2017 Investor Roundtable:General Discussion

[brian45011]

The tax credit certificate has more data through end of 2016:

http://www.diversifynevada.com/uploads/reports/TTC_Certificate_Tesla_Motors_June_2017.pdf

Total investment by Tesla by end of 2016 was $1.1 billion. For PENA, it's $300 million. That's with basically 1/2 of the pilot phase tooling installed, so about 19% of the total investment seems about right for mostly tooling and relatively low salary through end of 2016.

Unfortunately, I don't know we will get another Nevada GEOD report anytime soon.

Thanks, a lot of numbers being reported in various reports that are difficult to get one's head around. Presumably everyone is singing from the same hymnal.

The 10k states:
"We have incurred $825.3 million and $317.5 million of costs for our Gigafactory 1 as of December 31, 2016 and 2015."
" In 2016, we used cash of $455.3 million towards Gigafactory 1 construction and expect to spend a total of approximately $770.0 million during 2017."
(Incurred costs-cash used in 2016 = $370 million)

The 10Q for 2Q17 states:
During the six months ended June 30, 2017, we used cash of $758.2 million towards Gigafactory 1 construction.

We had cumulatively incurred and capitalized costs of $1.98 billion and $825.3 million, respectively, for Gigafactory 1 as of June 30, 2017 and December 31, 2016.
(Incurred costs-cash used in 1H20167= $396.5 million)

The terminology doesn't seem consistent: "cash" vs "spend" vs "incurred costs" Perhaps the "cash" is just that and the "incurred [and capitalized] costs" are accrued liabilities. Also, depending on the meaning of "spend" the expected 2017 total has been exceeded in the first half.

The $825.3 million through 12/31/16 is reasonably close to Grant Thornton's $812.8 million; however, if one backs out the $4.5 million GT shows for "Expensed Personal Property" the discrepancy increases.

The employee count seems to lag the 6,000 full-time employee projection:
At 9/30/16:
Tesla 311
Pena 58
Constr. 4,454

At 12/31/16:
Tesla 386
Pena 91
Constr 5,591
If you guesstimate the GF was 15% complete at 12/31/16: Tesla and PENA F/T employees = 477/0.15 = 3,180 at 100%

 

[vgrinshpun]

This post is very informative but it focuses on now, and SP is about the future. What gives you confidence that Samsung/CATL/Panasonic cannot supply BMW/Daimler/Audi three years from today with better battery technology (lighter weight or longer range or more power) than Tesla will have in 2020?

Oh boy! Where do I start?

May be here: read post by @esk8mw and my reply

 

[RobStark]

GM makes 10M cars, they would need 600GWh of battery production if they where all bolts.

GM has sold its European business,pulled out of the Indian,Indonesian, and South African market. Mary Barra has said GM may not be done "pruning."

GM is now making cars at the rate of ~7.5M per year. Nissan (including Nissan controlled Mitsubishi) may produce more cars than GM next year.

 

[vgrinshpun]

Tesla is the only manufacturer able to produce a price competitive electric vehicle. However, I am not sure it is only due to battery expertise.

From what I know of Elon, I am positive that every single aspect of the vehicle is being optimized. Look at Space-X dominance.

The lion's share of the cost savings, if not almost all of them, is in optimization of the battery and and the electric drivetrain, not other aspects of the vehicle. The difference between the former and the latter is likely to be an order of magnitude or more.

 

[vgrinshpun]

I can't see them getting in the same room with each other.

Personnally (I know I need help), I can work with some industrial designers, but not with others. I would struggle here:

]

Wait... Is that what I think it is??

 

[schonelucht]

I believe that the reason that Panasonic can't sell storage at the same prices as Tesla is because it costs them more to produce packs.

Why does it cost them more?

 

[jhm]

A distant possibility to the 'something else' that EM mentioned he would have at the Semi reveal would be: GF3 location to build it and batteries for it

That would be very exciting. And frankly if Tesla is serious about ramping up this product line, they really must devote sizable factory space to it. In the semi space, the ability to ramp up battery supply is critical. We're talking about 500 to 1000 kWh per truck. The company that can ramp up pack supply fastest will own this market.

So I am very eager to see what Tesla reveals in September.

 

[ValueAnalyst]

Oh boy! Where do I start?

May be here: read post by @esk8mw and my reply

I had already read that post before and "loved" it because I agree to a certain extent. Keep in mind, however, outinnovating is not a durable competitive advantage. Yes, Tesla is running faster today, but depending on who comes and who goes, that may change in the future.

As to your "partnerships don't work" argument, I agree fully, and this is the primary reason why most ICE makers I don't believe will ever catch up to Tesla, but I'm not sure if Apple/Foxconn/CATL combo couldn't pull it off and become a formidable competitor. That's the one that worries me the most by far than any other potential competitor. Disclaimer: I own both Tesla and Apple stock, but a lot more Tesla than Apple.

