What is Tesla? | CleanTechnica

May 18, 2019 by Guest contributor

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This article is the first part of a two part series on Tesla and its vehicles. This article involves a thorough review of Tesla's type of business and its place in the broader market segments it serves. The second part, which will be published tomorrow, discusses the author's personal experience with Tesla vehicles and how these vehicles compare to others on the market, today and tomorrow.

by L.W. Fraise

• Automobile company?
• Solar society?
• Battery company?
• Software company?
• Energy storage company?

When Tesla was created as "Tesla Motors", its founders realized that advances in battery energy storage (density) meant that electric cars were no longer idiots. They recognized that electric cars could not only achieve functional parity with internal combustion engine cars, but also surpass them because car transport could be provided without the expense of engine maintenance and pollution, and with fantastic performance. Clearly, they were right, but Tesla did not achieve car maker status in 2018. But, is Tesla a car company?

Few people would identify Tesla as a solar company. The acquisition of SolarCity sparked a lot of interest initially, but at present, the solar part of its activities seems to be that of the DOA. It is likely that Tesla will soon revitalize this part of the business with quality product offerings. But is Tesla a solar company?

Some strongly argued that Tesla was actually a battery company. This perspective has merit given Tesla's lead in terms of power density, longevity and battery capacity. Tesla manufactures more car and stationary storage batteries than any other company in the world. But is Tesla really a battery company?

Given that Tesla is able to provide software updates for live cars, the strong performance of its automotive software, its internal hardware architecture and its scalable autonomous driving technology, which could be blamed for Tesla as a software publisher? But, is Tesla a software company?

The successful performance of the stationary storage battery system sold by Tesla to Australia has many power generation companies claiming that the market for new gas-fired power plants is virtually dead. The projected demand for stationary storage is astronomical. But is Tesla an energy storage company?

Tesla is all of the above, none of these, and much more at the same time. It defies conventional wisdom because it does not correspond to traditional models. Taken individually in a financial market environment, Tesla is only one fish in a pond on five fronts. At present, other fish should have a higher Tesla in one or more of their areas, but this has not yet been done.

Tesla is proving to be the most polarizing stock in history. The high value of Tesla's stock relative to revenue seems irrational from the point of view of the traditional model. In recent years, Tesla has been valued for its perceived potential, as opposed to fundamental evaluation formulas. This fact makes conventional thinkers so crazy that many sold the stock short and were so frustrated by the resilience of the stock that they committed malicious acts in order to harm the company. Others see the potential for success and are investing the bet that Tesla is a different type of company, which will have an almost unimaginable success. But back to the question – what is Tesla?

Tesla today is a engineering innovation company, with the noble mission of making the transition of the world towards a sustainable energy. Because of the true meaning of his mission, he has sparked enthusiasm in many areas of engineering and software, and beyond. This served to attract the best and the brightest. The mere fact that engineers are introverted does not mean they do not want their work to make sense. In fact, every engineer worthy of the name at Tesla is a good example of an attribute of human nature rarely exploited. These people, like their CEO, are absolutely motivated and relentless. These attributes are evident in their products, which, when offered to the public, are unparalleled when evaluated in terms of safety, technology and value. The pace of progress of the company, in all areas where it focuses its talents, leaves its competitors perplexed. Few people understand that this "cult" at Tesla is an introduction to the collaborative abilities of humanity. Imagine what humanity will accomplish when this business management methodology replaces the heavy and outdated corporate cultures that currently dominate businesses. What kind of people would actively seek to undermine this method of business creation that exploits the success of humanity so profoundly? The answer is simple: ignorant passers-by, vandals and Street Street punks.

Benchmarking Tesla

Conventional wisdom pushes the idea that Tesla should be compared to auto companies. This activity is visible in the investment segment and has generated extremely controversial arguments. But since Tesla is not really a car manufacturer, how should it be compared?

Tesla is the best benchmark against other multibillion-dollar innovative companies that have disrupted the markets and have come out ahead of their respective industries by far. Tesla benchmark with these types, but only those who advance at a much higher rate than their competitors. Compare them to others who also attract the best talents, people on mission. Compare it with companies that realized what was considered impossible. Compare it with companies that are iterating their technology so quickly that their decision-making process looks like an amateur when viewed from the outside. Currently, the only company that can be compared to Tesla is SpaceX. Go understand.

