $50 an hour for access, or $3,000 a year.
You can buy a Tesla if you like, but you will never own the car outright. Part of your car will always belong to Elon, and he will decide if you drive tomorrow, and how your car operates.
Elon has compared this to cell phones and computers, where you buy the hardware and use the software on license. This is fine for a phone or computer, because you can opt out of your software or your device and go to a new one relatively easily.
A car? Yeah. How much of a bath is one going to take when they try to unload their non-functional Tesla onto the market and go to a different car?
Can someone say "Totalitarian?"
Originally Posted By: DoubleWasp
Originally Posted By: HTSS_TR
Disclosure: Author of this article owns shares of Tesla Motors, also Motley Fool owns shares and recommends Tesla Motors.
Originally Posted By: DoubleWasp
Nobody is casting any shade over Tesla for developing itself. People cast shade over Tesla because it's entire survival hinges on selling a lot of dreams, and actually only building government funded toys for the rich.
Tesla is borrowing from Peter (Model S) to pay Paul (Model 3, etc.).
It changes nothing about the simple fact that if the Model 3 flops or plays out, Tesla goes to the grave.
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Tesla's strategy has been to emulate typical technological-product life cycles and initially enter the automotive market with an expensive, high-end product targeted at affluent buyers. As the company, its products, and consumer acceptance matured, it is moving into larger, more competitive markets at lower price points.
Tesla has a three step strategy, where the battery and electric drivetrain technology for each new type would be developed and paid for through sales of the former types, starting with Tesla Roadster and moving on to the Tesla Model S, Model X and Model 3 vehicles. Step one was making the Tesla Roadster high price, low volume. The Model S is step two with mid price, mid volume. The third generation will be low price, high volume.
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Aiming premium products at affluent "thought leaders" is a very well-known business strategy in Silicon Valley and the global technology industry, where prices for the first versions of, for example, cellular phones, laptop computers, and flat-screen televisions start high but drop with subsequent products as the technology matures and production volumes increase. According to a blog post by Musk, "New technology in any field takes a few versions to optimize before reaching the mass market, and in this case it is competing with 150 years and trillions of dollars spent on gasoline cars."
The plan will work, if and only if they can achieve a huge growth in sales rates. I'm not familiar with their finances, but I bet they would need a whole bunch of years with growth rates north of a 50% annual increase in order to get the economies to scale where they would be profitable.
Maybe they do it, and maybe not. It will take both a huge increase in the motoring population's appetite for electric only vehicles, plus Tesla will need to avoid the many pitfalls that often befall businesses that grow at the exponential rates that Tesla will need to grow in order to achieve long term profitability. I'm not yet convinced, and Tesla is not in my portfolio.
500,000 sales of Tesla are a dream. At least GM is more reasonable with a target of ~30,000 for the Bolt (probably another 30,000 for the Volt).
500,000 sales would make it the highest sale car, beating by far the most sold which is the Camry. Consider that plus GM having a reasonably competitive offer beating Tesla to the market by a year means Tesla is dreaming about 500,000. Add in the other car makers which aren't just sitting around (BMW, Nissan, etc) as well as the competitive plug in hybrid offers (which somewhat compete) means you have a very competitive landscape. What percent of the market share are they going to get? No way it's 100% LOL.
Federal tax credits will be gone within the 1st year of the Model 3, probably true for GM as well (capped at 200,000 total PEV sales). Gas prices are expected to be low for the coming years.
No doubt there is a market for these but 500,000 and by 2020? Come on. It's hard to take them serious when they put numbers out like that.
And what's next? When will they do a model refresh on the Model S? I mean they do these little upgrades here and there but what about a complete refresh? Typical new model development cost is $1B, every what 5-7 years? It's now 3 years old.
The Model S is mostly sold in the US so you can't claim that they are going to get explosive growth from the rest of the world. It hasn't happened yet as well as sales of the Model S have been growing but not booming.
Originally Posted By: HTSS_TR
The author just pointed to the extra spending of a new car company in growth mode.
Sale of Model S in 2012 was less than 3,000, 23,000 in 2013, 32,000 in 2014, 50,000 in 2015 and 90,000-100,000 is planned for 2016 and 500,000 in 2020.
