I'm obviously a fan of the product but I think an electric car is far superior to an ICE vehicle from a driving experience, maintenance standpoint. Can't wait till I don't have to go to a gas station anymore. Maybe it's the type of people I know but they're never taking a car more than 200 miles a day.

I think the market for EVs is going to be much bigger once people understand how much better of an experience it is and it's a mistake to take BMW 3 series sales and translate them. People who would never buy a car over 50k stretch to buy a Model S. A large majority, and this is very anecdotal, of people I talk to who you would never expect have already decided a model 3 is their next car. Tesla came up in a conversation w/ a Swedish buddy and I figured he'd never buy an American car but he mentioned most of his friends in Sweden don't see a reason to buy anything other than a Tesla. Buddy who owns a Subaru and is a hippie, same story, same story with his brother. Same thing for a couple guys at a poker game I play at, I'm in software do half the company is waiting for the cheap Tesla. I walked by a guy on the phone in the lobby and said he couldn't afford a tesla there's no car he wants to buy now.

People will buy the best product, if they can afford it and driving a Tesla is a transforming experience kind of like using an iPhone for the first time. It's not the same driving a high end BMW or another EV. Some of it is inherent advantages in EVs and some of it is it costs 3x that of other vehicles. If they can get similar performance in a 3, it's a no brainier.

I'd certainly buy a Tesla (they weren't in my country) as a second car. However, I'd much rather buy a pure electric BMW or Toyota on the lower end when they come out. And that's the kicker. It's the pure electric experience, not the Tesla experience, that matters.

Teslas are mostly crap apart from the pure electric benefits (which are large).

The iPhone was different because it was a sensor rich touch screen and a certain aesthetic which no one else got. The user experience was enduringly different, and that's what drove it to grow so much.

Tesla has zero advantages like that, and never will. That's why iPhone comparisons are way off. Generally in a car you get what you pay for, and consumers are heavily price sensitive as they aren't with subsidized phones.

Thus you have cutthroat competition, and only the big players who can leverage production scale, supplier scale, marketing, decades of know-how and established dealerships tend to survive for any volume. That's also why there hasn't been a car start up who've made it to the big time in decades, unlike pretty much any other industry.

Could Tesla maintain some kind of enduring advantage in batteries (cost, range, volume) that allows it to overcome its other huge disadvantages, and scale up such that it can actually compete? Maybe. I'd bet 10:1 or more against it though. And even if succeeds, it's worth noting that Tesla is already valued at 75% of Nissan, 60% of Ford, and 65% of General Motors, who sold between 5 and 10 million cars each with good profit margins.

Thus if Tesla has a 50% chance of success of making 5%-10% of the world's cars eventually, it's already maybe 5x overvalued using DCF. If it has a 20% chance, it's maybe 15x overvalued. Not to mention, your stock will be quite heavily diluted between now and that time.

The whole thing is completely absurd. That's why there's all this nonsense about home battery packs ("powerwall") and autonomous cars and other assorted exaggeration. You have to keep the bull**** going because otherwise people are going to do the simple math above and see it for what it is - perhaps the worst big cap investment in the world.

Why are talking about Tesla as a car company? They are clearly a battery company.

As Musk said their patent development is open-source they essentially killed their battery moat....

What battery patents do they hold?

Oh man, gladly.

HFC vehicles will never be able to produce the fuel cells or fuel at an economically viable rate that allows them to succeed. Until someone overcomes the second law of thermodynamics it will take more energy to create hydrogen fuel than will be provided by that fuel.

In that scenario, it can never win a price war with electricity or combustibles.

Vast hydrogen production plants based on solar power would in fact solve the world's problems. They're about the only way solar power will ever be viable as a large scale energy source on Earth (well, in the next 20+ years, anyway). Without that it's fossil fuels, basically. So there's certainly incentive to create such a system. You could solve CO2 emissions with a hydrogen economy; there's virtually nothing else that can.

I'd argue that a scaled hydrogen economy is way cheaper and lower CO2 emitting than battery building and the power station/fossil fuel grid buildout needed for battery powered transportation.

Large scale cheap enough solar producing hydrogen certainly could. Not on a cost per watt level (yet), but people need power when the sun doesn't shine and they need it for days during continent-wide bad weather.

Still, I think oil with increasing battery replacement keeping the cost of oil low is the way the world is going to go, for lots of reasons, unless it turns out that the global warming predictions aren't heavily exaggerated as appears to be the case now. Then we might see more drastic action toward a hydrogen economy.

Why is using solar to create hydrogen fuel cheaper than using putting electricity from solar directly into a car?

