I received this forwarded email with a concise comment from a prominent journalist at a major news organization:
_______________________________________________________________________________________
WTF?
From: Khobi Brooklyn [mailto:XXXXXXXXX@teslamotors.com]
Sent: Wednesday, September 01, 2010 12:21 PM
To: Khobi Brooklyn
Subject: Tesla statement on GM's attempt to trademark "range anxiety"
Statement in response to GM’s attempt to trademark the term, “range anxiety” from Tesla VP of Communications, Ricardo Reyes:
By all means, GM can have “range anxiety.” To Roadster owners, the term is as irrelevant as “gas stop” or “smog check.” We are, however, looking into trademarking “Tesla grin.”
Khobi Brooklyn I TESLA MOTORS
office: 650 XXX XXXX I cell: 415 XXX XXXX
www.teslamotors.com
Wednesday, September 01, 2010
Monday, August 30, 2010
NewsBasis - A Must-Have Tool for Cleantech Communicators and Journalists
I recently launched NewsBasis, a communications platform for journalists and companies. Using NewsBasis, companies can embed their points of view directly in online news articles. Journalists using newsbasis will automatically see your point of view if they happen to read that article online. They can also find your point of view if they go to NewsBasis and search for keywords that match your point of view.
In addition, you can also create profiles for yourself, your company, or people on your staff on the NewsBasis system so journalists looking for expert sources on topics can easily find you. There has already been a good amount of cleantech related requests posted on the system by journalists, and each one could represent a media opportunity for you or a chance to build good relationships.
Why is this important for cleantech communicators? Because the origin of the company and the service it provides comes directly from some of the challenges I experienced managing communications in the cleantech world while I was leading sales and marketing for Tesla Motors.
Cleantech is a complex field that is evolving rapidly. The social, political and technological issues that corporate communicators and reporters deal with are very complex and what might seem like subtle nuances make a big difference. Anyone working in public relations on the corporate or agency side has experienced this. Journalists asked to cover a cleantech story that is outside their usual beat find it difficult to connect with the most relevant experts.
In my case, some of the challenges were explaining the details of lithium ion battery technology, and how Tesla’s unique approach to battery pack development using commodity cells was advantageous. Similarly, I had to work hard to counter misconceptions that existed about the safety of lithium ion cells, or the perception that the electric vehicles were just as polluting as gas vehicles because we produce electricity mostly with coal (a meme that persists to this day.)
Many of the articles I would read online contained some of these misperceptions, or put forth a point of view that I wish I could have influenced. Once these articles were published, other journalists would often link to them or continue to perpetuate the issue. Journalists don’t do this out of malice – its just that the issues are complex and they are under great pressure to publish often.
Cleantech communicators know what I am talking about. Silver Springs Networks, General Electric and other smart grid folks have to manage the “smart meters raise electric bills” issue. Solazyme has to battle the notion that algal fuels don’t scale because they are produced in ponds and require sunlight. Better Place has to educate people to understand why their model makes more sense than buying the battery. Coda has to continuously explain why not all battery packs are the same and why “100 miles range” should not be taken at face value.
These are all complex communications issues that are challenging to manage. So I developed a service that I think will help solve some of the problems. Using NewsBasis, you can attach your point of view to any article online to provide an alternate perspective, or clarify misunderstandings. These points of view are visible to journalists and other users who subscribe to NewsBasis when they visit that web page or when they search on the NewsBasis website for related issues. By embedding your point of view on the source article itself, you can manage the issue right where journalists will encounter it as they do research for the article they are writing. If they want to know more they can see your contact information easily.
Merely by establishing your profile on the system, we will automatically route relevant requests to you when they are posted to the system. For example, if you are a small company that specializes in advanced battery cathodes, fill out your profile and when a journalist needs to talk to someone with that niche expertise, you will automatically be notified by email. You don’t need to continually check the system or review requests.
