• Feb 24th 2011 at 1:49PM
  • 38
Back on November 11th, 2010, shares of Tesla Motors soared to $29.36, leading JPMorgan Chase analyst Himanshu Patel to say, "we are bullish on Tesla Motors as we believe it is at the vanguard of improving battery costs/durability." However, Motley Fool's Travis Hoium disagreed with Patel's assessment of Tesla, claiming that optimism pumped up TSLA's prices and predicted that a fall out was looming.

Apparently, Hoium is not alone in forecasting that an investment in Tesla could be risky. Seeking Alpha (SA) has tagged TSLA with a pass-hold, claiming that Tesla has two obstacles to address before deeming that an investment in the automaker will pay off. SA states that Tesla's "dangerous dependence on lithium" – a rare earth metal some (but not all) say is in limited supply – potentially positions the automaker to be driven out of the industry if lithium prices skyrocketing.

Furthermore, SA claims that the "cut throat competition" in the electric vehicle segment will have Tesla duking it out with the likes of Nissan, Ford, Toyota and other automakers for a chunk of the plug-in vehicle market. SA states that "going head on against auto companies is a high stakes game where it's a simple do or die scenario."

SA believes that it's best to pass on TSLA at this time, but concludes with this bit of advice:
If the firm does manage to succeed in the electric car space we have little doubt the stock will likely skyrocket over the long term and allow for ample opportunity to get in down the line when it has proved itself as a financially viable firm.
And here, once again, is our obvious disclaimer: AutoblogGreen is an automotive site, not a financial one. The views and opinions expressed above are those of Seeking Alpha. You can express your own in the comments below.

[Source: Seeking Alpha]


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    • 1 Second Ago
  • 38 Comments
      • 4 Years Ago
      Agree with Mike - Seeking Alpha looks like one stock analyst to pass on.
      They are scarey stupid here, both about lithium resources and competition.
      Apparently Tesla will break even on the all-important Model S if they can retail 10K per year. The Chevy Volt, a VASTLY inferior vehicle (amazingly, the car that ruined itself to provide a "non-anxiety-provoking driving range,"
      will end up with a range probably inferior to the Model S) is reportedly not making a profit at $42K with production numbers many times that of the Model S. It also cost three times as much to develop!! Even calling the all-electric Leaf a competitor is absurd - with its 73 miles of driving range, the Leaf is hard-pressed to call itself a viable automobile. The days of boosting
      useless vehicles like the Volt and Leaf just because they use electricty rather than gasoline is long gone. Consumers refused to be stampeded into buying into crap anymore just to prove themselves "conscientious." Most of the EVs out there are junk, pure, useless junk.
        • 4 Years Ago
        lad, the price of the stock is very "real". The price is what someone is willing to pay for it. There are many things that influence stock prices, not just analyst reports. As in all things, caveat emptor.
        • 4 Years Ago
        Don't get caught in this game; there are those who issue glowing reports because they are long in Tesla and there are those who issue negative reports because they are short. These are self-serving reports. And, I must add, there are those who comment who have a vested interest in the stock. Remember the price of stock is not real but what is perceived to be.

        Our choice of automobiles is based on many factors; among those is your requirements of range. About 100 miles is good for me and I don't mind planning my trips; however, others will find this difficult. But, in no case is the Leaf crap, nor is the Volt a jewel and the Tesla is certainly a very expensive vehicle and at this point still a promise.

        I look for the Leaf to be another Datsun 510 cult kind of car. I expect aftermarket modifications to be numerous. Indeed, there is already a modification to the supplied 120volt EVSE to increase its output by plugging it into a 240volt ac supply.
      harlanx6
      • 4 Years Ago
      Up to now, Tesla has defied the odds, but let the (stock) buyer beware. I still remember those beautiful DeLoreans.
        • 4 Years Ago
        @harlanx6
        Har-

        I still remember those Honda's, Toyota's, and Hyundai's that the Big Three blew off when they first appeared in the US market too. Not every car company goes the way of the Deloran.

