“ELON MUSK HAS always dreamed big, and tonight he showed off his biggest reverie yet: the fully electric Tesla Semi. Powered by a massive battery and capable of hauling 80,000 pounds, it can ramble 500 miles between charges. It’ll even drive itself—on the highway, at least.1
And Musk promises production will start in 2019.
The big rig, which Musk unveiled at SpaceX’s Hawthorne, California headquarters Thursday night, is just the latest step in his mission to make humanity forget about planet-killing fossil fuels and embrace the gospel of electric power.”
Having talked with trucking brokers the biggest cost and issue they deal with is ensuring truckers stay within legal amount of driving hours. This requirement wrecks havoc on book keeping scheduling and all facets of the trucking industry.
If Self driving did not count towards their hours or they could rest while the truck self drives. More importantly when the truck arrives and has to wait hours to drop or pick up loads they could put the truck in self driving mode, even though it is sitting there not moving, and not have to count those hours as drive hours. Currently since the truck is technically running these dead hours count against the truckers total driving time, even if they are sleeping in the truck. This last point alone is huge and could substantially offset the cost of a new electric rig.
Hope Tesla is working this angle with regulators who will need to update the laws.
Cannot even get the 3 out of the door. This semi may need even reach the assembly line. The amount of money Tesla is going to have to invest to get the 3 out, along with the batteries, etc…
I have not even looked at the finances, but Tesla already did a big debt offering, and the headlines (without reading the details) have said that the quality of this debt has fallen. I doubt Tesla will be able to do another such debt raise under equally good terms. They will most likely have to sell a few more billion in stock.
The product looks great, but we are years away and billions of dollars from Tesla having the capacity to build a material number of these rigs.
I will put one caveat forward, if truck companies, like consumers, put down a significant deposit to buy such trucks, then Tesla can largely self-fund, but it seems less likely that truck companies are going to put down deposits for trucks that won’t be built and delivered for multiple years and they certainly won’t be as patient as consumers.
But that is the one positive financing mechanism that Tesla has used over the years. It worked with consumers, but more problematic with businesses.
Tesla will need a big investment from these companies to churn these trucks out the door in any reasonable time frame.
Not unprecedented if these companies see sufficient efficiency gains, particularly since they have free cash flow, and competing against the likes of Amazon, that may actually be something that can happen.
If you own Tesla, if such an investment is made by a Walmart, then Tesla is going to be a nice stock to hold from here.
On the financing side, Deepak (Tesla CFO)explained at the latest conference call that the model 3 will start producing free cash flow in 2018, which then can be re-invested into these other growth projects. Which we now know as Tesla Semi (2019), New Roadster (2020), Chinese Gigafactory & Model Y.
What is fascinating to me is how many people don’t really understand Tesla finances or underestimate Musk’s financial acumen. If you have read Ashley Vance’s book about Elon’s companies, he fully understands the economics of what he is doing, but like Amazon re-invests for the long term so he can stay ahead of the competition and build truly industry changing companies.
I have a friend who owns a trucking company and when he watched the Tesla Semi presentation, he said “this is a game changer”.
They got a few hundred million for deposits on the Model 3. Nice trick but they were still a few billion short to get it to production!
If at some time they were to announce new vehicles with (almost literally) unbelievable specs that they may not actually be able to deliver on, as a way to raise cash through deposits, that would be a pretty desperate move and a sign that they’re grasping at straws.
At times like this it’s worth remembering that their end game is a capital-intensive industry with notoriously low margins.
The difference between Amazon and Tesla is easy to see: imagine that Tesla announced tomorrow the Model 3 was too much trouble and they’re shutting it down. It’s hard to see what else they would have to support their market cap.
Yet Amazon shuts down probably dozens of product lines every year. If they need to increase earnings I’m sure they have a list of what they need to kill off first to get any given amount of cashflow.
I could be wrong on all of this, but the standard of what I would need to see rises every day.
You haven’t the slightest idea what you’re talking about. Tesla will be mass producing the Model 3 by the end of 1Q18, and from that point forward is self-funding. You should try using better sources of information.
You haven’t the slightest idea what you’re talking about
Maybe, maybe not … But remember; You’re posting on a website that demands civility, not running for office.
And oh, my friend, there are so many better options. Care to start over? Pick one:
You could have made your point with a helping attitude.
You could have made your point with empathy.
You could have made your point with kindness.
You could have made your point with humor.
You could have made your point with links to data.
You could have made your point with no reference to anyone else’s point.
You could have made your point with CLASS.
You could have made your point with all the above.
I suppose. But the truth is that TSLA is one of the most shorted stocks out there. It was, before SHOP and others, a specific target of a Citron bear raid based on pure BS. Much of what is published regarding Tesla is utter nonsense either inspired by those with short positions, or likely paid by them.
When people post to this board simply parroting such carp, what else is there to say? Repeating gibberish is not research and degrades the board. There’s so much of this out there that I’ll stick to just pointing out that the poster has no idea what they’re talking about and leave it at that.
IGU, I have no idea too. Care to help educate us and take us through your model? Enlighten us rather than state someone is posting gibberish.
I’m genuinely interested and want to see both sides. I’m long Musk but only have a small position which is just riding Tesla for the last few years.
You say they’ll be self funding by q1 2018. Amazing. How many cars will they need to produce? How many are they producing this quarter? What are the key issues with the delays and why will they be sorted by q1? Help us understand your conviction.
Easy on the shorts. They are our friends. As long as they are opaque enough for this board to dig out the facts we can use Citron type attacks to make or add some really nice investments.
So here’s to short attacks.
At times like this it’s worth remembering that their end game is a capital-intensive industry with notoriously low margins.
At times, it is also worth remembering that Tesla has historically had much bigger margins than other car companies and that they are not just a car company.
Profit is what counts and since the beginning of the year TSLA and AMZN have both appreciated nearly the same percentages, 47% and 50% . Both have way outdone the indices. IMO from this point on TSLA may be the better investment. Way riskier, thus more potential.
Shorter range, over the last month ,TSLA has way outperformed AMZN
Nobody writes bearish opinions on AMZN. And everybody seems to agree about Amazon’s potential, a “sure thing”. TSLA seems to attract bears like a magnet, many from people who have never driven a Tesla. Though I will freely admit the chances of bankruptcy for Tesla is about 30% and only 1% or so for Amazon.
BABA has outperformed AMZN two to one during the same YTD period. .Again probably because of the perceived risk. I sold my AMZN a while back and put it in BABA. If AMZN is the paragon of e commerce then so is BABA . Both are more or less in the same industry and thus share some of the same risk factors.
But AMN and TSLA is not an either /or thing. Own one both or none.
I’d still rather own the car than the stock.
I certainly can’t argue with that.
But one does not exclude the other. I own both. At about the same initial investment. But my Tesla car is depreciating daily and my TSLA stock is way higher than what I paid for it.
OTOH the company could disappear tomorrow but the car will still be here.
Profit potential is obvious if unsure. Make lots of cars, sell them at more profit than others. What Apple does. Not the most ,but the best and the most profitable.
Have 10% of the world car market, not unobtainable, VW and Toyota did it from zero, that equals 10 million cars a year.
How many of us would have said they would be so successful when they wee selling 20,000 cars a year?
I’d still rather own the car than the stock.