Tesla& s & Gigafactory& is the next step toward world domination

2 Июн 2014 | Author: | Комментарии к записи Tesla& s & Gigafactory& is the next step toward world domination отключены
TESLA Model S – 60 kWh Auto

Tesla s Gigafactory is the next step toward world domination

On Wednesday, Elon Musk, the founder, CEO and Chief Product Architect of Tesla Motors (TSLA ), announced that Tesla would raise $1.6 billion through a bond offering to build an enormous factory that will produce lithium-ion batteries which the company needs in order to continue growing at its current rate. Musk has been talking about the project, dubbed The Gigafactory for weeks now and alluding to it for far longer than that, but until the announcement, the Street wasn t quite sure whether the Gigafactory was a near-term business plan or more of a long-term vision.

According to Tesla s webpage. the Gigafactory will produce more lithium-ion batteries annually by 2020 than were produced by the entire world in 2013. Also claimed on the website: By the end of the first year of volume production of our mass market vehicle, we expect the Gigafactory will have driven down the per kWh cost of our battery pack by more than 30 percent.

It would seem that Musk is relying once again on his faith in the efficiency of scale. That makes sense, because it is almost entirely due to efficiency of scale that Tesla s cars are more environmentally friendly than gasoline-powered cars. In effect, gasoline powered cars have to carry around a small power plant, which expends a great deal of power compared to producing the power in a central location and only having to lug around a really big battery.

The Gigafactory may produce other synergies as well. Powerful, low-cost batteries will be a huge boon to the solar industry. The industry needs to store electricity efficiently, because demand for power tends to be highest at night, when the output of solar power plants is sub-optimal.

You can bet that Musk, who is also the CEO of SolarCity (SCTY ), will be able to find a use for any extra batteries the Gigafactory may produce.

Tesla has been enjoying a streak of good news recently, including rising foreign sales and talks with Apple (AAPL ) which lead to speculation of a buyout. In all of the excitement, TSLA stock has risen to over $250 per share, giving the company a market cap of $30 billion. It has been suggested, and continues to be suggested in the mediaseveral times each daythat the company s valuation is bit high, given that Tesla only expects to sell 35,000 cars in 2014. This would be correct if Tesla planned on selling only its Model-S cars in the future, but the company is clearly moving full speed ahead with its plan to capture the mid-range American auto-market with its Model-X, to be released in 2015.

For those who are interested, you can pre-order a Model-X at Tesla s website for $40,000.

TESLA Model S – 60 kWh Auto

In 2013, the Street foresaw Tesla s doom many times. First, the states, under pressure from auto-dealers, tried to make selling Teslas illegal; the move backfired and won Tesla public support. Next, the Street decided that Tesla was doomed because the world wasn t making as many lithium-ion batteries as Tesla needed; Musk decided to make them himself.

Finally there were the lithium battery fires that were supposed to make Tesla look dangerous, and, of course, cries for a Model-S recall (mostly from short sellers); investigators determined that the Model-S was among the safest cars ever built, but just because he could, Musk completed a recall of the entire fleet of cars anywayby sending them operating system upgrade.

Short sellers are just plain beaten right now, but they ll be back with something new before long. By attempting to replace the family car with a gadget of his own devising, Musk picked a fight with some powerful forces. That seems to be no problem for Musk, who is playing three moves ahead, while his competitors can barely see one.

He is better at this than they are, and in the end, that is why I believe he will win.

Julian Close has been a business writer since the first day of the twenty-first century, having written for PRA International and the United Nations Department of Peacekeeping. He graduated from Davidson College in 1993 and received a Master of Arts in Teaching from Mary Baldwin College in 2011. He became a stockbroker in 1993, but now works for Fresh Brewed Media and uses his powers only for good. You can see closing trades for all Julian s long and short positions and track his long term performance via twitter: @JulianClose_MIC .

TESLA Model S – 60 kWh Auto
TESLA Model S – 60 kWh Auto

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