        And don't even get me started about losers starting businesses out of their garages out of nothing, like Apple and Microsoft.
      • 4 Years Ago
      US investors wanting to gamble on the success of electric vehicles don't have much choice so far. They can buy Tesla shares, or can buy shares in companies that supply key components. Smith Electric Vehicles (makers of the Smith Newton, the world's biggest electric delivery truck) will probably be their next opportunity to get into a pure EV stock. Its ceo Bryan Hansel has indicated that it will float shares on the Nasdaq stock exchange sometime in 2011.

      Those with access to shares on the UK stockmarket can take a proxy stake via a holding in the UK's Tanfield Group (TAN). Tanfield currently own 49% of the private stock in Smith, and the TAN share price, previously subdued, is starting to reflect this (up 30% on a month ago and rising). I hold a stake in Tanfield Group myself for the very purpose of cashing in on the publicity surge that will likely happen once Smith formally announces its stock floatation timetable. I don't know when that will be. Smith are participating in The Work Truck Show which opens next Tuesday, and I guess they might take that opportunity to announce something. Their Kansas City factory is churning out ten trucks a week right now, with full order books for this year, and the money raised from a stockmarket offering will fund their proposed expansion which includes up to twenty similar facilities across the USA. They are due to announce the location of the next one (probably in California) this quarter.

      I look forward to what Seeking Alpha have to say about Smith! Will they declare it to be a good prospect? Or has their stance on lithium pricings blocked out that?
        • 4 Years Ago
        I'll point out that UQM is a publicly-traded company that supplies the electric motors for many of the EVs that are coming to market. Delphi, Johnson-Controls, Magna, Visteon, and lots of other suppliers have also been publicly traded for decades and are pretty conservative bets for long-term growth. Likewise, you can invest in Nissan, Ford, GM, Toyota, Honda, or other traditional automakers who have indicated that EVs will make up a subset of their production.

        Due diligence, people.
      • 4 Years Ago
      "a rare earth metal some (but not all) say is in limited supply – potentially positions the automaker to be driven out of the industry if lithium prices skyrocketing."

      Ask Bolivia or China how rare Lithium is. You will get laughed at, hard. Bolivia can scrape the stuff off the ground.

      ABG, you seem bent on parroting articles that have a high FUD content. I almost wonder if there is a hidden agenda to discredit electric vehicles. Never seen a negative article on hydrogen or gas.

      Anyone else notice this?
        • 4 Years Ago
        "Never seen a negative article on hydrogen or gas."

        So, you're upset that ABG doesn't dislike the same things you dislike?

        ABG has certainly been fair in reporting factual information about the progress of alternative automotive technologies; ABG has no responsibility to support/promote one particular technology over any other.

        (I know, it's so hard to be anti-hydrogen, when HFCVs are so certain to be produced. It's like everything you thought impossible, was wrong. Why won't ABG just give you the confirmation bias you want, instead of constantly posting the truth?)
        • 4 Years Ago
        My guess is not a bias for or against one particularly technology. Instead an effort to link back to their own stories and inject some controversy - both of which should drive more ad impressions.
        • 4 Years Ago
        "...a hydrogen supporter who doesn't check the facts, and just looks at the negative stuff that ABG posts?"

        I'm not sure what you mean by this. I enjoy the many positive articles that ABG posts about all sorts of autos.

        The review of the Fisker Karma was certainly enthusiastic, going as far as calling it the best handling car in its segment - keep in mind, that segment is made up entirely of very desirable ICE-powered luxury sedans. Does that sound like ABG has a bias? If so, it's for the car with the electric motors powering the wheels.

        "We already were blown away by the dynamics of the all-new very stiff Karma chassis. Shall we risk a shower of disbelief from commentators by saying the Karma is the best handling large premium car in this entire segment? Why, yes, we shall."

