The Case Against the Case Against Tesla

RV_ · March 5, 2015

For those interested I'm not the only one following Tesla's historic upheaval of the auto and energy industries, as well as communications via LEO Internet satellite swarms. His Supercharger network is going in faster than even I'd hoped.

This is seminal.

Excerpt:

"Even for a growth company, Tesla is expensive. For its stock price to make any sense at all, you have to be at least willing to consider Musk’s vision of absolute market disruption for gasoline cars. Just look at some of the targets he's set for himself:

Musk’s Milestones

•Model X : Tesla’s electric SUV with two motors and falcon-wing doors (2015)

•Home Battery : for backup power and solar storage (2015)

•Gigafactory : $5 billion plant to double the world's battery capacity (2016/2017)

•Model 3 : Tesla’s $35,000 mass-market car with a 200+ mile range (2017)

•500,000 : annual sales of EVs, a 14-fold increase from last year (2020)

•50% Annual Revenue Growth : Musk's math (every year for a decade)

To build the Tesla of tomorrow, Musk is planning to invest $1.5 billion this year alone—and he’s just getting started. Should that scare off investors? It's a matter of perspective: If you believe in Musk’s ability to succeed long-term, then the more aggressive his spending, the better. If not, then he’s just digging himself deeper in a $25 billion valuation hole.

“We’re going to spend staggering amounts of money,” Musk said in a conference call with analysts in February. The battery factory alone is estimated to cost $5 billion, of which only about $110 million has been spent so far. To achieve its goals, Tesla must also build out its car-manufacturing capacity to 10 times current levels—in the next five years.

Analysts have always been more skeptical of Tesla than the people who drive its cars. “Have faith” is generally not a sound financial strategy, and this company's future is especially difficult to divine. The average stock-price target for 23 analysts surveyed by Bloomberg ranges from $65 (Bank of America) to $400 (Stifel). That’s a remarkable spread, valuing the company at anywhere from $8 billion to $50 billion. (It currently trades for about $200 a share.)

Musk's Math: 50% Annual Growth Beats Apple in 10 Years

So how should Tesla be valued? Most of the recent news that has tipped the scale against the stock has little to do with long-term prospects. If anything, wrote Stifel's James Albertine after fourth-quarter results that disappointed most analysts, the company again showed that it knows how to get things done.

In just three months, Tesla gave its Model S a massive overhaul—adding a second motor, all-wheel drive, and semiautonomous driving—all without taking a hit to production. The Model X, though delayed, hasn't been scaled back in its ambitious design. The Gigafactory is reportedly moving ahead of schedule, while more than 2,000 rapid-charging stations have been installed worldwide and the mass-market Model 3 remains on track for 2017."

More with links to every source in the original article here: http://finance.yahoo.com/news/case-against-case-against-tesla-140002961.html

wa_desert_rat · March 5, 2015

History says that the first people into a new market lose their a$$. Of course, Musk is not the first person into the EV market or the solar market or even the Lithium battery market. But whether even he (with a LOT of money) can keep it up. After all, 50% revenue growth isn't all that important if you have 60% cost growth.

Disruption of existing markets can be a good thing, in my opinion. The power utility monopoly (both for-profit and PUD) is entrenched and politically powerful and are just now beginning to try to penetrate solar-on-the-rooftop market (in partnership, ironically enough, with Musk) thinking that if they can get there first - with leased equipment - they'll gain control of that, too. That industry now sees distributed solar as its biggest threat; never mind whether or not it would be good for the world... what's important (to them) is that it will destroy their business model. Their attempts to keep the US focused on point-source solar and wind (which they can control easily via the grid and costs) isn't working out as well as they had hoped.

Look at how hard the auto industry fought plug-in EVs. But the combination of roof-top solar and plug-in EVs makes perfect sense for many commuters (although probably not the 100-mile-per-day commuters)

But the RV niche has certainly proven over-and-over that solar power can free you from the grid and from your generator.

WDR

Jack Mayer · March 5, 2015

The 100 mile/day commuter should be covered with Musks current technology - let alone the near future. Just as soon as he gets the X out - which uses the stuff he pretty much does today. When/if I settle back into a fixed location that allows it, I will likely put in panels and his battery system - that assumes he will produce it. I'll push power into the grid, and have backup for when I need it.

