Musk endeavours

[Howard]

German car sales has nothing to do with Tesla or electric to my mind.
People are moving to SUVs/4x4 and small cars both areas where the German brands don’t do very well because there SUVs are expensive compared to the French and Asia brands and there small car offerings are also expensive and not that small.

Surely you'd accept that the German designed Golf has done pretty well against any French or Asian brand? And VW have been more profitable than any other mass-market brand. Even despite their horrendous diesel activities!

Obviously one can't predict the future, but you'd be pretty brave to forecast that the small VW EVs of the future will do badly compared with the French and Asian competition?

The Chinese may surprise us all with the popularity of their EVs but all manufactures will struggle to sell EVs in volume profitably. As an investor I can't help looking at Tesla's share price!

regards

Howard

[Archtronics]

German car sales has nothing to do with Tesla or electric to my mind.
People are moving to SUVs/4x4 and small cars both areas where the German brands don’t do very well because there SUVs are expensive compared to the French and Asia brands and there small car offerings are also expensive and not that small.

Surely you'd accept that the German designed Golf has done pretty well against any French or Asian brand? And VW have been more profitable than any other mass-market brand. Even despite their horrendous diesel activities!

Obviously one can't predict the future, but you'd be pretty brave to forecast that the small VW EVs of the future will do badly compared with the French and Asian competition?

The Chinese may surprise us all with the popularity of their EVs but all manufactures will struggle to sell EVs in volume profitably. As an investor I can't help looking at Tesla's share price!

regards

Howard

Sorry slight misunderstanding when I wrote "German cars" I was refering to BMW and Merc referenced above.

"BMW is struggling alongside many other carmakers with a downturn in demand and record spending after years of growth. After a profit warning last year, the world's second-biggest luxury carmaker after Mercedes-Benz had a tough start to the year"

I completly agree with your points about VW group, I think they stand the best chance of being the ones to win the EV race out of the european brands.

Admittedly I like Tesla and Musk, if your buying into it because you believe in the mission to force the world to electric cars then fair enough.
But if your buying it to hold and make money I think your going to be disappointed.

Musk pretty much said this in his biography he doesn't care about companies that make money he just wants to create competion to force other companies to create the future he envisioned as a kid.
If Tesla goes bust he has still achived his goal so I think he will be happy regardless.

[odysseus2000]

German car sales has nothing to do with Tesla or electric to my mind.
People are moving to SUVs/4x4 and small cars both areas where the German brands don’t do very well because there SUVs are expensive compared to the French and Asia brands and there small car offerings are also expensive and not that small.

Surely you'd accept that the German designed Golf has done pretty well against any French or Asian brand? And VW have been more profitable than any other mass-market brand. Even despite their horrendous diesel activities!

Obviously one can't predict the future, but you'd be pretty brave to forecast that the small VW EVs of the future will do badly compared with the French and Asian competition?

The Chinese may surprise us all with the popularity of their EVs but all manufactures will struggle to sell EVs in volume profitably. As an investor I can't help looking at Tesla's share price!

regards

Howard

Sorry slight misunderstanding when I wrote "German cars" I was refering to BMW and Merc referenced above.

"BMW is struggling alongside many other carmakers with a downturn in demand and record spending after years of growth. After a profit warning last year, the world's second-biggest luxury carmaker after Mercedes-Benz had a tough start to the year"

I completly agree with your points about VW group, I think they stand the best chance of being the ones to win the EV race out of the european brands.

Admittedly I like Tesla and Musk, if your buying into it because you believe in the mission to force the world to electric cars then fair enough.
But if your buying it to hold and make money I think your going to be disappointed.

Musk pretty much said this in his biography he doesn't care about companies that make money he just wants to create competion to force other companies to create the future he envisioned as a kid.
If Tesla goes bust he has still achived his goal so I think he will be happy regardless.

Think that Musk is also on another mission which is to expose Wall Street & the media as charlatans and to build a huge corporation.