        I'm sorry that you think ABG is biased against BEVs, even though there is a constant stream of posts about how BEVs are coming into production and all they benefits that BEVs will have. I enjoy reading those articles (contrary to what you seem to think) because I know that BEVs will indeed play a vital role, no matter what the fortunes of the various companies that might decide to produce them. I know I've defended several BEVs against attacks made by yourself, because the BEV didn't meet *your* lofty expectations.

        "I suppose that's why people like you and Carney are still, whereas the people who were into electric drive seem to be gone missing."

        I support all kinds of EVs, including FCVs and BEVs. Carney supports ethanol. We may not agree, but we are both enthusiastic supporters of the techs we believe in. As for your thinking the other electric drive supporters having gone missing, well you're just oblivious aren't you?

        Heck, why don't you try being more positive? Instead of bashing companies like Coda, why not try to look on the positive side of things and be happy that American companies are working towards bring BEVs to market. They might not be the prettiest or cheapest cars ever, but as an enthusiast you should be willing to look past the first generation and just cheer for the underdog a little.

        If you really believe that BEVs are going to be successful, you wouldn't worry about the occasional no-so-positive post, especially one like this that is obviously an opinion piece written by someone with absolutely no connection to ABG. Like water off a duck's back...
        • 4 Years Ago
        Actually, I favor both, FCs and BEVs. It should be noted, that a BEV can do without a fuel cell but an FC can never do without a battery. A FC is really a hybrid comprised of a fuel cell and battery where the size of the battery is task oriented.

        As far as urban or suburban commuting is concerned, it is my personal conviction that a BEV will do just fine. There should be no range anxiety.

        It's a bit different going "cross-country". For the time being FC's will have an advantage as far as range is concerned.

        I'm not in favor of hydrogen being derived from fossil fuels of any type. The only acceptable way for me is synthesized photosynthesis of water using sunlight and nothing more. With all the progress being made in this discipline it should not be too long before anyone can produce hydrogen in his own backyard.

        There is a lot of talk about the danger of handling hydrogen. Evidently propane gas is absolutely safe; irregardless of bottle or tank size. If treated with the necessary care, I see no more danger emitted from hydrogen than from propane.

        Maybe the future of motor vehicles will be a hybrid solution with fuel cells and batteries and a infrastructure to meet the demands of both. I would enjoy seeing the oil-multis going out of business.

        BTW, I stumbled across a very interesting link:
        http://evworld.com/blogs/index.cfm?authorid=113&blogid=948&archive=1
        • 4 Years Ago
        I'm upset that ABG seems to have a bias against electric cars, slyly inserts doubt into the future of electric drive, when in fact, Electric drive is the only thing that is showing fruit right now.

        Factual information? from who's viewpoint? a hydrogen supporter who doesn't check the facts, and just looks at the negative stuff that ABG posts?

        I suppose that's why people like you and Carney are still, whereas the people who were into electric drive seem to be gone missing.
      • 4 Years Ago
      1) Lithium is an ALKALI metal, not a rare earth (sigh). The article doesn't state this, so it's an error on the part of greenautoblog.
      2) Lithium can be substituted, if you are willing to lower wh/kg
      3) SeekingAlpha doesn't believe anything, it's more like an aggregate blog site
      4) Alot of reports are predicting sufficient lithium for the EV move, furthermore lithium can be recycled and increasingly will be if the prices rises.
        • 4 Years Ago
        ...thank you

        starting to detect an anti-EV slant from ABG yet?
      • 4 Years Ago
      That's the problem with "Seeking Alpha", I find them scarily misinformed. Typically, they write their book, and are essentially worthless, unless you own oil stock and need "confirmation bias".

      As you've already pointed out, no shortage in Lithium, and essentially a shortage is not possible.
      Second, do the listed auto makers even compete in this price range?

        • 4 Years Ago
        Oh will someone just go ahead and say it! Seeking Alpha sounds to be an old person who is out of touch with the times!!!
      • 4 Years Ago
      Tesla's biggest problem: A car that costs over $50k to build, but planning to sell it for $50k.

