Published on March 24th, 2019 |
by Paul Fosse
March 24th, 2019 by Paul Fosse
As I disclose in my bio, I own Tesla stock in one of my investment trusts. I own the stock because I believe the company is a promising avenue of speculation, with a lot of risk and a lot of potential reward. On the stock price, but you could come to that on the basis of my stock holdings and my bullish comments on the company.
Tesla has had incredible growth in revenue over the past 10 years, growing from $ 15 million in annual revenue in 2008 to over $ 21 billion in the recent completed 2018 calendar year. This 107% compounded growth rate is not uncommon for small startups, but fast growth gets much tougher to maintain as the company gets bigger. So far, Tesla has been able to sustain very high growth rates of 74% over the last 3 years, only slightly slower than 100%. Tesla could continue to grow at high rates for a few years until it reaches its mission of accelerating the transition to sustainable energy. This mission includes automobiles, trucks, storage and solar. I'm not going to discuss semi trucks, storage, or solar, even though they are exciting areas. Building Cars People Want
There are two parts to building cars people want. Designing the car and building it. (cough, falcon wing doors, cough) could make the building of the car extremely difficult.
The Model Y has helped me realize that Tesla's strategy has now been shifted. S, the Model X, and the Model 3, the goal of the Model Y is more modest. Their goal is to show how they can address the largest portion of the world's vehicle market (the small and midsized crossover and SUV segments) with a few tweaks to the revolutionary Model 3 design. This line is hopefully meant to be the model Y line.
It is thus possible and even likely that the model 3 and model could have been built on the same manufacturing line , Tesla may use existing batteries, motors, electronics and interiors to build its next two vehicles, the pickup and the $ 25,000 Model 2, Tesla may avoid the production hell that it endured for the ramp of the Model S, X, and 3. There wants to make a big market for $ 15,000 electric cars, but depending on the speed of the transition to EVs goes, we may not have to build many. If you're looking for a cheap car, you'll find a lot of cars with 500,000 miles available for lower priced cars. Some want to satisfy that need.
Another problem Tesla (or the aftermarket industry) 100 copies of the same car. This is not a serious problem in finding your car. I do not want to say this is a good problem to have. This is a problem the traditional manufacturers are very good at solving.
So, Tesla has stated that designing a just car is easy but it is hard to come by what the company learned in building the Model 3 production lines.
Financing New Gigafactories
Tesla has been able to generate about $ 4 billion a year in cash flow from its existing operations (taking the last
Learning from previous factory builds, Tesla thinks it can reduce the cost of building future gigafactories from about $ 4 billion a year to about $ 2 billion a year (I think that's from the 4Q call, but it might be from the groundbreaking of the factory or another article). This means they can split their cash flow to finance one gigafactory a year and spend the other $ 2 billion to enhance existing factories and design new vehicles and manufacturing systems.
So, what are the vehicles and volumes I see Tesla building?  Vehicle Production / Sales
As you can see from the tables above and below, Tesla plans to become a leading manufacturer of vehicles in the world, with only 4 high-volume models.
Related: Which Electric Vehicles Could Score 500,000+ Sales A Year?
Depending on how much the sales of other cars will drop when they arrive at the airport, Tesla could be the world's largest manufacturer by about 2025. When this tipping p
How Does Tesla Match Supply To Demand?
One of Tesla's competitive advantages is the relative ease at which it markets into different markets. Most cars need to be reworked to meet local safety and emission standards.
So, how does Tesla use its international designs to match supply to demand?
- Tesla announces a unique vehicle that has value far beyond anything available today anywhere in the world.
- Tesla ships the new vehicle or model to the US and Canada as it ramps production and lowers its
- Tesla ships the new vehicle or models to the left-hand-drive markets in Europe and China during the pause in demand that occurs in the US after it worked through its waiting list.
- Tesla ships the new vehicle or model to the right-hand-drive markets during the break in demand that occurs in Europe and China after the pent up demand.
Then it starts again at the top with a new model (the $ 35,000 Model 3 at the moment) or a new vehicle (the Model Y, Pickup, or Model 2). When they are soft on the market, they just start shipping to the next market. The shorts scream " Demand Problem ," but Tesla continues to increase production and sales to new markets. They just need a new vehicle design every year or so to start the cycle. Considering how slowly the competition is moving, that is not difficult.
But What About Competition?
Tesla wants to continue to manage some different events. Countries wants to add and drop purchase subsidies and other EV incentives. They want to put on a gas and diesel bans in certain cities that wants to spike demand ahead of their effective dates. Competition wants to introduce cars competitive with Tesla's. The 5 areas it wants to compete for are:
- Battery supply and cost.
- Efficient EV designs that minimize the size of the battery needed for an acceptable range. As we are seeing, many companies can make a great EV, but making one as efficient as a Tesla is very challenging. I've only been impressed with the Hyundia / Kia products from an efficiency standpoint (other than Tesla).
- Supercharger deployment, charging speed, and reliability. Elon may not call it a moate, but everyone else thinks it is. If Tesla opens this up to other factories,
- Full Self Driving. Every Tesla car has been built since October 2016 and is fully equipped. Other companies want to have great self-driving features in selected models and offered in new cars.
- Safety. Tesla is obsolete with safety far beyond the requirements of any government organization. It is not a coincidence that the cars have been tested by the NSTSA are all Tesla vehicles.
I make it sound easy, but there is nothing easy about growing by 10 fold over the next 6 years. Yes, Tesla has done it before 3 times, but this time, it will be more difficult because the competition is no longer sleeping. Some of the companies have had their "Kodak moment" where they can not realize they are ready to survive. Other companies are "zombies" or the walking dead. They do not realize that they want to do that. When they realize it, they are likely to lay off their employees and sell the remaining scraps. But some major automakers are also jumping into the EV transition and aiming to benefit from it.
P.S. I've heard Tesla is selling off all of its demo cars for the end of the quarter. Sometimes they give big discounts on models with a few miles. Hurry if you want one of those deals. Supercharging on a Tesla on a Model S, Model X, or Model 3, here's the code: https://ts.la/paul92237 (but as I have said before, if another owner helped you more, please use their link instead of mine).
Paul Fosse I've been a software engineer for over 30 years, first working on EDI software and more recently developing data warehouse systems in the telecommunications and healthcare industry. Along the way, I've got the chance to help start a software consulting firm. In 2010, I took an interest in electric cars because of gas was getting expensive. In 2015, I started reading CleanTechnica and took an interest in solar, mainly because it was a threat to my oil and gas investments in my investment trusts. Tesla investor. Tesla referral code: https://ts.la/paul92237