It’s only natural that a service born of the challenges in cleantech communications would see early adoption from cleantech companies and reporters, so I recommend you go to http://newsbasis.com and signup. It is completely free during our beta period.
In addition, you can also create profiles for yourself, your company, or people on your staff on the NewsBasis system so journalists looking for expert sources on topics can easily find you. There has already been a good amount of cleantech related requests posted on the system by journalists, and each one could represent a media opportunity for you or a chance to build good relationships.
Why is this important for cleantech communicators? Because the origin of the company and the service it provides comes directly from some of the challenges I experienced managing communications in the cleantech world while I was leading sales and marketing for Tesla Motors.
Cleantech is a complex field that is evolving rapidly. The social, political and technological issues that corporate communicators and reporters deal with are very complex and what might seem like subtle nuances make a big difference. Anyone working in public relations on the corporate or agency side has experienced this. Journalists asked to cover a cleantech story that is outside their usual beat find it difficult to connect with the most relevant experts.
In my case, some of the challenges were explaining the details of lithium ion battery technology, and how Tesla’s unique approach to battery pack development using commodity cells was advantageous. Similarly, I had to work hard to counter misconceptions that existed about the safety of lithium ion cells, or the perception that the electric vehicles were just as polluting as gas vehicles because we produce electricity mostly with coal (a meme that persists to this day.)
Many of the articles I would read online contained some of these misperceptions, or put forth a point of view that I wish I could have influenced. Once these articles were published, other journalists would often link to them or continue to perpetuate the issue. Journalists don’t do this out of malice – its just that the issues are complex and they are under great pressure to publish often.
Cleantech communicators know what I am talking about. Silver Springs Networks, General Electric and other smart grid folks have to manage the “smart meters raise electric bills” issue. Solazyme has to battle the notion that algal fuels don’t scale because they are produced in ponds and require sunlight. Better Place has to educate people to understand why their model makes more sense than buying the battery. Coda has to continuously explain why not all battery packs are the same and why “100 miles range” should not be taken at face value.
These are all complex communications issues that are challenging to manage. So I developed a service that I think will help solve some of the problems. Using NewsBasis, you can attach your point of view to any article online to provide an alternate perspective, or clarify misunderstandings. These points of view are visible to journalists and other users who subscribe to NewsBasis when they visit that web page or when they search on the NewsBasis website for related issues. By embedding your point of view on the source article itself, you can manage the issue right where journalists will encounter it as they do research for the article they are writing. If they want to know more they can see your contact information easily.
Merely by establishing your profile on the system, we will automatically route relevant requests to you when they are posted to the system. For example, if you are a small company that specializes in advanced battery cathodes, fill out your profile and when a journalist needs to talk to someone with that niche expertise, you will automatically be notified by email. You don’t need to continually check the system or review requests.
It’s only natural that a service born of the challenges in cleantech communications would see early adoption from cleantech companies and reporters, so I recommend you go to http://newsbasis.com and signup. It is completely free during our beta period.
Tuesday, August 10, 2010
Morgan Stanley Contradicts Tesla
Morgan Stanley's first coverage report was a fascinating read last night given Tesla's rebuttal to my analysis of the ZEV credit market and the potential impact to EV startups. It also highlights Tesla's bizarre PR approach to critical journalism.
Morgan's analysis related to the ZEV credits reads like my original reporting in Wired verbatim:
"In 2009, ZEV credits sales totaled $8.2 million (7.3% of total sales and 86% of gross profit). For 2010, we forecast ZEV credit revenues of only $2.5 million as more sales are outside the US.
For the Model S, we forecast ZEV credit revenues of $5,000 per vehicle but recognize that there is uncertainty as Tesla has not finalized contracts to sell ZEV credits for the Model S. In our 2014 base case, ZEV credits account for 2.8% of revenue, 13.2% of gross profit, and 57% of operating profit. Because ZEV credit sales are nearly 100% margin, Tesla could have an EBIT margin advantage of 1.5–3.0% compared to traditional automakers."
and a little later they confirm it is Tesla who provided this guidance:
"Our forecast of $5,000 per Model S sold in the US is based on management’s guidance. If Tesla cannot sell ZEV credits, our EBIT margin forecast would fall an average of 2.4% per year."
