07-17-2014, 08:25 AM | #45 | |
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07-17-2014, 09:13 AM | #46 |
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Does anyone read the articles on TheStreet.Com?
Here's an interesting one pertaining to Tesla, BMW and - possibly - the 3: I'll save you the click through and just post it here. **************************************** NEW YORK (TheStreet) -- Fair disclosure right up front: The thesis presented in this article is speculation. I don't know anything, I could be completely wrong, but my conclusion is based on the logic of the argument presented. With that out of the way, the purpose of this article is to advance the thesis that I believe the meeting BMW had with Tesla (TSLA_) on June 11 -- as reported by none other than Elon Musk on June 12 -- will actually lead to a deal, and probably relatively soon. First, let's deal with the core of any deal: Motivation. Why would BMW want to enter into a supercharging deal with Tesla and vice versa? First, BMW: Automakers are generally uncomfortable dealing with fueling infrastructure. Many of these reasons are legal. For example, can you imagine General Motors' (GM_) lawyers signing off on a project that would place hundreds or thousands of unmanned 440-volt DC chargers along the world's freeway rest stops? What if someone electrocutes himself? In other words, car companies are leery about the liability of managing unmanned electric truck stops. But there is another reason. Automakers and oil companies have a long history of being under attack by government for vertical integration. For example, existing automakers are famously disallowed from selling cars directly to the consumer. One could also go back to the 1909 U.S. government antitrust case against Standard Oil. Old automakers don't want to become accused of vertically integrating the transportation and fueling food chain, and they don't want to spend anymore time in Congressional hearings defending their actions, on top of the painful experiences with bailouts and recalls. Tesla, on the other hand, has no such institutional memory or inhibitions. Elon Musk famously tweets in a manner that would cause a general counsel to have a heart attack. Musk thinks big and wants to build a factory that vertically integrates as far as possible backward in the transportation food chain, seemingly all the way down to the lithium mine. In the other direction, he would integrate forward all the way to selling spacecraft services for travel to Mars For Musk, vertical integration is not taboo. It is the opposite. It is religion. Any automaker, let alone a foreign one such as BMW, would be extremely leery about engaging in a construction program along America's freeways, installing "BMW fueling stations for electric cars" in plain sight of every potential adversary. That's why when Tesla offers to do this for them it is like throwing the old automaker a lifeline. So the case for an automaker such as BMW to take a supercharger deal with Tesla is pretty easy to make. The difficult one to explain is why Tesla would have any interest in entering into such a deal. First, let's talk about money. It's obvious that a company such as BMW would have to pay Tesla for this. It could be structured in any of numerous ways, but it doesn't really matter in terms of Tesla's motivation. Tesla is not lacking for money. BMW might pay Tesla some sort of construction contribution, as well as usage fees when BMW cars utilize the network -- all very straightforward. Basically, BMW would outsource this infrastructure project to Tesla. Outsourcing is good, especially for BMW in this case. It's like paying a maid or handyman instead of doing the work yourself. So if it's not that much about money, what's Tesla's primary motivation? Some will argue Musk is doing this out of the goodness of his shareholders' hearts, that he wants to change the world. There is probably some truth to that theory, but I don't think this means he will just roll over in a negotiation. Not at all. He wants something important from BMW. What is it? Tesla is very proud -- and rightfully so -- of its charging connector. Everyone would agree that it is more elegant than the competitive solutions. There is no way Tesla is going to change it. If Tesla can get the rest of the industry to somehow bend in its direction on the charging connector -- even if supplying existing BMWs with an adapter -- it would mean a huge principled win for Tesla. There are a variety of technical issues surrounding making non-Tesla cars work with Tesla's superchargers, many of which are well above my non-engineering pay grade. I have asked more knowledgeable people to speculate in terms of how this could be done, and there is simply no consensus on that subject. In any case, here are some of the issues: 1. Handling the electricity: How can the infrastructure and the car be modified so as to ensure that it works at all, even at a reduced charging rate? A solution may have both hardware and software components. 