EV King Tesla – Where Did the Cash Go?

by Neal Dikeman, chief blogger

Since it’s launch, cleantech darling Tesla (NASDAQ:TSLA) has delivered huge revenue growth in the electric vehicle market.  With a market cap of over $20 billion, it’s more than a 1/3rd of that of the massively higher volume GM or Ford.  Largely the market cap has been driven by phenomenal growth numbers, 60% YoY revenues last in 2014, and the company forecasts 70% increase in unit sales YoY in 2015.

But let’s take a deeper look.

The Company trades at 7.5x enterprise value/revenues, and 26x price/book.  At the current market cap, it needs to deliver the same revenue growth for another 4-5 years before normal auto net profit margins would bring it’s PE into line with the the other top automakers.  Of course, that assumes no stock price growth during that time either!  Our quick and dirty assessment test:

Take 2014 revenues, roll forward at the YoY growth rate of 60%.  Take the average net profit margins and P/Es of the major autos (we used two groupings, 2-3% and 20-25, and 7-8% and 12-17), roll forward until the PEs align, see what year it is (2018-2020).   That’s our crude measure of how many years of growth are priced in.  And it puts Tesla at between a $20-$50 Billion/year company (7-15 current levels) before it justifies it’s current market cap.  Or c. 300,000-1.5 mm cars per year depending on price assumptions.  Up from 35,000 last year.

Does it have the wherewhithal to do that?

Tesla Financials

 Well, looks awfully tight.  The numbers technically work, continued growth will cure a lot of ills.  But while nominally EBITDA positive now, the company has been chewing cash in order to sustain future grow.  2014 burned nearly $1 billon in cash in losses, working capital and capex to anchor that growth, almost as much in cash burn as the company delivered in revenue growth.

Positive progress on working capital in 2013 disappeared into huge inventory and receivables expansion at the end of 2014, and interest on the new debt for the capital expansions alone chewed up 10% of gross margin, while both R&D and SG&A continue to accelerate, doubling in 2014 to outpace revenue growth by more than 50%.

The cash needs this time around were fueled by debt, which rose over $1.8 bil to 75% of revenues.  Overall liabilities rose even more.  Current net cash on hand at YE was a negative half a billion dollars, seven hundred million worse than this time last year.

The company will argue it is investing in growth, and you can see why it better be.  With almost every cost and balance sheet line currently outpacing revenue growth, at some point a company needs to start doing more making and less spending.

So yes, continued growth outlook is still exhilarating (depending on your views of the competition and oil price impact), but the cost to drive it is still extremely high.  I think we will look back and see that 2014 and 2015 were crucial set up years for Tesla, and the really proof in the pudding is still probably 24 months in front of us.  And my guess is Tesla will be back hitting the market for equity and debt again and again to keep the growth engine going before it’s done.

 The author does not own a securities position in TSLA.  Any opinion expressed herein is the opinion of the author, not Cleantech Blog nor any employer or company affiliated with the author.

Plugin Electrics vs All Electric Battery EVs, Epic Throwdown?

I get this every time I discuss EVs.  Something along the lines of oh, you shouldn’t be including PHEVs in with EVs, they don’t count, or are not real EVs, just a stopgap etc.

I tend to think PHEVs may be better product.  At least for now.  And I follow the GM’s Chevy Volt vs the Nissan Leaf with interest.

The main arguments on each:

Plug in Hybrids

  • No range anxiety
  • Still need gasoline
  • Can fuel up at either electric charging station, your home or gas station
  • Depending on driving patterns, may not need MUCH gasoline at all
  • Expensive because:  need both gasoline and electric systems, and batteries are still pretty expensive, even with a fraction of the amount that’s in an EV
  • Get all the torque and quiet and acceleration punch of an EV without the short range hassle
  • But not really an EV, after a few miles it’s “just a hybrid”
  • Future is just a stop gap until EV batteries get cheap? Or just a better car with all the benes and no cons?


Electric Vehicles

  • No gasoline at all (fueled by a mix of 50% coal,20% gas, and the rest nuke and hydro with a little wind :) )
  • Amazing torque and acceleration
  • Dead quiet no emissions
  • Fairly slow to charge compared to gas
  • Lack of charging stations is getting solved, but still somewhat an issue
  • Switching one fuel for another, no extra flexibility on fuel
  • Expensive because lithium ion batteries are still pricey and way a lot
  • Future is cheaper better batteries?  Or they never get there and the future never arrives?