He has already proved all of the folk wrong who said he could not have mass market car sales, all those who said battery electric was a pipe dream, not to mention all the folk who said re-useable rockets and rocket clusters would not work etc.

What looks to be happening is that Musk is building his business into a profit machine copying aspects of Apple (best advertised and loved tech) and Amazon (availability and price).

Just as folk completely under-estimated Bezos I believe they are doing the same with Musk and in particular Buffett and Munger have not appreciated how things have changed in business giving someone like Musk the ability to scale very many enterprises. A smaller but nonetheless interesting parallel has been developed by Lord Sugar at the micro-level and Branson at a bigger level.

Regarding legacy auto I expect BMW to fail and be bought out by Chinese or Indian competitors. The engineering quality of BMW has collapsed with their over use of plastics creating a great resentment to them. Ask some one who has a few year old BMW mini about their repair bills for failing plastic. They are many years behind Tesla in electric.

VW I expect to be destroyed by Chinese low cost electric imports that are aimed directly at VW's market. VW too have demonstrated very poor technology with the carboning up of their petrol direct engines being one of several mistakes, all of which fall into insignificance compared to Diesel gate.

Of the German legacy that I expect to survive it is Mercedes, primarily as their engineering is still good for the mechanical systems, although let down by poor paint and poor electronics, but they have the medics, lawyers and celeb market, strongly entwined in all countries which is still a moat that I believe has some resilience.

Many folk are writing Tesla off and it is clear that the first half of 2019 has been hard for them, but the transition to electric will, even in my optimistic view, take a few years and Tesla have by far the best tech. If they pull off self drive too then they dominate the market and build Musk's empire all the faster which even without self drive I expect to greatly eclipse Branson and Bezos. The only fear I have is that some kills Musk.

Regards,

[Archtronics]

Not one thing I've read or heard suggests to me that Musk is interested in making any of his buisnesses into "profit making empire" he would have been better off sticking with software based buisness if that was his aim.

He has already achived his primary aims with Tesla and Space X, I expect he will move on from Tesla in the not to distant future and start up something else tackling another big problem.

[odysseus2000]

Not one thing I've read or heard suggests to me that Musk is interested in making any of his buisnesses into "profit making empire" he would have been better off sticking with software based buisness if that was his aim.

He has already achived his primary aims with Tesla and Space X, I expect he will move on from Tesla in the not to distant future and start up something else tackling another big problem.

Maybe, but I think its now about ego and having all the money, without having to be bothered by Wall Street, to do what ever he wants.

I believe he has modified his goals and his now thinking on a very big scale indeed.

We shall see!

Regards,

[dspp]

I look at it this way.

BMW manufactures 2.5m cars a year and is loss-making on a quarterly basis at present. JLR manufactures 0.6m vehicles and is loss making, -£3.6bn the year just ended.

The point is that these companies both support a dozen or so legacy ICE platforms. In order to keep those platforms competitive they need to achieve premium prices for high margins, and sales in excess of (say) 1 or 2 million units per year, simply in order to pay for the design teams and the always-recurring NRE on platform development, and to manufacture at the volumes required to create the cost base. They are typical of the struggle faced by any low volume auto maker, and give very direct insight into the corresponding scale game circumstances of the higher volume makers.

In contrast Tesla are remarkably close to break even at about 0.4m units a year, and two platforms (S/X, 3/Y), with another two platforms (semi, pickup) moving through the system. And they have a new factory coming through the system that is likely in time to take them to 1m units (I am assuming the Y volumes will take Fremont to 0.5m units).

So in a normal world Tesla would win out simply on the contrast between the two economic models. But this is not a normal world, because the legacy ICE manufacturers need to also spend to create very different BEV platforms that are not compatible with their ICE platforms. So the design overheads (and the mfg facility investment needs) of the legacy makers will double, and this situation will remain for so long as they are stranded with a foot in both saddles. The financial burden will cripple them, indeed it already is.

