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Can Tesla's $5 Billion Bet Pay Off?

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Rob Spiegel
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Any bets on location
Rob Spiegel   5/7/2014 7:56:26 AM
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Nice story, Chuck. I know it's early in the process, but has there been any talk about location for this factory? 

Charles Murray
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Re: Any bets on location
Charles Murray   5/7/2014 10:52:22 AM
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Last I heard, Rob, Tesla had narrowed it down to four states -- Arizona, Nevada, New Mexico and Texas -- according to multiple news reports. The news reports are saying that Musk plans to move forward in two states, all the way to the point of breaking ground, "just in case there's last-minute issues."

Rob Spiegel
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Re: Any bets on location
Rob Spiegel   5/7/2014 11:37:45 AM
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I'm glad New Mexico is on the list. Our state needs the jobs. I'd place my bet on Texas, though. They're very agressive in attracting business. Lately, they've been stealing existing business from California.

naperlou
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Not viable
naperlou   5/7/2014 3:08:54 PM
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Cap'n, I don't think this whole effort is viable.  The key is that the current battery makers are running at such low capacity.  Is the cost really driven by logistics?  If this were the way to go, then why don't auto manufacturers still operate the way Ford did originally.  In that case the raw materials were brought in and the steel, glass and rubber were made on-site.  Does anyone really believe that will happen again? 

bobjengr
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$5 BILLION BET
bobjengr   5/7/2014 6:19:56 PM
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Mr. Must is truly a man of steel.  I would nervous as a cat over this one.  I can certainly see the need but I doubt the sales number will be there to make the project viable and provide the necessary ROI.  I would expect federal rebates will continue to be necessary to attract "rank and file" consumers no matter how many cars are sold when addressing alternative energy and improving MPG usage.   With that being said, I would love to see his company locate in east Tennessee.   Excellent post Charles.  

Charles Murray
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Re: Not viable
Charles Murray   5/7/2014 6:31:49 PM
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I know what you mean, naperlou. To paraphrase bonjengr's statement above, Musk must have nerves of steel. There's a pile of factors that are right on the edge of reality here -- the massive investment and the complete reliance on unproven sales numbers being prime among them. Whether it works out or not, though, I think this will make an incredible ongoing business story over the next few years.

Charles Murray
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Re: Not viable
Charles Murray   5/7/2014 6:35:03 PM
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One more thing, naperlou. You raise a good point about our current auto industry. Vertical integration, as it's called, has gone completely out of vogue. Notice all the suppliers -- two that come to mind are Delphi and Visteon -- who are no longer part of the big automotive companies. There's a reason the automakers have abandoned that corporate strategy.

Cabe Atwell
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Re: Not viable
Cabe Atwell   5/7/2014 10:24:43 PM
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My money is on Texas for the new plant. That state is like a sponge when it comes to businesses relocating. But since Tesla lost $50mil this first quarter... mayber not

sbkenn
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Manufacturing and marketing flexibility
sbkenn   5/8/2014 8:49:05 AM
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As a complete moron in relation to finance and, marketing, I wonder is this venture will encompass other industry sectors such as renewable energy, other forms of transport, or whether the manufacturing facilities will be flexible enough to use new battery chemistries or power storage as they are discovered or developed.

  PV technology is coming down in price, but energy storage is still expensive.  Could trains use batteries ?  With better streamlining and regenerative braking, energy conversion to heat could be cut dramatically, making them very efficient.  Weight is not nearly as important here as in cars or aeroplanes.

benmlee
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Re: Not viable
benmlee   5/8/2014 9:02:12 AM
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Texas has outlawed the direct sale of Tesla to consumer along with New Jersey. That is a sticking point for Tesla to build their factory to a state that effectively outlawed their product.

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