2. Billing: The current Tesla superchargers are designed for Tesla cars only and don't have credit card swipes or equivalent. This makes them cheaper to make but it's harder to make them work with non-Tesla cars. Again, this would involve hardware and software development. The critical thing becomes this: What part of a deal could even be made to work on cars not specifically engineered to handle Tesla's superchargers, requiring only software upgrades and an adapter? If BMW or other automakers need to redesign their cars with new electronics, new software and perhaps even new batteries, we are talking at least three to five years for this to physically work. I am not saying that it is extremely likely, but if the Tesla-BMW deal involves not just charging but also a battery deal then this is indeed an even much bigger deal overall. I think the only reason BMW would consider such a deal is if it were technologically necessary to be part of the supercharging network. That becomes a much taller hurdle. Given the long engineering and testing cycles of the automotive industry, and battery-electric vehicles (BEVs) in particular, a Tesla-BMW battery deal would not likely be implemented in a BMW car until 2019. In the meantime, in a worst-case scenario, nothing would work at all, or only at a reduced charging speed (say, 60 miles per 30 minutes, or one-third of Tesla's rate). There is a far broader strategic rationale for Tesla to open up its charging network to BMW (and everyone else for that matter). By opening up the network while it still has an infinite lead in long-distance supercharging, Tesla, in effect, reduces the probability that someone else will invest the money to compete in that area. It clears the competitive field until the other automakers have re-engineered next-gen products (for 2019) that could take advantage of Tesla's superchargers. Basically, what happens is Tesla becomes an indispensable part of the infrastructure for BMW and presumably shortly thereafter also the other automakers. This is in contrast to the far more perilous business of actually making cars. When you make cars, you are in a risky business. It takes only one product mistake, one recall, one change in automotive fashion -- and you're out. You need to be large and diversified in order to tough it out over the long run. Musk probably doesn't feel comfortable having this kind of patience. One more car -- the Model 3 -- and he's off to Mars. Bye, bye. At least if you're in the supercharger business you're guaranteed some profits. Gasoline stations may work on razor-thin margins, but at least you're guaranteed a percent or two in profits. If you owned all the gasoline stations, you would make a good living. And herein lies the rub in this type of deal for Tesla: Longer-term, Tesla will feel the impact of having surrendered its primary competitive moat -- supercharger exclusivity -- in exchange for something not as valuable. This means two things for Tesla in the longer term: 1. Tesla's competitors can now plan for 2020 and beyond, knowing that all they need to do is to make electric cars with long range, and then they can use their scale advantage to accomplish better margins and better pricing. 2. Whether Tesla exits the actual car-building business or not, it will be stuck collecting low-margin profits from an electric car charging network, plus perhaps a battery-pack building business. Those are low-multiple businesses. $100 million in annual profits might support a $1 billion market cap; $1 billion in annual profits might support a $10 billion market cap. I believe Tesla wants to announce a supercharger deal with BMW before it reports earnings in August. Tesla's current revenue and bottom-line numbers are not supportive of a $30 billion fully diluted valuation, so it would be beneficial for Tesla to deflect the market's attention in favor of landing BMW as its first supercharger partner -- and perhaps more. This is only one scenario. There are other scenarios. Perhaps BMW could not stand Tesla's terms and is proceeding along a different route. Perhaps BMW will partner with some other entity that will help it build their versions of superchargers. That is also a possibility. Either way, I expect this to be sorted out very soon. Stay tuned. Sparks are about to fly. At the time of publication, the author held no positions in any of the stocks mentioned. This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff. TheStreet Ratings team rates TESLA MOTORS INC as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation: "We rate TESLA MOTORS INC (TSLA) a HOLD. The primary factors that have impacted our rating are mixed ? some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its solid stock price performance, revenue growth and notable return on equity. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, weak operating cash flow and poor profit margins." Highlights from the analysis by TheStreet Ratings Team goes as follows: •This stock has managed to rise its share value by 79.48% over the past twelve months. