this is all well and good... but 5 years? Tesla will likely have 2 more models on the road by then... c'mon Porsche. (disclaimer - I know that building a highly complex computer on wheels takes time. I just felt like complaining)Porsche said that it aims to begin production in the next five years.
A pyramid scheme is one in which the only way the business stays afloat is by attracting new buy-ins (as opposed to selling product). Tesla keeps issuing new stock every so often, and somehow, every time they do the price goes up. Their most recent issue was to the tune of $800,000,000, for example. Not exactly chump change. Fortunately for them they have a lot of Wall Street stock manipulators (oops, I mean boosters) willing to pump their tires for them. Remember the housing bubble? The same thing is going to happen to their stock as soon as the slightest thing goes wrong. My assumption is that the thing will be when they pre-sell a bunch of $35k cars (also sign of trouble that they feel the need to collect revenue before they can even manufacture the things), and then can't deliver them on time at that price. I base this on the fact that they can't make money selling cars at $100k.
Except they survived the same problem with the Roadster. They upped the price of everyone who hadn't bought yet and sailed on through. Tesla got the leg up it did because no one had taken electric vehicles seriously since the GM EV1, and because they were willing to sell $160k cars for $130k. It's the same as Microsoft selling the XBox for a $400 loss, or Sony selling the PS3 for half what it cost them to build it. They've also got that massive battery factory going in in Nevada, and Tesla is only like a third of its product. Panasonic and Yuasa are getting batteries there, too. Tesla could straight-up stop selling cars and be fine. That's what Brammo did - they made rippin' electric motorcycles at a loss, then decided they'd rather sell motors and batteries. Tesla has an exceptional exit strategy: they've established the brand name, they've established the quality, they've established the workflow, and really - an electric car is motors, batteries, controllers and a bunch of coachwork. I can totally see Tesla getting out of coachwork, especially as their best work looks like a Maserati as interpreted by Zoloft.
HAHAHAHAH! That's the most perfect description of their design I've ever heard. There's a reason no established car designers want to work for them (more than just their aesthetic, but that's part of it). But I totally agree on the battery front. Were I investing in Tesla, it would be because I believe in the future of their energy capture business. I hope they succeed in that venture.
Having read the Musk book, I get the keen sense that Musk's companies are a horrific grind to work for. I know an engineer over at SpaceX. When asked, both he and his wife said "it's better than Blue Origin." So there's your high water mark: Elon Musk - not as shitty a boss as Jeff Bezos.
You don't become part of companies like Tesla, ones that are incredibly famous and have many, very intelligent, people working for them, not for the pay, but for the chance to be part of "the future", while expecting to have a home life or to have an easy time at work.
I know four people who have been offered jobs as designers at Tesla. One was offered the job as head of interior design, which comes with a $250,000 salary and almost a half million bucks in stock options. Only one of the four took the job, and that was the kid looking for an internship. My wife saw him last time she was in LA and said he looked like a starving refugee. If it weren't for the personality cult of Elon, no one would put up with that bullshit.
Have you read the book? There's a great bit about Elon and his main designer buying flat panels and mocking them up in the cockpit to see what size iPad is best. NONE. NONE IS THE BEST SIZE. It's pretty deplorable that the automotive industry was caught completely flat-footed on the whole electric vehicle thing, but at the same time, the automotive industry has a pernicious need to turn a profit. That's one thing Tesla's got going for it - permission to burn money.
I'll never defend the dinosaurs running the Big 3. They are their own worst enemies, and they deserve to get out innovated. That said, permission to burn money only lasts for so long. At some point the bottomless pit gets filled up. Obviously, I don't have the slightest clue as to where that point is, but I can tell you that a price target of $400 for their shares sounds to me like a death wish for the would-be investor.
It's a cult stock. The pricing on it is so far out of line with fundamentals that you're absolutely buying on greater fool theory. Some wag pointed out after the 2008 crash that Tesla had a higher market cap than GM... that says a lot more about market capitalization than it says about either car company. He's already been anointed as the next Steve Jobs, though. When Apple stops selling computers, people will see it as innovative and amazing, and Mac SEs will go through the roof on eBay. When Tesla stops selling cars it won't be capitulation, it'll be market beneficence or some shit. I'll say this: 30 years from now we'll look back on the Model S the way we look back on the Ford Granada. "It was a car, and it was car shaped, and we have no desire to emulate that ever again."
Since they've open sourced a lot (or was it all? I can't remember) of their tech, this is a real possibility. "Hey everybody - we've got these cool components and here are our plans. Feel free to build one a little better. And hey - we've got a place where you can buy them. And did I mention my brother who has a solar panel company? Let me give you his number..."I can totally see Tesla getting out of coachwork
Elon Musk is in SpaceX because he's a true believer. He wants humans to establish a beachhead on Mars. Elon Musk is in SolarCity because he's a true believer. He wants to end the hegemony of fossil fuels. Elon Musk is in Tesla for the same reason he was in Paypal - he knew some people and saw some market inefficiencies. Cars have never been his passion. But yeah - motors, controllers, batteries, charging stations, solar panels. That's the kind of vertical monopoly that would make the robber barons proud.
There's a new kid on the block called Faraday (seriously, stop with the pretentious use of physics gods; I thought it was a joke when I first heard of them) who is going to try to out Tesla Tesla. They've been recruiting heavily from Tesla and from GM (and I assume others). They think they have a model to build one just a little better. Time will tell, but in the end, I hope that rationality prevails. If the world is going to have a sizable number of electric cars, stock bubbles aren't going to be helpful. We need to stop with the fantasy and start evaluating products shrewdly, as these are still companies, not gods or saints.