Here is a charging station in Limon, CO......I've seen these more and more....they are popping up!!

Selah · March 5, 2015

Just my opinion. Tesla as an automaker is, and probably always will be, a nitch market. Much like Porche or Farari, these are high end autos for people who want to make a statement. GM and Ford are developing EVs for the everyday drivers and I don't think Tesla can compete, nor do I think that they want to despite what Musk says to the media, with the likes of Chevy or Ford. That does not mean that Tesla will not be successful as an automaker. As they diversify there technology into other markets the company as a whole seems to have great promise. Whether that justifies there stock price is beyond my crystal ball.

RV_ · March 6, 2015

Selah,

Did you miss this up above? •Model 3 : Tesla’s $35,000 mass-market car with a 200+ mile range (2017)

Disclosure: I am a heavy for me investor in Tesla. I bought a very large for me block of Tesla stock when they IPO'd in 2010 for $17 and $25. Then sold just a little at $90 to take back all of my original investment and $5k just to say no matter what I made a profit. It went up since to $190 in 2013 and crashed back to $125 when I bought another block and since then it went to $279, then slid back down to around $200 where it is fluctuating until the next step is completed. Musk announced from the start that he was going to start at the top luxury class pricing, then as economies of scale kicked in he would move down to his consumer priced model by 2017 but since he slipped the Model X back a half year due to refusing to drop the gull wings but not happy with their design until recently. Actually if you look at the performance then it does beat a lot of the Super class cars but at $75k for a well appointed 60kwh Model S is it firmly competing, and outselling the luxury Mercedes, BMWs, Audis, and several other luxury cars because it is much faster, and for the second year in a row is the top rated car in the world of all classes for safety and value. But despite most folk thinking they are in a rarified price range and believing they cost as much as the specialty the biggest reason they are outselling the S8s anmd other luxury cars of the world is that they are less expensive by far then the top of the heap, yet outperform all but the Super car class which is a step above the luxury class and are niche vehicles like Ferrari.

But don't believe me, I just went to Motor Trend's luxury cars for 2015 listing and sorted them from highest price to lowest and the Tesla is way down on page two. Here see for yourselves: http://www.motortrend.com/new_cars/27/luxury_cars/page2.html?sortOrder=VehicleJATOMsrp.min|DESC

What many miss is that Tesla's Supercharger charging stations take only 20 minutes to charge, and it takes longer than that to stretch on a long cross country trip and have a light lunch. And they are FREE!

That's right, you can drive a Tesla cross country free today and Tesla plans to keep it that way into the foreseeable future. Jack the Stations are ahead of schedule. Check out the US Supercharger maps and what they do and how fast here: http://www.teslamotors.com/supercharger If you read the page they are listed on the routing in the Tesla's onboard 17" touchscreen computer.

BTW as far as keeping the company afoot and actually get the battery systems for solar up and running all of that is coming in the next six months for the starter systems. Musk is getting the Gigafactory going ASAP.

Did I mention he owns SpaceX, along with employee stock options and some key associates? http://www.spacex.com/about

And that he also is Chairman and helped his cousins start Solar City based on his design concepts: https://en.wikipedia.org/wiki/SolarCity Most folks think that large scale energy storage is an esoteric future thing but it is being made and sold now by many more than the 11 top companies on this list.

11 Energy Storage Project Developers To Watch, From Forbes.

Excerpt:

"Competition in the young energy storage market is heating up nicely. SunEdison’s announcement today of its purchase of an energy storage startup is the latest example of that.

This is a good time to look at who are the other developers in this market, which is driven by a federal rule and a state mandate. It will need more than that, including lower cost technology and project development and construction costs, to grow long-term.

The market is growing at a nice pace. A report by GTM Research today showed that 61.9 megawatts of energy new storage projects that generated $128 million in sales were installed in the United States in 2014, a 40% increase from 2013. The market could quadruple in 2015 by adding another 220.3 megawatts. Most of the energy storage projects installed in 2014 used lithium-ion batteries, and the average price for each energy storage system was $2,064 per kilowatt.

Here is a list of project development players you should know:

1. SunEdison: Bought Solar Grid Storage to develop projects for commercial and utility customers. It already has been offering solar and batteries in India.