Solar doesn't run at night or on very cloudy days; you'll still need baseload. The power used for transportation is roughly equal to all electricity use; you'd need to double baseload power, upgrade transformers, etc, not to mention build all the batteries, mines,hundreds of battery factories, millions of charging stations and tens of millions of in home wiring changes, and the grid wiring to power it. It would cost more than building a hydrogen economy, and you'd be using dirty power since there no renewables that are a viable electricity source on a large enough scale.

Extensive studies have been done on this. You can handle maybe 10% electric cars given current spare capacity before the costs start skyrocketing and multi trillions in infrastructure spend would be needed.

But it seems to me like your thesis is that all of those things won't be necessary for a hydrogen economy even though creating the same amount of energy in hydrogen fuel via solar will require MORE solar energy than what you listed off.

Do you anticipate that power storage won't continue to improve?
Do you anticipate that hydrogen fuel just won't be created during night time or cloudy days?

http://energy.gov/eere/fuelcells/hyd...-gas-reforming

"WHY IS THIS PATHWAY BEING CONSIDERED?
Reforming low-cost natural gas to produce hydrogen can provide the commercial hydrogen production capacity needed to support a full fleet of fuel cell electric vehicles (FCEVs). Over the long term, DOE expects that hydrogen production from natural gas will be augmented with production from renewable, nuclear, coal (with carbon capture and storage), and other low-carbon, domestic energy resources."

You can stockpile and transport hydrogen, which makes all of solar's problems go away, and it becomes reliable baseload. Parts of the Sahara with their reliable insolation could become the new Saudi Arabia.

It's hard to grasp the scale of the problem. There's just nothing on a 20+ year time scale that comes remotely close to turning solar into baseload except solar to fuels (which at the moment is only hydrogen). You lose a lot of power in the conversion, sure (75% or so), but that's more than offset by the greater efficiency of optimal panel siting, economies of scale, and the lack of waste for backup. Bizarrely, it makes sense, because solar panels are just total crap when it comes to producing regular power.

I think hydrogen is unlikely though. My guess is, we come up with some combination of increasing batteries, peaking solar charging for some + overnight off peak charging for others, and a gas turbine buildout given abundant fracking gas.

Hydrogen seems a very remote possibility. It's already produced on large scale though (about 10% of oil, amazingly, mostly from fossil fuels for industrial and oil processes mostly), so it's certainly possible to build a hydrogen economy if we decided to.

I don't think it happens unless temperatures suddenly start drastically increasing and the world goes into panic mode and starts a global solar to fuels project. I view that possibility as remote given that global warming seems hugely exaggerated, but it's maybe 10%? 20%?

I think we'd need smaller batteries to store larger amounts of power to make Tesla work.

Think of your phone, your screen gets larger but your battery is also larger and heavier and the faster and more apps your phone runs then the faster your battery dies. The density of power storage is not increasing quickly enough for us to expect solar energy capture to battery storage to run cars for more than a few hundred miles.

I'm not well-versed in this at all, just fascinated by Toyota, but my understanding is you can't up the scale of battery production and expect exponentially better results.. You'll always have efficiency issues with storing energy vs. using a fuel source

For your second questions, there's existing infrastructure for natural gas to produce hydrogen. It's not perfect but it can act as a bridge until the world figures out a better solution.

There IP "open source" comes with some pretty heavy strings attached, something like all competitors and their suppliers that use Tesla open source IP have agree to return the favor otherwise deal is off.

I just spent several hours reading SeekingAlpha articles on TSLA, a mix of positive and negative. My conclusion is that people don't really disagree that much on Tesla the company as it stands today.

So their TSLA narrative ends bullish or bearish for other reasons.

Imo it's about how they answer these two questions: (1) will car-battery tech evolve to reward modular or integrated design?; and (2) can we trust US auto CEOs to intelligently transition off ICE-centric business models?

(1) Will the next 5-10 years continue to reward "brilliant tinkering" in car+battery integrated design? Or will battery maker(s) create a truly modular car battery solution?
With just a dab of freshman physics (and perhaps a few all-nighters), Telsa took current (or out-of-date, depending on who you ask) battery tech, integrated it into the car design process, and made the only compelling BEVs on the planet.

Since battery makers weren't thinking much about cars, that bit of integrated design was necessary. But what if battery makers do produce a car-optimized battery module? Then Tesla's freshman engineering moat is bridged.

On the other hand, history strongly suggests that GM and F will never be able to hire anybody who knows freshman engineering. So if no modular battery solution appears, perhaps TSLA is worth as much them---in a world where integrated design matters.