Committee to extinguish success? (SECOND)

A problem that often surfaces with innovation is friction, not only with conventional thinkers, but also with bureaucracy. This is rarely a problem in communist societies where progress is curbed and where individuals who seek to advance faster than the state are silenced or worse. This is rarely a problem in capitalist societies when progress is gradual and predictable. While the United States remains the best place in the world to innovate en masse, even in this case, friction is generated when innovators act faster than regulatory bodies that aim to protect the public, and others.

Throughout the history of the United States, those who have succeeded, or almost succeeded, in disrupting well-established industries have most often been treated as outcasts or villains at some point in their careers. Although much of this is recognizable as a human nature, it is extremely disproportionate when bureaucracies, whose base has been established in bygone times, or with an irrational benevolent hand, attempt to assert their control over them. using outdated or poorly applied methods. In the face of innovation, regulators need to measure intent and monitor aberrations when innovation conditions do not match traditional models. In the case of Elon Musk, regulators have the easy task, given his long experience in innovation and communication methods. There is no irony in observing that Tesla has largely taken over the MO from his boss. Therefore, regulators should not be surprised that Musk, as a leader of Tesla, will probably equally communicate with the bewildering pace of change that his companies are publishing.

What form of public protection benefits innovators in bullying who, as evidenced by the history of their antecedents, have introduced technologies that have served to promote the general well-being of the inhabitants of the United States and the world in the case of Musk, by distinct and measurable proportions? If that person suddenly displayed aberrant behavior, such as the search for personal gain at the expense of the public good, then regulatory oversight would be required. In other words, if Musk had suddenly sold shares owned by him or advised others to do so in the now famous "420" case, the SEC would then be justified in doing so. apply sanctions or prosecutions. This case is not unlike this one: "The seen and the invisible". Perhaps the SEC only sees what is obvious, perhaps it is desperately unbalanced and blind to the emerging destructive capacity of malicious actors at the other end of the spectrum (aka short sellers) .

Where is the measured response and protection of the public interest when speculative and false stories are written that cause harm to an entity whose mission serves the public interest? It could be argued that the apparent inability of the SEC to evolve to meet the challenges of the new agency threatens to undermine the public interest. If the SEC has, in one hand, pleaded proven methods to pursue Group A, but does not have the established ability to sue the opposing Group B, then it allows Group B to harm Group A.

How can we identify when a regulator becomes an accessory to criminal activity? Turning a blind eye to an emerging threat rarely ends up well for the public. It's no exaggeration to see how someone like Musk, deprived in part of his sleep by the constant barrage of malicious actors (who currently enjoy the title of "short sellers"), can be frustrated when the SEC seems to have no ability to balance the equation.

Tesla and SpaceX are the building blocks of tomorrow's successful businesses. The SEC must constantly reinvent itself before actually destroying it. It is in the interest of the general welfare of the United States to maintain its innovative advantage. Regulators must be ready to keep pace with progress. The SEC should eliminate street punks and not stifle innovation.

Is it any wonder Musk sought to take Tesla privately? SpaceX is private – just look at the pace of its innovations and the lack of controversy around the company. Come on, SEC, make an effort to be part of the solution and head for talent!

The curve in S – Tesla Style

Tesla's changes to rates, model availability and programs make him look like a depressed teenager, even for the most fervent supporters. Why would a company say "Model 3, worth $ 35,000, will be available in 2 to 4 weeks if you order now," but only to change that 6 to 8 week delay two weeks later late, and then remove it completely from the website a month later. Maybe Tesla did it because he constantly adapts to the data in real time.

Every Tesla ad generates global headlines. For a company that does not advertise, it's the ultimate use of free advertising. Sometimes ads coincide with external factors to generate increased or declining demand. The S curve is a proven behavioral trend for the adoption of new technologies. In the early stages, the S-curve will move in fits and starts. Tesla alone embodies conventional wisdom about automotive transportation, software, energy storage, battery production and solar home energy production and storage, in a way that that few people can conceive currently.

