ValueBuddies.com : Value Investing Forum - Singapore, Hong Kong, U.S.

Full Version: Tesla
You're currently viewing a stripped down version of our content. View the full version with proper formatting.
Pages: 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21
(09-01-2018, 09:38 AM)Wildreamz Wrote: [ -> ]1. On valuation:

2016 Auto Revenues: https://www.statista.com/statistics/2329...worldwide/
[Image: sYCTD6w.png]

In 10 years time, assuming combined revenue growth follows the same trajectory, then Tesla would be around the size Toyota is today (inflation adjusted).
Toyota currently has ~$210B market cap, PE~11. 4x in 10 years, not too shabby. 
Yes, this is just one of the blue sky scenario, just leave it at that Tongue 

Actually I think all these valuation estimates are really not useful, the auto industry is undergoing a huge transformation (ride sharing, automation, electrification), who knows what it will look like in 10 years? Tesla business model also evolving very rapidly, they are going into SUVs (Model Y), Pickup Trucks (Model P), Semi Trucks (Tesla Semi), utility scale battery storage, home battery storage (Powerwall), High-End Solar Panels (Tesla Solar Roof), ride-sharing (Tesla Network), insurance (insureMyTesla) all has the potential to contribute very significantly to their main auto business.

My investment Thesis is simple, I believe in Elon Musk's ability to innovate and execute.

2. on Competition:
There is a reason why Apple doesn't compete directly with all the other Android phones out there. All the Android phone manufacturers you stated compete with one another, but not directly with iPhones. Apple die hard fans would only ever consider Apple devices, mostly due to operating system, but also due to Apple building a life long relationship with their fans through their Apple Store, history of excellent customer services, excellent build quality, app and accessory ecosystem, simple to use UI, integration with MacOS and the Apple hardware ecosystem, dramatic keynotes, history of being forefront of technology, Steve Jobs' legacy, high price point (which added it's desirability), first mover advantage etc. 

Apple also has a unique advantage of being able to produce their phones at an extremely low cost: vertically integrated design (designed their own SOC, OS and Hardware), most efficient global supply chain ever building the highest volume of a small number of Phone models. Allowing them to pack the most features in their phone while maintaining a wide profit margin. 

Tesla has very similar brand loyalty from their fans, maybe it's a combination of their direct selling method (Tesla Stores), compared to other auto manufacturer's dealership model, or their use of social media, or Elon's personal charisma, Tesla's high price point, their first mover advantage, quality of their car, super charger network, or the company's mission to upend the Gasoline Car industry, and the fact that they have never sold a single gasoline car in their history, unique and fun features on their every car (Model S - first great EV, Model X - Falcon Wings, Model 3 - No Dashboard) etc.

Tesla also has the lowest cost among all the auto manufacturers out there due to their vertically integrated supply chain (they make 80% of their own parts in 2016), and Gigafactories to mass produce Batteries. In addition to Brand Name, this gives them the lowest cost of production and the widest margin. The only other EV with similar levels of vertical integration is BYD, but they lacked a globally recognized Brand Value (it's easier for Tesla to start selling cheap cars, than BYD to start charging a premium). 

Point is, Tesla now still do not compete with low price point cars. Rich people in China buying a new luxury EV, would not consider a BYD. Just like rich people buying a new flagship smartphone will not use OPPO or Essential Phone as their daily driver (but they may still buy it for fun) no matter how cheap they price it. And there is no luxury EV other than Tesla.. yet. Why is that?  Smile Maybe it's still unprofitable to manufacture Luxury EVs at scale (and they don't want them to cannibalize their own ICE luxury car business)?

Also, any link to NIO and Byton producing cars 40% cheaper than Tesla? Would love to see it, for reference purposes.

3. On using Tesla as a public transport:
Well, there are many buses in Singapore manufactured by Daimler (Mercedes branded buses). In the case of supplying for public utilities (it's all speculation from here), it is the cost that matters most (then safety and reliability). The most expensive component in an EV is still the battery, and Tesla still leads the industry in cost per kwh.

It's a high risk play (lot's of stars must align), but I would rather bet on Elon than bet against him. 

(vested)

Very good analysis. I can't add anything but it's not a value investor play. Using the 210b market cap in a decade valuation, that's just a return iof 15% and while assuming huge risk. And the rapidly changing nature of the industry means this valuation may be worthless. There's no margin of safety, qualitatively or quantitatively.
@Kaimin You are absolutely right Smile

It is more like a high risk VC play on one of the smartest Entrepreneur I have seen (Elon Musk).
Is the Tesla Model 3 any good?

1. Austin Evans - Is the Tesla Model 3 Worth it?


2. The Electrek Review – Tesla Model 3, a promise delivered
https://electrek.co/2018/01/08/electrek-...a-model-3/
Quote:It’s fast, it’s quiet, it handles like a dream, it looks good, it’s well-thought-out, it’s usable, it’s convenient, it’s efficient, it’s high-tech, it’s reasonably priced (or will be when the 35k version hits the road).  It says yes when everything else says “not quite yet.”  It’s out now, not in the future, but in the present.

And from where I am, the present looks fantastic.  If you’re in the market for a new car in this category, but are worried about the long line to get a Model 3, you shouldn’t be.  It’s worth it.
(12-04-2016, 07:55 AM)HitandRun Wrote: [ -> ]I have taken a look at model 3.

As a petrolhead, I agree that not only its specs looks great on paper, it also offers good value for money at USD35k. The only catch is whether Tesla can make money at this price point barring safety issues/concerns. (not so similar to Apple which offers premium specs for even more premium prices  Tongue)

I thought model 3 was selling at USD35k. 