(2) It's hard to predict when, but there will be an inflection point when people basically stop buying new ICE cars (used car market will persist much longer.) Traditional automakers will face risks here that TSLA won't. Is this significant?
TSLA bears think this risk is barely worth mentioning.

TSLA bulls say that ICE dealerships make all their money on maintenance, and it will be incredibly hard to get them to move to BEVs without killing the manufacturer's margins.

Bulls also imply that traditional auto CEOs are, uh, strategically challenged, and will not be able to negotiate this transition without stranding billions and billions of ICE-d assets.

Why don't you see hydrogen phones? This is exactly how Musk described it in the annual meeting. Virtually every battery chemistry has been researched and developed if economical. If you are not a phd chemical engineer or a dedicated tinkerer, you should not be discussing battery technology. Lithium is good enough, the costs of the battery are in the battery. After it is used it will be 100% recycled. Over 99% of original nissan leaf batteries are still in use. “It will be possible to have a 500-mile range car. In fact we could do it quite soon, but it would increase the price. Over time you could expect to have that kind of range.”- Musk. Tesla, Panasonic, China are all working on improvements to lithum technology.

The P85D Tesla go 0-60 in 3.1 seconds and the 1/4 mile in 11.6 seconds. It can even go 0-60 in 2.8 seconds in ludicrous package.

====

As for solar storage, the future is the powerwall type lithium devices. They will last over 20 years (probably 50 years in the future or even present technology) and can be placed in existing substations. The cost of storage is about $.10 a kwh. It might be less. Thus your daytime power might be cheaper than your nighttime power in the future. Top tier in Los Angeles is already $.30 a kwh. A small 10x10x10 room would provide enough storage for a small city (1000 homes, 10 kwh per cubic foot). I believe the energy density between the roadster and the tesla improved 40%.

Interesting to note for from July 2014 to July 2015, solar and photovoltaics increased about 1000 megawatthours (mwh) for the month. However, the country increase demand 14000 mwh for the month. Wind increased about 1500 mwh, but the 3.3% increase was made up by increase in natural gas use at 25000 mwh. Some coal plants were shut down.

http://www.eia.gov/electricity/monthly/pdf/epm.pdf

Bottom line: 500 miles mainstream batteries, it's game over for Tesla. There's no reason you'd buy one.

The only holdout is that their battery factory might give them some leg up on others. I think that's unlikely for several reasons, once you get away form the hype. For one, they're not really doing anything new that other battery makers can't do. For example, LG chem division president says:
That's lower than TSLA in the same time frame, since Musk recently slyly pushed it out to 2018 from 2017 by saying "2 to 2.5 years" for the Model 3 when it was previously 2017.

Lest you think TSLA have some super duper special leg up or make batteries in unseen volumes- consider: the total yearly iPhone/iPad battery kWh is roughly equivalent to Tesla's 50,000 cars. For a ****ing phone.

There is just so much bull**** being spun here by Tesla fans. For example, its PowerWall is just hype and bull**** like the rest. They don't have a leg up. For example, LG Chem recently released their own home battery pack (into an already crowded market) with specs superior to Tesla's PowerWall at a lower price.



Meanwhile, China has finally made the leaps necessary to bring online large scale battery plants of their own for the first time. LG Chem has recently built new plants (one in the US) and can easily build more.

There is no margin here and there is no edge here.

The battery stuff like the car stuff (especially "supply limited") is all just total bull**** and hype to desperately keep the stock price up for this debt ridden company that relies purely on exactly this hype to keep its head above water (the recent $500 no-wait-$750 million stock sale to suckers to keep them going another year, immediately after saying their cash position was fine and they didn't need capital (hello SEC) - being an example of why they need a high stock price). You are a Musk nuthugger who's not looking at this guy, his history, his skills, his truthfulness or his company rationally.

As for changing the world: a mass produced quality BEV with >200 miles would have existed at exactly the same time as the Model 3 had Musk never even existed. The car makers were simply waiting for the battery technology for pure BEVs to be ready and commercially viable, which depended on (always happening) worldwide battery research and advances, of which Musk has no part. It was always coming. Musk is simply megalomanicing his way into this space, he's not "changing the world". Nothing he has done at Tesla will make a lick of difference to the world or the timeline for mainstream BEVs.

The only thing Musk has ever done is SpaceX. Even that is not his idea or his engineering that I can see, the ideas came from Tom Mueller. He merely provided the money and the interest in a space company. As a businessman he's quite astute, probably on par with Donald Trump (that's both a compliment and an insult). He deserves credit for investing his PayPal money (another company he didn't create or do the core work on) in SpaceX and some of the business decisions. Beyond that, people really need to start stop the bootlicking. The guy is a businessman running on debt and hype and a very, very carefully run PR machine and carefully created personality cult.

