Tuesday, June 11, 2013

Volt and Tesla



Financially Volt is a disaster but it serves as a compliance car. It drove GM to the brink of bankruptcy – thanks to Chinese for saving GM. Without Volt, the investors of the new GM could make more money. The current owners of Volt do not have good resale values.

Estimate how many miles you drive in a year to calculate how much money you save in gasoline. Most likely it will not pay back the extra investment / maintenance (two drive trains until we have a pure electric car) / reliability, the extra electricity bills, the inconvenience of charging (your time as a Volt owner must be more expensive than the time of a Corolla driver), finding a qualified mechanic (except from the dealer who will charge  you a bundle), the tickets for driving too slowly, the increased chance of hitting something due to no warning sound...

Why folks buy it besides the rebates from the government (at least at one time)? It is the same folks camping in line to buy the new iPhone to replace the ones they bought several months ago except of the age difference of iPhone owners and Volt owners. Don't tell me the iPhone would improve the productivity after they have wasted one night camping in the cold.

They want to be the first one in their town to own a Volt and show the world they're green conscious (that is debatable). It boosts their social standing and 'prestige' for some. It is not for me even if I had the money. Well, it could save them money by visiting a psychiatrist to boost their ego and most likely a prostitute could do a better job for less. J

There are a very small number of folks buying the car for the good of the environment. It is debatable as I said before. There is no convincing figure that it will reduce carbon dioxide emission significantly even when 80% of all cars are electric. However, I have to thank the first wave of electric car owners and the government rebates. Without them, we will never have a truly usable and affordable electric car in the future.

The battery technology is evolving and M.I.T. has a very promising technology. It may take at least 10 years for M.I.T. folks to deliver the next breakthrough from a research project to a commercial product.

I’m very absent minded. Many days I may have to call my boss that I cannot come to work as I forget to charge or I may drive the car with the charger on that could do some harm to the car, the charger or the house (hopefully it would not burn it down).

I also wonder how long it takes to drive an electric car from Boston to Washington, D.C. (including the time to recharge) for my family vacation.

Afterthoughts

·         Tesla is an electric car. It still has similar problems as the Volt except with one simple drive train. The problems are:

1.       The service stations are built for free charging. Are they really free? The charging range for the average owner is far worse than the range under ideal conditions.

2.       The other problem is some states do not (or will not) allow selling a car there without a dealership.



3.       My estimate is $10,000 per car sold by Tesla from the government. That’s part of the reason of the public debt of 17 trillion. Will the government subsidize them forever?

4.       Even the company is making easy money in selling the carbon credit, it is still have a big loss.

Musk is very brilliant in pumping up the stock. He will sell it without the restrictions in the loan after he paid it back to DOE. The last owners of this stock will be the biggest losers. I could be wrong in the timing but not wrong in the fundamentals of the company. 


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My e-book Debunk the Myths of Investing could save you a lot of money in investing. The above is one chapter out of 105 and some important chapters will not be included in the blog.
  http://ebtonypow.blogspot.com/2012/12/special-debunk-myths-of-buffett.html

Sample portfolio for the book.
  http://stockportfolios.blogspot.com/2013/03/welcome.html

(c) 2013 Tony Pow

Disclaimer. I'm not responsible for your actions in your investment. Treat this as educational information and past performance does not guarantee future performance.

8 comments:

  1. Thanks for posting such a hilarious blog full of every misconception imaginable about Tesla. I'll just address a few:

    1) Yes, the SuperChargers are really free--free for life. You can take that family trip from Boston to DC in about the same time you could do it in a gas car using the east coast SuperCharger network unless you drive in diapers and never stop to eat. Any time spent charging is offset by the fact that you don't have to pay for gas.

    2) Your comment on range has nothing to do with SuperChargers being free or not. Some have driven the Model S over 400 miles on a charge (slowly). EPA two cycle test gets you 300 miles. EPA 5 cycle test gets you 265 miles. However, with so many miles available, I don't really worry about it. Sure, if I drive fast and aggressively I'll get less than 265, just as you'll get worse mileage if you speed in your gas car. One thing is for sure--Model S owners probably have a lot more fun driving their car than you do driving yours.

    3) Not having a dealership is a benefit, not a negative. Most people hate dealerships and most dealerships make their money on service. Tesla cars need very little service, and if you need some, they come to your house to fix it or drop you a loaner. I live in one of the states you refer to (Texas) but it doesn't prevent you from ordering via the Internet and having the car show up at your house. Over 400 owners in Texas have already done just that.

    4) Tesla has a lot of naysayers. Building something new is hard, so most of the time, such naysayers are often correct. However, in the case of Tesla, they have proved people wrong every step of the way. Tesla says they will hit 25% margin with no ZEV credits by the end of Q4. Clearly, you don't believe them, good luck with that.

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    1. Thanks for the comment. I will make changes to the article in my book Debunk the Myths in Investing (from Amazon.com). It represents the views of most actual owners. The following are added after this post:


      • Common mistakes to learn:
      1. Investing in a company is different from investing in a company’s products.

      2. Potential appreciation of a stock has nothing to do with past performance.

      • Shorting a stock is costly (Chapter 62). To illustrate, shorting 200 shares of TSLA will cost me over $3 interest a day. It will be over $1,000 for interest for a year (more if it pays dividends).

      I have no intention to own one even if I have the cash. I view Tesla as a potential investment. Based on that, the charging station and mechanics coming to your house is free to you but not to the company. It could be the straw that breaks the financially shaky company.

      If I were an owner, it will be a logistic nightmare to plan the vacation with locating the charging station. Thanks again and this is the reason for the blog to include both sides of the argument.

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    2. As in the article mentioned, individuals have to calculate the extra cost and the saving in owning the car for n (5 to most) years as in any investment.

      When the car price is dropped to 40,000 and the government chips in 7,000, then it will be economical for the average owner driving over 10K a year.

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    5. The current Tesla owners are being exploited as the salesmen / women for the company. It is a good marketing model, but it may not be a good business model by giving the blades free for life.

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    6. TonyP4: You continually mix messages. First, I think if you talk to the average Tesla owner (and I have talked to many), we are happy to be 'exploited'. Honestly, if you love a product, you enjoy talking about it, and it doesn't matter if that is a car, or an iPhone, or a powertool. Who do you believe more, the person who loves the product, or the salesman on the dealership lot who will say anything to get the sale? We aren't selling, people are hearing about our experience, seeing the car, and then buying.

      Second, I assume you are suggesting that the free 'blades' are free SuperCharger electricity. Given the arrangement with SolarCity, when the SuperChargers are not in use, they are selling power back to the grid. Some of the locations even have grid storage so they can function in the face of a complete grid failure (or zombie apocalypse as Tesla jokingly described it). Net electricity costs for stations may approach 0 over time, especially if they get power company rebates for using the grid storage for peak demand. Even if they have to pay a bit for power, it is negligible given A) the goodwill it generates and blue water it puts between them and other manufacturers that don't have a SuperCharger network and B) lowers the price of the car because you can get by with a smaller battery.

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  2. Great post. A lot of money will be lost on Tesla when the music stops. You need to separate the man - and Elon Musk is brilliant - from the stock itself. Oh, and does the name Better Place ring a bell? There are better alternative investments out their if one wants to own auto stocks.

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