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Elon Musk makes a rare appearance on SolarCity’s Q2 conference call

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SolarCity reported its Q2 quarterly results on Tuesday August 9, 2016, but unlike calls from the past where CEO Lyndon Rive’s provides a financial outlook for the nation’s largest full-service solar provider, Tesla CEO and SolarCity Chairman Elon Musk took stage to discuss future plans for the company. This marks a rare occasion for Musk and arrives at a time when discussions for the impending merger between Tesla and SolarCity is the hot topic among shareholders and analysts.

SolarCity provided shareholders with a Q2 2016 Shareholder Letter and accompanying  Slide Presentation. While there might be little interest in the earnings report for Tesla owners and fans, quite a few interesting tidbits were provided during the afternoon SolarCity Analysts conference call by Musk.

Tesla Acquisition

Philip Lee-Wei Shen of ROTH Capital Partners asked why “the final deal and offer price was actually lower than the original price.”

Elon responded that “this is a negotiation of the independent board members. I actually wasn’t part of – and part of it was simply what they came up after, I think, a quite exhaustive discussion that lasted a week or two. So I’ve not inquired about the details and I’m not privy to the details, but it was ultimately what they concluded was fair between the independent board members of SolarCity and the board members of Tesla. Obviously, this is now up to the shareholder votes, independent shareholder votes where, I would say, I’m recusing myself. I’m not legally obligated to recuse myself, I’m just doing so, because I think it’s morally the right thing to do and so is Lyndon and Pete and JB Straubel.”

A new Product: Solar Roof

SolarCity is going to enter the “solar roof” market.

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“We’re going to be making a pretty interesting product and I’m excited to kind of reveal to you all at some point, but it is not just your typical module, it is both very efficient and it looks really, really good,” said Peter Rive (CTO).

Elon elaborated that “It’s a solar roof as opposed to a module on a roof. I think, this is really a fundamental part of achieving a differentiated product strategy – it’s not a beautiful roof, that it is a solar roof, it’s not a thing on a roof, it is the roof. That’s – which is quite a difficult engineering challenge, and not something that is available really anywhere else that is at all good. I think this will be something that’s quite a standout. So one of the things I’m really very excited about the future.”

“It’s just addressing a really big market segment, so just in the U.S., there is 5 million new roofs installed every year,” said Lyndon Rive (CEO).

“The interesting thing about this is that it actually doesn’t cannibalize the existing product of putting solar on roof, because essentially if your roof is nearing end-of-life, you definitely don’t want to put solar panels on it, because you’re going to have to replace the roof,” said Elon Musk (Chairman). “So, there is a huge market segment that is currently inaccessible to SolarCity, because people know they’re going to have to replace their roof, you don’t want to put solar panels on top of a roof you’re going to replace. However, if you are close – if your roof is nearing end-of-life, well, you’ve got to get a new roof anyway, there’s 5 million new roofs a year just in the U.S. And so, why not have a solar roof that’s better in many others ways as well. We don’t want to show all of our cards right now, but I think people are going to be really excited about what they see.”

Notice that roof solar is a business where there are players already: Luma Resources, CertainTeed and Integrated Solar Technology, in particular and one that DOW Chemical just exited.

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The solar roof product will be manufactured in Buffalo, NY. Elon added that “it’s really important to manufacturing in-house because its panels control the aesthetics and ideally really design – it’s kind of like making a custom car, like when somebody orders a car from Tesla, they’ll pick a wide array of options, that car will be custom made to their preferences, and you really want the roof custom-made to the individual customer as a kit and then sent to, that will be, the delivery team to get installed.”

Home Energy Management

Colin Rusch of Oppenheimer inquired “how long is it going to be before the combined entity [Tesla Motors + SolarCity] introduces a home energy management system or some sort of robust energy efficiency offering?”

To which Elon joked that “solar and battery go together like peanut butter and jelly. You obviously need the battery, particularly as you get to scale and you want to have solar be a bigger and bigger percentage of the grid. If you don’t have the batteries there to balance the grid and buffer the power, you really can’t go beyond a certain percentage of solar in a particular neighborhood. Maybe you can go up to about 20% solar, but more than that, it starts to unbalance the grid and you need to buffer it, because the energy generation is low at dawn and dusk, it’s high in middle of the day, and it’s at zero during at night. So you got to smooth that out.”

Elon reiterated the usual “sustainable energy” mantra he has been preaching for a decade: “if you like sort of fast forward to where do we want the world eventually to be is want the world to have a sustainable energy generation, a sustainable energy consumption, so that it really requires the three critical ingredients for that, there is the solar panels, the stationary batteries, and electric vehicles.”

