|From: Julius Wong||11/16/2020 7:00:52 PM|
|Tesla joining S&P 500; shares jump 10% (updated)|
Nov. 16, 2020 5:32 PM ET|About: Tesla, Inc. (TSLA)|By: Jason Aycock, SA News Editor
Tesla (NASDAQ: TSLA) has jumped 10% postmarket on heavily awaited word that it's joining the S&P 500 index.
The company will join the index prior to the open on Monday, Dec. 21, coinciding with the quarterly rebalance.
But due to the size of the addition, "S&P Dow Jones Indices is seeking feedback through a consultation to the investment community to determine if Tesla should be added all at once on the rebalance effective date or in two separate tranches ending on the rebalance effective date."
And the company it's replacing will be named later, S&P says.
Updated: With an approximate pro forma weight of about 1.01% in the S&P 500, the Index Committee estimates the funding trade to be $51B, one of the largest in S&P history. "However, TSLA itself is very liquid, and adding the stock at the upcoming December quarterly rebalancing coincides with the expiration of stock options, stock futures, stock-index options, and stock-index futures, which may help facilitate the funding trade," S&P Dow Jones Indexes says.
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|From: Eric||11/17/2020 11:42:15 AM|
| News |
Tesla’s sole ownership of Giga Shanghai is a silver bullet amid China’s anti-combustion engine initiative
By Simon Alvarez
Posted on November 17, 2020
It may seem almost unremarkable today, but the fact that Tesla holds sole ownership of Gigafactory Shanghai is nothing to scoff at. This is especially notable as China implements a strong push against the internal combustion engine, as highlighted by the country’s new rules that make it extremely difficult to establish a factory producing gas-powered cars starting 2021.
In September 2019, a top Chinese industry official announced during an automobile conference that the country was planning on phasing out fossil fuel-powered vehicles. Few details were shared during the time, but recent updates from China show just how serious the initiative would be.
At a press conference on Tuesday, the National Development and Reform Commission, the country’s top economic planner, noted that China will no longer allow new companies that make fossil fuel-powered vehicles to be set up in the country. The new rules, which were published last week, came after the commission announced notable changes to China’s auto industry investment policies earlier this year.
(Credit: Wu Wa/YouTube)
China has taken a very supportive stance for its new energy vehicle segment, which comprises battery-electric, hybrid, and fuel-cell cars. Currently, the country stands as the world’s largest market for electric vehicles, and it has implemented programs that are aimed at discouraging car buyers from purchasing fossil fuel-burning cars. Among these are restrictions for ICE cars in cities to notable subsidies for new energy vehicles. With China’s updated rules in place, even existing carmakers that have already established a presence in the country will find it difficult to expand their manufacturing operations for gas-powered cars. If an automaker wishes to establish an ICE vehicle factory, the company would have to meet several strict requirements.
These include proving that their manufacturing efficiencies are higher than the industry average. Companies that produce ICE cars must also make more new energy vehicles than the industry average. Automakers must spend at least 3% of their revenue on NEV research and development as well, among other requirements.
China’s update sets the bar for carmakers so high that only a few companies are expected to meet it, such as Geely and SAIC, an automaker that is state-owned and based in Shanghai. Both companies currently stand among China’s top automakers, as per data from the China Association of Automobile Manufacturers, an organization that is affiliated with the government.
(Credit: Chen Zhengbao/Shine.cn)
Amidst these developments, Tesla’s Gigafactory Shanghai could effectively ramp without being weighed down by restrictions from the Chinese government. Tesla’s sole ownership of the expansive facility also means that the electric car maker will stand to benefit immensely from the facility’s expansion and growth. This could be a massive edge or even a silver bullet of sorts for Tesla next year when the Made-in-China Model Y begins its rollout.
Tesla may only be an emerging carmaker in China today, but the company has received some notable support from the government over the years. Prior to Gigafactory Shanghai’s groundbreaking event, Tesla was able to secure low-interest loans from local banks without any issues. The bidding process for the land where the China-based factory also proved smooth for Tesla, with the electric car maker strangely being the only company that placed a bid for the site.
Open support for Tesla was also shown by high-ranking government officials such as Chinese Premier Li Keqiang, who personally hosted CEO Elon Musk in the Tower of Violet Light, a site usually reserved for foreign dignitaries, following Gigafactory Shanghai’s groundbreaking ceremony. During their meeting, Li proved optimistic about Tesla’s future in China, at one point even offering Musk a “Chinese Green Card” so that he could pursue his projects in the country.