      Then amortise the development costs on top of that.

      "We lose money on every vehicle, but we make it up in volume."
        • 4 Years Ago
        And how do you know what their cost is? I take it you don't actually work for Tesla, and have no idea what their actual cost structure is, nor what they are paying for components, you're just guessing based on the price of their existing vehicle, the Roadster. Fact is, a substantial portion of the Roadster cost is the carbon fiber body shell, which will not be used on the Model S, and even if the battery had the same $30K cost as the roadster (doubtful, considering improvements) that would still allow $20K for the rest and profit.

        I can assure you that Tesla Motors is a serious business, and has no intention of selling cars at a loss.
        • 4 Years Ago
        @Chris M

        You answered your own question. Assume $20k for the battery pack (low).
        Can this luxury car, in a relatively limited production, be built for another $20k or even $30k ?
        Profit ?
        Amortizing the development costs? Over how many vehicles? Break-even?

        Sorry, but I do have some insights, and experience in this field.
        • 4 Years Ago
        57K is only the base price - most Teslas will likely be middle or upper-level packages, and Musk has recently mentioned that the price range will top out around 100K.

        "The good news for those whose budgets do not include the Roadster's $109,000 price tag, Musk announced his next project, Tesla's Model S sedan — with a $50,000-$100,000 price tag — due out in 2012."

        http://www.mydesert.com/article/20110123/BUSINESS/101220362/Tesla-CEO-Elon-Musk-talks-clean-tech
      • 4 Years Ago
      I don't see how the EV has a future. Yes, zero emissions from the "tailpipe" but INCREASED levels at most of the electricity generating plants. Wait 'till the owners get their electric bills after daily recharging. The obvious solution is the HEV... . self charging and half the consumption of petrol. Since we import roughly half of our oil from overseas, HEV's would drastically reduce that percentage. I own a Shelby but rented a Prius (only car left on the lot) and was floored by its overall performance. Drove hundreds of miles and filled it back up with 9 gals of gas. Yes, I wore a bag over my head (eye holes cut out) while driving it, but have to admit I'm a closet admirer.
        • 4 Years Ago
        prisonboy 86

        That's a great testimonial.
        Just imagine if everyone drove hybrids, or even 40mpg Toys, 2012 Focus, Fiesta, or Hyundais.
        We wouldn't need to import any oil at all.
        The answer is right in front of us, but most deny it or ignore it.

        Damn pick-ups and SUVs are so out of tune with the times.
      • 4 Years Ago
      "prices (start) skyrocketing" could be a potential problem if the suppliers can't keep up with demand. This imbalance would indicate that batteries in the automotive segment would have had more than a preliminary foothold on their ICE counterparts in the ownership-operating cost/benefit analysis category. If we are paying $5.00 + for gasoline by 2012 in the U.S. and their is no relief in sight, then a near term spike in lithium pricing could limit mainstream adoption of any post Model S vehicle.
        • 4 Years Ago
        To suggest $5 gas will stall adoption of EVs is just plain stupid. I don't think anymore needs to be said.
        • 4 Years Ago
        I replied on SA:
        'I'd agree with the doubtful prospects of Tesla, but concerns about lithium really do not hold water.
        The price of the lithium carbonate is around $8 kilo for the basic material, $50 kg for the more refined battery grade.
        It takes around 1kg/kwh for a battery, so a 50kwh battery pack uses around $2500 of lithium carbonate, a substantial but by no means predominant cost in a premium car.
        Any hypothesised shortage of lithium and high prices is going to hit cheaper cars first. '
      • 4 Years Ago
      Uh . . . SeekingAlpha is a just a blog site where any JoeSchmoe can spout any insanity.

      (Not that I disagree with this person, but it is not real media outlet.)
      • 4 Years Ago
      Ignore that last point of mine about what Seeking Alpha might think. I note someone's earlier observation that Seeking Alpha is merely a platform for comments by others.
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