Steveottawa Posted November 6, 2015 Share Posted November 6, 2015 http://finance.yahoo.com/video/plan-ask-elon-musk-ron-125100676.html Baron Capital chairman & CEO, discusses questions he will be asking Tesla's Elon Musk at today's Baron Conference. Care to put in your two cents on his comments near end of video? What if Ford was to shock everyone and announce a a strategy similar to Telsa - and invested in batteries. The funny thing here is that Baron says that by 2020, Telsa will be making 500,000 cars per year, and will make a profit of 6 billion, and will therefore be worth a 20PE with a value of 120 Billion, an increase of 4 times. Meanwhile, Ford and GM get a PE far far less (8-12). He then gets into why Telsa is worth the risk - because essentially THEY TAKE RISKS. He slams the current management at car companies because they will not take risk and ditch the billions we have invested in engine plants. http://finance.yahoo.com/video/plan-ask-elon-musk-ron-125100676.html Baron Capital chairman & CEO, discusses questions he will be asking Tesla's Elon Musk at today's Baron Conference. Quote Link to comment Share on other sites More sharing options...
Biker16 Posted November 6, 2015 Share Posted November 6, 2015 http://finance.yahoo.com/video/plan-ask-elon-musk-ron-125100676.html Baron Capital chairman & CEO, discusses questions he will be asking Tesla's Elon Musk at today's Baron Conference. Care to put in your two cents on his comments near end of video? What if Ford was to shock everyone and announce a a strategy similar to Telsa - and invested in batteries. The funny thing here is that Baron says that by 2020, Telsa will be making 500,000 cars per year, and will make a profit of 6 billion, and will therefore be worth a 20PE with a value of 120 Billion, an increase of 4 times. Meanwhile, Ford and GM get a PE far far less (8-12). He then gets into why Telsa is worth the risk - because essentially THEY TAKE RISKS. He slams the current management at car companies because they will not take risk and ditch the billions we have invested in engine plants. http://finance.yahoo.com/video/plan-ask-elon-musk-ron-125100676.html Baron Capital chairman & CEO, discusses questions he will be asking Tesla's Elon Musk at today's Baron Conference. That IS the innovator Dilemma. Quote Link to comment Share on other sites More sharing options...
akirby Posted November 6, 2015 Share Posted November 6, 2015 Is he delusional or just heavily invested in Tesla? 2 Quote Link to comment Share on other sites More sharing options...
03 LS Posted November 6, 2015 Share Posted November 6, 2015 It's just pie in the sky talk. Or worse, out right deceit. The reporter commented, "Everything HAS to go right, even so it (the valuation) still seems too high". Let's assume Everything HAS GONE right - They are able to achieve 50% growth every year through 2020. That's still less than 400k cars a year in 2020, significantly less than the 500k number he used to justify the valuation. Further, let's pretend things have GONE BETTER THAN right, they actually will make 500k cars in 2020. They'll need a 2nd plant by 2018. Where is the expansion plan? Where is the announcement? After all, they started building the gigafactory in 2014 for 2017 production use! When and where will they build the 2nd assembly plant to enable 500k annual production? They don't have one. They don't even have a plan. Nobody, not even Tesla themselves believe it. They just threw that number out there to hype their Gigafactory! Quote Link to comment Share on other sites More sharing options...
RichardJensen Posted November 6, 2015 Share Posted November 6, 2015 The funny thing here is that Baron says that by 2020, Telsa will be making 500,000 cars per year, and will make a profit of 6 billion. Yeah. That is funny. But probably not in the way you meant it. Unless you meant it in this sense: Tesla's got major issues with every aspect of their business model that doesn't involve selling batteries. They have to issue stock to fund ongoing development, the only time they were profitable, it was due to government policy, they're working at a scale that no other independent car company has been able to make work, and the only thing they've got going for them is Elon Musk's remarkable ability to get ostensibly impartial people (like this guy) and organizations (CR) to shill for him. Quote Link to comment Share on other sites More sharing options...
Steveottawa Posted November 7, 2015 Author Share Posted November 7, 2015 What I think is funny is that his company gets a tech company PE ratio, and we get 8. That's funny. And not haha funny. Quote Link to comment Share on other sites More sharing options...
jpd80 Posted November 7, 2015 Share Posted November 7, 2015 (edited) The whole thing is unsustainable and Musk knows it, he needs a white Knight to buy Tesla in the next few years before investors get wise that he's using their investments to seed development of future cars. There's no way Tesla will be selling 500,000 cars in 2020, not when it currently sells around 1,700/mth and mostly in California. I think it's a huge extrapolation on a small exclusive niche of buyers. I can't belive how many smart investment people who should know better are buying into this and don't see Tesla for what it really is, an unsustainable business model that's more akin to a money making scam Edited November 7, 2015 by jpd80 Quote Link to comment Share on other sites More sharing options...
