It seems that there are quite a number of Tesla shareholders here in the forum.

I would like to start a discussion thread to share ideas on this company and its shares.

Feel free to put in your bull or bear case, but please be respectful and classy.

I'm a shareholder since 2018 holding on to 250 shares to date.

I see tremendous potential in this stock but the current valuation has been IMHO a mixture of FOMO and high expectations.

This is sort of a continuation from my /Kopitiam thread here https://forum.lowyat.net/index.php?showtopic=4822127

It has been more of a one way street there so I would like to get opinions of others by posting here as well.

Isn't this thread already under the Stock Exchange subforum? Did I do anything wrong?

Pushing on to further highs. Another +10% at the time of writing.

The market is very positive on Tesla beating expectations.

If you follow traditional metrics, Tesla is overvalued even at $200.

Current $1500 price seems like is being supported by retail and institutions due to higher than average volume.

I’m not too sure about the price drop after S&P. Difficult to predict.

This might not have the specs of a Model Y, but the badge could mean something. Let's see how serious is BMW this time. Nice to see more choices from other auto manufacturers. I'm hoping it will trickle down to this part of our world soon.


This looks promising especially the range. Hope the turmoil in Nissan will not hamper their efforts. They are more experienced due to having the Leaf for so many years already.

More or less. However, Tesla has the energy business and software superiority (so far).

Tesla needs to scale the production fast or else the legacy autos will catch up.

If we can get a Tesla here for the price of a 3 series, I’ll be one of the first to order.

Zerohedge should tell us something we don't yet know.

I'm confident on the earnings call.

How the share price reacts though, I have no idea.

My predictions from my /k thread:

https://ir.tesla.com/news-releases/news-rel...tion-deliveries

Delivery numbers are out. 90k delivered. 82k produced.

My prediction update.

1. Deliveries flat were accurate.

2. Operating income more likely now with wildcards being expenses incurred due to shutdowns.

3. S&P500 inclusion very likely.

I don't think the stock will drop below $900 anymore.

Build quality can be improved. Tech and innovation are its strengths.

This post has been edited by kelvinlym: Jul 17 2020, 01:44 AM

How so? Do you have examples of which tech that can be easily copied?

While I'm sure not every tech is exclusive, as most companies do license and do patent sharing agreements, Tesla is the leader in automated driving data, leader in battery management, biggest investments and consumer in battery manufacturing, highest range and efficiency. All these are valid if you believe that EVs are the future.

While I'm not sure which major car manufacturer you have visited, I have worked in Continental AG's ADAS division and was in charge of the thermal and mechanical simulation of their radar, lidar, infra red and camera sensor modules. I have left the industry in end of 2015 so my points here may not be valid. However, here are my thoughts and facts based on my first hand experience. Their R&D is not as vertically integrated as Tesla's. Legacy auto such as BMW, Daimler, VW, Toyota depends on their suppliers to innovate. They push their requirements to suppliers and suppliers will make a product as general as possible to accommodate as large a client base as possible. This tends to make the products generic and mediocre as Daimler's pricing and volume will be different than Toyota's pricing and volume.

The amount of effort the auto makers put to make the tech "theirs" is minimal at best. They do not want a fully integrated approach but rather want to have each module give just a signal or identifier to their central "intelligence". This is difficult as there is no feedback loop. Each sensor may come from different suppliers and the amount of effort to integrate all into a cohesive system is close to impossible.

Hence, the approach of VW in recent years to invest in their id.3 OS. This will make the suppliers be merely hardware manufacturers instead of also software providers. The modules will be "dumb" and VW will provide the "intelligence". This is also what Daimler and Nvidia will be pursuing, however, Nvidia will also be selling their products to other auto brands so Daimler will likely only have a few years of leadership (as with their tradition all the while).

Next is the batteries. Plenty of people thinks that just buying the batteries and putting it in the car will make it run. However, Tesla has a deep understanding of the full battery and drivetrain. They are designed to work closely together. Their main product is actually the battery management system. How they could optimise and detect each of the cell's voltage and health is a proprietary knowledge that no other auto maker can leverage. This is because they buy the "energy" system as a black box. They let the suppliers do the management and they have no idea how to maximise the potential of the battery based on their drivetrain and vehicle. Hence you see the lower efficiency across the non Tesla brands.

Next is the continuous product improvement cycle. Legacy auto works in the 7 year product development cycle with a couple of facelifts in between. Any improvements in efficiency and tech will be planned around those milestones. Tesla works like a software company with the agile and skunkworks methodology. They foresaw that over the air updates can bring continuous improvements to the product and applied them to their manufacturing processes as well. They are not stuck with the rigid bureaucracy of the legacy auto. This brings visible and non visible improvements to their products which smoothes their demand. This is also why legacy auto have to depend on the dealership model. The dealers buys stock continuously and holds inventory so that the factories can continue producing. Otherwise, consumers will keep holding their purchases to the next facelift instead of buying the product as they need and the factory will have peaks of demand which they cannot cope, which in turn will make consumers turn to other brands.

That's my 69 cents of opinion and facts.

