Tesla Will ‘Disappear’ Or ‘Lose 80%’ Of Its Value

[Adam Varga + 123]

According to Professor of Marketing at NYU Scott Galloway, Tesla is among several companies that could lose 80 percent or more of their value or disappear. And Tesla is not the only one on Galloway's list of disappearance. This list also includes  WeWork, Robinhood, Lyft, and OYO.

https://www.teslarati.com/tesla-elon-musk-disappear-lose-80-percent-value-nyu-professor/ 

[Guest]

Agreed, it's a joke, but sure Musk and plenty of others will chuck load more on the moneypit fire first. 

I thought Tesla was just around for people to short it?  A year ago it was $350, now it's $237.

   

Can't think why ... 

Edited October 7, 2019 by Guest

[BenFranklin'sSpectacles + 762]

On 10/7/2019 at 1:02 PM, DayTrader said:

Agreed, it's a joke, but sure Musk and plenty of others will chuck load more on the moneypit fire first. 

I thought Tesla was just around for people to short it?  A year ago it was $350, now it's $237.

   

Can't think why ... 

And now it's (once again) above $320.  Seems odd until one realizes the volatility is entirely a result of finance industry dickery. 

The fundamentals of Tesla's situation have remained constant: it's a young company innovating its way into an established industry, with all the pros and cons that implies.  We all knew the risks from day one, and none of those risks have changed.  The bottom line is that you either think Tesla can win and you invest or you don't.  Either way, there's no fundamental reason for volatility.  It's just not that complicated. 

That said, as time has passed, Tesla has consistently cleared hurdles.  10 years ago, no one thought EVs were viable - much less a company based entirely on EVs.  Today, EVs are acknowledged to be the inevitable future, the industry giant VW views Tesla as their primary competition (commenting that Teslas is years ahead), and Tesla has established all of the fundamental competencies necessary to compete in automotive.  We can quibble about how far Tesla must go to become financially stable, but there's no question about how far they've come already.  Their frightening progress should be a wake-up call to doubters. 

Which brings me to my thesis: Musk knows what he's doing, and Tesla's disturbingly rapid progress will continue.  To face this threat, the entire automotive industry will rearrange itself to look and function more like Tesla.  Tech's culture of fierce competence and rapid change will rip and tear its way through sclerotic incumbents.  Only a handful of automotive companies will survive.  Tesla will be one, and VW another.  It's doubtful any of the Big 3 will join them.  If they do survive, they will do so as radically changed - and probably miniaturized - versions of their former selves.

[Refman + 207]

And now Tesla is over $400. The new factory in China is ramping up and Tesla just bought land in Germany for their next factory.

I'm not an investor but I hope they succeed.

[Jan van Eck + 7,558]

The problem (one of them) with the Tesla products is that you cannot buy, or even obtain, spare parts to repair them.  Those cars are all built with proprietary components and body panels.  You cannot go down to the local NAPA Store and pick up a spare drive motor if yours burned out; those motors are specially built, totally proprietary.  Nobody makes a generic aftermarket part.  Yours is shot, you go to Mr. Tesla and ask nicely for one.  If Elon is in a good mood, he sells you the motor -  for $6,000.  Now you have to find somebody to go put it in.  Those are not simply drop-ins.  If you flat-bed the car to a Tesla service center, who knows how long it sits until they get around to it.  And then you pay their bill - whatever they want to charge you.  Remember: a car is still transportation.  What good is it if you cannot get parts and cannot get it fixed?

You have a little crash and you need new body panels.  Now what?  Aftermarket parts? They do not exist.  Back to Mr. Tesla.  You ask nicely.  Sorry, bud, we need all the parts we can fabricate to build that 250,000 car backlog.  When we get done with that we will start thinking about selling you a spare fender, door, and front fascia.  OK, so again your fancy electric car just sits.  It can sit for months.  A year.  Years.

This is why insurers simply end up writing off a Tesla as a constructive total loss after even a smallish crash.  Your equity is gone.  Your payments are gone.  Your dream car is gone.  Now what?  Back to buying Chevrolet?