Steveottawa Posted November 7, 2015 Author Share Posted November 7, 2015 Well, the markets can stay insanely over priced far FAR longer than you can stay solvent- so don't bet against it. You do know what a short squeeze is I assume? Quote Link to comment Share on other sites More sharing options...
RichardJensen Posted November 7, 2015 Share Posted November 7, 2015 You do know what a short squeeze is I assume? I am, in financial terms, extremely conservative. As my collection of used books would demonstrate. And because of that, I cannot fathom the mindset it takes to take a massive short position in a company. Especially if you haven't bought options to cover your position in case the stock moves the other way. BTW: If I thought Ford could profitably invest in batteries, I'd be more supportive. But I don't see them having the corporate knowledge to make a success of it faster than established players. Tesla is a good battery company with a terrible car company wrapped around it. Same way that PayPal was a good payment processor with a horrible financial services company wrapped around it back when it was X.com, or whatever Elon called it. Quote Link to comment Share on other sites More sharing options...
GT-Keith Posted November 7, 2015 Share Posted November 7, 2015 Does he expect Ford to just invest and be competitive with Tesla's batteries in the near term? Li is a commodity and Tesla isn't the only name in the game and the other players aren't masquerading as a car company thats gushing red. I don't see them going from ~2,000 vehicles a month to ~40,000 a month in five years with just a handful of models, half of which are not "mass market" friendly. Tesla is a nice civil engineering project, though. Quote Link to comment Share on other sites More sharing options...
BrewfanGRB Posted November 7, 2015 Share Posted November 7, 2015 Well, the markets can stay insanely over priced far FAR longer than you can stay solvent- See AMZN. They have a PE of 956 and yet... It's up 120% over the last year with essentially no earnings. Quote Link to comment Share on other sites More sharing options...
Steveottawa Posted November 7, 2015 Author Share Posted November 7, 2015 @RichardJensen -- "Tesla is a good battery company with a terrible car company wrapped around it. " You are correct. On one had a go to market strategy would be to license Tesla technology to everyone with a "Telsa inside" logo on the car (like Intel inside). I know that's a bad idea. And Yet I wonder why it is that Telsa doesn't see fit to work with a company with scale (Like FCA) to use their Telsa technology to transform a major automaker. They would simply do a reverse takeover. A crazy idea here but...maybe where TLSA would get say 20% of this major automaker at the start, control of their BOD by proxy voting rights, and warrants to be given 30% more at the then stock price (plus 30% higher within 36 months) if they achieve agreed sales targets. This would allow existing Tesla company to have plants around the world - instantly. And be making 3 million cars by 2022 Quote Link to comment Share on other sites More sharing options...
Edstock Posted November 7, 2015 Share Posted November 7, 2015 @RichardJensen -- "Tesla is a good battery company with a terrible car company wrapped around it. " You are correct. On one had a go to market strategy would be to license Tesla technology to everyone with a "Telsa inside" logo on the car (like Intel inside). I know that's a bad idea. And Yet I wonder why it is that Telsa doesn't see fit to work with a company with scale (Like FCA) to use their Telsa technology to transform a major automaker. They would simply do a reverse takeover. A crazy idea here but...maybe where TLSA would get say 20% of this major automaker at the start, control of their BOD by proxy voting rights, and warrants to be given 30% more at the then stock price (plus 30% higher within 36 months) if they achieve agreed sales targets. This would allow existing Tesla company to have plants around the world - instantly. And be making 3 million cars by 2022 Elon and Sergio, this I gotta see . . . Quote Link to comment Share on other sites More sharing options...
RichardJensen Posted November 7, 2015 Share Posted November 7, 2015 You are correct. On one had a go to market strategy would be to license Tesla technology to everyone with a "Telsa inside" logo on the car (like Intel inside). I know that's a bad idea. Actually, I think that's a pretty good idea. Elon's built a surprising amount of brand equity for a company that's essentially propped up by government regs. Of course in time, that might end up like this: Quote Link to comment Share on other sites More sharing options...
silvrsvt Posted November 7, 2015 Share Posted November 7, 2015 See AMZN. They have a PE of 956 and yet... It's up 120% over the last year with essentially no earnings. But they deal with something like 30% of all online sales Quote Link to comment Share on other sites More sharing options...
jpd80 Posted November 7, 2015 Share Posted November 7, 2015 So what happen when these companies commit to Battery plants only to find the chemistry and construction changes to a better more efficient process? Is there enough flexibility in processes to accommodate next Gen batteries? Quote Link to comment Share on other sites More sharing options...
