Tesla Financial Results 2019 Q4
ir.tesla.com
ir.tesla.com
No doubt execution has been an issue in the past, but recent sales trends, completion of gigafactory, and Chinese expansion show that they are on the right trend.
Tesla's were confined to the luxury market, but the Model 3 is doing well and Tesla is being allowed to come out with more and more SKUs while the other big auto's are still finding their footing.
The branding is on point without the need to advertise, like the iPhone, Tesla's are becoming just a feature of everyday life (at least in large metro's). Finally, and this is absolutely non-empirical, I just believe in Elon. Tesla might be one of those companies that simply fades away once a galvanizing leader leaves, but as long as his heart is beating I'll hold.
As to subsidies, governments are pushing ev's harder and harder. The EU has continually-increasing fleet standards that can be met only by adding more ev's, and China has continually increasing ev production standards. Ev sales are going to keep increasing, and Tesla makes the best ev's. Sales, revenues and profits are going to keep going up.
Companies are rarely production constrained. Many claim they are, but the fact that Tesla sales in their two largest markets declined doesn’t indicate to me that production is their number one issue.
The nice thing about this disagreement we are having is it will be settled by what happens in the next year. I say Tesla's sales will go up strongly now that it has another factory. I take it you think they won't, and all that new capacity will go unsold.
And I would say Tesla’s revenue growth will start to flatline, yes, as the last two quarters have shown.
Their capital efficiency has markedly increased.
To put it less glamorously, they burned boatloads of money chasing “alien dreadnaught” style fully automated production, and after recognizing that failure (better late than never) they now find they are able to build out new production lines at a fraction of the first line’s cost.
But more to the point, what exactly do you think Tesla should have been spending its money on that it didn't?
And let add to my original comment that Tesla also has the Semi going into production later this year, and recently brought out a greatly improved version of its solar roof, and is working like crazy on self-driving.
But back to my question: what should it have been spending its money on that it didn't?
Capital Expenditures are what a company spends on land, buildings, equipment -- all of those sort of long term assets. Depreciation is how much the value of those assets decline over time with usage and would eventually require maintenance or repair costs.
Usually, when depreciation exceeds CapEx, it means the company isn't spending enough to maintain their current assets, and this will eventually catch up to them. For growing companies investing in the future, CapEx is usually a great deal more than depreciation, since there will be a large amount spent on future assets.
> But more to the point, what exactly do you think Tesla should have been spending its money on that it didn't?
> And let add to my original comment that Tesla also has the Semi going into production later this year, and recently brought out a greatly improved version of its solar roof, and is working like crazy on self-driving.
> But back to my question: what should it have been spending its money on that it didn't?
My point is that the PR statements that Tesla releases don't match the financials. It's easy to announce that a factory is being built or a new car is going into production, but we should be extremely skeptical of these statements when they aren't backed up by audited financial information.
Generally when investing in a company you should look at their financials first, as they are going to be the most honest, and PR statements/rumors last, as they will be the least honest.
Oh dear, are you saying that Tesla did not actually recently open a new factory in Shanghai, or start a new one outside Berlin? In spite of all the news stories and announcements by the governments in each of the countries. And ditto it has not been developing the Y in spite of all the reported sightings? Or that the new version of the solar roof did not go into production, in spite of all the reviews of it, and all the people who have said they have ordered one? It is all an extremely elaborate hoax? And even when their latest quarterly report discusses all this?
You know, when someone is so far gone into conspiracy theories as you appear to be, there is no reasoning them.
Companies exaggerate in their PR statements. It’s very easy to claim a factory is complete but not have meaningful production. It’s very easy to claim that the Model Y is just around the corner. It’s apparently very easy to bilk investors that solar roofs are beyond a concept phase for three plus years. That doesn’t mean they are.
It’s not a conspiracy theory to want a company to produce audited financials that show that they have done the complete investment in all of these projects and they aren’t vaporware.
From that document in the FINANCIAL SUMMARY section there are these quarterly profit/loss number:
Income (loss) from operations
Q1-2019 Q2-2019 Q3-2019 Q4-2019
-522 -167 261 359
But for the whole year that was only a loss of 69 million dollars.
I think what the market likes is the Tesla cash position.
If you look at those it would appear Tesla is no longer burning cash.
Cash and cash equivalents
Q4-2018 Q1-2019 Q2-2019 Q3-2019 Q4-2019 QoQ YoY
3,686 2,198 4,955 5,338 6,268 17% 70%
How does this stack up to last year, and forecasts for next year? If they were in the hole $120MM last year and now only 69, with forecasts for ~20MM or less next year then there is a clear road to profitability and I might be willing to do the Long thing.
It's a lot of things, really. Range, performance, the hope of self-driving, the supercharging network (Which is much bigger than people think!), and of course, the fact that they look like normal cars. Most other EVs like the Leaf are either incredibly lacking in range and performance, or they're incredibly ugly like the BMW i3.
Then you've got cars like the Mullen Qiantu K50 [0] that try to be something special, but other than looks are incredibly lackluster and overpriced. $125K, and its performance and range are on par with a $48K Model 3 LR AWD. They're trying to brand it like a supercar, but it's only a supercar in the looks.
It's crazy to me that other makers can't even get charging done well. Most public CHAdeMO or CCS chargers are only up to 50 kW, while Tesla superchargers are usually 72 kW and sometimes up to 150 kW. Being able to charge quickly is a must when one of your biggest barriers to getting customers is overcoming their range anxiety.
Also, Supercharger v3 goes up to 250kW
Also, we are many to love the i3 look. It's a matter of tastes.