It all sounds good - until reality hits.  Then it sinks in that Mr. Tesla is mentally ill, some bi-polar disorder, and that is affecting every single thing about that car, including fixing it.  The whole thing comes crashing down.  Forget about Mr. Tesla and his fancy stuff, it is all a mirage. 

Edited December 22, 2019 by Jan van Eck

[PE Scott + 563]

@Jan van Eck makes some good points about replacement parts. In that situation, you're assuming there is a service center in your area to take your car to, because no one else will work on it for even the most basic things. Now, in Teslas defense, they do have a mobile service fleet that will come to you and I don't know much about its operation personally. Still, I would assume that any major problems out of warranty would be so expensive to fix it would render the car worthless. 

My bigger complaint with Tesla is advertising and charging for features that don't exists and are perpetually a year away from being realised. I'm talking about their 'Autopilot' feature for full self driving of course. I think it's an ambitious endeavor and have no doubt Mr. Musk means well, but it's not ready yet. If you pay an extra $5000 or whatever it's up to now, your basically paying tesla for the opportunity to be a beta tester on their hardware. For years, Tesla has been promising that technology right around the corner. A few people, believing the hype, have lost their lives by putting their faith in unproven tech. As a result, features have been limited even further is some places, like Europe. Still, as a consumer you're asked to pay additional money for hardware and features that don't work and who's utility may never be realised? All this time, Elon keeps saying it will be ready soon, it's right around the corner, etc. 

Then, Tesla comes through and makes a hardware update that makes their old hardware obsolete. Not only that, but the first version of the hardware was discovered to have a fatal manufacturing/design error that will guaranteed brick the unit after 'x' amount of times writing into a specific memory unit. That unit is almost $3k to replace and it's happening outside of warranty. Plus, you've already dropped additional money for features that were never realised during the life of that car to begin with. It's hard for me to understand why people defend tesla for this kind of behavior. As consumers, there are a bunch of Tesla owners who just drink the koolaid, step in line, and do as their instructed. At least that's been my observation.

Also, my Jaguar is still in the shop getting parts replaced under warranty. They're uncertain why, but they think a failure in the charge controllers cooling system may have allowed it to overheat and short some things out. Details were sparse, but it's been 2 weeks and they had to fly their west coast specialist into town to fix my car. Most generic ICE cars would have been fixed by now, likely at a fraction of the cost. Just being realistic.

 

[Gerry Maddoux + 3,627]

1 hour ago, Jan van Eck said:

It all sounds good - until reality hits.  Then it sinks in that Mr. Tesla is mentally ill, some bi-polar disorder, and that is affecting every single thing about that car, including fixing it.  The whole thing comes crashing down.  Forget about Mr. Tesla and his fancy stuff, it is all a mirage. 

A normal person would worry about where the cobalt came from.

[PE Scott + 563]

16 minutes ago, Gerry Maddoux said:

A normal person would worry about where the cobalt came from.

Fair enough, I literally just finished reading that article on oilprice.com about child labor in the DRC cobalt mines.

To be fair though, that's Li batteries for everything that uses them. The phone I'm using contributes to that problem as well. 

Edited December 22, 2019 by PE Scott

[Gerry Maddoux + 3,627]

If it's any consolation, your iPhone uses about 1/1,000th the amount of cobalt than a Tesla battery, so there's less blood on your (and my) hands using an iPhone.

[frankfurter + 562]

I find the brand name to be an affront to Mr Tesla's legacy.  Yet another vulture capitalist exploiting Tesla's name.  If the west were not so immoral, and dumbed-down, perhaps consumers would have rejected the association.  Reliability is not in Musk's dictionary.  To say Musk is an innovator is to stretch the truth.  Like Apple, the tech is R&D'd by others: Musk is essentially an assembler cum marketer.  Tesla is not viable in its home market, and HAD to look to China. Three prime reasons; greatly reduced manufacturing costs; significant government subsidies to consumers; and the world's largest market. Musk looks to China to save the brand, which is rather ironic for the USA capitalist ideal. But China is phasing-out the subsidies; the market has levelled off and looks now to be shrinking; and MANY other companies are set to offer EVs very soon. Tesla has virtually zero dealerships, so how repairs will be effected is a mystery. I imagine Tesla will find a niche in China, as even a shrinking market remains huge; but the question will be whether that niche will be sufficient to save the brand and offer a genuine ROI to investors.  Given the zero reliability, and hyper price tag, of the brand, I have my doubts. Time will tell. 