I tend to think the combination of plugins and EVs has actually worked together solved range anxiety.  As a consumer, I get to pick from a full basket when I buy, Leaf, Volt, Prius, Model S, lots of pricey batteries to deal with range anxiety, a plug in that gets me almost there with zero range issues, or a Leaf in between.  Whatever range anxiety I had disappears into consumer choice, just like it should.  I don’t think pure EV is any better or worse than a plugin, just a different choice.  They work together in the fleet, too, plug ins help drive demand for EV charging stations that are critical to electric car success, and EVs drive the cost down on the batteries that brings the plugin costs into line.  Unlike with the Prius over a decade ago, it’s not a single car changing the world, it’s the combination that’s working well for us.

300 Smart Electric Cars in New San Diego Car Sharing

I am driving the new 2012 smart fortwo electric drive vehicle (smart ed) through the busy downtown streets of San Diego, America’s eighth largest city. San Diego presents itself as “America’s Finest City” with some justification. The temperature is in the sixties on this November day as ships sail in the vast harbor, towering office buildings offer dramatic views of the Pacific Ocean, and active people are in motion.

This little electric car is a weapon against the growing gridlock that grinds drivers to a halt for minutes or hours in morning and evening freeway traffic. I speak from the experience of driving I-15 and I-5 to conferences or when shuttling kids for family and friends. This new approach to electric car sharing now allows people to take express buses down HOV lanes and Coaster Rail from North Country to and from work, with car2go solving the problem of traveling the last one to 3 miles to work and popular destinations.

Walter Rosenkranz, a manager with car2go shows me how it works. Like any member, he displays the car2go app on his smartphone, sees the location of an available electric smart car a block away. Since this car is charging, he disconnects the Blink Level 2 charger then holds his car2go RFID card next to the car window. Walter kindly puts me behind the wheel then enters his pass code into the car2go navigation display on the dash of the car. I start the car and we take off in silence.

I drive us to Balboa Park, a popular destination with its vast acres, museums, and famous San Diego zoo. We park the car, sign-off and walk away. If we were paying members, this trip would have cost us only $3 or $4. We got there in minutes without the hassle of car rental or bus transfers. Car2go is a point-to-point car sharing service. You pay 35 cents a minute. If you use lots of minutes, you’re automatically lowered to $12.99 per hour. Keep the electric car overnight and pay $65.99 per day. No surprise fees are charged for being early or late, like some other car sharing services.

This point-to-point car sharing service has proven itself in Austin, Texas, with hundreds of the gasoline sipping smart fortwo. San Diego is an excellent choice for the electric car sharing, since a fast network of Blink and other level 2 chargers are being installed in public areas. SDG&E supplies the electricity using a generation mix that is 20 percent renewable, nuclear, and natural gas. There are zero coal power plants in California. San Diego already has over 1,000 drivers of Nissan LEAFs, Chevrolet Volts, Tesla Roadsters and other electric cars. San Diego Smart Grid / Electric Vehicle Report.

Additonal program and Smart Electric Drive Details in original post at Clean Fleet Report.

Daimler is the parent company of Car2go. In the U.S. we best know Daimler for its Mercedes cars. Daimler also owns smart. Although most individuals and fleets own cars, a growing number lease, rent, or simply use a car as an on-demand service. Car sharing has about one million members in the U.S. and the numbers are growing to include many who also own cars. Daimler is ahead of the curve to expand into car sharing.

Car2go started in Austin, Texas, with 200 smart fortwo gasoline cars in this useful point-to-point model. The car2go program is already very successful in the German cities of Ulm and Hamburg, and the Canadian city of Vancouver. More than 45,000 members have used the 1,100 car2go more than 900,000 times. The average duration of a car2go rental is between 15 and 60 minutes and the average range lies between 5 and 10 kilometers.

Its first two cities for electric car sharing are San Diego and Amsterdam, each opening in November 2011 with 300 electric cars each. Both cities currently have networks of hundreds of electric car charging points. By the end of 2012, each city will have over 1,000 charge points. Expansion to at least 40 additional European cities will include a joint venture between Europocar and car2go.

Car Rental and Car Sharing Competition Put 5,000 Electric Cars into Service

The innovative electric car share program gives car2go competitive advantage, but it does face formidable competition. The giant in car sharing is Zipcar that is testing a few electric cars from San Francisco to Philadelphia.