I know that if I buy an electric car that isn’t a Tesla, whenever that car bugs me, I will think ‘damn it, I wish I bought a Tesla’
But if I buy a Tesla, I’m not going to think it wish ‘I’d bought a leaf’
That’s just me. I don’t even have an electric car yet. But my name is down for the cybertruck.
I bought an used electric car with a tiny range to commute and every time I did long trips with it I wished I got a Tesla with a five times bigger battery.
But then I think about it, I do not regret not spending the money on a Model S, renting a long range car a few times a year, and buying a bigger flat with the money I saved.
Range is good enough for daily driving, sure.
More than good enough performance? Subjective and debatable. I frequently hear about all the instant torque of an EV, but all it takes is a ride in a Leaf to learn that this really only applies to Teslas and the more sport-intended EVs. In other words, not the Leaf. Sure, the torque is still instant, but its...not a lot.
But the range...we need more 300+ mile EVs that support 150+ kW charging in order to overcome people's range anxiety for road trips, not to mention more 150+ kW chargers. I'm taking my Model 3 Performance on a 2,250 mile road trip later this year, and it'll be my first EV road trip. I'd be lying if I didn't say that I'm feeling a little anxious about it. I've planned the crap out of my stops (Thanks to sites like ABRP), but still a little nervous. If I had a SR Model 3, I'd probably just say forget it and take my wife's CRV.
This is while Telsa is building out a charging network and fighting for a direct to consumer sales model and also possessing a knowledge base of every fault that's ever occurred in it's entire fleet and every Tesla Sale increases the return on Tesla's deployed capital plus a highly dedicated creative resilient workforce that are at the point of smoothing variability and product refinement.
So for BMW to win they have to bet the factory that they will take enough market share while Tesla's quality and brand strengthen. Hence the current share valuation.
Now a lot of people say Elon is a manipulative exaggerator but the fact remains he has built car sensor database company with a carbon advantage that has BMW on the ropes while reigniting a space race. If machine learning can sort the data and it seems to be improving year on year then alot of people who haven't built nearly as much will probably be taking a Tesla to work.
Why do people want Tesla to fail. Economies of scale, improving battery technology and a global charging network and everyone eventually has a cheaper travel option. How revered the founder was is a quite irrelevant.
This was my first thought during the Cybertruck unveil. It no longer looks like a normal truck. Rivian was far out originally, but this blew it out the park.
So the question is really, would people want an electric pickup truck that looks like nothing before it?
I'm leaning towards yes, but we have to wait for the market to make its choice to find out for sure.
The whole problem with eg the BMW i-Series or most other electric cars is that they are designed in a silly way that says, “look at me, I’m a weird electric car, I’m not a normal car at all, I’m willing to look like a total dork in order to virtue-signal about being eco-friendly”. Teslas just look like sports cars—except the Cybertruck’s styling is 100% “dorky virtue signal about having a weird special truck”, and truck people are even less likely than car people to put up with that.
And I think it looks cool, so that literally purely your opinion.
The design of the truck allows it to be produced for 40k and still have quite a bit of range. Those performance and price measures matter. Had they copied an F150 it would cost at least 50k and would not have as much range.
Tesla had to make conservative cars to establish themselves, but a revolutionary brands will not always just copy the competition, specially when trucks are on of the most uninspired markets where literally every vehicle is a copy of the other.
I wouldn't characterize Tesla's other cars as "conservative" in the slightest. "Conservative" makes me think of Volvo or Lexus. The Model S is absolutely gorgeous and if any car aficionado saw it, he would say, "that is an absolutely gorgeous car". It literally looks like a better Lamborghini, Ferrari, or Porsche. The Cybertruck provokes reactions somewhere on a spectrum between "what the fuck is that?" and "hmm, that's interesting". Which is roughly the same design space that the Pontiac Aztek, Chrysler PT Cruiser, and BMW i-Series inhabit. It's not fertile ground.
> It’s really damn cool aside from the roof coming to a point. I’m not sure I understand that design decision. However, onboard air compressor, 110v/220v accessory power, fast as shit, good ground clearance, integral bed cover and ramps, air ride suspension, and tough shell to boot... there is a lot to like here. I might just have to buy one in a couple years.
> Yeah because everyone wants a ‘bed’ you can’t load from the sides.
> I think [being able to load the truck bed from the sides] really only matters for people who use their trucks for actual work. This is obviously for people who want a truck for play and not work.
> ... he could have taken this seriously and actually made an impact. Now he’s proven the older anti EV crowd 100% correct that an electric truck isn’t a viable alternative.
> Clearly designed by someone who has literally never even used a truck once in their entire life.
> It's stupid tall bedsides ruin it for slide in campers too. If it wasn't for that the 3500lb payload and huge battery would make it great for a slide in.
> I'm surprised you all are not pouncing on the unibody. The other "truck" (Honda) that uses a unibody construction does not get much love.
> [People who like the Cybertruck design are] those who've never actually used a truck to haul items and/or trailers. Those who are in the ranching, mining, and other similar industries are laughing at this.
> Is the bed cover transparent? Seems like the rear window is only usable when the cover is retracted. I'm sorry. This is a truck for the Ridgeline crowd. No 8ft bed option. Only crew cab configuration. AWD, not 4WD. Can't tow a Gooseneck or 5th wheel, which you're gonna want when towing a 14K trailer. People will buy it. I won't.
> It’s a weird case of form over function. He was so focused on the blade runner vibe he forgot to make sure it was usable as a truck. Can’t even get to the front of the bed without opening the tailgate and getting inside.
