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Making Tesla profitable?

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Making Tesla profitable?

Unread postby EdwinSm » Wed 22 Jun 2016, 00:05:38

Tesla makes offer to buy SolarCity



US electric carmaker Tesla has offered to buy solar panel company SolarCity in a bid to expand its clean energy business.

The company has made an all-stock deal worth as much as $2.8bn (£1.9bn).....
Analysis: Dave Lee, North America technology reporter

Elon Musk is under serious pressure to make Tesla profitable. The path to that goal is two-fold. The cars may eventually bring in serious money, but the outlay needed to fund the manufacture of the vehicles is far greater than what sales are bringing in.

But while Tesla is considered to be a carmaker first and foremost, the real money might be in selling energy technology. Its enormous Gigafactory, opening this summer, will be able to make batteries for much more than cars.

The SolarCity purchase was always on the cards. Musk is already the firm's chairman and biggest shareholder, and the company's chief executive, Lyndon Rive, is Musk's cousin.

Some are questioning why Tesla had to buy SolarCity rather than just work closely with it. SolarCity has struggled lately, and so some are calling this a Tesla-financed bailout.


http://www.bbc.com/news/business-36593549


Mods: I put this in economics because it involves more than cars and batteries, but feel free to merge it with other Tesla threads if you feel that is best.
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Re: Making Tesla profitable?

Unread postby SeaGypsy » Wed 22 Jun 2016, 02:22:35

Probably have to wait & see what Panasonic wants, which will happen after the sake binge. I can't see why they would want to pull out now, & If they do, no reason they can't set up.shop with a new partner in competition.
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Re: Making Tesla profitable?

Unread postby efarmer » Wed 22 Jun 2016, 09:09:25

Tesla boldly jumped out to mainstream the electric car based on lithium battery packs and of course the Solar City play to scale with Panasonic bringing the technology moxie for the cells and process. I do admire Elon Musk and I am very pleased he is forging ahead on several private ventures of paradigm shifting scale and potential impact. I do have doubts.

1. Lithium ion cell technology is wonderful for 3 to 4 year life personal computing and communications devices and gadgets. Thousands of "C" sized cells in a computer network equipped battery pack, with each cell being hooked to a performance measuring brain system that is able to bypass cells and manage the flock and then talk to the CAN bus for the other major control modules (ECM, BCM, TCM, etc) is the makings of a disaster for a 10 year hang of a vehicle in the fleet.

2. The revenue for many highway and roadway infrastructures is augmented by gasoline and diesel fuel being taxed, the electric car shifts the taxation revenue back to the electric utility who is going to jump for joy, as will the smallest granular local government who get automatic licks from the utility taxes as well, these domains have been hungry for revenue, and the will use it for anything but fixing roads and highway infrastructure. This will lead to efforts to tax electric cars once for road use and again for electricity usage.

3. The Tesla finalizes the trend of almost every single owner being unable to fix major things on their own automobile. And Tesla not having scale in spare parts, and market share, and profit history, means to me their repair and spares experience for an owner will be akin to buying plastic surgery instead of car repair.

Talk me down POILITES.
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Re: Making Tesla profitable?

Unread postby baha » Wed 22 Jun 2016, 10:45:57

Once again Tesla boldly jumps out in front the mainstream imagination. The combination of Solar PV and Tesla Powerwall eliminates the need for centralized power. Not only is it more reliable but loosens the grip of TPTB.

1. I have a flip phone from 04 that still works with the original battery. More than 1/2 capacity left. Computer controls will eliminate the stupid human problem.

2. Find a new way to tax cause the utilities are going under. Only thing that will make them jump for joy is passing the cost of decommisioning on to the public.

3. I plan to build my own electric car so this doesn't apply to me but...why would I care who will fix a car that doesn't break?
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Re: Making Tesla profitable?

Unread postby Plantagenet » Wed 22 Jun 2016, 11:29:34

The title of this thread has it backwards---this deal does't make TESLA profitable---it makes TESLA less profitable.

This deal is good for Musk---the guy making the deal---- but bad for investors.

You've got a money-losing car company merging with a money-losing solar company.

Musk will pay himself billions with inflated Tesla stock propped up by Tesla investors' money for his solar city shares.

The investors in Tesla wind up with two money-losing companies instead of one----i.e. Tesla will be even farther away from ever being profitable.

This is the kind of financial scam that happens just before a financial bubble pops----Musk is seeing all the numbers and he's cashing out. Thats no surprise....but why should investors support a deal that make billions for Musk, but leaves them worse off? :lol:

Image
Is the bubble about to pop? Is that why Musk is cashing out?
Last edited by Plantagenet on Wed 22 Jun 2016, 11:55:28, edited 1 time in total.