[Refman + 207]

On 12/22/2019 at 11:58 AM, Gerry Maddoux said:

A normal person would worry about where the cobalt came from.

I believe Tesla has already minimized Cobalt in their batteries and is working to eliminate it entirely.

[Gerry Maddoux + 3,627]

27 minutes ago, Refman said:

I believe Tesla has already minimized Cobalt in their batteries and is working to eliminate it entirely.

Rock salt cathode battery, likely. 

My argument against EV's in general, and Tesla in particular, has always been that the true environmental damage is a) hidden from sight, and, b) is probably much worse than the users of EV's suspect. 

I'm not just talking about "Blood Cobalt," which is bad enough (in human cost too). Cut back on very dense cobalt in the battery and the rock salt cathode just about has to use more manganese and nickel. Getting quantities of the latter is the biggest problem: current nickel-mining techniques result in massive SOX pollution. Huge--makes maritime SOX look mild. Maybe that can be addressed and partially eliminated, but if you need more nickel, to replace cobalt and make this story prettier, the SOX pollution from it is likely only going to get worse. 

My thrust has always been, just a second, there's an environmental cost for everything that produces energy. Add them up, see which industry--fossil fuels (ICE) vs batteries (Tesla)--is the most toxic to the environment, per unit. The whole movement is being driven by a growing number of people who aren't really interested in that sort of thing; they just want fossil fuels gone. I have friends who grin smugly when they're showing off their new EV. They usually have no idea about the environmental cost endogenous to its production. 

[BenFranklin'sSpectacles + 762]

On 12/22/2019 at 10:33 AM, Jan van Eck said:

The problem (one of them) with the Tesla products is that you cannot buy, or even obtain, spare parts to repair them.  Those cars are all built with proprietary components and body panels.  You cannot go down to the local NAPA Store and pick up a spare drive motor if yours burned out; those motors are specially built, totally proprietary.  Nobody makes a generic aftermarket part.  Yours is shot, you go to Mr. Tesla and ask nicely for one.  If Elon is in a good mood, he sells you the motor -  for $6,000.  Now you have to find somebody to go put it in.  Those are not simply drop-ins.  If you flat-bed the car to a Tesla service center, who knows how long it sits until they get around to it.  And then you pay their bill - whatever they want to charge you.  Remember: a car is still transportation.  What good is it if you cannot get parts and cannot get it fixed?

You have a little crash and you need new body panels.  Now what?  Aftermarket parts? They do not exist.  Back to Mr. Tesla.  You ask nicely.  Sorry, bud, we need all the parts we can fabricate to build that 250,000 car backlog.  When we get done with that we will start thinking about selling you a spare fender, door, and front fascia.  OK, so again your fancy electric car just sits.  It can sit for months.  A year.  Years.

This is why insurers simply end up writing off a Tesla as a constructive total loss after even a smallish crash.  Your equity is gone.  Your payments are gone.  Your dream car is gone.  Now what?  Back to buying Chevrolet?

It all sounds good - until reality hits.  Then it sinks in that Mr. Tesla is mentally ill, some bi-polar disorder, and that is affecting every single thing about that car, including fixing it.  The whole thing comes crashing down.  Forget about Mr. Tesla and his fancy stuff, it is all a mirage. 

 

On 12/22/2019 at 11:32 AM, PE Scott said:

@Jan van Eck makes some good points about replacement parts. In that situation, you're assuming there is a service center in your area to take your car to, because no one else will work on it for even the most basic things. Now, in Teslas defense, they do have a mobile service fleet that will come to you and I don't know much about its operation personally. Still, I would assume that any major problems out of warranty would be so expensive to fix it would render the car worthless. 