> Trucks have a utilitarian purpose. There is a reason for their shapes. And if you look worldwide there are some differences, but also some commonalities. Like being able to access the frigging bed. That’s a massive failure here.
> There’s some things about truck design that are important to the function of being a truck. Like not having angled bed sides so you can fucking reach the first 1/2 of the bed without getting in it or being able to tow a 5th wheel.
> After looking at more pictures today I realized it doesn't even have a true 6.5' bed. It's much shorter than that, but angles in underneath the rear seats. Probably ok for hauling a few sheets of plywood, but putting in, say, furniture, would be harder.
> I set things in the bed over the bedside a lot. And climb in the sides. I’d have to awkwardly yeet shit over the side of that angled monstrosity
> This truck looks like an absolute nightmare to load and unload tbh. I actually even ditched my bed for a Bradford flatbed to make my truck easier to use. Rear/side visibility looks awful. Boasts a 14,000 towing capacity yet it looks like a nightmare to hook up to a trailer. I’d love to know how far this thing can tow 14,000lbs. Payload of “3,900lbs”. What does the truck itself weigh? Does Tesla understand GVWR or how to calculate payload or is it assuming it’s potential buyers do not? I guess I just don’t understand the whole concept and what exactly they’re going for. Seems like they’re trying to do too much. This has been the plague of these types of “crossovers” which is exactly what this is. El Camino, Ford Ranchero, Subaru Brat, Subaru Baja, Chevy Avalanche, Honda Ridgeline, the list goes on and on.
> Having a large locking cover would give me so much peace of mind when I'm parked with my tools in there. Having the thing build of stainless steel made me ask why hasn't trucks been main of stainless steel for years.
> The bed has some L-Tracks and T-Slots in it too for easy tie downs, which was something I learned from a video I saw that someone did a test drive in
> Literally the only good truck feature is the integrated full width ramp in the tailgate.
> And you can lower the suspension in the back to make it easier! I would have killed for that the last few times i was loading heavy equipment into the back of my truck by myself. I had to make due with backing up to a hill and using a shitty steel ramp that would fall if i so much as looked at it wrong.
> Let's be honest, most people in suburbia/cities with trucks are just drugstore cowboys anyway. This truck will meet the needs of most consumers
> Good luck towing a 5th wheel with that thing
> If you need a truck, Cybertruck's already disqualified itself. Little clearance, no room for mods, unibody, no side access to the truck bed, likely range issues (once you add a load), and that's just the stuff we know about now. I can only imagine buying this if you buy a truck just so you can feel like you're driving a truck but never plan on using the truck features beyond occasional off-roading.
[1] https://old.reddit.com/r/Trucks/comments/dzvqhx/tesla_truck/ [2] https://old.reddit.com/r/Trucks/comments/e061ru/style_contra...
The self-driving bit is a risk either way, but I think Tesla is dangerously close to losing out on both the “looking like a normal car” and potentially the performance factor if they’re serious about Cybertruck.
Plus I actually think the cybertruck looks awesome (you have to see it as a driving space ship not a car) and the value is amazing - so much range for not that much money. And that thing looks built to last (balls of metal thrown at the windows withstanding)
7 kW.
Seven! What is the point of that?
The only place a 7 kW charger should be considered acceptable is at home, a hotel, or the workplace. A supermarket where you're likely to only be parked up to an hour? Nah, that needs to be much more.
It’s a totally different mind-set and usage pattern. Gas-like refills vs just topping off for free. Older EVs with smaller batteries that you charge all around town, vs newer Tesla’s that you supercharge like a fill-up. But 7kW can still give you 30 miles of range in an hour of shopping, plenty to get home somewhere in the suburbs even if you happen to be low already.
Well aware of the difference in sales figures, but having driven both, I prefer it to the Model S.
I think battery tech will end up deciding the market, though, and GM would have to pivot harder that I think they are able to in order to beat Tesla. I am very curious about their internal R&D pipeline for the Maxwell technology.
From my perspective the Bolt is: -Ugly -Less safe -Slower -Doesn't drive itself, or will be capable in the future
Worst of all the Bolt's infotainment system is horrible.
https://www.chevrolet.com/content/dam/chevrolet/na/us/englis...
I have no use for an infotainment system in any vehicle (give me a hotspot and I'll bring my own devices). I disliked the Tesla center mounted tablet console dashboard, though that's subjective.
I don't think the Tesla drives itself, does it? That was not a factor for me, and if anything would be a mild negative at the current level of self-driving tech maturity. At any rate, the Bolt had some useful driver assist packages for safety, though they are upgrades. I think they both have fairly similar safety ratings. And speed isn't a consideration for me, as long as it goes fast enough for highway. Nor is appearance, within reason.
I really am thrilled for Tesla's success and don't think there is a "right car" but a "right car for you". The Bolt is a good car, though.
Tesla's more or less take over on the freeway. They are also on their way to mastering traffic lights.
> center mounted tablet console dashboard Yeah, that's a little weird.
> the Bolt had some useful driver assist packages for safety, though they are upgrades
Tesla's are the safest cars on the road now.
Eh, I imagine that depends on how actively you use the autopilot and auto unpark features. I know they don't want to cede the frontrunner status of that technology, but it still feels like a risky gambit for tesla and for its customers.
[0]https://www.iihs.org/news/detail/tesla-earns-its-first-ever-...
Sure and I’m on my way to mastering Russian Roulette. Until I actually get there though you might not want to sell me life insurance.
There are some things where being “on the way” to mastery is worse than nothing, and propelling a two ton object at a red light is one of those things.