It is possible that the delay in delivery of model 3 to $ 35,000 is related to a changing demand. The release of Model 3 at $ 35,000, along with the announcement of Model Y, had the effect of a mainstream advertising campaign. What is not well recognized is that Tesla's offer is limited in the production of batteries. It would be foolish to generate a demand far exceeding its ability to provide. Its current task, from the point of view of the management of the company, is to adapt the demand to its production capacity. This is not an easy problem. Given the scale and the risks, I would challenge anyone who thinks they are great to intervene and who manage this transition successfully. Your challenge is this: if you fail, you kill your business. In this respect, it is much easier to respect Tesla's board of directors. Elon Musk is a brand, and do not get me wrong, enigmatic or not, Elon Musk is also a tool of the board. Tweets move the brand, and precise brand movement is critical to success. Get it, SEC?

An innovative company like Tesla is improving its efficiency by appropriately allocating capital to research and development, expansion and reduction of production costs. Each upper-margin vehicle feeds this synergistic process. Flexibility is essential to Tesla's success. What seems to be an inexperience or stupidity for outside observers is probably a quick bending to maximize profitability while maintaining the agility of innovation and rapid expansion. Tesla does it because it's part of the DNA of society. It's not a car manufacturer, it's a fast-paced, iterative, technical innovation company that makes things. It is not because its main purpose is to produce cars that we produce other products and services. In the spaces she chooses to produce, her offerings are generational improvements over existing technologies.

Tesla is a generational intellectual dragon. As mythical as it sounds, it tends to explain its inexplicability.

Aftermarket – In the pipeline

Take the example of the popular Ford Mustang and look at the aftermarket and customization market for this car. It took 54 years for Ford to produce 10 million Mustangs with multiple design changes in the platform / body / engine, which complicates the aftermarket product line.

Model 3 could reach the 10 million mark in about 10 years from now with only one platform. With this type of volume and respecting its inherent structural integrity, it could become the most modernized and most personalized car in history. Consider these three points:

1. Model 3 is so well built that it is reasonable to conclude that it will always work like new, even with half a million miles.
2. Tesla might consider open source cosmetic designs that could change the look of the car. A kind of "custom Tesla customs" that would allow buyers to configure the style of their car based on current models.
3. Handicraft industries could see the light of day by allowing DIYers to use used Tesla batteries to store energy at home. Imagine that a well-used model 3 battery of 75 kWh retains a load capacity of 80%. This results in a storage capacity of 60 kW for domestic energy. The current commercial prices for this home storage capacity are about $ 18,000. Even assuming a 50% cost reduction by 2025, a used Tesla battery could be worth between $ 4,000 and $ 6,000. Note that Tesla sells the Powerwall 2, rated at 13.5 kWh, for $ 6,700.

Tesla price modeling

Since Tesla is not a car manufacturer, a different valuation model could be used to predict where the valuation of Tesla is going. A simple, purely speculative model that examines all areas of Tesla's business using three measures.

1. Projected growth for each product / service
2. Gross profit margin for each product / service
3. Sentiment Earnings Multiple (SEM)

With these, implicit (IV) and conventional (CV) assessments can be projected forward and backward. Keep in mind that the figures do not take into account the initial construction of facilities, equipment costs, R & D, extensions and one-time charges. The conventional value can be seen as the place where Tesla would land if it suddenly stopped being Tesla (stop innovating and developing) and be run like a conventional business (dead ). With the help of static costs, the model generates the following end-of-year values:

The amazing thing about the model is that Tesla could be significantly underestimated. This is attributed to its speed of innovation, which can continue to catch everyone off guard. By 2025, Tesla could generate a $ 1.4 trillion business figure and generate a profit of about $ 105 billion. At a multiple of 16x for earnings, the conventional value would be $ 9,833 per share. At the last fundraiser in May 2019, Elon Musk bought $ 25 million of additional shares of Tesla. Why would he do that?

Again, this article is the first part of a two part series on Tesla and its vehicles. The second part, which will be published tomorrow, discusses the author's personal experience with Tesla vehicles and how these vehicles compare to others on the market, today and tomorrow.

Keywords: Elon Musk, EV sales, SEC, Tesla, Tesla competitive advantages, Tesla Energy, Tesla SEC, Tesla short sellers, Tesla shorts, Tesla software, Tesla stock, United States