If you read Tesla's rebuttal to my original post, where I sourced a morgan stanley analysis from the roadshow that I saw myself, they say that they never said the $5,000 figure, and imply that their profit margins are not dependent on ZEV credit numbers. This flatly contradicts what Morgan Stanley (one of their underwriters) just released in a report.
The one thing I appear to have gotten wrong in my reporting is my failure to point out that the ZEV credits apply only to about half of their projected volume, but on the other hand I used Tesla's own estimates for operating margin which are optimistic in drawing my conclusions. Morgan stanley believes their operating margins will be about half of what they project, so the bottom line potential earnings impact if ZEV credit value goes to zero is still 50% in the Morgan Stanley scenario.
All of this highlights what I consider a compulsive desire for Tesla management to rebut anything said in the press that can be interpreted as critical or unfavorable. The fact that they would do so on a day when all of the analysts who they have been working closely with came out with reports that reinforce my original point is mystifying.
My guess is that their rebuttal post will do more harm than good as they find themselves having to explain the inconsistency to the analysts they have been working closely with to provide "guidance" on financial projections. The easy solution to this would be for Tesla management to be transparent about what they believe the market for ZEV credits will look like in the 2012-2017 timeframe so the various analysts covering Tesla can reflect this in their models.
Morgan's analysis related to the ZEV credits reads like my original reporting in Wired verbatim:
"In 2009, ZEV credits sales totaled $8.2 million (7.3% of total sales and 86% of gross profit). For 2010, we forecast ZEV credit revenues of only $2.5 million as more sales are outside the US.
For the Model S, we forecast ZEV credit revenues of $5,000 per vehicle but recognize that there is uncertainty as Tesla has not finalized contracts to sell ZEV credits for the Model S. In our 2014 base case, ZEV credits account for 2.8% of revenue, 13.2% of gross profit, and 57% of operating profit. Because ZEV credit sales are nearly 100% margin, Tesla could have an EBIT margin advantage of 1.5–3.0% compared to traditional automakers."
and a little later they confirm it is Tesla who provided this guidance:
"Our forecast of $5,000 per Model S sold in the US is based on management’s guidance. If Tesla cannot sell ZEV credits, our EBIT margin forecast would fall an average of 2.4% per year."
If you read Tesla's rebuttal to my original post, where I sourced a morgan stanley analysis from the roadshow that I saw myself, they say that they never said the $5,000 figure, and imply that their profit margins are not dependent on ZEV credit numbers. This flatly contradicts what Morgan Stanley (one of their underwriters) just released in a report.
The one thing I appear to have gotten wrong in my reporting is my failure to point out that the ZEV credits apply only to about half of their projected volume, but on the other hand I used Tesla's own estimates for operating margin which are optimistic in drawing my conclusions. Morgan stanley believes their operating margins will be about half of what they project, so the bottom line potential earnings impact if ZEV credit value goes to zero is still 50% in the Morgan Stanley scenario.
All of this highlights what I consider a compulsive desire for Tesla management to rebut anything said in the press that can be interpreted as critical or unfavorable. The fact that they would do so on a day when all of the analysts who they have been working closely with came out with reports that reinforce my original point is mystifying.
My guess is that their rebuttal post will do more harm than good as they find themselves having to explain the inconsistency to the analysts they have been working closely with to provide "guidance" on financial projections. The easy solution to this would be for Tesla management to be transparent about what they believe the market for ZEV credits will look like in the 2012-2017 timeframe so the various analysts covering Tesla can reflect this in their models.