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year. •TSLA's revenue growth trails the industry average of 21.9%. Since the same quarter one year prior, revenues rose by 10.4%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share. •TESLA MOTORS INC's earnings have gone downhill when comparing its most recently reported quarter with the same quarter a year earlier. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, TESLA MOTORS INC continued to lose money by earning -$0.71 versus -$3.70 in the prior year. This year, the market expects an improvement in earnings ($1.21 versus -$0.71). •Net operating cash flow has declined marginally to $60.64 million or 5.36% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower. •The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Automobiles industry. The net income has significantly decreased by 542.7% when compared to the same quarter one year ago, falling from $11.25 million to -$49.80 million. |
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07-17-2014, 12:03 PM | #47 |
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07-17-2014, 12:22 PM | #48 |
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That's a very tall order my friend. Elon has taken the Battery Electric Vehicle "sateboard" design (that GM debuted over 25 years ago to my memory) and put in a big battery to get range. If you look at the Tesla mile/kWh rating, there are other EVs as good or better. Any real market sucess of EVs will be with battery technology well beyond lithium-ion. I see where Tesla is trying to get the price per kWh down via battery production. I don't see where Tesla is advancing battery energy density state-of-the-art.
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07-17-2014, 12:23 PM | #49 | |
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07-17-2014, 12:37 PM | #50 |
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It's really Panasonic's battery tech that you have to look to for Tesla's battery direction.
and while Tesla's current KW/H numbers are not earth shattering, they're certainly heads and tails above, say, Nissan (24 vs 60 kwh). In terms of battery density, I'd direct you towards Ryden and Power Japan. I don't think Lithium-Ion has much future left so it's companies like Ryden and Panasonic that are going to push the envelope and these companies will partner with the Teslas of the world. So, in this regard, I would have to agree that, no, Musk, is not the most important catalyst. But in a day an age when even BP is saying the Earth's remaining oil will only last another 53.3 years, and private companies are competing with NASA to get more and more humans off the planet and global economics are polarizing humanity, is IS people like Elon Musk who will be important catalysts to help drive us past those eventualities. |
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07-17-2014, 12:54 PM | #51 |
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The only problem with these electric cars becoming more popular and mass produced is that we are going to start getting taxed on every mile driven instead of our gas being taxed.
The cost to operate electric cars will increase. California already considering doing so. http://www.nbclosangeles.com/news/lo...258170311.html |
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07-17-2014, 01:36 PM | #53 | |
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07-17-2014, 01:38 PM | #54 |
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07-17-2014, 01:53 PM | #55 | |
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I would say you are in the top 1% for mileage. Most people don't drive > 30k miles a year. I myself drive in one year what you claim to drive in 8 weeks. Also I don't know why someone would need a 400 mile range with a 5 minute fuel up. Most folks stop every 3-4 hours on road trips. I could totally rock a 200-250 mile range with a 10 minute juice up. Plus those times when I am doing 200-250+ miles at one sitting are limited to 3-4 times max. |
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07-17-2014, 09:35 PM | #56 | |
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Most people do stop every 3 - 4 hours on a road trip, but not for 3 - 4 hours to recharge. Tesla does not have a 10-minute recharge cycle that gains a 250-mile range. And the battery-swap scheme, well the fine print there is you have to trace back and eventually end up with your original battery. The ICE automobile became highly successful in the early 1900's because the cost and availability of gasoline rapidly went down and increased respectively and the product offered far more convenience and utility than the product it was replacing; the Horse. Elon is competing with a highly successful and inexpensive product, it's just not the same as when Henry F and Herr Benz took a crack at it. Last edited by Efthreeoh; 07-17-2014 at 09:53 PM.. |
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07-17-2014, 11:53 PM | #57 |
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I'm with you Efthreeoh on the range problem, but I'm not sure it is that critical in practice
