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> That would surely imply a _lower_ valuation? You wouldn't expect lasting high margins in that business, whereas it is at least _possible_ (if not common) in t

> That would surely imply a _lower_ valuation? You wouldn't expect lasting high margins in that business, whereas it is at least _possible_ (if not common) in the auto industry. I think that's one difference here. I do expect lasting high margins (car sales and services). I mentioned this in another comment, but being able to sell passes for autopilot trips for $100 or something are going to be very lucrative. Think about something like the Tesla supercharger network. Ok now that Tesla is also an energy supplier and uses software to find good rates, stores energy in batteries, etc, they'll better be able to get the best price on energy. You can sell excess energy back into the grid via Tesla software with your solar roof, for example, or charge your Tesla even cheaper than competitors might using a traditional energy grid. These are just possibilities, but I see the end result being an extremely profitable business with great margins. My only area of concern right now is that their auto service is abysmal. They charge a premium price for a car, but boy it's nowhere near the service you get with Mercedes or BMW. Lots of "well that's in-spec" types of comments from service teams. Lack of loaner cars at times, just all around not great service (though there are exceptions) that I've seen first-hand and anecdotally. Even the r/Tesla subreddit will tell you it's bad.

rsynnott 6y ago
> Ok now that Tesla is also an energy supplier and uses software to find good rates, stores energy in batteries, etc, they'll better be able to get the best price on energy. You can sell excess energy back into the grid via Tesla software with your solar roof, for example Okay, so assuming the grid will support this, one would expect other energy companies to buy solar power, from any domestic solar panels (this already happens in some markets). So why would one buy Tesla panels, which were tied to one buyer, who could use that tie-in to get lower prices (if that were legal; electricity markets are heavily regulated in most countries and I suspect this sort of tie-in would ultimately not be legal). I can see two scenarios here (assuming a developed grid allowing this sort of feed-in). (a) Tesla panel owners can sell to any energy company, like anyone else. Tesla can thus sell their panels for the same as anyone else (ie, pretty low margins),but they have no advantage as an energy purchaser. (b) Tesla panels are tied to Tesla as an energy purchaser, whereas generic panel owners can sell to anyone. Tesla gets cheaper power, but their panels are now an inferior product and they must sell them at negative margins to get them on roofs. Any cleverness about domestic grid pricing will likely have to be enabled by national grid controllers, and accessible to all energy companies. While I do think it will come, I would doubt that there's room for anyone to have a monopoly in most markets, and I think it may actually be a hard sell to consumers, because traditionally consumers _hate_ variable pricing, even if it's ultimately to their benefit, for psychological reasons. RE the supercharger network, I suspect that this is at best a short-term advantage. It's already a tiny part of the high-speed charger infrastructure in many countries. It probably is a clear advantage for now in the US, but that shouldn't be expected to be a long-lasting situation.
- ericmay 6y ago
  > Any cleverness about domestic grid pricing will likely have to be enabled by national grid controllers, and accessible to all energy companies. While I do think it will come, I would doubt that there's room for anyone to have a monopoly in most markets, and I think it may actually be a hard sell to consumers, because traditionally consumers _hate_ variable pricing, even if it's ultimately to their benefit, for psychological reasons. Using something like Powerwall means you can still have lower rates with variable pricing. When most are connected to the traditional energy grid running their AC units during the peak hours and getting charged peak rates, you can draw from Powerwall where you've stored energy either over time or potentially over night when rates are cheaper. Automatically. You can also eventually probably see real-time electric rates. With software, Telsa could potentially bid on electricity and find reduced rates for you. There's a lot of possibilities here. Idk what the future will hold, but do I want to bet on Duke Energy and BMW or do I want to bet on Tesla? I'm probably betting on Tesla based on what I've seen as part of my portfolio.
  - rsynnott 6y ago
    Sure, but again Tesla doesn't have a monopoly on battery storage, and battery storage would be expected to become pretty low margin. I would think that Tesla's best avenue for lasting high margins would actually be the cars; other companies have managed that before, especially in the luxury/semi-luxury market (BMW's margins are decent, say). But they'd really need to capture the whole high end market, if not more high end market than actually exists, to justify their prices.
    - ericmay 6y ago
      Well, you don't need a monopoly on battery storage do you? Besides the fact that no other company has demonstrated the ability to actually install a battery system in the way that Tesla has, the monopoly comes with the total integration of the hardware, services, AND software to effectively allocate prices. I don't see any other company really competing in this space. Are there any that you can think of? > But they'd really need to capture the whole high end market, if not more high end market than actually exists, to justify their prices. Why? They can probably effectively sell Tesla Model 3 style sedans at BMW or better margins around $35,000. I don't think they need to capture the high-end market anymore than Apple does. Sure, insert famous person here uses an iPhone, but so do I and so does my grandma.