It has Carplay/Android Auto; you'd never look at that UI if you didn't want to.
The 2020 Bolt has 259 miles of EPA range and is the best value for money of any EV in the world at the moment. Have a look at these prices:
https://www.cars.com/for-sale/searchresults.action/?mdId=362...
Here's a real world example of someone who has leased a 2020 Bolt:
https://www.youtube.com/watch?v=f8Egdi0GU9Y
He has a 2017 Bolt on lease and he was thinking about getting a different EV, but in the end he went with a 3 year lease on a 2020 Bolt because the offer was too good to refuse. He paid $2500 down (which was covered by state EV incentives) and the lease is $147 a month for 12,000 miles per annum.
Show me a better EV deal than that.
Here's a 2020 Bolt doing a 1,000 km trip: https://www.youtube.com/watch?v=bMVRm8UvHjs
Here's a Bolt which did the Cannonball run: https://www.torquenews.com/8861/chevrolet-bolt-ev-set-cannon...
Here's a 2017 Bolt surviving the cold: https://www.torquenews.com/8861/my-chevy-bolt-ev-sat-unplugg...
As ever, you need to plan your trip around charging stops. A Better Route Planner (https://abetterrouteplanner.com/) is a useful tool but it's a bit conservative for the Bolt (although I think it's better to be conservative than stranded). It also doesn't necessarily take into account overnight charging. On a long trip you'd charge overnight and start the next day with a full battery: https://www.torquenews.com/8861/chevrolet-bolt-ev-issues-bet...
I compared it to a Tesla (test drove a Model 3), and a Tesla would be about $15k more. I have no use for self-driving. As a software engineer, I feel that full self-driving requires a general AI, which I think is on the order of decades away.
I really just wanted a simple electric car with minimal maintenance and no fossil fuel dependencies. Minimal complexity, no gimmicks (fart generator, Tesla? come on...)
With those requirements, the Bolt is awesome.
Doctors make the worst patients.
https://www.theverge.com/2019/12/5/20996866/gm-lg-ev-electri...
And recently an ounced a $2.2 billion investment to turn a plant into one that will produce only electric vehicle
https://www.freep.com/story/money/cars/general-motors/2020/0...
GM has the EV knowledge from Bolt and Volt. It has autonomous tech from Cruise Automation.
GM is planning 20 all electric vehicle models by 2023.
IMHO they would be the clear leader in the pack of traditional manufacturers.
I also don't think anyone needs to beat anyone. Everyone will have their market share sooner or later as the tech becomes a commodity. I just want my self driving EV cheaply, and reliability. I've never owned a GM vehicle but I'm an keeping an eye on what they come out with.
To justify their current valuation, the “bull case” is for them to dominate the entire automative industry (not just the EV segment) and do an Amazon-like turnaround of losses into profitability.
Anything short of that, their valuation is ludicrous.
Tesla owns the entire vertical from battery cell manufacturing, using those cells to do work (automotive), home and grid energy storage, and solar generation. Throw in the rest of Elon’s companies and you also get the transportation network itself (Boring) and even the data provider for these cars that need to be highly connected (Starlink). And if you really want to believe Elon, some weird, someday a pressurized version of the Cybertruck might become the transportation off of this planet.
With batteries... you just make batteries. With cars you have to score adequate or better in lots of different areas to be competitive.
Toyota has over twice the market cap that Tesla has (230 billion vs 105 billion) and considering how big the auto industry is outside of just these 2 companies, I don't know how you think an automotive company at 105 billion is vastly overvalued.
They also have the world's biggest charging network, storage solutions, solar solutions and produce more batteries than virtually everyone else combined. Mercedes actually just put out a press release that said they can't build enough electric cars because they can't build enough batteries, because Tesla acquired the company they were going to use in 2016. Evidently Mercedes have done exactly zero about that in the years since.
Of course Tesla also have the whole "self driving car" thing they've been working on for a while. If they crack that one in the next ~24 months, their valuation will easily top Toyota's, because they're worth so much more than just how many cars they can build.
Right now revenue from energy storage resembles Tesla's auto business in 2013[1].. so if it grows at the same rate...
https://cleantechnica.com/2020/01/29/tesla-energy-lifts-off-...
What matters is that they produce lots of cars and the cars have a better then expected profit margin, focusing on anything else is simply foolish.
And they produced the most cars they ever did and still lost money for the tenth consecutive year, in a year where the expectations given from Wall Street and the company were to make money.
https://teslamag.de/news/betriebsrat-tesla-ist-mitschuld-an-...
And translated
https://www.reddit.com/r/teslamotors/comments/euob34/the_cri...
This growth will eventually plateau but it's a good bet that it will do so with millions of cars in production.
“No-one wants a touch screen keyboard” etc, the CEOs said as their business evaporated.
Tesla are still at iPhone 3G point I reckon, having just released their first affordable car.
Also consider that while they are so far ahead - they are still accelerating. And the traditional car makers haven’t even realised they’re in a race to the death yet.
Most countries have barred the sale on non-EV cars in couple of decades. That’s not actually that far away. Or self driving could make all other cars seem like Nokia 3310s.
Cheers!
> the “bull case” is for them to dominate the entire automative industry (not just the EV segment)
Is Tesla's market valuation highest than the highest valued automakers?
*Daimler, Volkswagon, Audi
In what way are they treating EV like the enemy?
> Same thing happened with Kodak.
No it did not. What happened to Kodak was that its primary source of profit, film, was threatened by new technological developments. That is in no way comparable with the situation of car manufacturers.