Monday, August 09, 2010
Tesla's rebuttal to my ZEV credit analysis
Here is a link to Tesla's rebuttal to my ZEV credit article, where I point out that the value of ZEV credits will likely crash and that may present additional chalenges to profit margins.
Tesla has a record of being combative with journalists who offer criticism or unfavorable opinions, so I was pleasantly surprised that there were no obvious ad hominem attacks in the rebuttal. Actually I was disappointed.
Its a long rebuttal, but I can sum up their argument for you:
1) We didn't say what your source heard us say on a conference call (which was corroborated by what another source told me)
2) Your analysis of our projected gross margins (which came from theTesla roadshow) is wrong but we can't say why its wrong because we don't make forward looking statements. But you're wrong.
3) You were wrong in your analysis because we are only going to sell a fraction of our cars in ZEV states, which means the $5,000 per car figure (which we never said) is even less attainable than you thought (you douchebag.)
So I ran it by my sources and one of them said the following, which I think sums it up quite nicely: "So if I hear it right, they are willing to talk in general terms that could be misleading as long as no one questions the assumptions. And then if someone does they will defend themselves vehemently?"
Tesla has a record of being combative with journalists who offer criticism or unfavorable opinions, so I was pleasantly surprised that there were no obvious ad hominem attacks in the rebuttal. Actually I was disappointed.
Its a long rebuttal, but I can sum up their argument for you:
1) We didn't say what your source heard us say on a conference call (which was corroborated by what another source told me)
2) Your analysis of our projected gross margins (which came from theTesla roadshow) is wrong but we can't say why its wrong because we don't make forward looking statements. But you're wrong.
3) You were wrong in your analysis because we are only going to sell a fraction of our cars in ZEV states, which means the $5,000 per car figure (which we never said) is even less attainable than you thought (you douchebag.)
So I ran it by my sources and one of them said the following, which I think sums it up quite nicely: "So if I hear it right, they are willing to talk in general terms that could be misleading as long as no one questions the assumptions. And then if someone does they will defend themselves vehemently?"
Monday, August 02, 2010
[Wired] Tesla Subsidy Vanishing Amid Electric Vehicle Boom
Here is a link to my latest article on Wired.com.
Its always tricky to write about anything related to the CARB ZEV mandate, since it is probably the most opaque and confusing reg in the world (ok, maybe that is hyperbole, but it's pretty accurate.)
In the past year I've spoken to dozens of analysts and investors and not a one had a good understanding of the reg. Ironically Automotive News ran an article today that gets it all wrong too (sub req'd)
Its always tricky to write about anything related to the CARB ZEV mandate, since it is probably the most opaque and confusing reg in the world (ok, maybe that is hyperbole, but it's pretty accurate.)
In the past year I've spoken to dozens of analysts and investors and not a one had a good understanding of the reg. Ironically Automotive News ran an article today that gets it all wrong too (sub req'd)
Thursday, July 29, 2010
GM can't catch a break
Maybe I have a soft spot for GM because everybody seems to like to shit on them and they are actually great folks and great engineers who have worked hard and transparently to deliver a very unique technology to the market when they said they would.
Granted that I would have like to see them be more aggressive on pricing the Volt, but they do offer an extremely competitive lease at $350/mo - the same as the LEAF.
But the flurry of press about the announcement has been mixed and some of the commentary is downright silly. The following quote from Jessica Caldwell, industry analyst for Edmunds.com, deserves to be called out because of the inherent contradictory nature of blasting GM for "teasing the Volt" for so long before launching and then in the same breath blasting the price by comparing it to a vehicle that doesn't even exist yet, much less have a firmly established price.
"If GM had launched the Volt when they started teasing us years ago, it could have successfully commanded a hefty price tag," Caldwell said, noting that there now are a wider range of vehicles in the Volt's price range with improved powertrain technology and packaging. "Tesla's Model S will start at $8,000 more and is better targeted at people who can afford to pay $40,000-plus on a vehicle."