Add in the costs of either playing catch-up in the autonomy stakes, or becoming a stack-taker from MobilEye/Intel and legacy are toast at anything less than 5-10m units of scale. See https://en.wikipedia.org/wiki/Automotive_industry . How many of those do you think will survive the transition ? Who will they be beholden to if they do make the transition, will they merely become a grey-box PC-maker in thrall to Intel (autonomy) & Samsung/Panasonic (batteries) ? Will the current 'vertical' become a 'horizontal' as we go through an industry cycle ?

Oh, and until the legacy ICE makers transition they will essentially have to pay a jail-fine to the BEV makers on an annual basis. The sums I have seen is that FCA will have to pay €2bn per year to Tesla et al until they can get their fleet average emissions down.

A sector undergoing transition like this is no way a LTBH sector, except in retrospect. But as a high-risk gamble it sure is an interesting fight to bet on. Personally I think Tesla is a contender, but that is not to say I think it is a certain survivor. But I certainly don't much fancy the chances of any of the other dogs in the fight. However Tesla is not just a single-play. If it were just automotive I wouldn't bother with the odds of a successful investment. But as a triple play on auto, storage, and autonomy I think it is worth a very high risk punt.

What I am interested in here is how we as retail investors can reasonably and objectively keep an eye on things as they involve. At the moment there are so many players, and so much emotion, and so much FUD, that about all I can do is to keep my eye on the Tesla survival & success odds. But I feel I ought to be trying to keep the wider game in view at the same time. That is what I personally would appreciate as a collective effort, to the extent that there is one here. Not a ra ra pissing match.

regards, dspp

[BobbyD]

Sorry slight misunderstanding when I wrote "German cars" I was refering to BMW and Merc referenced above.

I have pointed out before that Ody's mildly racist habit of referring to a bunch of very different companies together just because they all come from Germany is neither constructive nor clear, which is hardly surprising since it is only ever used to generalise a negative across all German car manufacturers when it explicitly doesn't apply to all German car manufacturers.

Musk pretty much said this in his biography he doesn't care about companies that make money he just wants to create competion to force other companies to create the future he envisioned as a kid.
If Tesla goes bust he has still achived his goal so I think he will be happy regardless.

Musk's aims at the outset may well have been different, and I have no reason to believe they weren't, but does he sound like a happy man? Picking fights with rescue workers in Thailand, repeatedly baiting the SEC... I think he's become too emotionally invested and too proud to ever walk away happy, or for that matter voluntarily walk away.

Is it too early for 'the full Daenerys' to have entered the Musk endeavours lexicon?

Now if he'd kept to brief and concentrated Tesla's resources on nailing the efficient production of electric powered consumer vehicles which could be sold profitably at a mass market price point, then he'd really have succeeded, we'd be living in a world where there were several million Tesla's on the road and Tesla would be turning a profit. Instead he's got a cruise control on steroids and a semi produced semi, and he's abandoned the one market Tesla might ever have have operated in profitably, flamethrowers.

Think that Musk is also on another mission which is to expose Wall Street & the media as charlatans and to build a huge corporation.

Would this be the same Elon Musk who used plucky outsider firm Goldman Sachs to take his company public, and then to attempt to take it private again? Mind you he dodged a bullet there, $420? Now available for $205.36.

He has already proved all of the folk wrong who said he could not have mass market car sales,

No he hasn't.

What looks to be happening is that Musk is building his business into a profit machine

What profit?

I look at it this way.

BMW manufactures 2.5m cars a year and is loss-making on a quarterly basis at present. JLR manufactures 0.6m vehicles and is loss making, -£3.6bn the year just ended.

The point is that these companies both support a dozen or so legacy ICE platforms. In order to keep those platforms competitive they need to achieve premium prices for high margins, and sales in excess of (say) 1 or 2 million units per year, simply in order to pay for the design teams and the always-recurring NRE on platform development, and to manufacture at the volumes required to create the cost base. They are typical of the struggle faced by any low volume auto maker, and give very direct insight into the corresponding scale game circumstances of the higher volume makers.