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Re: Making Tesla profitable?

Unread postby Timo » Wed 22 Jun 2016, 11:53:35

Name one other business in the world that generates renewable energy, stores renewable energy, and uses renewable energy in a seamless, reliable format, all for purposes that billions of people engage in every single day. Tesla is not a simply car manufacturer any longer. They are a renewable energy company, from start to finish. Can any other global business make that same claim? Other car manufacturers are scrambling to catch up to Tesla in the energy storage business. Tesla is way ahead of the game. They are, in fact, changing the rules of the game, and the entire car industry, energy storage industry, and energy production industry are now collectively trying to keep pace, but all within their own individual industries. Elon Musk now has all three industries, all three in high global demand, now in one single company. I'm glad i bought into Tesla when its price was relatively low. That company is on its way to being one of the largest businesses on the planet.
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Re: Making Tesla profitable?

Unread postby Plantagenet » Wed 22 Jun 2016, 12:00:35

Timo wrote:Name one other business in the world that generates renewable energy, stores renewable energy, and uses renewable energy in a seamless, reliable format, all for purposes that billions of people engage in every single day. Tesla is not a simply car manufacturer any longer. They are a renewable energy company, from start to finish. Can any other global business make that same claim? Other car manufacturers are scrambling to catch up to Tesla in the energy storage business. Tesla is way ahead of the game. They are, in fact, changing the rules of the game, and the entire car industry, energy storage industry, and energy production industry are now collectively trying to keep pace, but all within their own individual industries. Elon Musk now has all three industries, all three in high global demand, now in one single company. I'm glad i bought into Tesla when its price was relatively low. That company is on its way to being one of the largest businesses on the planet.


Tesla is a high tech powerhouse.

Unfortunately it loses money on every car it sells.

AND combining Tesla with another money-losing company just moves Tesla even farther away from ever being profitable.

I wish Tesla every success and hope your Tesla stock goes to the moon. But be careful----companies that can't make a profit often see dramatic stock price collapses when financial reality can't be ignored any longer.

Cheers!

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Re: Making Tesla profitable?

Unread postby ennui2 » Wed 22 Jun 2016, 12:16:30

I wish Tesla every success


No you don't. You just accused them of being a pump-and-dump scam.
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Re: Making Tesla profitable?

Unread postby Plantagenet » Wed 22 Jun 2016, 12:30:06

ennui2 wrote:
I wish Tesla every success


No you don't. You just accused them of being a pump-and-dump scam.


As usual you are lying.

I never accused Tesla of being a "pump-and-dump scam."

When I write "I wish Tesla every success" it means I wish Tesla every success. I know your little brain can't understand simple statements but like that, but the words are pretty clear.

What i did do was question Musk's motivation in making this deal. Elon Musk is not the same thing as Tesla ---another thing your little brain apparently does't understand.

Its rather extraordinary for a CEO of a company to buy out another company that he is the main stockholder in. The entire financial community is buzzing about this odd and questionable move---but of course like so many other things you don't know anything about that.

There is so much concern that Tesla stock is cratering on the announcement---but of course like so many other things you don't know about that.

tesla-shares-crater-as-wall-street-reacts-to-bid-for-solarcity

I suggest you try to live in the real world instead of a fantasy world. Tesla is not a pump-and-dump, but Musk's move to use TESLA stock to buy out his own stock in solar city benefits mainly Musk and actually hurts the prospects of Tesla becoming profitable. This is raising questions and Tesla stock is down big because of this questionable move by Musk.

Cheers!

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Re: Making Tesla profitable?

Unread postby ennui2 » Wed 22 Jun 2016, 14:23:49

In other words, a perfect time to buy. Only fools buy on the upside.
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Re: Making Tesla profitable?

Unread postby ROCKMAN » Wed 22 Jun 2016, 15:34:22

Timo - If you bought Tesla for under $40/share where it sat from when it started until mid-2013 you might think about dumping all or some now at $197/share. It has dropped 30% in the last 12 months and appears to still be tending down. Then if it keeps falling and you still have faith you can buy back in after it bottoms out. One thing to track is insider sales. If it turns into P&D that's where you might see it first.
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Re: Making Tesla profitable?

Unread postby ennui2 » Wed 22 Jun 2016, 15:54:10

BTW, I worked for a dot com that got kicked off of Nasdaq and languished in the pink sheets before it sold out to a big player later and the stock surged, which paid off well for me. So anyone who thinks that a stock that dips is automatically a death-knell is a fool. You have to analyze deeper and think more long-term.
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Re: Making Tesla profitable?