Who is going to Win? Rooftop or centralized generation?

“You’ll have millions of these batteries, you’ve got to manage that and integrate it with the utility,” said Elon. “I do want to emphasize, there’s still a very important role for utilities here, sometimes people think that this is an either/or thing, it’s like either rooftops are going to win or centralized generation is going to win and actually both are going to win, because the electricity usage is going to increase dramatically as we transition away from burning old dinosaurs to electric cars, and then to electric transport, we would see roughly a doubling of electricity consumption as all transport moves to electric. And then, there is a tripling of electricity usage if you take all heating and make that electric as well, because obviously most heating is from oil and natural gas particularly.”

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Combining battery and rooftop solar

Gordon Johnson of Axiom Capital Management inquired what was the rationale behind the acquisition [of SolarCity by Tesla] when “combining a battery and a rooftop solar company didn’t make a ton of sense because when you have a rooftop solar company with net metering, the grid acts as, effectively, a battery, ruling out the need for a battery technology.”

“Where we see net metering evolving over the next few years, I think this is a really important part of how storage is a combination with the solar,” answered Peter Rive (CTO). “A case that I’d like everybody to review is what just recently happened in New York. This is a collaboration of the local utilities and the solar industry. And the collaboration is net metering for the next three years and then a phasing to more of a grid services model, where you combine solar, storage, smart inverters and provide all these additional grid services, and you phase that in and then essentially you phase-out net metering into that grid services model.”

Peter concluded that “we see that probably happening as a standard policy and we’re going to promote that across all the different states. But you – we have to get to a point where it is the grid services, so that, actually it recognizes the value that solar and storage can provide you to grid.”

I think Peter Rive indeed sees the writing on the wall for “net metering” as being phased out over time. Net metering has disappeared already from states like Nevada, and while it has been retained in California, at least until 2019, all local utilities are switching gradually to TOD (Time-of-Day) billing (the “grid services” model Peter references above), where a “smart battery storage” product that provides “time-shifting” will solve the solar basic dilemma: while solar production peaks during midday, energy consumption is highest in the morning and evening. With storage, you can save the energy you produce for when you need it most, and at the same time you limit the output to the grid, a benefit to the local utility.

Source: Enphase Energy

Source: Enphase Energy

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Tesla called ‘biggest meme stock we’ve ever seen’ by Yale associate dean

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Credit: Tesla

Tesla (NASDAQ: TSLA) is being called “the biggest meme stock we’ve ever seen” by Yale School of Management Senior Associate Dean Jeff Sonnenfeld, who made the comments in a recent interview with CNBC.

Sonnenfeld’s comments echo those of many of the company’s skeptics, who argue that its price-to-earnings ratio is far too high when compared to other companies also in the tech industry. Tesla is often compared to companies like Apple, Nvidia, and Microsoft when these types of discussions come up.

Fundamentally, yes, Tesla does trade at a P/E level that is significantly above that of any comparable company.

However, it is worth mentioning that Tesla is not traded like a typical company, either.

Here’s what Sonnenfeld said regarding Tesla:

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“This is the biggest meme stock we’ve ever seen. Even at its peak, Amazon was nowhere near this level. The PE on this, well above 200, is just crazy. When you’ve got stocks like Nvidia, the price-earnings ratio is around 25 or 30, and Apple is maybe 35 or 36, Microsoft around the same. I mean, this is way out of line to be at a 220 PE. It’s crazy, and they’ve, I think, put a little too much emphasis on the magic wand of Musk.”

Many analysts have admitted in the past that they believe Tesla is an untraditional stock in the sense that many analysts trade it based on narrative and not fundamentals. Ryan Brinkman of J.P. Morgan once said:

“Tesla shares continue to strike us as having become completely divorced from the fundamentals.”

Dan Nathan, another notorious skeptic of Tesla shares, recently turned bullish on the stock because of “technicals and sentiment.” He said just last week:

“I think from a trading perspective, it looks very interesting.”

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Nathan said Tesla shares show signs of strength moving forward, including holding its 200-day moving average and holding against current resistance levels.

Sonnenfeld’s synopsis of Tesla shares points out that there might be “a little too much emphasis on the magic wand of Musk.”

Elon Musk just bought $1 billion in Tesla stock, his biggest purchase ever

This could refer to different things: perhaps his recent $1 billion stock buy, which sent the stock skyrocketing, or the fact that many Tesla investors are fans and owners who do not buy and sell on numbers, but rather on news that Musk might report himself.