1. most family have 2 cars (because they are married, duh). Good chances are that one is an ICE. In which case, just use this one for long travels. If that's not how your family works (single, or both in the couple rack a lot of local miles so you want 2 E- cars, ...), then ... 2. Renting an ICE for the odd 1000 miles trip 3x a year can be cost effective in the end. |
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07-18-2014, 06:13 AM | #58 | |
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If it were a common family scenario as you speak of, it would seem to me the Nissan Leaf you be selling like hot cakes. I agree with you that most families maybe could get by with a BEV (especially with a 250-mile range like the prospective Tesla 3) in the real sense. But what happens when the power goes out over night during a charge and you had plans for outpatient surgery the next day the hospital that's 40 miles away... That's what people think about with range anxiety. Having a 200% - 300% family-range reserve that ICE gives you is not a bad thing. And being able to recharge an ICE in 5 minutes with stations with in 50 miles of each other all over the country is probably never going to be matched by an EV charge infrastructure. I mean, people in NYC can get fresh food everyday a step away from their home, but virtually all still have a refrigerator in their home with 5 or more days of food stored; it's just the way it is. |
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07-18-2014, 08:50 AM | #59 | |
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As it is right now, the infrastructure just isn't there but Musk does have plans to build this out significantly. http://www.teslamotors.com/supercharger |
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07-18-2014, 12:22 PM | #60 |
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Unconfirmed, but seems to be further confirmation of solid Tesla / BMW cooperation.
What is confirmed is that BMW, Samsung SDI partnership. Tesla is already signed with Samsung SDI as well as Panasonic. http://insideevs.com/bmw-signs-deal-...y-cell-supply/ |
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07-18-2014, 02:32 PM | #61 | |
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07-22-2014, 10:13 PM | #62 |
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When looking at EV range estimates consider how much available range you have remaining in your conventional vehicle before you think you are "on fumes." I think most would say 50 miles or so... Then consider this prevailing attitude even with hundreds of thousands of fuel stations available for a quick fill up on demand.
I think a example calculation looks like the following: Rated 200 mile range minus 15% error, climate, or accessory use = 170 miles. Take off a reserve 50 miles and you really have a 120 mile range. Following the 2/3 rule pilots and seamen use, and you are really looking at a 'comfortable' 80-100 mile range. I think the big question (still) is why. Why buy a car with such a limitation when there are plenty that do not suffer from this issue? It just doesn't seem to make sense unless you are looking to make a statement.
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07-22-2014, 10:45 PM | #63 | |
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To your point, not everyone cares about range. I can't remember when I have driven 200 miles on one day. It's not something I do. So one could argue why buy a fossil fuel car with epic throttle lag, when you can buy an electric car with no throttle lag.
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07-24-2014, 08:49 PM | #64 |
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I am a HUGE tesla fan. Everytime i fill up and see the price i'm not pleased. Even more upsetting is who profits from our gas. Its taken maturity to realize what people are saying about buy american, and effects on american economy. Im excited by the ease of maintenance that comes with the electric car. Cars only get worse with age and never get better so the less that can break the better. I don't see electric cars off setting ICE gas costs due to battery cost(tesla $10k-12K/nissan leaf $7.5K), but i can see it evening out over time.
I have high hopes for the model 3. I'm now on the TMC forum more than i am here.
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07-25-2014, 10:44 PM | #65 |
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I am also a huge fan of the Tesla, but not sure what they can do to almost cut the price in half in a very short time. I try to keep up with what Tesla and Elon are up to but haven't had the time to lately.
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07-25-2014, 10:50 PM | #66 |
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I test drove a Volt a few weeks ago. Full battery charge. EPA range estimate is 37 miles. I got 37.6 miles. In the summer, 90+ degrees outside, AC on the whole time and the stereo cranking. AND 70 MPH runs on the highway with mixed urban driving. I was impressed with the accuracy of the EPA estimate. I'm sure the Tesla S experiences the same range matching to EPA tests.
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