Apparently Jessica thinks that the Model S exists today, and is priced at $49,000 before the Federal Tax Credit, and she doesn't mind being teased for years unless its GM. Pricing has a nasty habit of creeping up when you actually realize how much the car costs to make.
The Volt is priced competitively with the LEAF when it comes to leasing, which is what everyone should do anyway. The Model S, when it is finally produced in 2012 at the earliest, will run you about $75,000.
The full article is here.
Tuesday, July 27, 2010
Chevy Volt matches Nissan LEAF pricing
Chevy announced pricing for the Volt today, and while all the articles are focusing on the $41,000 MSRP vs the LEAF at about $32,000, the real headline is that the lease they are offering is exactly the same monthly cost of $349. The down payment is $500 higher, but you don't need to install a level 2 charger so lets call it a wash. What makes this so interesting is that we will see how the pure BEV architecture fares against the EREV (extended range electric vehicle), since the cost to own is essentially the same if you lease. Aside from the major difference of the drivetrain approach, the other major differentiators are brand and styling (and possibly warranty). Neither car is a clear winner on styling and Brand is a very personal thing.
$TSLA short interest large out of the gate
In a previous post I described the response I was hearing to the Tesla roadshow as highly polarized - people seemed to either be very bullish on Tesla or very bearish. No one seems to be sitting on the fence. To get the IPO completed successfully, the bears are irrelevant: you only need a certain number of people who are excited to get the deal done.
What happens in the market after shares are floated is a different story. People bearish on Tesla can bet against the stock in a number of ways, betting that the stock price will go down and earning a profit on the downward move.
There are several indicators that one can look for to get a sense for the "short interest" on $TSLA, and the three or four data points I have seen in the last days supports my theory that you have a large number of bears on one side and a lot of bulls on the other.
First, the NASDAQ reports that there are 5,642,448 shares held short. The total shares floated in the IPO were 15,295,000 assuming underwriters exercised their entire over-allotment option. That means 38.6% of the shares out there are held short.
The demand for shares to borrow to take a short position is very high, as indicated by the interest rate that is being quoted to those who want to borrow shares. This data can't be found easily on any website, but two quotes I have heard recently are around 15% and around 40%. These are huge numbers, and indicate that there are a lot of people eager to short the stock. For someone to borrow shares at that high an interest rate means they need to have the stock go down more than that number (pro-rated for the time period) before they earn a profit.
The number of put contracts sold outnumbers the number of call options by over 3 to 1. This means there are a lot more people in the options market betting that the stock will go down in the future than are betting it will go up.
In spite of all the bearish indicators, TSLA stock remains a good 22% above its high IPO price - trading at $20.89 as of this writing. That's all the evidence you need that there are a lot of people equally as bullish on the stock. It also means that TSLA will continue to be a volatile stock.
Monday, July 26, 2010
Barclay's upgrades $AONE - bullish on Fisker
AONE is up 15% today on an upgrade from Barclay's, which also bumped the price target from $12 to $14. Read part of the Barclay Analyst's rationale below: "Several positive pot'l catalysts on horizon: (i) Fisker and heavy-duty customer ramps appear to be on schedule - checks suggest Fisker could start commercial production of 100-200 vehicles in Dec, looking to ramp to 1K units/mth run-rate by end Feb'11 (well ahead of investor expectations)." Apparently the Barclays analyst read Autobloggreen.com. Either that or he "checked" with the company itself, which of course will say that everything is on track, until it isn't.
So much of AONE's prospective value is tied up in the volume that Fisker will deliver over the next years, as they represent the largest PHEV program that AONE has locked down. What is interesting to see is that very few of the analysts covering AONE make much effort to discount the execution risk of the Karma program and the volume expectations.