Unread postby Outcast_Searcher » Wed 22 Jun 2016, 21:02:12

ennui2 wrote:BTW, I worked for a dot com that got kicked off of Nasdaq and languished in the pink sheets before it sold out to a big player later and the stock surged, which paid off well for me. So anyone who thinks that a stock that dips is automatically a death-knell is a fool. You have to analyze deeper and think more long-term.

As though buying pink sheet stocks was a reasonable venture -- to anyone but the brokers pushing pink sheet stocks.
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Re: Making Tesla profitable?

Unread postby EdwinSm » Thu 23 Jun 2016, 00:04:24

Thanks Plant for your response raising possible issues with the deal - I did have a "?" mark in the title to indicate I was not sure that it was such a good thing.... Here is some one else who thinks it is a bad idea, but as he his betting big money against the deal (shorting the stocks) I am not sure if one can take his public announcements seriously.

BBC wrote:Tesla's bid to buy struggling solar energy firm SolarCity has been called "shameful" by financier Jim Chanos.

Mr Chanos, who is betting against the shares of both firms, described the bid as a "shameful example of corporate governance at its worst".....

"As a combined automotive and power storage and power generation company, the potential is there for Tesla to be a trillion-dollar market cap company," Mr Musk said.

Mr Chanos has taken short positions in both Tesla and SolarCity.....

Mr Chanos said SolarCity was "headed toward financial distress," and neither company could handle the burden of a tie-up.

"[SolarCity] is burning hundreds of millions in cash every quarter, a burden that now Tesla shareholders will have to bear, at a total cost of over $8bn," he said.

Mr Musk said SolarCity would not impact Telsa's cash flow and would have its own positive cash flow in the next three to six months.

SolarCity reported a loss of $25m in the first quarter and has liabilities of $6bn, which includes debt and unpaid tax.....

SolarCity's shares have fallen over 50% during the last year, but rose more than 3% on Wednesday.

Tesla shares closed more than 10% lower.
http://www.bbc.com/news/business-36602509

I wonder if "corporate governance at its worst" just means "I am pi$$ed off as someone has acted to stop me making a killing without having to do any real work."
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Re: Making Tesla profitable?

Unread postby ennui2 » Thu 23 Jun 2016, 08:21:31

Outcast_Searcher wrote:
ennui2 wrote:BTW, I worked for a dot com that got kicked off of Nasdaq and languished in the pink sheets before it sold out to a big player later and the stock surged, which paid off well for me. So anyone who thinks that a stock that dips is automatically a death-knell is a fool. You have to analyze deeper and think more long-term.

As though buying pink sheet stocks was a reasonable venture -- to anyone but the brokers pushing pink sheet stocks.


In my case, I got lucky by being lazy. The dot com I was in offered a buyback program after the stock hit the pink sheets. I chose not to exercise the buyback because, after taxes, it wouldn't have amounted to much. Most took the money, thinking it was the best return they were likely to ever get, even including some managers above me. They regretted it later.

Remember that Tesla has already been near death at least once before in its history. This is common. Startup companies rarely if ever proceed in a straight line from inception to "success". Also, even established companies are not immune from tanking (witness the recent failures of Detroit). The sign of a savvy investor is someone who knows when to hold when everyone else is fleeing and selling when everyone else is piling in. That's how Warren Buffet made his fortune, for instance. You make money by betting against conventional wisdom.

Of course, there are a lot of people on the internet who are really more interested in schadenfreude than to actually offer genuine investor advice.
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Re: Making Tesla profitable?

Unread postby Timo » Thu 23 Jun 2016, 09:05:39

ROCKMAN wrote:Timo - If you bought Tesla for under $40/share where it sat from when it started until mid-2013 you might think about dumping all or some now at $197/share. It has dropped 30% in the last 12 months and appears to still be tending down. Then if it keeps falling and you still have faith you can buy back in after it bottoms out. One thing to track is insider sales. If it turns into P&D that's where you might see it first.

Rock, i didn't buy that low. I wish i did, but i missed that opportunity. I also fully acknowledge the volatility of TSLA that's going on right now, but i'm not in for the short-term. I plan on using my revenues from stock sales in another 15 years, or so. I don't need them at the moment. As for the current volatility in the renewables market right now, part of that is due to the uncertainty of the continuation of the tax credits issued by Congress, but as far as Tesla is concerned, i think that people are still trying to figure out exactly what Tesla is as a company that perpetually changes the rules and ultimately exceeds expectations on its success. Tesla is brand new, and isn't a normal stock option by any means. People are still trying to absorb their new business model because no one has ever seen a company remotely like Tesla at the place where Tesla currently sits. They're re-writing the book of BAU. People are slow (cautious) to adapt. I get that, but i'm not looking to make a quick buck, either. I look at Musk's track record, and see where he wants to go, and i'm on board that train. I might win big, or i might go bust. My risk, but the whole planet is going to go bust at some point. In that sense, Tesla is really no different, but they're going where i want to go.
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Re: Making Tesla profitable?