In contrast Tesla are remarkably close to break even at about 0.4m units a year, and two platforms (S/X, 3/Y), with another two platforms (semi, pickup) moving through the system. And they have a new factory coming through the system that is likely in time to take them to 1m units (I am assuming the Y volumes will take Fremont to 0.5m units).

So in a normal world Tesla would win out...

Against JLR and possibly BMW? Wow...

But this is not a normal world, because the legacy ICE manufacturers need to also spend to create very different BEV platforms that are not compatible with their ICE platforms. So the design overheads (and the mfg facility investment needs) of the legacy makers will double, and this situation will remain for so long as they are stranded with a foot in both saddles. The financial burden will cripple them, indeed it already is.

Again smaller Legacy, quite possibly. Bigger legacy is more flexible than Tesla, it can reconfigure it's manufacturing base as the market develops, it can move it's production from continent to continent to avoid tariffs as Trump tries to destroy the modern world, it can average the development cost of the systems in it's Frankenstein cars across millions of vehicles a year, battery and electric because the platforms are designed to provide flexibility and optimisation of design not to make the current parts bin obsolete, and they can pay for development and refitting with actual profits made on the sale of actually profitable cars around the globe.

Add in the costs of either playing catch-up in the autonomy stakes

One company currently has a level 3 system available for sale subject to local regulations, and it isn't Tesla. Atleast two companies currently have Level 5 taxis operating in the wild, neither of them are Tesla. There is no lead to catch up.

[redsturgeon]

https://www.alternet.org/2019/05/the-el ... ot-the-us/

Interesting article showing the growth and importance of the China EV market.

What i found particularly interesting was fall in prices of batteries, from over $1000 per kw to $176 per kw last year. As this continues then EVs will cost less to build than the equivalent ICE car within five years, that will surely be the tipping point for EV sales.

John

[redsturgeon]

https://www.bloomberg.com/opinion/artic ... total-cost

More detail of battery costs as a percentage of total EV cost

Falling from nearly 60% in 2015 to around 20% in 2025 with some suggestions that the crossover point where EVs are cheaper to make than ICEVs will be 2022 in Europe for large cars.

John

[Archtronics]

Sorry slight misunderstanding when I wrote "German cars" I was refering to BMW and Merc referenced above.

I have pointed out before that Ody's mildly racist habit of referring to a bunch of very different companies together just because they all come from Germany is neither constructive nor clear, which is hardly surprising since it is only ever used to generalise a negative across all German car manufacturers when it explicitly doesn't apply to all German car manufacturers.

Musk pretty much said this in his biography he doesn't care about companies that make money he just wants to create competion to force other companies to create the future he envisioned as a kid.
If Tesla goes bust he has still achived his goal so I think he will be happy regardless.

Musk's aims at the outset may well have been different, and I have no reason to believe they weren't, but does he sound like a happy man? Picking fights with rescue workers in Thailand, repeatedly baiting the SEC... I think he's become too emotionally invested and too proud to ever walk away happy, or for that matter voluntarily walk away.

Is it too early for 'the full Daenerys' to have entered the Musk endeavours lexicon?

Now if he'd kept to brief and concentrated Tesla's resources on nailing the efficient production of electric powered consumer vehicles which could be sold profitably at a mass market price point, then he'd really have succeeded, we'd be living in a world where there were several million Tesla's on the road and Tesla would be turning a profit. Instead he's got a cruise control on steroids and a semi produced semi, and he's abandoned the one market Tesla might ever have have operated in profitably, flamethrowers.

Critisims of BMW/Merc I think are valid, I can see them struggling in future I'd expect BMW to shrink and specilise on the M cars/Mini and the Merc brand will go like Chrysler imo.
VW however I think Ody is wrong, they have multiple brands that can share the MEB tech across, targeting every price point from high end Porsche/bugatti to affordable Seat/Skoda with Audi/VW in the middle.
The quality of the VWs are also top notch, I leased a top spec golf the year before last and I was really impressed with the refinement and quality of it especially compared to the MK4 I had previously.

Tesla has just under 2 year in my book to sort itself out and get ahead before the big boys get ahead of the curve.