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|From: Eric||11/17/2020 11:46:49 AM|
| Tesla (TSLA) goes on crazy hiring spree, adds 1,000 sales and delivery people in 2 months |
Nov. 17th 2020 9:35 am ET
Tesla (TSLA) is preparing to ramp up deliveries by adding about 1,000 sales and delivery people in North America in a crazy hiring spree over the last 2 months.
The automaker also changed its strategy and focused on hiring part-time employees.
It was just a little over a year ago that Tesla CEO Elon Musk was talking about shutting down almost all of Tesla’s stores and moving to an online-only sales model.
A few months later, he reversed the strategy and Tesla has been slowly growing its retail presence since then.
Earlier this year, the automaker actually ramped up its sales and delivery presence in several markets as production is increasing and it needs more capacity to support the distribution of higher volumes of vehicles.
Now sources familiar with the matter told Electrek that Tesla went on a hiring spree and hired about 1,000 new people in sales and delivery positions across North America in just two months.
These new hires are coming just in time as Tesla is preparing to try to deliver a record number of vehicles in the fourth quarter to attempt to reach its goal of delivering 500,000 vehicles in 2020.
Furthermore, sources familiar with the matter told Electrek that Tesla employed a new strategy and focused on hiring part-time sales and delivery workers.
This is a cost-saving initiative since part-time employees have fewer benefits and Tesla is also not supplying them with laptops and cellphones.
Tesla is also putting in place a path for those workers to become full-time sales and delivery employees at the company — resulting in an interesting trial period for part-time employees and giving Tesla the opportunity to move the highest performing workers to full-time roles within the organization.
It’s crazy to think that it was just over a year ago that Elon said that Tesla would close most of its stores.
Now, in fact, Tesla actually added almost 100 new stores and service centers in the last year and hired several thousand more sales and delivery workers — now including 1,000 in the last 2 months alone in North America.
I think he underestimated the importance of a salesforce in the auto industry at the time and even though most people buy Tesla vehicles online, most buyers still like to ask questions and get test drives.
You need staff to manage that.
This new part-time strategy is smart. They get a bigger and cheaper salesforce during delivery rushes and then can promote those who perform best. It could pay off into the next year.
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|From: Ms. Baby Boomer||11/17/2020 10:19:36 PM|
|When Tesla Joins the S&P 500, You Know It’s Game Over...|
(Bloomberg Opinion) -- In an anecdote often attributed to President John F. Kennedy’s father, the moment he knew to get out of the 1920s stock market boom was when he started receiving share tips from his shoeshine boy.
You can make a similar argument about the moment that leading equity indexes finally give their blessing to an up-and-coming stock. The latest and most dramatic instance of that will happen next month, when the S&P 500 will admit Tesla Inc. through its club doors for the first time.
Take Yahoo Inc. The archetypal dotcom business found its way into America’s prime share index in December 1999, just four months before a collapse in internet stocks that took the U.S. more than a decade to recover from. New admissions in the mid-2000s were rich with real estate plays such as CBRE Group Inc., Boston Properties Inc., and Kimco Realty Corp. Those companies were then hammered by the subprime and 2008 financial crises. Is this time really going to be any different?
To be sure, it looks like Tesla is on more solid footing than two years ago, when regulators were lobbing fraud charges against Elon Musk and the company was, in his words, “single-digit weeks” away from bankruptcy. Its elevation to the S&P 500 had been predicted ever since second-quarter results chalked up a fourth consecutive period of profit, passing one crucial criterion that keeps a lot of startups out of the index.
Looked at from the more exacting perspective of operating cash, it’s doing even better. The $2.4 billion inflow in the third quarter alone was more than total operating cash in the decade through September 2019. The auto industry as a whole seems to be performing remarkably well in the grip of Covid-19, with the S&P’s automobile and parts sub-index Monday hitting its highest level in more than two years.
Tesla is already the 11th-largest company by market capitalization on U.S. exchanges, worth about as much as the world's three biggest carmakers Toyota Motor Corp., Volkswagen AG and General Motors Co. put together. Casual investors are likely to see their index-tracking funds turn them into indirect Tesla shareholders whether they like it or not. So what’s not to like?
The lingering question is around valuation. Tesla is past the point where it’s at imminent risk of demise, but it’s still very hard to justify the price put on the stock. Returns on equity are only just pulling even with the broader automobiles sub-index. Even analyst estimates that they’ll rise north of 20% over the coming years will only bring them in line with what were, until recently, considered normal levels for an industry that’s been out of favor with investors for years.
That sort of pedestrian financial performance is hard to square with Tesla’s eye-wateringly expensive stock. The median price of S&P 500 constituents is 20.89 times blended forward 12-month earnings. Tesla’s price-earnings ratio is 113, which would be enough to give it the richest rating on the index after Under Armour Inc., Boeing Co., and SBA Communications Corp. Comparing forward Ebitda to enterprise value, just six companies have higher valuations than Tesla’s 49.51 times multiple.