Right, so I think Tesla's value proposition is exactly: "We are the only firm that has taken commodity batteries and integrated them into the design of a compelling car."

That value proposition is mostly orthogonal to the increasing value offered by better commodity batteries. So if you're bullish on TSLA, it's because you think they will CONTINUE to be in their own league in car-battery integrated design.

But yeah, I haven't read anything that makes me believe Tesla will make lots of money selling batteries. (Or any money selling batteries, really.)

Yeah, I completely disagree with you on this one. Sources of disagreement, in increasing order of importance:
(1) Reading Vance's biography. (Have you?)
(2) A Saturday of watching Musk interviews after reading the biography.
(3) The fact that you can find an endless supply of quotes like this one from a famously gushy nut-hugger:
I have a really strong prior belief that NO ONE (not even Elon) could manufacture a personality cult that fools Bill Gates, Larry Page, Craig Venter, Richard Branson, Jen-Hsun Huang, Peter Thiel, and on and on and on.

I don't object to you believing that Elon is running a supernaturally effective PR campaign, but I also don't see any evidence for it.

Edit - I think it's much more probable that he's what he appears to be: a 0.0001-percentile genius who took huge risks at just the right time.

Yes but we're still carrying around bigger batteries inside our bigger phones. And we aren't taking about phones with chargers and existing electrical outlets.

Why don't you see Teslas driving 200 miles a charge around the world?
Because there aren't enough outlets.

Why doesn't battery storage increase exponentially?
There's no Moore's law for batteries. Battery storage is about pushing limits (8-10%).

Put a different way, Ford/Nissan/GM will only kill Tesla if the car-battery design problem decouples completely...

(Car-battery design) => (Car design) + (Battery design)

...and in that world the only thing to do is sell the company and buy AAPL anyways.

Oh, I forgot about this one.

Honestly, Elon Musk === Donald Trump is basically a conspiracy theory.

No without Musk there would be no electric cars on the road. They would in fact be pulling the cars as sub-standard with low gas prices. Before Musk electric cars were seen as slow, no air conditioning, small, no range, and ugly. Musk pushed the battery companies to make a better battery. This battery technology has been around 20 years, but no one other than Musk tried to put it in a car. Musk is also the one to make a performance car out of EVs from the ground up. The purpose of the gigafactory is to make batteries for $250 a kwh. To cut out the middle man. Thus the battery in the car might only be $10,000-$20,000. Consumer reports gave the cr a rating of 103. Tesla, may get into trouble mainly because there are too many competitors coming into the space. I saw black I3 on the road yesterday and it looked like the most modern car I have ever seen. I see 3 leafs a day, and you can buy them used for $12,000.

Model X review - https://www.youtube.com/watch?v=KbO6-C2Yajg
Musk model X launch - https://www.youtube.com/watch?v=RUz_EXSmp9w

I disagree with this statement. There are tons of electric cars out there that don't have the same experience Tesla does and several examples of failed electric car startups. Tesla does real engineering and is a lot here - a supercharger network, OTA updates, dual motor control systems, etc. Not to mention, where are other manufacturers going to buy their batteries from?


The big players only really own the engine technology and the design. The rest of it is operational excellence. I don't believe that dealerships are an advantage - people don't deal with dealerships because it's like walking into an Apple store.

The advantage is an engineering driven culture, continuous innovation, and the guy at the top who is able to both dream up new features and understand the engineering behind it. The valuation is questionable and there are many risks people aren't considering - what if people hate the Falcon Wing doors? They're complex to manufacture, what if they fail within a year, reservation holders canceling because the 2nd row seats don't fold down, gigafactory explosions, etc. What if Elon Musk dies (he doesn't look that healthy)?

I know that you don't value Elon, but the company is him. The uncompromised car is him, the fact that they're doing real engineering is him. This company simply doesn't work without him.

http://seekingalpha.com/article/3537...ver-tesla-wins
As usual its SA so take it with a spoon of salt...

http://uk.businessinsider.com/r-tesl...15-2?r=US&IR=T
Sure a lot can go wrong on the way, but as things are going now it seems that the probability that everything will go as planned, could be larger than 1/14.

If there's one major criticism of Musk he's over optimistic on both timelines and his prospects of success. He truly believes that his companies can be worth more than Apple. You have to be a super optimist to build a private rocket company and an electric car company.