I'm undecide on Musk current behaviour it seems very similar to the kind of stuff happening when he lost control of paypal, I think once something else comes along he will move on from Tesla which will probably be a good thing for the buisness.

[odysseus2000]

https://www.bloomberg.com/opinion/articles/2019-04-12/electric-vehicle-battery-shrinks-and-so-does-the-total-cost

More detail of battery costs as a percentage of total EV cost

Falling from nearly 60% in 2015 to around 20% in 2025 with some suggestions that the crossover point where EVs are cheaper to make than ICEVs will be 2022 in Europe for large cars.

John

These kinds of forward projections are always unreliable.

Currently everyone is having trouble sourcing reliable supplies of batteries for current needs & the battery production with its wet chemistry & then drying is slow, expensive & heavy on energy.

There are several potential alternatives. If any of these become commercial new projections will be needed.

Tesla have now closed their Maxwell acquisition. The use of super capacitors to give enhanced acceleration is currently on going for various performance vehicles making it very likely that it will be possible to build EV with performance figures beyond what ice can achieve.

The history of this field is that technology moves faster than analysts who I still think are too pessimistic in terms of adoption time scales for EV.

Regards,

[redsturgeon]

https://www.bloomberg.com/opinion/articles/2019-04-12/electric-vehicle-battery-shrinks-and-so-does-the-total-cost

More detail of battery costs as a percentage of total EV cost

Falling from nearly 60% in 2015 to around 20% in 2025 with some suggestions that the crossover point where EVs are cheaper to make than ICEVs will be 2022 in Europe for large cars.

John

These kinds of forward projections are always unreliable.

Currently everyone is having trouble sourcing reliable supplies of batteries for current needs & the battery production with its wet chemistry & then drying is slow, expensive & heavy on energy.

There are several potential alternatives. If any of these become commercial new projections will be needed.

Tesla have now closed their Maxwell acquisition. The use of super capacitors to give enhanced acceleration is currently on going for various performance vehicles making it very likely that it will be possible to build EV with performance figures beyond what ice can achieve.

The history of this field is that technology moves faster than analysts who I still think are too pessimistic in terms of adoption time scales for EV.

Regards,

I would agree with your analysis and I think the two articles I quoted both support the early tipping point for EV vehicle uptake. Yes the predictions are usually wrong and inevitably in the case of battery costs have had to be revised downwards, so crossover date is brought forward. From what you say, do you think the tipping point will be before 2022 then, seems soon enough to me...one lease cycle away.

I am absolutely bullish on the EV case...less so for Tesla. Have you topped up recently?

John

[BobbyD]

Critisims of BMW/Merc I think are valid, I can see them struggling in future I'd expect BMW to shrink and specilise on the M cars/Mini and the Merc brand will go like Chrysler imo.
VW however I think Ody is wrong, they have multiple brands that can share the MEB tech across, targeting every price point from high end Porsche/bugatti to affordable Seat/Skoda with Audi/VW in the middle.

I haven't looked at BMW that closely, but I can believe they are vulnerable. Merc like BMW are a bit small carwise for my liking, but like VW have interests outside cars and may do well with electric busses and lorries. I ws definitely looking at one or the other or month or two back, but the details elude me.

VW, are as you say a different beast. Their volume and range I think affords them some degree of protection, they can be many things to many people, and aren't susceptible to problems in any one part of the market, and they've been able to commit more strongly to electrification than BMW or Merc with less disruption to their other business. Scale brings cost benefits, and something I think I knew but hadn't realised, if you see what I mean, until last week was that because all VW companies distribute independently, each is allowed their own 200,000 cars at $7500 US federal subsidy... which is nice.

[PeterGray]

The use of super capacitors to give enhanced acceleration is currently on going for various performance vehicles making it very likely that it will be possible to build EV with performance figures beyond what ice can achieve.

No doubt there are niche markets where provision of high levels of short term power would be an advantage, performance cars being one. However, that is a niche and most current cars provide far more "performance" that those other than enthusiasts need, or want.