It’s very hard to see how Tesla will be able to justify those valuations in the long term. That’s the case even if you agree with the most bullish analysts and assume the company will be producing about $10 billion a year of net income by 2022 or 2023, compared with $556 million over the past 12 months. On those numbers, a 20 times price-earnings multiple would produce a business worth not much more than half of Tesla’s current $387 billion market cap.
That’s the true lesson for newcomers to the big indexes. For every Yahoo or AOL Inc. that turns into a parable of market excess, there’s a Kimco or CBRE that survives but never recaptures the magic that propelled it into the limelight. Yahoo’s 1999 hype ultimately fell victim to the better search technology being developed by a then little-known startup called Google. The race to dominate electric vehicles over the coming decade will scarcely be less competitive....
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|From: Julius Wong||11/18/2020 8:33:31 AM|
|Tesla higher after Morgan Stanley points to huge 'internet-of-cars' upside|
Nov. 18, 2020 7:47 AM ET|About: Tesla, Inc. (TSLA)|By: Clark Schultz, SA News Editor
Morgan Stanley upgrades Tesla (NASDAQ: TSLA) to an Overweight rating from Equal-weight.
That means analyst Adam Jonas has something to say this morning.
"Tesla is on the verge of a profound model shift from selling cars to generating high margin, recurring software and services revenue."
"Tesla has continued to develop its services/platform business to a level where we feel that it is appropriate for investors to consider to change how they model the company’s revenue and profit streams."
"The internet-of-cars opportunity is real and, in our opinion, is a prerequisite to unlock further upside to the stock."
Jonas math: Tesla auto is worth $254 a share, Tesla energy is worth $12 a share, the insurance business is worth $15 a share, a potential mobility/ride-sharing business is worth $38 a share, the software/network services adds up to $164 a share and Tesla's 3rd party supplier business is potentially worth $58 a share.
Jonas and team think that to value Tesla on car sales alone ignores the multiple businesses embedded within the company, as well as the long- term value creation arising from monetizing Tesla's core strengths, which are driven by best in class software and ancillary services.
The new Morgan Stanley price target on Tesla is $540 vs. $360 prior. Wall Street in general is a bit skittish on Tesla due to valuation.
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|From: Eric||11/18/2020 1:07:58 PM|
| Tesla (TSLA) starts hiring for its first full-scale battery cell factory |
Nov. 18th 2020 1:01 pm ET
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Tesla is starting to hire leadership positions for its first full-scale battery cell factory at Gigafactory Berlin in Germany.
At its ‘ Battery Day‘ earlier this year, Tesla unveiled its own battery cell, the Tesla 4680, and explained its plan to produce its own battery cells for the first time.
Tesla is currently ramping up production at its pilot production line in Fremont.
As we previously reported, Tesla has designed the entire production system called Roadrunner in-house and it is currently using the production line to improve on its machinery with the goal to deploy a full-scale factory using the production system.
Tesla is believed to be planning to deploy these full-scale battery cell factories at its current Gigafactory projects in Berlin, Texas, and China.
Based on how construction has been progressing, it looks like the battery factory in Berlin is going to be the first one ready.
Now Tesla is looking to hire people to lead the battery cell manufacturing effort in Berlin.
Drew Baglino, SVP of Powertrain and Energy Engineering at Tesla and the defacto CTO of the company since JB Straubel left, posted on LinkedIn about the new hiring effort:
“Accelerate the transition to sustainable energy by joining Tesla’s cell manufacturing effort in Berlin, recruiting for leadership positions now.”
Here are the three roles that Tesla is looking to fill right now:
As we recently reported, CEO Elon Musk went to Tesla Gigafactory Berlin to boost the hiring effort and even interviewed candidates personally.
However, he was specifically hiring for his “25 guns” team, a 25-person Tesla engineering task force to fix problems at Gigafactory Berlin.
Tesla hasn’t provided a clear timeline for the start of battery production at Gigafactory Berlin, but it is expected to start around the same time as vehicle production, which they officially aim to achieve in July 2021. That’s because the automaker plans to use its new structural battery pack technology to produce the Model Y in Berlin and that requires the new 4680 battery cells.
However, Tesla said that it will support the production of the European Model Y with battery cell production at its pilot production facility.
While it’s officially only a pilot production facility to tune its battery cell manufacturing system for bigger factories, like the one in Berlin, Tesla still aims to have an annual production capacity of 10 GWh at the facility.
That’s more than most battery factories can produce today and should be very useful early in the production ramp of Tesla’s battery cells and Model Y in Berlin.
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