> You spend decades, centuries even, perfecting the internal combustion engine. Your pride and joy is now obsolete. You can see why it was so hard for everyone to switch over.
It was hard to switch over because it was thought that it wasn't profitable. Now that it is apparent that it is profitable nobody has any problems switching over at least not any problems of the kind you are talking about.
> Almost all your cumulative knowledge, obsolete.
Almost all knowledge is obsolete... wtf. Are EVs not vehicles and haven't we been making vehicles for a long time?
> It is why Toyota, with their insanely successful Prius, who knew full an well how transformative the EV side is, dragged their heals until to this very day.
Because they were concentrating on hydrogen cars.
> Most of the Germans have delayed their EVs for mass market in the US from 2021 to 2022. Even Hyundai, who is the closets to Tesla in efficiency, is frought with delays. "We are X* we will have no problem making an EV" they said!
And how many delays did Tesla have?
The dealer networks are outright hostile to them since maintenance revenue is reduced so much.
You're talking 3 billion people that all want cars.
The short interest has declined from a high of ~44 million shares in mid-May last year to about 25 million shares currently, which is currently 18.7% of float.
[1] - https://twitter.com/ihors3/status/1222630157535588352/photo/...
If the Tesla cars start throwing off profit and make the company self-sustaining, their vertically-integrated energy thing opens the kind of insanely huge global energy market. They're not just going to eat Ford's lunch - but also Chevron, Saudi Aramco and your local energy company.
But it's the long term I care about, and I'm fairly confident that Tesla is well-positioned for the direction things are headed.
Electricity (and solar in particular) - Continually reducing production costs on a resource that is unlimited, at least from the perspective of our planet.
Fossil fuels - Continually increasing costs as resources are depleted and externalities are accounted for.
I guess you can tell where my chips are. :-)
But they are happy to sell solar and storage to utilities, to the extent that power grids still provide useful services. (And I definitely believe they do...) See: https://www.tesla.com/utilities
I also think that consumer 'behind the meter' solar generation and battery (or other) storage tech will also capture a lot of value that goes to utilities right now.
It's actually Panasonic solar panel + SolarEdge inverter, that Tesla puts their sticker on. Tesla is just an installer of third party products, like majority of all other solar companies. That can possibly change with solar roof, but it's very early stage.
In the new context a large solar installation connected to the grid is more cost effective if you need a grid for nighttime. The real question is whether batteries will make it so you don't need that. They're currently too expensive for that, but they're also declining in price. So if batteries get cheap enough that you can run your home from local panels and batteries without needing the grid, the cost of needing to keep the grid when you could otherwise not have it anymore makes the centralization lose its cost advantage.
Moreover energy produced by solar panels in homes is locally consumed, therefore there is no maintenance (nor any non-neglectable cost or loss) related to distribution (they are non neglectable).
As for photovoltaic a home system seems very robust to me, even serious hail cannot damage it (some windshields will break under it way before the panels!).
I completely fail to see even a single and most prominent problem.
In a sunny geographical zones there usually are many user, and a is local service offering.
I think Tesla might run into issues around energy regulation. They are working on energy storage and solar, but we'll have to wait and see how that turns out in the market. Energy companies are highly regulated and generally provide highly reliable service. This comes with costs like running higher than you can actually charge for so you don't get outages, employing a lot of people for emergency response and storms, etc. What happens when solar roofs get covered with snow and don't work as well? If the utility company is tasked with making sure they have enough generation power to cover that, then we'll still need to pay them for the investment even if we're using our solar roofs 90% of the time. We're already seeing net metering going out of fashion as the unpredictability of it doesn't help utility companies lower their costs enough.
Would Tesla be willing to also go into the generation and transmission side of things? It's definitely possible, but that's also difficult. Generation is easier since they could just set up solar arrays and batteries and sell into the grid. However, that still means customers paying the transmission company. It's possible that you're talking about the generation side and Tesla could tackle that a lot easier. In terms of the transmission side, they'd probably have to start buying utility companies which don't come cheap.
I think it's more likely that Tesla will sell tech to transmission companies and solar roofs and small batteries to individuals. I think there's still a lot of money and environmental benefit there, but I think transmission companies are going to stick around. It's a good business if you're just looking for standard return-on-investment, but it also requires dealing with a lot of regulation and communities that end up hating on you.
--
In terms of Tesla being up so much, it's a bit surprising. Automotive revenue is basically flat year-over-year. Total revenue is up only 2%. So, Tesla isn't really growing. By contrast, Apple's revenue was up 9% year-over-year and Apple is solidly profitable today. Assuming that Tesla continues having profitable quarters, their PE ratio would be around 250 which would be fine if they were growing revenue rapidly.
On the plus side, Model 3 production and sales are up over 40% YoY which is excellent, but it's clear why revenue is flat: Model S/X sales are down significantly and they carry a high price tag. For every three Model 3 sales, they lost a Model S/X sale. That's certainly to be expected. The Model 3 is really nice. However, it does mean that revenue is flat.
As a car offering, I like the Model 3. However, I don't know if demand will continue to increase. How many people want to spend $40k on a car - and specifically a Tesla Model 3? Will there be some hockey-stick like growth in revenue? Probably not. Profits? Maybe. Tesla's vertical integration might pay long-term dividends. Maybe they can spend less developing things they've already paid for or maybe they can keep spending on R&D and really outpace the industry.
Still, it seems unlikely that they will grow more than 10x their current size in the automotive industry. That's not a dig at Tesla. If they're pushing out around 600k cars this year, becoming 10x the size would put them in the same place as Ford and GM. A 17x increase would make them larger than Toyota. But that's going to take time. It looks like Tesla is looking to increase production capacity by 15.6% in 2020 (from their slides). At that rate, it would take 20 years to match Toyota's capacity (starting from 640k production capacity and compound expanding at 15.6% per year for 20 years).