Rental car giant Enterprise has 150 electric cars now available for rental. Many customers will prefer the Nissan LEAFs and Chevrolet Volts that are offered. By the end of 2012, Enterprise expects to be renting at least 1,000 electric cars including business programs for fleets and large multi-tenant complexes. Enterprise has expanded into car sharing with WeCar. Enterprise has a vast fleet of cars that can be rented in one location and left at another.

There is a friendly competition between German headquartered Daimler and French headquartered Autolib. Paris is trying 66 electric city cars in a point-to-point Autolib Blue Cars in a point-to-point car share program. The goal is to have 3,000 of these electric city cars available in Paris by the end of 2012 expanding on 20,000 Velib shared bicycle program now successful in the City of Light.

The race is on to provide us with more convenient choices as we navigate our busy lives. With smart phones and smart apps we can make our best choices during the day of using transit, driving our own cars solo when necessary, and using electric car share to start at one point and finish at another.


Ford and SunPower Simplify Solar Charging of EVs

Ford and SunPower offer a rooftop solar system that will allow Focus Electric owners and other electric car drivers to “Drive Green for Life” by providing renewable energy to offset the electricity used to charge the vehicle. The SunPower rooftop solar system also will be compatible with the C-MAX Energi plug-in hybrid electric vehicle Ford is rolling out in 2012.

This pre-configured solution makes solar charging easy for new customers.  Many of the first 50,000 U.S. buyers of electric cars have been early adopters of solar power and renewable energy. Music legend Jackson Browne lives off-gird and charges his Chevrolet Volt with his own wind and solar power.   Johnson and Johnson installed 1.1MW of SunPower solar covered parking structures that includes 5 Coulomb electric car chargers. The U.S. Marine Corp at Camp Pendleton showed me their solar powered parking structure that charges their 291 electric vehicles. Solar Parking Structures

The 2.5 kilowatt rooftop solar system is comprised of the SunPower® E18 Series solar panels that produce an average of 3,000 kilowatt hours of electricity annually. These high-efficiency solar panels generate approximately 50 percent more electricity than conventional panels and utilize a smaller footprint on the roof. The system was sized to accommodate an electric car owner who drives about 1,000 miles per month.

The complete SunPower solar system is offered at a base price of less than $10,000 after federal tax credits. Local and state rebates, along with other incentives, may drive the system cost down even more, depending on a customer’s location. Included in the purchase is a residential monitoring system, which includes the ability to track the performance of their solar system on the web or through an iPhone application. Affordable financing options for the solar system are available through SunPower.

When Ford customers order their Focus Electric or C-MAX Energi they will have the option of indicating an interest in the SunPower system. SunPower leads the industry with more than 400 dealers in the U.S., and can support the initial Focus Electric roll out in all 19 markets. A participating SunPower dealer who will visit their home to begin the installation process will contact interested Focus Electric customers. Ford also has an agreement with consumer electronics leader Best Buy to offer a 240-volt home charging station for the Focus Electric and future electric vehicle owners.

I was impressed with my test drives of early versions of the Ford Focus Electric, which will challenge the Nissan Leaf. In 2013, NISSAN opens its new Tennessee plant with the ultimate capacity of making 150,000 LEAFs each year. The Ford C-MAX Energi will challenge the Chevrolet Volt’s leadership of plug-in hybrids. Chevrolet will make 65,000 Volts and Opel Amperas next year.

Electrification is an important piece of Ford’s overall product sustainability strategy, which includes the launch of five electrified vehicles in North America by 2012 and in Europe by 2013. Ford launched the Transit Connect Electric small commercial van in 2010 and will launch the all-new Focus Electric later this year. In 2012, these models will be joined in North America by the new C-MAX Hybrid, a second next-generation lithium-ion battery hybrid and C-MAX Energi plug-in hybrid. This diverse range of electrified vehicles allows Ford to meet a variety of consumer driving needs.

Electric car critics and many oil industry executives claim that there will only be coal power charging electric vehicles. In my two years of interviewing electric car owners and fleet managers, I have yet to met someone who only uses coal to power their electric vehicles. Most use zero coal power. Many use 100 percent renewables. One oil giant who does not make the false coal claim is Total, which is buying the majority of SunPower stock. Total sees a billion dollar opportunity to charge cars with renewable energy.