My bigger complaint with Tesla is advertising and charging for features that don't exists and are perpetually a year away from being realised. I'm talking about their 'Autopilot' feature for full self driving of course. I think it's an ambitious endeavor and have no doubt Mr. Musk means well, but it's not ready yet. If you pay an extra $5000 or whatever it's up to now, your basically paying tesla for the opportunity to be a beta tester on their hardware. For years, Tesla has been promising that technology right around the corner. A few people, believing the hype, have lost their lives by putting their faith in unproven tech. As a result, features have been limited even further is some places, like Europe. Still, as a consumer you're asked to pay additional money for hardware and features that don't work and who's utility may never be realised? All this time, Elon keeps saying it will be ready soon, it's right around the corner, etc. 

Then, Tesla comes through and makes a hardware update that makes their old hardware obsolete. Not only that, but the first version of the hardware was discovered to have a fatal manufacturing/design error that will guaranteed brick the unit after 'x' amount of times writing into a specific memory unit. That unit is almost $3k to replace and it's happening outside of warranty. Plus, you've already dropped additional money for features that were never realised during the life of that car to begin with. It's hard for me to understand why people defend tesla for this kind of behavior. As consumers, there are a bunch of Tesla owners who just drink the koolaid, step in line, and do as their instructed. At least that's been my observation.

Also, my Jaguar is still in the shop getting parts replaced under warranty. They're uncertain why, but they think a failure in the charge controllers cooling system may have allowed it to overheat and short some things out. Details were sparse, but it's been 2 weeks and they had to fly their west coast specialist into town to fix my car. Most generic ICE cars would have been fixed by now, likely at a fraction of the cost. Just being realistic.

 

Tesla's upper-middle-class customer base knew full well the software wasn't ready.  If Tesla were preying on the poor, I'd take issue with its behavior; as it is, I say let the market decide.

As for the repairs, that's a valid point.  Unfortunately, it's to be expected with a new company selling new technology.  These things take time to develop; that's just the way it is.  That said, what will be the state of things in 5 years?  10 years?  What does the aftermarket look like when all manufacturers are making EVs?  Like Tesla's problems with cosmetic details, I suspect this issue is temporary. 

 

[Guillaume Albasini + 851]

A TV set from the '70 was also way more easy to repair than our current HD flat screens... but TV breakdowns were also way more frequent than today.

There are only around 20 moving parts in an electric engine, compared with nearly 2,000 in an ICE, so your EV will need a lot less maintenance.

[PE Scott + 563]

16 minutes ago, Guillaume Albasini said:

There are only around 20 moving parts in an electric engine, compared with nearly 2,000 in an ICE, so your EV will need a lot less maintenance.

I'm with you on that.

Show me an electric car in production that isn't packed to the gills with complex electronics.....many of which are vital to the cars operation. So, its misleading to only note the parts of the electric motor without also including parts for charging, for cooling the charger, for heating/cooling the battery, the cab, etc. Electric cars are deceptively complex in their current iteration. 

[PE Scott + 563]

Jag was fixed b th they way. The culprit was a coolant leak in the on board charger. Very expensive but covered under warranty.

[PE Scott + 563]

On 1/23/2020 at 9:51 AM, BenFranklin'sSpectacles said:

Tesla's upper-middle-class customer base knew full well the software wasn't ready.  If Tesla were preying on the poor, I'd take issue with its behavior; as it is, I say let the market decide

I can mostly agree with this sentiment and thus I'm not outraged. However, Elon Musk and Tesla as a company have advertised that upgrade as being something which added a tremendous amount of yet untapped value for the car. In effect, the idea of autonomous taxi ability has been touted as making the whole company worth far more. I feel like that's misleading. I think there are some less-than-upper-middle-class people who have gone to questionable lengths in order to obtain a tesla with the anticipation of that investment making them money at some point in the future (a future that is perpetually delayed). 

Still, mad props to tesla for driving an entire market in a different direction. You have to give credit where credit is due. Even the ICE vehicles are all adapting a touch screen in place of a center console. You cant argue the Tesla affect on the overall market.