Maybe Tesla can expand faster than that, but that would also likely require moving into lower cost/margin vehicles, many more types of vehicles, etc. Toyota has 17 US vehicles not including variants like hybrid vs non-hybrid not to mention many more for other markets and not including things like Lexus - Lexus adds another 12 models, not counting variations like hybrid vs non-hybrid.
And I'm not saying that Tesla isn't going to do that. However, I think it's going to take a long time and a 20-year horizon (and the risk involved in money that might materialize in 20 years) deserves a discount compared to money that's actually being earned today.
You might totally be right that Tesla will not only eat Ford and GM's lunch, but also energy companies. However, that future is likely 20 years away with a lot of risk between now and then. Musk has been very upfront that electric vehicles are easier to make than ICE cars. Other auto makers are creating good electric vehicles except they won't offer enough range because batteries are expensive. When batteries become cheaper, will competition limit Tesla's automotive expansion? I think they'll still be highly successful, but what happens when Toyota or Volkswagen puts their full weight behind battery-powered cars? Some people will surely buy them instead of Teslas. At some point, if battery-powered cars are our future, Tesla will clash head-on with Toyota. Toyota is so good at manufacturing. Even if Tesla is good, Toyota is likely to find ways to capture a lot of the market. Heck, if electric cars are more reliable as Musk touts, what happens when people double the lifespans of their cars? That's a much smaller customer base to be selling to.
Again, I want to emphasize that Tesla is doing well, but anything with a long time horizon has all sorts of things that can happen in the interim and Tesla is playing a long game and going up against a lot of established incumbents and that means risk. I don't think it means risk of bankruptcy or anything like that, but there's a big difference between Tesla's current market cap (around $115B in after-hours trading) and ending up as the next Mazda (a solid, profitable, and well-respected auto maker) that's only worth $6B. Even if they're the next VW (the second largest auto maker sitting just behind Toyota), VW is only a $95B company - and there's a lot of risk between now and Tesla selling 10M cars per year. Likewise, there's a lot of incumbents, competition, and risk between Tesla's current solar and storage deployments and eating energy companies' lunch.
Tesla is one of the most compelling stories to follow in recent years, but it seems like moderates have been pushed out and discussions have devolved in to Tesla is a fraud vs Hodl to the moon, with both sides cherry picking facts so hard it's mildly impressive.
So the above is a breath of fresh air, and I'd love to read more in depth takes from others whether I agree with them or not.
That's an interesting point. During/after the worst of the recent California drought years, some water companies had to raise their rates because people were so good at saving water. Because so many of the utility company's expenses are fixed costs, their savings from not distributing as much water weren't proportional with their reduction in revenue.
In Q4 2018 they sold 27,607 S/X, and in Q4 2019 they sold 19,475 (-8132, 29%). In Q4 2018 they sold 63,359 M3, and in Q4 2019 they sold 92,620 (+29,261, 46%). Vehicle production over the trailing 12 months increased from ~245k to 365k (~50%).
Why didn't revenue grow? It's not just the 8,000 fewer Model S/X, because S/X doesn't cost 3.6x a Model 3. Just as important was the ASP of the Model 3 fell... about $7,500 to be precise.
> If they're pushing out around 600k cars this year, becoming 10x the size would put them in the same place as Ford and GM. A 17x increase would make them larger than Toyota. But that's going to take time. It looks like Tesla is looking to increase production capacity by 15.6% in 2020 (from their slides).
Tesla says their current production capacity is 640k vehicles (I was surprised by this - it's well beyond the promised "500k run rate by the end of 2019", so I think we're seeing the full effect of Giga Shanghai turning on here).
By mid-2020 Tesla has said they will be running at a 740k annualized production rate based on added Fremont capacity for Model Y. They have said they intend to increase Model 3 capacity in Shanghai and have at least equivalent capacity for Model Y starting in 2021. That means Shanghai + Fremont will be producing nearly 1m annually in 2021. Now, at that point Berlin will be coming online, which is planned to produce 500k units/year. The upshot I think is that production capacity is increasing at a rate of 40-50% year-over-year -- I'm not sure where you got 15.6% from.
> Even if they're the next VW (the second largest auto maker sitting just behind Toyota), VW is only a $95B company - and there's a lot of risk between now and Tesla selling 10M cars per year.
Many people confuse market cap with enterprise value. VW enterprise value is $255B vs $110B for Tesla. You have to subtract the outstanding debt, of which Tesla has very little compared to most automakers, before you get down to Market Cap, which is the value remaining for the shareholders.
All that said, it is clear that the current valuation of Tesla has ceased to be based purely on fundamentals.
At the very least Tesla (and any similar 'electricity' co) already benefits from policies geared toward limiting greenhouse gases (and various 'pollutants') emissions, and as those will probably ramp up, will benefit more and more from them.
But there may be more, maybe even much more.
The gorilla in the room is the fact that solar (nor wind) energy cannot deliver 100% of the time.
Any intermittent energy source has to be compensated. On a grid in order to provide the necessary 'baseload'. On most autonomous locations because people don't want or cannot wait for power, they want to switch it ON and immediately enjoy the ride.
At any moment delivering power to a non-producing geographical zone may be done thanks to power produced in other areas, or (this not a XOR!) by storing energy.