Tesla is trading around $423.76 at the time of publication, as of 3:25 p.m. on the East Coast.

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Elon Musk affirms Tesla commitment and grueling work schedule: “Daddy is very much home”

The remarks came as Tesla shares crossed the $400 mark on the stock market.

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Tesla CEO Elon Musk reiterated his commitment to the electric vehicle maker and its future projects this week, responding to speculation following his $1 billion purchase of TSLA stock. 

The remarks came as Tesla shares crossed the $400 mark on the stock market, extending a rally fueled in part by Musk’s TSLA purchase.

Elon Musk’s nonstop work schedule

Amidst the reaction of TSLA stock to Musk’s $1 billion investment, Tesla owners such as @greggertruck noted that “Daddy’s home.” Musk replied, stating that “Daddy is very much home.” He then shared details of a packed weekend of work, which was definitely grueling but completely within character for a “wartime CEO.”

Musk did note, however, that he had lunch with his kids during the weekend despite his extremely busy schedule.

“Daddy is very much home. Am burning the midnight oil with Optimus engineering on Friday night, then redeye overnight to Austin arriving 5am, wake up to have lunch with my kids and then spend all Saturday afternoon in deep technical reviews for the Tesla AI5 chip design. 

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“Fly to Colossus II on Monday to walk the whole datacenter floor, review transformers and power production (excellent progress), depart midnight. Then up to 12 hours of back-to-back meetings across all Tesla departments, but with a particular focus on AI/Autopilot, Optimus production plans, and vehicle production/delivery,” Musk wrote in his post

Wartime CEO

Wedbush analyst Dan Ives described Musk as operating in “wartime CEO mode,” highlighting autonomous driving and AI as a trillion-dollar market opportunity for Tesla. Musk reiterated this point late last month as well, when he outlined the several projects he is juggling among his numerous companies. At the time, Musk stated that he was busy with Starship 10, Grok 5, and Tesla V14. This was despite his notable presence on X. 

With Tesla Master Plan Part IV being partly released, the company is entering what could very well be its most ambitious stage to date. To usher in an era of sustainable abundance, Tesla would definitely require a “wartime CEO,” someone who could remain locked in and determined to push through any obstacles to ensure that the company achieves its goals.

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Tesla analyst says Musk stock buy should send this signal to investors

“With Musk’s (Tesla stock) purchase, combined with the upward momentum for delivery expectations and robotaxi rollout, we are becoming more bullish.”

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(Credit: Tesla)

Tesla CEO Elon Musk purchased roughly $1 billion in Tesla shares on Friday, and analysts are now breaking down the move as the stock is headed upward.

One of them is William Blair analyst Jed Dorsheimer, who said in a new note to investors on Monday that Musk’s move should send a signal of confidence to stock buyers, especially considering the company’s numerous catalysts that currently exist.

Elon Musk just bought $1 billion in Tesla stock, his biggest purchase ever

Dorsheimer said in the note:

“With Musk’s (Tesla stock) purchase, combined with the upward momentum for delivery expectations and robotaxi rollout, we are becoming more bullish. This purchase is Musk’s first buy since 2020. To us, this sends a strong signal of confidence in the most important part of Tesla’s future business, robotaxi.”

Musk putting an additional $1 billion back into the company in the form of more stock ownership is obviously a huge vote of confidence.

He knows more than anyone about the progress Tesla has made and is making on the Robotaxi platform, as well as the company’s ongoing efforts to solve vehicle autonomy. If he’s buying stock, it is more than likely a good sign.

Tesla has continued to expand its Robotaxi platform in a number of ways. The project has gotten bigger in terms of service area, vehicle fleet, and testing population. Tesla has also recently received a permit to test in Nevada, unlocking the potential to expand into a brand-new state for the company.

In the note, Dorsheimer also touched on Musk’s recent pay package, revealing that William Blair recently met with Tesla’s Board of Directors, who gave the firm some more color on the situation:

“We recently participated in a meeting with Tesla’s board of directors to discuss the details of Musk’s performance package. The board is confident of its position in the Delaware case and anticipates a verdict by end of year. It does not expect a similar situation to occur under new Texas jurisdiction. Musk has the board’s full support, and we expect he’ll get more than enough shareholder support for this to pass with flying colors.”

Tesla stock is up over 6 percent so far today, trading at $421.50 at the time of publication.

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