blazerdude20 Posted November 8, 2015 Share Posted November 8, 2015 So what happen when these companies commit to Battery plants only to find the chemistry and construction changes to a better more efficient process? Is there enough flexibility in processes to accommodate next Gen batteries? This is the issue. Short term it's more expensive to source components third party but the buyer safe guards themselves against a shift in the market. Tesla would have all the money invested not the buyer. Quote Link to comment Share on other sites More sharing options...
jpd80 Posted November 8, 2015 Share Posted November 8, 2015 (edited) This is the issue. Short term it's more expensive to source components third party but the buyer safe guards themselves against a shift in the market. Tesla would have all the money invested not the buyer. Yeah, I'm thinking that if Tesla backs the "wrong horse" in battery development, it could find itself spending considerably more to undo commitments and restart on the right path, worse if it's locked into long term commitments, it may have to wait years to correct an error / misstep.. The best it can hope for is to choose correctly now and that's hard with so many development opportunities being explored with battery design and chemistry Edited November 8, 2015 by jpd80 Quote Link to comment Share on other sites More sharing options...
Steveottawa Posted November 8, 2015 Author Share Posted November 8, 2015 So what happen when these companies commit to Battery plants only to find the chemistry and construction changes to a better more efficient process? Is there enough flexibility in processes to accommodate next Gen batteries? Most certainly - just like the same plant that built 4 cylinder gas engines can be converted to 8 cylinder diesel. The input into the plant (for lithium) just changes to whatever. There are leapfrogs made all the time, and those that came before the leapfrog just adapt, or die. This is one of those times Ford and GM must adapt, or die. Quote Link to comment Share on other sites More sharing options...
RichardJensen Posted November 8, 2015 Share Posted November 8, 2015 Well, from a contrary point of view, batteries are like, say, seats, instrument panels or even front and back bumpers: They're all parts furnished by tier one suppliers. Ford doesn't need to manufacture batteries to make a competent EV. And I think the general consensus is that hybrid is going to be the next stage, not full EV. 1 Quote Link to comment Share on other sites More sharing options...
AGR Posted November 9, 2015 Share Posted November 9, 2015 There is a lot of NIH(not invented here) syndrome at BON. Once Ford unveils their(rumored) 200 mile EV, EVs will be the wave of the future... Quote Link to comment Share on other sites More sharing options...
mustang_sallad Posted November 9, 2015 Share Posted November 9, 2015 There is a lot of NIH(not invented here) syndrome at BON. Once Ford unveils their(rumored) 200 mile EV, EVs will be the wave of the future... Can you point to these rumours? I posted an interview with Mike Tinskey a few months back where he basically acknowledged cars like the Bolt and the next Gen Leaf, and gave the impression that Ford wouldn't be left out of the mix. That's all I've heard, other than that, I'm just using logic to conclude that Ford will get into the 200 mile club as well. It'd be really interesting to see one car offered as both a 200 mile EV and a 50 mile PHEV. I imagine a scenario like that - the EV would get all the attention and bring people into the dealer, and the PHEV would seal the deal once customers get more than a 30-second sound bite to explain why PHEVs are the best of both worlds. Quote Link to comment Share on other sites More sharing options...
mustang_sallad Posted November 9, 2015 Share Posted November 9, 2015 In either case though, I agree that Ford doesn't need to build their own battery plant to compete in this segment. Let LG Chem and Panasonic (and Tesla) duke it out and drive costs down against each other. You can bet that GM announcing their $145/kWh price loud and clear (to LG Chem's displeasure) will do wonders for keeping everyone on their toes. Quote Link to comment Share on other sites More sharing options...
RichardJensen Posted November 9, 2015 Share Posted November 9, 2015 There is a lot of NIH(not invented here) syndrome at BON. Feel free to refute any of my concerns about Tesla's business model. You know, in order to prove that my skepticism of their long-term viability is "NIH syndrome" and not an eminently reasonable conclusion based on their balance sheet, revenue sources, funding mechanisms and the industry as a whole. Quote Link to comment Share on other sites More sharing options...
jpd80 Posted November 9, 2015 Share Posted November 9, 2015 (edited) No doubt Ford is forging ahead with electrification developments, the leaked stories in late 2014 and earlier this year suggest a more hybrid/PHEV friendly platform (if not a dedicated one). Ford is also hiring 200 engineers to continue work on electrification so yeah it's coming in 2018 but what mix of electric mileage and ICE is needed to please the most favorable buyer group? Will it be a 200 mile Bolt Competitor or more like a PHEV with better range like 40-50 miles.... And for the record, I'd love nothing better for Ford to punch out an alloy bodied PHEV and with it, a dedicated EV version that is not unlike a Tesla "mini me" done to a price that reaches more buyers. Edited November 9, 2015 by jpd80 Quote Link to comment Share on other sites More sharing options...
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