From a practical viewpoint a mix of sources (windfarms, geothermal...) and interconnecting grids (forming a continental-scale supergrid) are mandatory, and in many nations there are massive investments towards all this, boosting 'distributed generation' (mainly wind energy, various other forms of renewables, long-distance transmission (see high-voltage, direct current (HVDC)))...
Tesla ability to deploy supercharger networks in many countries ties them with local folks in charge of the gridpower. They know about local energy storage (batteries, which will not be only useful for the car). They also explore distributed generation (Solarglass roof). The necessary smartgrid is mainly tied to operational research and IT (Tesla knows about those)...
In summary Tesla knows about a fair part of many pertinent domains, at worse as an integrator.
Moreover Tesla stands nearby the consumer (mindshare).
Therefore Tesla may become the most prominent ultimate link to the customer when it comes to electric power (which will become more and more pervasive as policies geared toward limiting effects of climate change will phase out fossil fuel), enabling them to rack-up a fair part of the benefits from more and more massive infrastructure-oriented investments.
The market did not expect the company to cease operations and that was particularly not the expectations baked into this quarterly result (the bar Tesla had to jump over this quarter). A small group of agitator shorts pushed that narrative, which very little of the market actually believed as witnessed by Tesla's persistently outsized market value (pre rally it was still worth more than Ford).
Companies the size of Tesla don't trade with $40-$50 billion market caps when the market actually thinks they're going to stop operating soon.
This is excluding any other growth opportunities (self driving, solar, battery storage, drive train). just plain car sales...
And just think, they could put a dashboard on the model 3 and sales would probably double.
[1] - https://ir.tesla.com/news-releases/news-release-details/tesl...
[2] - https://ir.tesla.com/news-releases/news-release-details/tesl...
[3] - https://ir.tesla.com/news-releases/news-release-details/tesl...
[4] - https://ir.tesla.com/news-releases/news-release-details/tesl...
I remember years ago reading that although the "please don't squeeze the charmin" commercials were annoying, people remembered the name. Maybe a really weird truck announcement works the same.
Or it could be that "normal" people are starting to see model 3s showing up (outside of california for once)
Tesla lost $800 million this year. That should be the focus.
Parent cherry picked the facts for his argument, you cherry picked yours, neither of you have objective truth on your side. FWIW, I lean towards your argument more than theirs.
So if it will probably take some sales from both the 3 and X. But X sales aren't very significant compared to 3 sales anyway.
IMO, all Tesla vehicles (so far) are pretty similar to each other.
On the one hand, Y is a less expensive X.
On the other hand, Y is a bigger 3 with a hatch back.
I'm not an expert in automotive consumer behavior, but I have to imagine that Y will cannibalize some amount of 3 sales. I also don't think that will matter that much - there is so much demand for Tesla vehicles that they are battery limited.
The Y is a crossover SUV like the X, but based off the Model 3 platform/chassis; what I'm really surprised by is the notion that they will build these in Fremont!
I actually interviewed at the Fremont Factory in '17 in logistics, the factory was a at Max capacity even with the low 3 numbers being produced. In 18-19 they hit their stride and started to use auxiliary lots:
https://teslamotorsclub.com/tmc/threads/found-a-lot-of-model...
They stated that at full capacity and with a successful ramp up 3 would overwhelm their storage capacity, so turn around was critical with little to margin for error; if anyone remembers all the Tesla employee parking lots were full and created a parking nightmare. Well, the outbound deliveries were equally bad. The shutdowns and refitting of the assembly lines showed just how drastic things were for a while.
They overcame this and I'm glad they did as they are now offering the 35k base model 3 as was announced in the beginning which was the 'game changer,' but I'm also glad I turned down the offer in the end, especially because they don't seem to be utilizing their Sparks and Shanghai factory for this model which would probably be best as S/X/3 are still being made in Fremont. Then again that stock price leap to 600 is pretty nice, just not worth the stress induced heart attack or stroke at 40.
I wonder where Semi/Roadster II/Cybertruck are being made then. I honestly thought they'd consider doing the Roadster II at Fremont for that extra 'Made in California' cache to match its price tag, but not the Y.
It sounds like they may have backed away from some of the more extreme high end projections for the Y. It looks like worldwide production may double within 1-2 years, though.
I don't particularly like it.
Generally agree about the charging infrastructure. Personally I have fun trying to find where I can connect to the grid but I don’t think everyone would call that fun...
Round numbers: I think when there are ~2-3x the number of supercharger locations (not chargers but locations), it will basically be at parity with the convenience of gas. I believe range (500km @ 60mph) is already acceptable and if the number of locations is increased it will be even less of an issue. Just my $.02
True parity with gas will take a much longer time. My previous diesel car had almost 4 times the range and could be refueled in 5 minutes. But there are other advantages that cover for that. Which is why my estimate is that 5-10 years depending on location is what will be needed for both the offer of models and the charging infrastructure to all be in place.
[0] https://www.treehugger.com/bikes/want-buy-high-tech-low-carb...
Those things basically look like a rehash of the Twike, which has been around since the 80s: https://en.wikipedia.org/wiki/Twike
Tesla cars are nice cars. Polluting that brand with a cheap bicycle is a mistake IMO.
Heck, Fiat has to hand over almost $2B to Tesla just to be permitted to sell cars in Europe because they have little to no low or zero emissions vehicles to sell.
As an investor desperate for returns, do you invest in the past or the future?
Do you have data for this?
Tesla had, essentially zero growth in the US in 2019, which is where it sells half of its cars. There are many companies that had higher growth than that, including Volvo, which grew 10% in the US. LandRover sold 125k units in the US in 2019, which is far more than the Model S + X (its competitors).