The capital spending to support growth rate like this is much more than all other established car companies, in term of percentage of revenue.
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Federal Government loan Tesla several hundreds million in 2010, they paid it all back with interest in 2013, more than 9 years ahead of due date.
As of now Tesla doesn't received any government funded from Federal or any State.
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Tax incentive(s) from Federal and state(s) are to buyers not to companies, and they are available for any EV and Plug-in hybrid brand, include foreign brands such as BMW, MB, Nissan ...
Personally, I think tax incentive should be given for vehicle manufactured in US only, not for vehicles manufactured oversea in Germany or Japan or Italy ...
Tesla does have some incentives from States and Local governments for having their plant(s), but this is the same incentive as any big company would receive when they set up new plant.
Quote:
Tesla's strategy has been to emulate typical technological-product life cycles and initially enter the automotive market with an expensive, high-end product targeted at affluent buyers. As the company, its products, and consumer acceptance matured, it is moving into larger, more competitive markets at lower price points.
Tesla has a three step strategy, where the battery and electric drivetrain technology for each new type would be developed and paid for through sales of the former types, starting with Tesla Roadster and moving on to the Tesla Model S, Model X and Model 3 vehicles. Step one was making the Tesla Roadster high price, low volume. The Model S is step two with mid price, mid volume. The third generation will be low price, high volume.
Quote:
Aiming premium products at affluent "thought leaders" is a very well-known business strategy in Silicon Valley and the global technology industry, where prices for the first versions of, for example, cellular phones, laptop computers, and flat-screen televisions start high but drop with subsequent products as the technology matures and production volumes increase. According to a blog post by Musk, "New technology in any field takes a few versions to optimize before reaching the mass market, and in this case it is competing with 150 years and trillions of dollars spent on gasoline cars."
Originally Posted By: Nate1979
500,000 sales of Tesla are a dream. At least GM is more reasonable with a target of ~30,000 for the Bolt (probably another 30,000 for the Volt).
500,000 sales would make it the highest sale car, beating by far the most sold which is the Camry. Consider that plus GM having a reasonably competitive offer beating Tesla to the market by a year means Tesla is dreaming about 500,000. Add in the other car makers which aren't just sitting around (BMW, Nissan, etc) as well as the competitive plug in hybrid offers (which somewhat compete) means you have a very competitive landscape. What percent of the market share are they going to get? No way it's 100% LOL.
Federal tax credits will be gone within the 1st year of the Model 3, probably true for GM as well (capped at 200,000 total PEV sales). Gas prices are expected to be low for the coming years.
No doubt there is a market for these but 500,000 and by 2020? Come on. It's hard to take them serious when they put numbers out like that.
And what's next? When will they do a model refresh on the Model S? I mean they do these little upgrades here and there but what about a complete refresh? Typical new model development cost is $1B, every what 5-7 years? It's now 3 years old.
The Model S is mostly sold in the US so you can't claim that they are going to get explosive growth from the rest of the world. It hasn't happened yet as well as sales of the Model S have been growing but not booming.
Originally Posted By: Nate1979
500,000 sales of Tesla are a dream. At least GM is more reasonable with a target of ~30,000 for the Bolt (probably another 30,000 for the Volt).
500,000 sales would make it the highest sale car, beating by far the most sold which is the Camry. Consider that plus GM having a reasonably competitive offer beating Tesla to the market by a year means Tesla is dreaming about 500,000. Add in the other car makers which aren't just sitting around (BMW, Nissan, etc) as well as the competitive plug in hybrid offers (which somewhat compete) means you have a very competitive landscape. What percent of the market share are they going to get? No way it's 100% LOL.
Originally Posted By: Nate1979
Federal tax credits will be gone within the 1st year of the Model 3, probably true for GM as well (capped at 200,000 total PEV sales). Gas prices are expected to be low for the coming years.
No doubt there is a market for these but 500,000 and by 2020? Come on. It's hard to take them serious when they put numbers out like that.
The Model S is mostly sold in the US so you can't claim that they are going to get explosive growth from the rest of the world. It hasn't happened yet as well as sales of the Model S have been growing but not booming.
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