TSLA

Investment Analysis Clubs Saul’s Investing Discussions
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With the discussion about if companies are affected by the drop in oil I wonder if anyone has thoughts about this drop in TSLA price to $214?

As far as I can tell the FA of the company is unchanged. They sell as many cars as they can produce. On the open market it would cost $10-$12 dollars in electricity to go 265 miles which is still far less the gas at $2.80.

I have not seen the cars up close but most I know rave about the car itself and not just the fact that it is electric.

I am a buyer here at $214. Any thoughts?

Robert

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Yes Robert.

Get in. Sit down. Shut up. Hold on.

:slight_smile: KLVanLiew

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Thanks for that analysis.

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I am a buyer here at $214. Any thoughts?

Robert, what does the company have to do to going forward to justify that $214 price tag? It looks like adjusted TTM EPS is $0.58? I get that they lost a month of production last quarter due to factory retooling, and so only had $0.02 EPS, so let’s say TTM EPS should have been $0.70 or $0.75 or something? That’s still a P/E around 300. And they say they expect to increase deliveries next year by only 50%.

How much will they have to grow? How long will that take? Where will that growth come from? What kind of capex and additional investment will be required to get there? What kinds of problems will they need to overcome? What are the risks?

Those are honest questions. I don’t know the answers, but those are the first things that pop into my head.

Neil

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There is an active Tesla board on the SAS service. Also 2 www sites , teslamotors.com and teslamotorsclub.com where lots of info can be found

Re Tesla- I have owned an S85 for 7 months and it is by far the best car I have ever owned . Consumer Reports gives it a 98% consumer satisfaction rating compared to Audi BMW and MB whose ratings are mostly in the 70"s. These ratings are based on what user actually say. I got my first service today. The car is flawless but had tires rotated and they installed some upgrades. Valet service picked the car up and brought it back to me. No waiting at the dealer. Cost- nothing, it was free.

Of course the car isn’t the stock but if you have never driven one you can’t really understand how much smoother and quieter they are ,with an instant really fast acceleration unlike any ICE car.

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Neil

My mistake I thought Saul owned both tsla and scty at one time. Must be another board.

Robert

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My mistake I thought Saul owned both tsla and scty at one time. Must be another board. Robert

Hi Robert, I did own TSLA (at least twice as I remember), and currently own SCTY, and owned it at least once before.

Saul

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So Saul why did you sell tsla?

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Neil:

I don’t own TSLA but do own KNDI, the Chinese EV maker. I have followed the industry for four years. I can’t give you figures but $214 assumes that Tesla will one day become a real car company, not the luxury car company it is today. GM, Ford, VW, and Toyota sell millions of cars each each year. To do so the price of the car has to come down. The car itself is a lot simpler than a conventional car, it has far fewer moving parts but the battery is expensive. That’s where the problems and the opportunities lie.

One way Tesla is moving to bring down the cost of the battery is to extend its useful life in stationary storage in Solar City installations. A battery that is no longer good enough to power a car is still good enough to store extra power from the solar panels. In stationary applications weight is not a problem. Any money Tesla can recover by selling the used batteries to Solar City brings down the price of the cars.

Kandi had announced a similar deal with a large Chinese electric utility but for reasons unknown to me the project is stalled.

With Tesla you can’t look at the next quarter or the next year. The real question is whether EVs catch on or not. If they do, $214 is probably a bargain. If not, Tesla is worth what a luxury car maker is worth.

Denny Schlesinger

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I’ll jump in to back up what mauser says. I’ve owned a Model S for 19 months. The car is superb, the customer service is phenomenal (here in NJ they offer a free shuttle service to Newark Airport for all owners, while you leave your car with them and they check it over, do needed maintenance, wash it) and then they pick you up on your return trip at the airport - shuttle service all in a Model S. No airport parking charges, no charge for the service, just tip the driver. Another Model S owner told me yesterday that there is a commercial pilot who flies out of Newark and owns a Model S and this is how he gets to the airport every day.

My wife and I did a cross country trip this summer in the Model S - we traveled 10,700 miles using the Supercharger network, all with no cost for fuel. We reckon it would have cost about $1,750 in gasoline charges for a comparable ICE vehicle.

I agree with Denny, that you are not buying TSLA for it’s earnings in the next year or two, but for what it might become in 5 - 10 years.

mauser and I vie for the top cheerleading spot on the SA Tesla board.

I am also long KNDI - thanks to Denny for all the great posts on that board.

I agree with mauser, if you haven’t driven a Model S, you are not going to get it. Also, don’t think of shorting if you haven’t driven the car.

Finally, the concerns about low gas prices impacting Tesla sales are misplaced IMO. No one is buying a Model S to save money. They are buying it for the car’s performance. Savings on gas are a perk, but not a necessity.