I think it would be wise for anyone advising investors in AONE to recommend a fair value based on the Fisker's current stated launch date and volumes. Then provide a downside scenario. There is no upside scenario because the manufacturer's statements are the upside scenario. So my question to the Barclay's analyst is what do you think the fair value of AONE shares are if Fisker enters production in Spring of 2011 and is able to support volumes of the Fisker Karma in the 3 to 4000 unit range over the next years? I'm not necessarily picking on Fisker here - all startup manufacturers of EVs/PHEVs will always present the most bullish estimate of volumes before they actually bring product to market for the obvious reason that doing so presents the best picture of their business. It should be the role of analysts to do the work to come up with a reasonable discount for those company statements, or a rationale for why they support it. In my opinion, the key factors which cause me to discount Fisker's projections are: 1) They have not yet demonstrated a real production intent prototype with production intent parts. This is a very big concern that can't be allayed with the waving of hands and PR statements.
2) They only locked down a battery supplier in February, when AONE bought the contract out from under HEV. I believe they have still not finalized a volume production partner for motors, which are an important piece of the puzzle.
3) The Karma's current projected price is around $90,000. The market for $90,000 cars is quite small. The market for PHEV $90,000 cars is a smaller portion of that.
On the plus side,
1) I continue to believe that the market for PHEVs will be bigger than the market for EVs in the short term, even though the media attention seems to favor pure BEVs.2) They already have 40+ dealers who are eagerly awaiting product to sell to their customers.3) The car is very pretty, which matters a lot.
So much of AONE's prospective value is tied up in the volume that Fisker will deliver over the next years, as they represent the largest PHEV program that AONE has locked down. What is interesting to see is that very few of the analysts covering AONE make much effort to discount the execution risk of the Karma program and the volume expectations.
I think it would be wise for anyone advising investors in AONE to recommend a fair value based on the Fisker's current stated launch date and volumes. Then provide a downside scenario. There is no upside scenario because the manufacturer's statements are the upside scenario. So my question to the Barclay's analyst is what do you think the fair value of AONE shares are if Fisker enters production in Spring of 2011 and is able to support volumes of the Fisker Karma in the 3 to 4000 unit range over the next years? I'm not necessarily picking on Fisker here - all startup manufacturers of EVs/PHEVs will always present the most bullish estimate of volumes before they actually bring product to market for the obvious reason that doing so presents the best picture of their business. It should be the role of analysts to do the work to come up with a reasonable discount for those company statements, or a rationale for why they support it. In my opinion, the key factors which cause me to discount Fisker's projections are: 1) They have not yet demonstrated a real production intent prototype with production intent parts. This is a very big concern that can't be allayed with the waving of hands and PR statements.
2) They only locked down a battery supplier in February, when AONE bought the contract out from under HEV. I believe they have still not finalized a volume production partner for motors, which are an important piece of the puzzle.
3) The Karma's current projected price is around $90,000. The market for $90,000 cars is quite small. The market for PHEV $90,000 cars is a smaller portion of that.
On the plus side,
1) I continue to believe that the market for PHEVs will be bigger than the market for EVs in the short term, even though the media attention seems to favor pure BEVs.2) They already have 40+ dealers who are eagerly awaiting product to sell to their customers.3) The car is very pretty, which matters a lot.
Saturday, July 17, 2010
Meet Toyota's Point Man for the Tesla RAV4 conversion project
In the past, he has been openly critical of Tesla Motors' battery approach (the use of thousands of interconnected commodity cobalt oxide cells). He is also now the man in charge of the Toyota end of the Toyota/Tesla RAV4 EV conversion project (from what I hear).
That's what happens when your top boss takes a shine to Tesla. Will Bill Reinert be a convert to the Tesla technological approach, or will he be a reluctant company man? The back story on this is fascinating, and I can't wait until the stories are told in the course of time.
If Akio Toyoda really wants to drive Bill nuts, he'll make him collaborate with Shai Agassi and Better Place next.
Photo is "courtesy" of Automobile Magazine - I put "courtesy" in quotes because I just lifted it from their website. Hopefully they don't mind since I link to preston Lerner's fascinating profile of Bill here. You should read it!
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