If there is to be a useful motor market for that tech it will arise if capacitors can be used to simplify battery design - if you can use capacitors to provide short term power during acceleration, and as a result reduce maximum power outputs needed from batteries then perhaps batteries could be made lighter and cheaper - which would be clear advantage for all EVs. It's not easy to see how that would help on longish hills where similar power outputs would be needed to be maintained, though.

[BobbyD]

If there is to be a useful motor market for that tech it will arise if capacitors can be used to simplify battery design - if you can use capacitors to provide short term power during acceleration, and as a result reduce maximum power outputs needed from batteries then perhaps batteries could be made lighter and cheaper - which would be clear advantage for all EVs. It's not easy to see how that would help on longish hills where similar power outputs would be needed to be maintained, though.

The VW ID R is quite good at hills...

Paper specs like acceleration and top speed are easy to brag on in forums, they appeal to a certain crowd lots of whom like Tesla. Reproducible and sustainable performance matter more offline, along with other non-performance factors.

[odysseus2000]

redsturgeon
I would agree with your analysis and I think the two articles I quoted both support the early tipping point for EV vehicle uptake. Yes the predictions are usually wrong and inevitably in the case of battery costs have had to be revised downwards, so crossover date is brought forward. From what you say, do you think the tipping point will be before 2022 then, seems soon enough to me...one lease cycle away.

I am absolutely bullish on the EV case...less so for Tesla. Have you topped up recently?

John

Currently my instinct says about 3 years before no one will want to buy an ice engine, but the ice makers are putting up very strong rear guard actions & there is also a back lash against Tesla which makes me wonder if ice makers can forestall the transition by stopping the politicians from becoming too aggressive with anti-carbon legislation in the next few years. So currently I am undecided.

No I haven't topped up on Tesla down here. I try to maintain something of a diversified portfolio so I have stuck with the Tesla I bought badly at higher prices & been adding to other things. Currently I like uber, Ttd & qcom, but I am nervous about where Trump is going & guarding a little cash in case we get serious down side.

I am still very bullish on Tesla, but I have been wrong before, so maintaining some discipline here.

Regards,

[odysseus2000]

The use of super capacitors to give enhanced acceleration is currently on going for various performance vehicles making it very likely that it will be possible to build EV with performance figures beyond what ice can achieve.

No doubt there are niche markets where provision of high levels of short term power would be an advantage, performance cars being one. However, that is a niche and most current cars provide far more "performance" that those other than enthusiasts need, or want.

If there is to be a useful motor market for that tech it will arise if capacitors can be used to simplify battery design - if you can use capacitors to provide short term power during acceleration, and as a result reduce maximum power outputs needed from batteries then perhaps batteries could be made lighter and cheaper - which would be clear advantage for all EVs. It's not easy to see how that would help on longish hills where similar power outputs would be needed to be maintained, though.

Potentially super capitors will replace batteries if the energy density & costs can be lowered. There are many stories kicking around suggesting this is happening now, such as:

https://www.wired.co.uk/article/superdi ... ar-battery

Whether this or similar are true is unclear. But there a lot of research going into super capacitors for the reasons cited in the article as any practical super capacitor system will transform EV.

Regards,

[BobbyD]

Morgan Stanley Slashes Worst-Case Price for Tesla to $10

- https://www.bloomberg.com/news/articles ... weak-sales

Tesla Autopilot suggests lane change into oncoming traffic

- https://electrek.co/2019/05/21/tesla-au ... g-traffic/

Tesla cuts base price of new Model S and Model X vehicles

- https://electrek.co/2019/05/21/tesla-pr ... x-changes/

Tesla's shifting capital raise narrative

- https://ftalphaville.ft.com/2019/05/21/ ... narrative/

[odysseus2000]

Musk exercises options for 175,000 more Tesla shares

https://www.marketwatch.com/story/elon- ... 2019-05-21

Regards,

[BobbyD]

Musk exercises options for 175,000 more Tesla shares

https://www.marketwatch.com/story/elon- ... 2019-05-21

Regards,

at $31.17....

So still a little upside left!