The thing people don't understand about electric cars is they're orders of magnitude simpler than internal combustion cars. Not only that, but outside of the batteries, every single part of them is ancient tech that hasn't much changed in the past 100 years. We didn't do electric cars for most of our automotive history because batteries have historically sucked. Since the invention of cell phones, however, there has been substantial market pressures to develop high-performance electrical storage. That's really the change - once you have the batteries, you have the kingdom. There's ZERO reason Tesla should have a monopoly on coachwork, on controllers, on charging tech, on suspension, on motors, on seating, on anything because that shit has been handled so long it hurts. The only thing Tesla added to the equation was a commitment to building $100k electric cars, which is something that nobody had ever done before, which is the kind of loss-leader first-in innovation necessary to jump-start a new market segment. The first VCRs cost $10k (back in the '70s!) but the last VCRs were $39. Raw materials cost will never push an electric car down into the supercheep range, but there's literally nothing keeping electric cars expensive other than economies of scale. Every manufacturer in the world is going to whip Tesla's ass when it comes to economies of scale. Guaranteed: Tesla is going to stop making cars the minute they can make more money selling parts. I don't think Elon Musk gives a rat's ass about competing with the automotive industry, I think he wanted to nudge the world into sucking down volts instead of oil.
Let's forget about Porsche, Nissan, BMW, and Mitsubishi for a minute and focus on GM. GM, a company that was has a culture that is so stuck in its ways that it gave up a massive foothold in American market share to import car companies like VW and Toyota. A company that worked in a joint plant with Toyota to learn manufacturing techniques from them and after a little over two decades they didn't seem to learn jack shit. The fact that GM is now coming out with a Consumer EV means it's safe to say the idea is mainstream. By the way, that joint venture plant between GM and Toyota, NUMMI? Guess who bought it. Small world.
General Motors is wholly beholden to its shareholders, who demand dividends and regular stock splits. That's why they killed the EV1 and sold the Hummer H1: profits on the EV1 were nonexistent while the Hummer was as lucrative an SUV as GM has ever made. NUMMI died for the same reason as Saturn: The UAW. 'member back when GM was talking about how awesome Saturn was gonna be and they were making cars in Spring Hill, TN? Yeah. Right-to-work state. Meant that the UAW couldn't lock the Spring Hill factory into a union contract with union wages and union benefits. So when the UAW decided to strike GM, one of their demands was that GM close the Spring Hill plant because, you know, fuck those guys that aren't in the union. Then when GM went bankrupt, they had force majeure to shed contracts and non-performing assets, such as NUMMI. This left Toyota holding the bag on their only union shop in North America and they were able to vanish like a fart in the wind and ramp up production in Texas and Mississippi - also right-to-work states. Tesla? non-union as fuck. It's easy to beat the shit out of GM but the fact of the matter is, they're trapped between shareholders that don't give a fuck about their future and workers that don't give a fuck about their future. It works out really well for both sides of that equation but somewhere in the middle, General Motors has to make money. Porsche, Nissan, BMW and Mitsubishi, to the best of my knowledge, don't have any UAW pain points so they can fuck off to Mexico or Mississippi without anybody picketing their headquarters in Detroit. And Tesla doesn't even have to make money. What kind of world of shit do you think GM would be in if they built Cadillacs for $160k and sold them for $130k? I'll bet they'd get investigated by congress. How 'bout if Ford suddenly decided to change the price of the GT from $400k to $600k after taking deposits? They'd face criminal charges. Tesla? Tesla gets away with this shit because people don't really consider them a car company when shit hits the fan. Delays? "It's a startup." Price overruns? "Being a visionary company has unforseen complications." If Elon Musk had to compete in Preston Tucker's environment he'd have been a cautionary tale in 2009. Frankly, if Elon Musk weren't Elon Musk, he'd be Henrik Fisker.
I've read speculation that Musk is in this venture to change the prevailing opinion of electric vehicles. In other words, Tesla needs to survive just long enough to get the major automotive companies heavily invested in electric cars so they don't just quit like they've done before. At that point, it doesn't matter if Tesla still exists because Musk will have built the world's largest battery factory. Oh and have a preeminent solar panel manufacturer as well.
Thanks for the insight. I don't pay enough attention to their "business" practices and crazy money scheming. Although - now that you mention it - a guy I know at work dropped $10k on the deposit over a year ago for their SUV that was supposed to deliver sometime this year? or is it 2016... either way - that's a tall stack of cash for nothing in hand. And if they're doing the same on wall street with some extra 0's on the end - yikes. It's too bad the cars are so sexy.
The difference, I think, is you suspect Tesla might actually try and sell a commuter car in the next five years. I think the mars colony is more likely. I mean, yeah... theoretically you can buy a Model S for $72k or whatever. Nobody does, though. The ones you see 'round here are loaded up with 30-40k in options so that they can compare and contrast with their buddies in the Porsche Panameras. The Model X is going to cost more than the S. Meanwhile you can lease an electric Fiat around here for $80 a month, which is less than you pay in interest on your Tesla. Musk's downmarket play is SpaceX. He's doing it by imitating the Soviet design bureau. Tesla is every bit the bespoke coachbuilder Duesenberg was. And yeah - Cords were cheaper, but they sure weren't cheap.