This post has been edited by kelvinlym: Jul 17 2020, 10:21 AM

Tesla buys batteries from Panasonic, CATL and LG Chem currently. They have exclusivity but their strengths are not in manufacturing of the batteries. They are constrained by batteries because demand is high nowadays. In 2015 they knew that supply of batteries will be constrained hence they went out to invest and build the Nevada facility. That effectively doubled the supply of batteries worldwide. It has never been their strengths as the battery will turn into a commodity (like fuel). What they wanted to do all these while is to invest in the battery management. Hence, they worked closely with Panasonic with their first cells to make sure their supply is not constrained. Later, they'll just let the battery suppliers do their thing and they'll buy the batteries. However, they're not stopping as they do have J. Dahn heading their research of newer chemistry. While nothing has been shown as yet, many promising prototypes are available. The step from lab to factory will be key. Hope we'll see more on 22 September.

Name me another automaker which has that vision. Nowadays we see CATL announcing factories in Europe to be closer to the German auto makers. The EV will come. It's just now up to which auto maker to rise up to that challenge and be really serious in taking a piece of the pie.

Model S is 400 miles, that's 650km per charge. Supercharger network for road trips is available in all Tesla markets. Range anxiety is now moot.

Tesla is the only manufacturer to have brought down the battery price to $100/kwh. They're still working to bring it down further, plus increasing energy density and life of battery.

The $100/kwh price point has been touted to be the magical number when EV will be on par with ICE vehicles. Let's see what battery day has to offer.

Edit: Added the battery information

This post has been edited by kelvinlym: Jul 17 2020, 11:10 AM

Don't you need to stop to rest? Aren't you gonna stop at your destination? Can't spare the 1 hour to charge?

Why is EV not profitable? Have you seen Tesla's gross and net margins? They're definitely higher than the mean of the auto industry. Why would the legacy auto with the "enormous" amounts of money not want to get that kind of margins?

Auto makers are still not serious enough. Their ICE investments still need to be written down. They put forward plenty of excuses such as no profitability, consumers want a choice, no infrastructure, range anxiety etc instead of pushing the envelope with actually solving those issues, which Tesla has been doing. While I don't think that Tesla will take over the world, but they will definitely be the one to chase.

Do you have numbers showing that cars produced by Tesla is below its capacity?

Tesla does not have a dealership network to "massage" the sales. They report production and deliveries every quarter and their delivery numbers are conservative as they only record it when the paperwork is done. Tesla fans also track delivery numbers via VIN numbers, China has people in the DMV to count the cars, Europe and South Korea has owners who follow the ships.

With all due respect, what made you think that Tesla has more production capacity? They're building factories left and right and they have low inventory numbers (except during Q1 and Q2 this year due to Covid).

I've driven my colleague's Nissan Leaf in 2012 and used the Smart EV occasionally in Germany as a car sharing service to know how an EV feels. Since that day, the engineer in me believed that EVs will be the future, albeit there are still technical challenges at the time.

Yup, that's what the guidance was in Q1. They were confident to comfortably exceed 500k in deliveries this quarter before the virus situation. Their annualised installed capacity of 600k+ is just enough to supply that guidance.

So far, 180k delivered H1. If look at it linearly, it will be 360k this year (basically flat YoY). But there were closures in Q1 and Q2. Assuming H2 production and demand returns, They could comfortably reach 420k delivered. Short of the target guidance of course but not surprising considering the economic conditions. If they hit that, it would be already a win as it is higher than last year. It's a long shot though.

No.

https://www.google.com/amp/s/www.bloomberg....-hitting-record

15k cars registered in China in June, up 32%.

Don't get me wrong, I also agree that Tesla is now very very overvalued. I don't deny that one bit. I entered this stock with the expectation that it'll grow to 1 trillion in market cap only from 2030, not 280 billion in 2020. My early projection was share price of around $400 by 2021.

My cost basis is $280, that being said, I'm happy that it's this high, but I know that its valuation now does not make sense, at least based on logical and historical metrics.

However, I'm valuing it based on forward metrics too. My horizon is 10+years and pretty confident on my thesis considering the risk reward ratio.

All in all, there's no animosity here. I'm just sharing and rebutting the points put forward. I don't mind being pointed as wrong but some contributors did not put forward any valid arguments to support their statements.

Other brands are available but currently Tesla has the highest market share in most markets.

Elon is tweeting about memes involving bears on twitter.

Short term gamble: Buy calls before earnings.

Be careful of IV though.

I'm not doing it though. Don't blame me if rugi.

ARK's research is always worth a read.

I have followed them since late 2018 and their insights have given me the inspiration to look for companies that I would have otherwise overlooked.

About Tesla, they do show a profound understanding of the company and their analysis are not bound by the usual Wall street analysis of quarterly price targets and traditional metrics.

Great lessons to be learnt there.

On the earnings front, here are my takeaways. Feel free to pitch in your thoughts for everyone.

Positives:

1. Showing growth across the business groups
2. Focus on new production capacity, which shows demand is strong
3. Margins are improving despite ASP drop, which shows efficiencies and cost controls are there.

Negatives:
1. Big drop in Model S/X numbers shows slowing demand in luxury vehicles, Tesla may need a refresh such as those done by other automotive sectors. Not sure if that's a good idea. May need a totally new generation to refresh that segment.

2. Battery supply constraints still very much a problem.

3. Automotive revenue still takes up a big chunk of total revenue. Although growth in Energy seems healthy, may need to quickly ramp to reduce risk on overdependance on Auto. Challenges of battery supply and regulations here.