Brandon Reeves's Profile

Profitability, what is that?! This is a silicon valley company we are talking about. 🙂

I actually believe investors care about scale more than a short term probability of a few million dollars. Tesla’s first goal should be to hit delivery targets as their value today has lots of future growth baked in. I am of the camp that any dollars today should be reinvested for future growth for Model III and their energy storage business. With that being said profitability is a possibility next year. Automotive companies are thought to need to achieve a scale of a 100ku run-rate to achieve sufficient economies of scale and Tesla is on track to hit that next year.

That is an interesting point. I wonder if Elon had this foresight at the time of the choice. My belief on the birth of the direct sales model was out of necessity. Early on Tesla’s vehicles were made to order and Tesla did not have the capital or manufacturing run-rate capacity to build up the inventory needed for dealerships.

Nupur – I do agree the battery business will be huge and I am curious to see where it goes. The requirements for cellphone vs. automotive batteries are quite different but having a phone battery with much greater density would solve a huge pain point.

I also agree they nee a stronger presence in Washington but this may be part of their growing pains. Texas is another state that has push back for the direct sales model. I do know Tesla has been trying to use future SpaceX sites, and future factories as leverage to persuade some of these states.

Tesla’s auto-pilot team is pretty incredible. They have been able to accomplish so much in such a short period of time. There are also google articles that detail how large the team has grown to.

For autopilots roll out there have have been several OTA’s with upgrades to the autopilot functionality. Tesla’s belief has to been put the hardware in the cars and roll out software updates to initiate the functionality.

I feel the larger barriers to EV’s are the price point and lack of charging infrastructure, both of which I hope will be solved for Tesla’s Model III which they forecast 500,000 cars by the end of this decade.

Tesla uses the SAE JAE1772 standard which is widely adopted (Ford, Nissan, Toyota, Honda, etc.) Theoretically others could use the supercharger stations if there cars were designed for it but currently none but Tesla support the fast 400V DC charging. In the future I do expect other OEM’s to get on board.

I also think about this. Why is Chipotle the only restaurant establishment that I can eat 3-4 times a week and still enjoy it. Not to mention I even order the SAME salad bowl.

Rafael,

It will be especially interesting to see if this model can be replicated overseas. Domestically the lock stop of their business/operating models have found great success but I express similar concerns to Sara. A second concern is how Chipotle will handle rising food costs. Just in the past two years I have seen my burrito in San Francisco increase in price a few times. What would have been an $8 meal is now approaching $10 or $10+. While this is a small increase I feel there is a large concern looming of when Chipotle is no longer a great value option.

By the way…can we petition for one on campus! 🙂

Excellent post and very timely! In fact just in the past week the Vivint deal is back on the table at a reduced price to the original proposal. I have gone back and forth about what this means for SunEdison. Ultimately I feel it is a positive for both companies. SunEdison can use synergies from its manufacturing business to reduce the cost of Vivint to compete with SolarCity. The residential solar market is also growing extremely fast – an opportunity hard to miss even if it does result in a large increase of debt on the balance sheet. The YeildCo model offers an interesting dynamic to this as lower quality assets (nature of the residential solar business) will now be funneled through to investors.

I also agree with Will that this does sound largely like the events that led up to the housing crisis, just better managed – I hope.

It will be interesting to see how these entities (YieldCo’s, MLP’s, etc.) in the energy space (solar and even mid-stream oil) will play out.

Great post and choice of company!

The innovation in solar business models have been an incredibly interesting concept from various long-lease options, pay-as-you-go (PAYGO) solar is emerging markets, and now crowdfunding/sourcing options from companies like Solar Mosaic and SunFunder.

Pundits are now on the verge of believing that solar will be bankable (although the events in the last few months may say different) but if that is the case how do you feel this may affect Mosaic and its ability to compete? It is also interesting to what type of investors Solar Mosaic attracts, and how they compete with investors looking at YieldCo’s that have a high-paying dividend in solar.

All in all I agree that Solar Mosaic has a very interesting business/operating model and I look forward to how this industry plays out.

Sara,

Very interesting article! I do agree that Tesla has achieved outstanding success for both itself and shareholders based on this symbiotic relationship of its business and operating models.

I do feel the next journey they make into their energy business, building Gigafactory and launching Model III will prove to be the most important chapters for their story. When you are in LA I highly recommend you drive one (setting up an appointment is easy). From a COG’s point of view this all relates to their single largest expense, the battery technology. It is essential for Tesla to find a way to reduce cost faster than just following the cost curve for Li-Ion.

Will – I wanted to respond to your point about Tesla’s marginal advantages eroding if the government subsidies and neutral free supercharging station.
At first this does seem like it this could be a worry for Tesla but in fact Elon would hope that action would increase adoption of EV’s in the world. The charging standards today are fragmented but the industry is narrowing in on the SAE J1772 standard as Tesla hoped to help enforce a universal standard.