Edited January 25, 2020 by PE Scott

[Enthalpic + 1,496]

On 1/24/2020 at 1:23 AM, PE Scott said:

I'm with you on that.

Show me an electric car in production that isn't packed to the gills with complex electronics.....many of which are vital to the cars operation. So, its misleading to only note the parts of the electric motor without also including parts for charging, for cooling the charger, for heating/cooling the battery, the cab, etc. Electric cars are deceptively complex in their current iteration. 

Show me a ICE car in production that isn't packed to the gills with complex electronics.  New cars don't even have mechanical ignition keys.

Edited January 25, 2020 by Enthalpic

[PE Scott + 563]

3 hours ago, Enthalpic said:

Show me a ICE car in production that isn't packed to the gills with complex electronics.  New cars don't even have mechanical ignition keys.

There are plenty, especially in parts of the world that aren't the U.S. or Europe and the used market. None of those ICE cars have complex batteries or on board chargers.

Some of the newer ICE cars have equal electronic bells and whistles and all of them require more regular maintenance to keep them running well. In terms of reliability, I think the jury is out. My anecdotal personal experience is that the regular maintenance is never what broke the bank of a regular ol' ICE car. Unforeseen failures out of warranty will brick a car real quick though.

[Rob Kramer + 696]

As an auto tech I can say I know cars well. I never certified for EV tho. But what I can tell you is the mechanics that do get a 10% premium for working on EV / Hybrid .... and still avoid them like the plague! As for reliability research is key  and avoiding lemons. Even old tech (slush box autos like were used in the 60', or even engine blocks) have some bad runs and regular failures.  But speaking of old technology.... the ammount of lead acid batteries that fail in the 2-3yr range at low km is unreal. And then the replacement same or different brand same owner lasts 5-7yr.... you'd think we'd have good batteries by now lol (speaking of Tesla) 

[BenFranklin'sSpectacles + 762]

On 1/24/2020 at 2:23 AM, PE Scott said:

I'm with you on that.

Show me an electric car in production that isn't packed to the gills with complex electronics.....many of which are vital to the cars operation. So, its misleading to only note the parts of the electric motor without also including parts for charging, for cooling the charger, for heating/cooling the battery, the cab, etc. Electric cars are deceptively complex in their current iteration. 

The difference is that solid-state components, such as electronics, are orders of magnitude more reliable than moving, mechanical components.  At least, they are when they're designed properly. 

We tend to think of electronics as unreliable because the overwhelming majority of our experience is with consumer electronics: cheap crap assembled in China, its software written by undisciplined, caffeine-guzzling monkeys spawned in American public schools.  On the other hand, industrial-grade electronics of the kind found in aerospace and manufacturing are unbelievably reliable. 

I wouldn't be surprised if the Big 3, largely run by accountants and financiers, spec crap and end up with problems.  I doubt Tesla, run by engineers, will suffer this fate.  Initial tear-downs of Tesla's power electronics revealed masterpieces on par with the most advanced aerospace products, and Tesla is in the process of dramatically simplifying vehicle electrical architecture.  With Tesla, you'll likely see fewer points of failure, more redundancy, and higher component quality. 

As I mentioned before, Volkswagen has explicitly stated that Tesla is their main competition.  They further stated that Tesla is years ahead.  The technological details I keep mentioning - details that constitute enormous comparative advantages - are exactly why VW says this.  The finance, accounting, and business clowns who run American companies don't understand what Tesla is doing because they don't know the first f***ing thing about engineering.  Engineering is the foundation of their business models, and they haven't a clue.  If they did, they'd be too scared to poke fun at Tesla. 

[notsonice + 1,266]

ouch those short on Tesla got spanked hard today. Tesla shares soared nearly 12% in after-hours trading, returning to a meteoric rise that had hit some speed bumps in mid-January as analysts grew concerned about its skyrocketing valuation. The company’s shares have climbed approximately 95% in the past 12 months to a market value of more than $100 billion.

Tesla Will ‘Disappear’ Or ‘Lose 80%’ Of Its Value??????