YouTube Video on Model 3 (also see post above)

But this young man who took recently took delivery said that it costs USD56k before rebates. USD56k, which is equivalent to SGD75k, buys cars like the BMW 730 (if one uses the OMV as reference). So much for a mass market car. Would sales fall off a cliff (like in Hong Kong) after rebates go away?

Tesla sales screech to a halt in Hong Kong Registrations fall from 3,000 to single digits after end of full tax break
There are many possible configuration for Model 3 (larger battery capacity, better interiors, better roof, better tires etc.), the first batches pushed out are those with higher price point and wider margin. It is a completely different ball game as Model S and X which has wider margin, and buyers are less price sensitive.

The current tax rebate of $7000 is going to be a great consideration for buyers at the $35,000 price range. Not so much at the $100,000 price point of the Model S.

To address your points:
1. The Gigafactory's new way of manufacturing (extreme vertical integration) is supposedly able to mitigate margin issues with manufacturing and selling at the $35,000 price point.

2. Tesla has been quietly cutting cost of Model X and S, supposedly their plan is panning out well, and they have "achieved efficiencies". Let's see how this works out for Model 3 (they may be able to cut price further, if the loss of tax rebate does put a dent on demand).
Tesla’s Pay Deal to Keep Elon Musk: All or Nothing
Andrew Ross Sorkin
DEALBOOK JAN. 23, 2018

https://www.nytimes.com/2018/01/23/busin....html?dlbk

Quote:The company is planning to announce on Tuesday Mr. Musk’s new compensation plan, and it is perhaps the most radical in corporate history: Mr. Musk will be paid only if he reaches a series of jaw-dropping milestones based on the company’s market value and operations. Otherwise, he will be paid nothing.

Tesla has set a dozen targets, each $50 billion more than the next, starting at $100 billion, then $150 billion, then $200 billion and so on, all the way to a market value of $650 billion. In addition, the company has set a dozen revenue and adjusted profit goals. Mr. Musk would receive 1.68 million shares, or about 1 percent of the company, only after he reaches milestones for both.

But to put these numbers in perspective, Tesla is worth only about $59 billion today.

..

Mr. Musk’s new compensation plan is similar to the previous one put in place when the company was worth $3.2 billion in 2012. Only now, the numbers are much larger. That package also paid Mr. Musk only when he reached certain market value and operational benchmarks. And virtually nobody could conceive Tesla would be worth 17 times what it was back then.

..

Elon Musk has high ambitions for Tesla. “I actually see the potential for Tesla to become a trillion-dollar company within a 10-year period,” he said.

'Is the Electric Vehicle Revolution Real?' with Marin Katusa of Katusa Research
Cambridge House
Published on 20 Dec 2017
This is what a Tesla Roadster looks like floating through space
Robert Ferris | @RobertoFerris
Published 3 Hours Ago
[Image: EaROHuQ.png]
https://www.cnbc.com/2018/02/06/this-is-...space.html

Quote:* Elon Musk was not kidding: SpaceX really did send a Tesla Roadster with a dummy in the driver's seat into space.
* The idea was to put a twist on the practice of sending dummy payloads into space during flight tests.

Nothing to do with business fundamentals of Tesla stock. But as someone working and investing in science and tech companies, and a (self-proclaimed) hopeless romantic, this picture captures perfectly, what many Tesla bulls sees in the company, Elon Musk, and the potential of human creativity and enterprising spirit.
Check out many of the big name investors in EVs: Tencent, Baidu, Xiaomi, Hillhouse Capital, Sequoia Capital, Alibaba, Yunfeng Capital, Zhejiang Geely, Nvidia, Sina. This sector is definitely getting increasingly crowded.


China’s car market, the world’s biggest, is changing fast. With “new energy”, “connected” and “autonomous” among the industry’s buzzwords, tech-savvy start-ups have drawn inspiration from upstart Tesla Motors and are determined to be the next disruptor of traditional carmakers like Volkswagen and GM.

A flurry of electric car start-ups has sprouted up in recent years after the Chinese government started handing out special manufacturing permits to non-traditional carmakers, offering consumer subsidies and issuing special ownership quotas that make it easier to get licence plates for new-energy vehicles in bigger cities.

As a result, start-ups and venture capital investors in China are ploughing billions of dollars into developing the future of mobility. Here are 10 newcomers that are looking to shake up the auto industry.

http://www.scmp.com/tech/start-ups/artic...orry-about
The reason why the bigger established names have such a strong foothold, a lot of it is attributed to its supply chain and amount of money invested in RnD. It is extremely difficult to disrupt the auto industry. (not that it cant be disrupted) Even in its most basic and simple form, a car still requires thousands of components and sub-components and endless testing on its reliability and safety.

Electric vehicles are less complex in how how they are powered. Even then, you will still need your HVAC, navigation system, car panels etc etc The cost and number of hours spent just on the cars panels is staggering. Each new design would require many tools to completely form all the panels. At this very moment, China designed and manufactured cars are still some years behind. So dont expect the start ups to be anywhere near the quality level of the established autos anytime soon.

A couple billion dollars is just not enough to make an impact on the autos. Would require a lot of time, a lot of competent engineers and a huge supplier network. Tesla managed to pull it off after many years of trying(then again Elon also managed to build Falcon heavy) but the real challenge is to get its supply chain in place and iron out all production/quality issues. Timeline for that is usually years, if not decades.
Pages: 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21