2. SunPower: It’s partnering with SunVerge, a battery system and management software provider and is running pilot projects with KB Home. There is no reason why SunPower wouldn’t create energy storage projects for commercial and utility customers since it already builds solar power projects in those two market segments.

3. SolarCity: Since the company is the largest residential solar installer in the country, it’s not surprising that it wants to sell energy storage services to homeowners, too. But the residential market is the toughest to crack now because there isn’t much financial incentive for homeowners to pay for energy storage. The company is marketing its services to commercial and utility customers as well.

4. Tesla Motors: A comment by Tesla’s CEO, Elon Musk, recently suggested that Tesla has positioned itself as a project developer, not just a battery system supplier. Certainly, Tesla will want to find as many customers as possible for the battery packs that it plans to produce from the giant factory it’s building in Reno, and we could hear some announcements of its batteries being used in commercial and utility projects soon. Tesla is supplying batteries to SolarCity, and Musk talked about designing a cool battery system for homes last May.

5. Advanced Microgrid Solutions: This startup came out of nowhere and snagged 50 megawatts of contracts with Southern California Edison. It hadn’t built any project before winning those contracts. Its executives have held powerful, energy-related government posts and worked at utilities. Its advisor’s venture capital firm invested in Tesla. Advanced Microgrid is an interesting company to watch.

6. Stem: Another startup that has completed project and attracted equity from the venture capital firms of large energy companies such as Total and Exelon, as well as a $100 million commitment from a hedge fund to develop and build projects. That project financing fund is the largest I’ve seen to date. It won two contracts totaling 85 megawatts with Southern California Edison last fall.

7. AES Energy Storage: You can considered AES a “veteran” in the energy storage industry just because it was building projects, and large ones, too, for several years now. It completed a 32-megawatt, or 8 megawatt-hour, project next to wind farm in West Virginia in 2011 and has built over 100 megawatts of projects in the United States. It’s also done a few projects in Chile. It’s backed by AES, an electricity generator and distributor with power plants in various corners of the world. The energy storage company is now working on delivering a 100-megawatt contract with Southern California Edison.

8. Greensmith: The startup has lined up a nice list of utility and other business customers in North America and Australia. Like some of its competitors, Greensmith aims to set itself apart by developing good software for managing the health of the battery system and controlling its charging and discharging to different types of services.

9. Coda Energy: The company was formed out of the bankruptcy of an electric car maker in 2013 and has some projects to show for.

10. Green Charge Networks: This startup also is targeting businesses and sells its energy storage service as a way to cut energy bills. It lined up a $10 million fund last year to finance projects.

11. Nextera Energy Resources: The company is a big power producer and distributor and owns a bunch of wind and solar power plants. It also is developing energy storage projects to sell electric grid-regulating services.

That whole article with hot links to all the listed companies is here: http://www.forbes.com/sites/uciliawang/2015/03/05/11-energy-storage-project-developers-to-watch/

RV_ · March 6, 2015

Sustainable energy is catching on. I believe that Tesla, Elon Musk in particular with his companies, has already changed the world. While many know we are already past the tipping point, many folks see it as a threat and that confuses me. Our freedoms are based in our belief that free enterprise is free. So why not just let folks put solar on their roof if they want to. If the solar incentives are the issue then work to stop the incentives at the voting booth. I'm not talking about the incentives, I am talking about the power companies coming on as if they are protecting us poor ignorant people from harming ourselves economically. I say that I am living in a free country.

For example. The local state legislatures, in only a handful of states, have been lobbied successfully by the National Automotive Dealer's Association (NADA) and their local members, who have lobbied their state legislatures to prevent any manufacturer of cars from selling directly to the consumer. They make a legitimate point that if their manufacturers like Ford and GM can sell directly to the consumers that they, local people who have invested heavily in their Internal Combustion Engine (ICE) dealerships, would be put out of business. Let's look at that and put our prejudices against or for dealers aside.

ICE vehicles burn carbon based fuels or gases which in turn cause massive amounts of internal coke/carbon/sludge to be generated into the lubricating oils that are necessary for an ICE to explode fuels to drive pistons in cylinders or rotary ICE designs. We all know that and know we need to change all our fluids regularly. Engine oils, need to be changed much more often than rear end, transmission, and other fluids not directly exposed to the heat and burning fuel in the combustion chambers. As a result of the heat and intake of fresh air for combustion, and the exhaust of contaminated air that is processed in a catalytic convertor to reduce some of the toxic gases, there is a lot of wear in the combustion, and exhaust systems from heated metal and plastic parts.