Unread postby ROCKMAN » Thu 23 Jun 2016, 11:03:58

Timo - I understand your long term plan. But I wonder if you're stuck in the same trap that I've been in before: if you sold now it might be at a loss. Damn tough to do emotionally even if it is the right move. Nothing wrong with the long view but you buy on the short game: if you really think the stock has bottomed out stay where you are. But if it drops another 10% to 20% you would be better cashing out, stay cash somewhere getting almost no interest and then buying back into Tesla when you think it has hit a new bottom. It would be a much better long term investment if you were holding $90 stock then $190.

Of course timing the market for any stock can be very difficult. But imaging if you had sold out close to $300/share and bought back in at $150/share: you would own twice as much of Tesla for the same amount invested. There is one little silver lining to selling at a loss and then buying back in: get to writer the loss off on your taxes
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Re: Making Tesla profitable?

Unread postby StarvingLion » Thu 23 Jun 2016, 14:54:15

"... of being a pump-and-dump scam."

Its a pump and dump scam within a Ponzi Economy:

http://www.hussmanfunds.com/wmc/wmc140922.htm

The Ponzi Economy

John P. Hussman, Ph.D.

The U.S. Ponzi Economy is one where domestic workers are underemployed and consume beyond their means; household and government debt make up the shortfall; corporate profits expand to a record share of GDP as revenues are sustained by household and government deficits; local employment is replaced by outsourced goods and labor; companies refrain from productive investment, accumulate the debt of other companies and issue new debt of their own, primarily to repurchase their own shares at escalating valuations; our trading partners (particularly China and Japan) become our largest creditors and accumulate trillions of dollars of claims that can effectively be traded for U.S. property and future output; Fed policy encourages the yield-seeking diversion of scarce savings toward speculation in risky securities; and as with every Ponzi scheme, everyone is happy as long as nobody seeks to be repaid.
EV's are fuel-less automobiles and Thorium Reactors are fuel-less reactors. Perfect.
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Re: Making Tesla profitable?

Unread postby KaiserJeep » Thu 23 Jun 2016, 15:15:32

If anybody wants $7500 of stock in Cape Wind, which was Obama's "shovel ready" project he was gonna "fast track" in his 2007 campaign, I will gladly sell mine for the original $7500. Of course, the project was already 8 years along when I invested. I thought I would do my part to clean up the nasty coal effluents from Cape Cod, which frequently blow over my place on Nantucket.

Little did I know that nothin' was ever gonna happen, because a powerful bunch of Democrats (the Kennedy-Shriver clan) did not want to see itty bitty windmills on the horizon, from their infamous "family compound" in Hyannis, MA. NIMBY is alive and well, even when it kills people.

One thing did happen - there was an undersea power cable feed constructed from the soot-spewing coal plants on the Cape across 30 miles of Nantucket Sound to the island, and now they don't have the huge diesel generators in downtown Nantucket any more. But this was really unrelated to the stillborn wind farm, something the Koch brothers did. (They have the coal contracts for the Cape and large parts of the Massachusetts coast.)

In case you are wondering, the corporation that was gonna construct the wind farm will be declaring bankruptcy and I will write off the $7500. At this point in time, just the litigation costs alone would add about $0.60 per kw-hr to any power they generate. It'll probably never get built, but if it does, it'll be some other corporation building it, one that could actually make a profit on wind power, because they avoided that massive litigation cost.

Once burned, twice shy - I'll never invest in "green" power again. But all you Greenies should run right out and plunk down your cash on Tesla. I might need to buy some of those whole-house battery packs for my new place.
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Re: Making Tesla profitable?

Unread postby ROCKMAN » Thu 23 Jun 2016, 16:42:44

KP - Too bad you didn't buy NextEra back in 2005 when it was $40/share. Today it's $125/share and paying 2.8% dividends. They started building the Horse Hollow Wind Farm in 2005. It's a large wind farm with 735.5 MW capacity. It consists of 291 GE 1.5 MW wind turbines and 139 Siemens 2.3 MW wind turbines spread over nearly 47,000 acres of land in Taylor and Nolan County, Texas.

And the same lecture: wind power has worked great in Texas due to cooperation between the govt, private companies, environmental groups and the public. And Horse Hollow didn't work just because it's in lightly populated west Texas. There's a huge wind farm right on the coast near Corpus Christi with about 500,000 residents in the immediate area.
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