John

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My most recent Tesla experience. It was time to rotate the tires so I called my Service Center… They sent a valet to pick up my car at my home. The tires were rotated, a titanium battery shield installed, some mechanical proactive upgrades, a software up date, washed the car, and the valet returned it the same day.
Cost- zero, nothing, free.
No shuttle, no wait at the dealer, no wait for parts (all too common with super cars)

Tesla is the only car company that does much in the way of proactive fixes. In some 1000 cars delivered to Norway they found 1% to have a defective coupling in the drive train (not enough lubricant) They recalled all 1000 cars and replaced the unit even though only 10 were defective. Free. Probably in one day, because the drive train is modular and designed for easy removal. So you can see why Tesla owners are so happy. And why most will probably never buy an ICE car again.

GM or most car companies would have waited until they failure and fixed them one at a time. If they failed one day after the warranty ran out,the owner would probably pay for it. I had this experience with a 2005 Chevy Malibu. There was a defective part in the steering gear, the lubricant leaked out, 100 % of them failed. But if failure was after the warranty, GM wouldn’t pay…

An investment in TSLA should be long term ,5 years or so, and is very dependent on near flawless execution. I agree that gas prices are of secondary or tertiary concern for Tesla owners.

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I believe this was raised earlier, but gas prices do make a difference.

I know when I ran the math on buying a Tesla last year, including the $12,500 tax credit I would get, gas savings was a significant part of the equation.

Tesla themselves, on their calculator on their web-site makes a big deal out of savings on gas to better put in perspective the higher monthly payment for a Tesla. It does matter.

The future of Tesla, at least in a very material manner, is based upon the mass market car expected to start rolling out in 2017. There will be more price sensitivity with that car than there is with the S, or will be with X (and there is price sensitivity on the margins with the S and X) and consumers will be looking at alternatives to an electric car.

This will not be an issue for years to come however. The E car (for everyone) will be in such short supply relative to demand, that it will take years until Tesla reaches the point where they are selling to more “pragmatic” buyers of cars and not to pent up demand for those truly excited about getting a Tesla.

Thus, yes, falling cost of gas is a negative impact on Tesla. However, I don’t see the falling price of gas having any impact on Tesla for many years to come. Not until Tesla starts selling to more pragmatic customers, and that point is still many years into the future.

A Tesla S is the finest car in the world without any reservation, and also an enormous value standing on its own in comparison to the substitutes. It has the power of a high end Ferrari, the size of a large SUV, the safety that exceeds a Volvo, the reliability that exceeds everything, customer service second to none, and all at less cost than the closest equivalent ICE car, say a Ferrari or a higher end Porsche, or a to of the line BMW 7 series. It is a value product that delights.

The price of gas will some day matter to Tesla, but that day is so far away that it is impossible to know what the price of gas will be, in say 2019, 2020, 2021, so it really is not relevant, except as to market perceptions, and said perceptions can sway dramatically within days.

Tinker

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Tinker I agree that lower gas prices will only dissuade a few model S buyers.
But money is money, no matter what any likely level gas prices fall to, Tesla owners will save $1000 or more a year even with low milage, charging at home. When gas prices were higher I figured charging at home was costing me about 1/4 to 1/5 the gas cost of any even semi-competative car ( a sub compact is not competition).

To be honest the gas savings were probably more of an excuse to justify putting down all that money to get a Tesla. Even at low (what we used to call high) gas prices if you travel a lot and use SC the car is almost free to run.

With the gen 3 it may be different.
When I look at the ICE cars costing 40,000 or so (the out the door price with options I expect these cars to sell for) most do not get very good mpg. In any case that is too far away to make any predictions about.
Except that availability of many SC , end of range anxiety, is likely to be far more important for early mainstream customers.

If I could predict gas prices even for tomorrow with reliability I would be writing this from my mega yacht off the French Rivera.

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Is there a possibility of TSLA coming up with something to complement the E cars that would be a more efficient home charger or some such?

Say like a discount on a SCTY install where the base would cover the charging?

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Who knows what Tesla is coming up with. What we do know is that Tesla thinks about the whole product and thinks outside the box, and thinks of solutions that are efficient and work that yet are genius.

The whole synergy with SCTY as an example. The company was not even Musk’s idea, but it got light bulbs ringing in his head.

Tinker

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XMFBreakerTinker wrote:
A Tesla S is the finest car in the world without any reservation, and also an enormous value standing on its own in comparison to the substitutes. It has the power of a high end Ferrari, the size of a large SUV, the safety that exceeds a Volvo, the reliability that exceeds everything, customer service second to none, and all at less cost than the closest equivalent ICE car, say a Ferrari or a higher end Porsche, or a to of the line BMW 7 series. It is a value product that delights.

Exactly. I’ve had my P85 for ten weeks now and I’m still looking for any excuse to drive it around. It’s so far better than any other car that no Tesla driver will consider going back voluntarily. And the truly amazing thing about it is that like all high tech products it’s only getting better. I think that the expected 2017 mass market vehicle will be better than today’s Model S in almost every way that matters.

Tesla will be supply limited for the forseeable future. Expansion of capacity will be limited mostly by people issues – how they can scale without lowering their standards.

-IGU-

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