 

 

[Enthalpic + 1,496]

On 1/25/2020 at 4:39 PM, PE Scott said:

There are plenty, especially in parts of the world that aren't the U.S. or Europe and the used market. None of those ICE cars have complex batteries or on board chargers.

Some of the newer ICE cars have equal electronic bells and whistles and all of them require more regular maintenance to keep them running well. In terms of reliability, I think the jury is out. My anecdotal personal experience is that the regular maintenance is never what broke the bank of a regular ol' ICE car. Unforeseen failures out of warranty will brick a car real quick though.

An alternator is sort of a charger.

Hybrids have been around long enough that most of this isn't new. 

The Prius has been around since 1997, current young drivers weren't even born yet.

https://en.wikipedia.org/wiki/Toyota_Prius

"As the Prius reached ten years of being available in the US market, in February 2011 Consumer Reports examined the lifetime and replacement cost of the Prius battery. The magazine tested a 2002 Toyota Prius with over 200,000 miles on it, and compared the results to the nearly identical 2001 Prius with 2,000 miles tested by Consumer Reports 10 years before. The comparison showed little difference in performance when tested for fuel economy and acceleration. Overall fuel economy of the 2001 model was 40.6 miles per US gallon (5.79 L/100 km; 48.8 mpg‑imp) while the 2002 Prius with high mileage delivered 40.4 miles per US gallon (5.82 L/100 km; 48.5 mpg‑imp). The magazine concluded that the effectiveness of the battery has not degraded over the long run.[169] The cost of replacing the first generation battery varies between US$2,200 and US$2,600 from a Toyota dealer, but low-use units from salvage yards are available for around US$500.[169] One study indicates it may be worthwhile to rebuild batteries using good blades from defective used batteries.[170]"

Edited January 30, 2020 by Enthalpic

[PE Scott + 563]

Understand that I'm not hating on Tesla or electric cars. I have an electric car. I fully endorse the technology. I'm just not going to pretend it doesn't have its issue too and that it somehow can be designed to be flawless.

I don't disagree with you guys on many of these points, I just think you give Tesla too much credit. Just a cursory search will reveal all sorts of regular problems from things as simple as the door handle (not really simple on a tesla) to things more complicated like computers with limited lifetimes as result of an honestly stupid design. In both cases they've made revisions and updates to newer models, but other problems still pop up. Problems will always pop up. With electronics, especially proprietary ones, they become far far more expensive when they do pop up. 

I don't think Tesla is going anywhere. I think Elon Musk has proven incredibly resilient and resourceful. If he meets deadlines and pricing on the new cybertruck, I think it will be wildly popular. If he manages a reasonably priced electric semi, I think it will become popular for local routes. Tesla will probably do just fine. They've already secured a reasonable market segment and appear to be very well liked by their consumers.

 

[Douglas Buckland + 6,308]

On 12/23/2019 at 6:13 AM, Gerry Maddoux said:

If it's any consolation, your iPhone uses about 1/1,000th the amount of cobalt than a Tesla battery, so there's less blood on your (and my) hands using an iPhone.

This is going off topic a bit, but why do you feel that there is ‘blood on your hands’ if you happen to buy any item that contains cobalt? Are you making the assumption that your ‘demand’ is the root cause of the working conditions in the DRC? Do you feel the same concerning your clothing and sneakers produced in factories in Asia that do not adhere to US or EU safety regulations?

The wages paid to foreign workers cannot be compared to the minimum wages in either North America or Europe because THEY ARE NOT IN NORTH AMERICA OR EUROPE! The economies and lifestyles are totally different and in many cases, if we apply our cultural sets of values to these industries and cause them to go out of business, the local populations would have no other opportunities for work or any way to support their families.

Do not get me wrong, I am all for better working conditions and wages, but to blatantly apply ‘our’ values to ‘them’ leads to consequences that may be even worse.

Consider this, if these workers suddenly demanded, and received, the US minimum wage, what impact would that have on the price of the product when it got to market? Would it still be competitive? Would demand shrink to the point where the factory/mine was no longer profitable and was forced to close? If the factory/mine closes then there are no jobs and these people are making no money.

Just food for thought and not meant to be a doctoral thesis...