Posts Tagged ‘Tesla motors’
One day prior to going public, BrightSource Energy pulled their IPO citing challenging market conditions even though they priced in the middle of their range at $22. The last time I looked, the S&P 500 was up almost 8% year to date. It sounds like the market is challenging for solar companies that have executional risk. Obviously this is a big disappointment.
Over the last year, we have sharply reduced our investments in Greentech recognizing that although we have done well with Tesla Motors and SolarCity, we fundamentally don’t have the in-house expertise and experience to make large investments in this space. Instead we are turning our attention much more to Consumer Internet where we have the capability to make educated bets.
I attended the Tesla Model X launch last night at the SpaceX headquarters in Hawthorne, and liked the car so much that I made my fourth Tesla reservation. Why? The Tesla Model X is a SUV that combines the practicality of the minivan, the cool of the SUV, and the performance of a sports car. The Model X appears to seat 7 adults comfortably, without requiring any movement of the middle row to access the back row of seats partly because of the new fangled falcon retractible doors. The luggage compartment in the front and the back of the car is substantial, and I have a picture of two ladies sitting in the front of the car which is smaller than the back. Acceleration is projected to be 4.4 seconds from 0 to 60 mph which is clearly in the range of a high performance sports car.
At the end of the presentation by Elon Musk, there was an opportunity to make a $5,000 or $40,000 refundable reservation before reservations became available on Friday at noon to the general public. I had to get in line to make a reservation and probably had at least 30 people in front of me. I suspect this will be the fastest selling car in the Tesla model line-up, and the stock price should react favorable, but the stock was down almost 10% at one point this morning. I bought some Tesla calls and wrote some puts this morning and suspect that we should have a near term announcement that reservations for the Model X were larger than expected.
Update: I received reservation sequence number #16 for the Tesla X.
Last Saturday, I had the opportunity to visit the Tesla Motors factory in Fremont, California, and ride in the Tesla Model S Beta sedan. The car looks fantastic, but the crowning moment must have been when Elon Musk announced that a Sport version would be available that was capable of 0-60 acceleration in less than 4.5 seconds. When you have a sedan that has up to a 300 mile range, a luxuriously appointed interior, and supercar acceleration, I think you have a winner.
The Tesla Roadster is fantastic in many respects, but the interior seems rather cheap and the fit quality is not what you expect in a $100,000-$170,000 sports car. In contrast the Tesla Model S is luxuriously appointed in leather and wood, but the amazing 17 inch infotainment system is heads and shoulders above anything else I have seen. Apparently Tesla has developed their own OS, and hopes to open the platform to developers to allow Tesla owners to customize the functionality on their dashboard.
The exterior of the car looks great, and has some interesting styling details. The door handles are flush with the car’s body and are supposed to automatically raise themselves when you approach the car with your key fob. This was not working during the test, but looks very cool in practice. In addition, there is no visible place to charge the car. Apparently this is hidden under one of the tail lights, and it opens automatically when you are in range of a charger.
I’m going to order a second Tesla Model S!
We invested in Fisker Automotive in October of 2009 and then more than doubled our investment in Q1 of 2010. Fast forward 18 months and the first Karma is just about to roll off the assembly line in Finland.
There are three key reasons why we believe Fisker will be a hit:
1. Technology approach – let’s face it, who wouldn’t love a pure electric vehicle like Tesla. The thought of plugging-in your vehicle at night just as how you plug-in your smart phone is easy enough to grasp. Factor in time and money savings and you’ve got a clear winner. However, we do live in a world with less-than-sufficient charging infrastructure and at a time when fast, super-charging is flat out not practical (I don’t know anyone who would be willing to wait for hours at the charging station).
In comes Fisker’s plug-in hybrid. Just exactly what is a plug-in hybrid? Forget the Prius and think Tesla + gas tank. The Karma will travel the first 50 miles on pure electric and when the battery runs out, the gas engine kicks in. It’s well documented that 80% of Americans travel less than 50 miles per day so this means that for those lucky folks, filling-up at a gas station may soon become a thing of the past. Here’s the kicker – when Fisker owners decide to take a long road trip, they won’t have to experience range anxiety as they can simply fill up at any gas station around the world.
This practical approach to addressing a real market need is why we believed in the big sales numbers Fisker has thrown out. As a country, we average 1.17 cars per licensed driver. We believe Fisker’s energy, time, and operating cost savings could make its car the primary vehicle for a large number of drivers. To put things in perspective, Tesla has reportedly sold a total of 1,650 vehicles since 2008 (~3 years) whereas Fisker has hinted they will deliver 6,000-7,000 vehicles in the last five months of 2011. I think the market has spoken.
2. Henrik Fisker – we love Elon Musk (the founder of Tesla). How can you not love the guy who gave us Paypal, launched the first electric car company, and is working on Space X! Henrik Fisker though, is quite a super-star in the auto world himself. Henrik worked at BMW for years, conceptualized the BMW Z8 roadster, and is guy who designed the gorgeous Astin Martin DB9. While Elon is an awesome entrepreneur, Henrik is an auto industry veteran with real deep knowledge in the space. We love domain expertise.
3. Dealer network – while Tesla took the Apple store approach by setting up their own retail stores, Fisker has been working hard on signing up a global network of dealerships for the last few years. It’s a bit early to say which is the right approach, but we do believe there is value in the decades of personal relationships that has been built by people in Fiskers’ dealer network. After all, we are not selling $300 iPhones and those friendly calls to past customers should & could translate into lots of orders.
Time will tell how Fisker will do – but we sure believe the stars are aligned and good things are on the horizon.
(I have a Karma on order and will share my experience after I receive the car in September)
We finally divested the last of our stake in Tesla Motors. Although we had a fantastic IRR (250%+) and multiple (4.2+) on this investment, it was hard to sell the stock and move on. Since we do not have Limited Partners (LPs), we did not have to sell or transfer shares to our LPs 180 days after the lockup expired. Instead, we sold covered calls for income after the lockup expired and sold the stock gradually over six months.
I admit that there was a bit of an emotional attachment, and I remain a huge fan of Tesla Motors. I own a Tesla Roadster S and have a reservation for a Signature Tesla Model S. But rather than wait for Morgan Stanley’s $70 target, we’ll redeploy the proceeds into other investments that have a higher IRR potential over the next 12-18 months.
Several years ago, I went to a Google event where there were a collection of electric cars on display. I remember fondly looking at the Tesla, and hoping that some day I would be able to afford the roadster. Several years later, I learned that Tesla had opened a showroom and repair facility in Los Angeles, and I went down to test drive a Tesla roadster and ultimately bought #601.
After a few weeks of car ownership, I began to tell people that I was a non-equity investor in Tesla. I had bought a car that cost three times the similar looking Lotus Elise, and I wanted Tesla Motors to succeed, but I didn’t stand to benefit if the company became successful. Finally, I got tired of saying that I was a non-equity investor in Tesla, and began to research how I could buy shares in Tesla Motors which was then a privately held company. I found that were new marketplaces, like Sharespost and Secondmarket, launched where buyers and sellers could buy and sell private company shares, and I ended up buying 0.5% of the company from a prior co-founder of Tesla Motors.
Over the next 18 months, I purchased shares in 20 private companies ranging from Linkedin to SolarCity. An interest in owning Tesla stock had become something more than a hobby. Meanwhile Harry had been doing much of the same, and many of our portfolio companies overlapped. And so in March 2011, we decided to join forces again, combine resources and invest in great start-ups and mature IPO candidates.