The electric vehicles on the other hand need little in the way of maintenance. The Tesla car is warranted as is the battery for 8 years. Why? Because the only moving part on the engine is the armature. Maybe one or two more but that is it on the engine. They have service shops in most states that allow them to sell in them. See electric vehicles need no air intake for combustion, no air and oil filters for cleaning the air and the fouled oil with combustion residues, and according to the synthetic oil crowd, burned petroleum sludge and gunk. ICE vehicles carry and burn explosive gases and liquids that can in a crash explode massively and instantly as we saw when we lost Paul Walker. But the daily news about fiery crashes goes unheeded. Here is a Duck Duck Go search result of the term "Fiery crash." https://duckduckgo.com/?q=fiery+crash&ia=news and here are 3,020,000 results in Google: https://www.google.com/?gws_rd=ssl#q=Fiery+crash .

Now we know that Teslas are phenomenally fast and that there will always be crashes of any car until we get self driving cars. And even those can have failures. Imagine if the computer that runs the auto driving car suddenly freezes up or fails completely? Teslas have been crashed through concrete walls at 120mph, and the car slowly caught fire but the driver survived. Another stolen tesla hit a metal pole and was cut in half and the batteries caught fire but the thief survived the crash. So what about Tesla and crashes? Do they burn people up? Apparently not when you read these articles all the way through: https://www.google.com/?gws_rd=ssl#q=Tesla+crash In fact I don't know of a single person who died as a result of a Tesla crash caused fire itself, and was burned alive. If they did not wear a seatbelt and were ejected, oh well. I know some folks here locally that don't wear seatbelts because they view it as an intrusion on their liberties. I agree that they should leave their seatbelts off. Mine are on.

So it is the safest car two years running, and it does not have dealerships just repair facilities. Does not need them. Everything like brakes, bearings, wiper blades and tires can be done by any mechanic or garage like Firestone and Sam's club vehicle service centers. Collisions by any body shop.

I would ask our state legislators to defend their no car sales directly to the customer on a factual basis. They started with a fabrication of how they were protecting us from ourselves making bad choices for a car with no dealership, which they no longer spout except locally in person where there are no corrections like can happen when tall tales are told online for whatever reason.. They proclaimed loudly that without service centers the new electric Tesla would be too costly to maintain. So is their claim that Teslas will run them out of local business and deny dealers their livelihood valid? YES! I agree! Letting all manufacturers sell to their customers directly would put local people out of business that invested in Franchise dealerships.

Simply put, the solution is to pass a law that any company that has any franchised dealerships in that state be prohibited from selling their vehicles direct to the public. I completely agree that with all the heat, dirty sludge and exhaust issues that ICE vehicle must have a dealership. For example the Nissan leaf which along with the Smart electric are the only major companies to sell a full EV today in the US, not a hybrid. And I agree that the manufacturers should not be allowed to compete with their dealers who need to be there to service their customer's vehicles.

So passing a law that allows direct sales of the Tesla and the Elio vehicles, without franchise dealerships, as long as they have not a single franchise dealership in the state or country, would protect the dealers just fine from the fear of their dealers with their cars competing with them and putting them out of business immediately.

As far as the future is concerned, since they make most of their money from their service departments, they will see a definite decrease in those profits as their own companies fall in and compete with Tesla. If the electric car boom is only a [passing fad then why all the bother. Just compete and be done with it. Some folks don't like the absence of the sounds of the fuel roaring out of the tailpipes! I would be one to keep a gas or diesel car even if I weren't too old to see the final conversions to electric happen. IMHO we will have ICEs around for at least another two decades. But regardless, I think by now most see the train is coming and, be they buyers or sellers, they can either get on board, get left behind, or if they stand in the way, just get run over. But that hasn't happened yet so is only my vision of the future and opinion. Everyone is entitled to those.

But it is danged exciting to watch stuff we only dreamed of ten years ago on the roads and our roofs! And it appears that there are folks who are against them only because their own statements that they are impossible, and would never work, will have to admit they were wrong. For some, being right is more important then doing right.

I am glad I got to see this come to pass technologically. Others refuse to see what is coming. Cars replaced horses didn't they?