rsynnott 6y ago

> Ok now that Tesla is also an energy supplier and uses software to find good rates, stores energy in batteries, etc, they'll better be able to get the best price on energy. You can sell excess energy back into the grid via Tesla software with your solar roof, for example Okay, so assuming the grid will support this, one would expect other energy companies to buy solar power, from any domestic solar panels (this already happens in some markets). So why would one buy Tesla panels, which were tied to one buyer, who could use that tie-in to get lower prices (if that were legal; electricity markets are heavily regulated in most countries and I suspect this sort of tie-in would ultimately not be legal). I can see two scenarios here (assuming a developed grid allowing this sort of feed-in). (a) Tesla panel owners can sell to any energy company, like anyone else. Tesla can thus sell their panels for the same as anyone else (ie, pretty low margins),but they have no advantage as an energy purchaser. (b) Tesla panels are tied to Tesla as an energy purchaser, whereas generic panel owners can sell to anyone. Tesla gets cheaper power, but their panels are now an inferior product and they must sell them at negative margins to get them on roofs. Any cleverness about domestic grid pricing will likely have to be enabled by national grid controllers, and accessible to all energy companies. While I do think it will come, I would doubt that there's room for anyone to have a monopoly in most markets, and I think it may actually be a hard sell to consumers, because traditionally consumers _hate_ variable pricing, even if it's ultimately to their benefit, for psychological reasons. RE the supercharger network, I suspect that this is at best a short-term advantage. It's already a tiny part of the high-speed charger infrastructure in many countries. It probably is a clear advantage for now in the US, but that shouldn't be expected to be a long-lasting situation.

ericmay 6y ago
> Any cleverness about domestic grid pricing will likely have to be enabled by national grid controllers, and accessible to all energy companies. While I do think it will come, I would doubt that there's room for anyone to have a monopoly in most markets, and I think it may actually be a hard sell to consumers, because traditionally consumers _hate_ variable pricing, even if it's ultimately to their benefit, for psychological reasons. Using something like Powerwall means you can still have lower rates with variable pricing. When most are connected to the traditional energy grid running their AC units during the peak hours and getting charged peak rates, you can draw from Powerwall where you've stored energy either over time or potentially over night when rates are cheaper. Automatically. You can also eventually probably see real-time electric rates. With software, Telsa could potentially bid on electricity and find reduced rates for you. There's a lot of possibilities here. Idk what the future will hold, but do I want to bet on Duke Energy and BMW or do I want to bet on Tesla? I'm probably betting on Tesla based on what I've seen as part of my portfolio.
- rsynnott 6y ago
  Sure, but again Tesla doesn't have a monopoly on battery storage, and battery storage would be expected to become pretty low margin. I would think that Tesla's best avenue for lasting high margins would actually be the cars; other companies have managed that before, especially in the luxury/semi-luxury market (BMW's margins are decent, say). But they'd really need to capture the whole high end market, if not more high end market than actually exists, to justify their prices.
  - ericmay 6y ago
    Well, you don't need a monopoly on battery storage do you? Besides the fact that no other company has demonstrated the ability to actually install a battery system in the way that Tesla has, the monopoly comes with the total integration of the hardware, services, AND software to effectively allocate prices. I don't see any other company really competing in this space. Are there any that you can think of? > But they'd really need to capture the whole high end market, if not more high end market than actually exists, to justify their prices. Why? They can probably effectively sell Tesla Model 3 style sedans at BMW or better margins around $35,000. I don't think they need to capture the high-end market anymore than Apple does. Sure, insert famous person here uses an iPhone, but so do I and so does my grandma.