So, I'm not sure where you get the idea that everyone else is shrinking while Tesla is growing. Some companies might be, but some are growing faster than Tesla. These are not mysteries; there is data out there.
Unlike the US, those subsides will be around for a while. China also gave Tesla very favorable loan terms for the China Gigafactory.
Why? That doesn't seem like a stable investment thesis.
> China also gave Tesla very favorable loan terms for the China Gigafactory.
And if Tesla doesn't meet a number of targets the Chinese government takes complete ownership of the factory. They didn't give the good financing terms out of goodwill. Tesla entered an incredibly risky proposition with its Chinese factory.
If one disagrees with the market, short TSLA. Hasn’t worked out that well for those starting with relatively large amounts of capital, but maybe shorts are still right! Vote with your dollars.
Its a drop in the bucket compared to the rest of the industry, so I wouldn't expect it to be possible to tease out the impact on other manufacturers in a reliable way.
Totally unrelated markets, it's no different than the crypto coin markets. Even the volatility is similar.
Besides that, Tesla has a rockstar CEO. He can achieve things that conventional companies can't even dream of. If he needs money he can do a publicity stunt and collect the money. It's a cult and the members believe in the cause and the members are quite affluent.
Stocks are valued at the long term discounted value of their future cash flows. Are the markets always accurate and rational? No, but that's how they are intended to be valued.
If that's true then no one would ever invest in stocks.
Because investing is entirely about determining future value?
What you are saying is circular reasoning, you essentially say that company performance matter because many people think that is should matter. There's no causality relationship here, essentially people think that matters because other people thing that matters.
This is just my opinion:
The way people were valuing Tesla is a massively valuable stock with a high potential of blowing up.
From the looks of things, Tesla has crossed into prolonged profitability. It's not a huge increase in revenue, but it is a big decrease in the chance of bankruptcy. Additionally, because Tesla can self fund and doesn't have to rely on the markets to raise money, they don't have to care very much about short sellers driving the price down.
The bull case (robo-taxis, etc.) is still there, but the chance of Tesla going bankrupt is much lower than 1 year ago, so the stock has shot up.
How? They lost $800 million in 2019.
> Additionally, because Tesla can self fund and doesn't have to rely on the markets to raise money, they don't have to care very much about short sellers driving the price down.
They still have increasing bills and huge liabilities. Acting like they have no risks if they don't raise money is crazy.
You're not wrong.
Of course the counterpoint is that they were profitable both the 3rd and 4th quarter.
> They still have increasing bills and huge liabilities.
That is true. However, some of their debt will convert into equity as long as the stock price remains where it is.
More broadly, I'm not trying to convince anyone that Tesla is some sort of value stock. It's not.
It's absurdly volatile. There's also a good chance that they won't win the race to level 5 autonomy.
All I'm saying is: enough people believe in the upside and think the downside has been diminished sufficiently to drive up the price to where it is.
Maybe they're wrong. Maybe they're right. I certainly don't know.
Less so than last year. Why do we believe this is sustainable over a full year?
> More broadly, I'm not trying to convince anyone that Tesla is some sort of value stock. It's not.
There seem to be people who do, and I want to insure that they don't lose their whole retirement savings chasing that.
Did they get a bunch of great deals on land/machinery/etc?
Or did they not build all the things they intended at the time they gave that guidance?
Read the numbers on page 21-22 first, of course.
After the big FB rally, the report was mostly underwhelming.
Entirely different expectations on the shoulders of FB vs Tesla at this juncture of their operational histories.
I forsee an ingress-style mobile game and "pay 1$ to outmuscle that guy on the highway/arrive faster at work" features.
you can write off up to $3K in capital losses a year. people who jokingly bought $420 and $690 strike options just a few weeks ago are literally up six and seven figures each.
But there are few investments outside of options that can turn a few hundred dollars into $1M in a matter of weeks.
Today they were selling for ~$85/share. But on Jan 1 they were selling for ~$5/share, and tomorrow morning it looks like they will be worth maybe $150/share.
30x in a month for a True Believer -- sure wish I had done it!
[1] - https://www.marketwatch.com/investing/stock/tsla/option/TSLA...
The reason you can make so much with so little capital is that the probability of the stock price moving above strike price of the call option is low assuming that the strike price is much higher than the current price and the expiration date is soon
This difference you're missing is the upside is asymmetric with options. Your losses are capped but your gains are essentially unlimited. In a typical casino game the house edge is >50%. If you're turning $500 into $1M at a blackjack or craps table you're cheating.
on a craps table there's no bet that has no house advantage other than the behind the line bet. Same with roulette.
and no, usually these tables have max bets, so it wouldn't be possible, if you had got to $500k (somehow), to bet that on a single bet.
again, the difference is the upside is asymmetric with options. also it's never an all or nothing bet like a coin flip - if your option value goes in the wrong direction you can sell for a partial loss.
Splitting hairs over whether or not it's in a casino isn't really a requirement to being gambling, which is kind of the point.
i'm not sure what your point is. this is a just a large 35x bet. turning $500 into $1M is 2000x. what casino game can you play that would get you there?
again, outside of essentially winning at a slot machine I don't know a game where you can turn $500 to $1M.
the insight here is that options buying is asymmetric. max loss for essentially unlimited gain if you bet in the right direction. there isn't a casino table gain that has the same quality.
i'm also not suggesting this is not speculative or not akin to gambling, but the risk/reward for options buying is better than a casino. it's also not an "all or nothing" bet. You can sell for partial losses without losing everything if it goes in the wrong direction, whereas table games are generally "all or nothing".