And as I've expressed this concern today, I've gotten a lot of and but I'm yet to read a solid argument why Tesla will remain ahead of Apple for many years to come.

Supercharger buildout would take Apple a year or two, and they can build multiple Gigafactories around the same time frame Tesla builds its Gigafactories 3-6, and they have similar/superior software capabilities. Yes they haven't built a car before, but they have managed a very complex global supply chain. They have more capital than Tesla. They're already known as a renewable energy environment friendly company. They have a similar cult following. They don't have an Elon Musk, if that's the only thing, that's a helluva key man risk in your argument.

So, I'm looking for a solid cohesive succinct argument rather than which tell me most here may not be realizing the seriousness of this risk.

 

[vgrinshpun]

I had already read that post before and "loved" it because I agree to a certain extent. Keep in mind, however, outinnovating is not a durable competitive advantage. Yes, Tesla is running faster today, but depending on who comes and who goes, that may change in the future.

As to your "partnerships don't work" argument, I agree fully, and this is the primary reason why most ICE makers I don't believe will ever catch up to Tesla, but I'm not sure if Apple/Foxconn/CATL combo couldn't pull it off and become a formidable competitor. That's the one that worries me the most by far than any other potential competitor. Disclaimer: I own both Tesla and Apple stock, but a lot more Tesla than Apple.

And as I've expressed this concern today, I've gotten a lot of and but I'm yet to read a solid argument why Tesla will remain ahead of Apple for many years to come.

Supercharger buildout would take Apple a year or two, and they can build multiple Gigafactories around the same time frame Tesla builds its Gigafactories 3-6, and they have similar/superior software capabilities. Yes they haven't built a car before, but they have managed a very complex global supply chain. They have more capital than Tesla. They're already known as a renewable energy environment friendly company. They have a similar cult following. They don't have an Elon Musk, if that's the only thing, that's a helluva key man risk in your argument.

So, I'm looking for a solid cohesive succinct argument rather than which tell me most here may not be realizing the seriousness of this risk.

Why Apple cancelled the car part of their "Car" project?

The main advantage of Tesla over Apple IMO is structural: vertical integration approach of Tesla vs. partnership (Apple/Foxconn/CATL).

In my over 30 years of engineering experience, true optimization that is done at reasonable cost and within reasonable amount of time is only possible with vertical integration.

 

[Alketi]

And as I've expressed this concern today, I've gotten a lot of and but I'm yet to read a solid argument why Tesla will remain ahead of Apple for many years to come.

Does everyone realize that the Model 3 is 100% built for Tesla's ride-sharing network? Like 100%. Every single design decision, bar none. It goes WAY beyond the 15" display. Even the press and the industry reporters/insiders haven't figured it out...

I'm trying to publish a member article on the subject because what Tesla has delivered is mind-blowing.

 

[jhm]

400k Semi's would be 2x what I assumed in my DCF, starting with 10k units in 2019 followed by 23k in 2020.

Sounds like I may be on the unreasonably conservative side of estimates with this one.

Well, mine is just a wildass guess. IIRC, the global market is about 3.6 million per year. So I'd love to see Tesla capture at least 10% of that. Once major fleet operators figure out how they can save serious money with these, I think it will ramp very fast. It'll be a race to scale up battery production.

Heavy duty trucks consume about 17 mb/d of diesel. To replace this, the steady state demand for batteries will be about 700 GWh/y. So if Tesla can quickly ramp up to about 400GWh and stay cutting edge in the battery tech and price, then they could dominate this market. Other truck makers can design electric trucks, but I don't think any of them can ramp up battery supply as fast as Tesla. So velocity gives Tesla a strategic advantage.

 

[ValueAnalyst]

Well, mine is just a wildass guess. IIRC, the global market is about 3.6 million per year. So I'd love to see Tesla capture at least 10% of that. Once major fleet operators figure out how they can save serious money with these, I think it will ramp very fast. It'll be a race to scale up battery production.

Heavy duty trucks consume about 17 mb/d of diesel. To replace this, the steady state demand for batteries will be about 700 GWh/y. So if Tesla can quickly ramp up to about 400GWh and stay cutting edge in the battery tech and price, then they could dominate this market. Other truck makers can design electric trucks, but I don't think any of them can ramp up battery supply as fast as Tesla. So velocity gives Tesla a strategic advantage.

I think you're WAY off on the 3.6m per year estimate, unless if you're including a bunch of other things aside from semi trucks. I'm pretty sure the global annual unit sales for semi trucks is less than 2 million, and maybe even closer to 1 million than 2.

I do agree that Tesla has significant advantages in this space, and I cannot wait for the September event. I think it will be special. And i expect Tesla to capture a lot of market share as well. For now, however, I'm keeping my conservative estimates until I see more defined guidance/numbers from management and details on the product.

 

[RobStark]

I think you're WAY off on the 3.6m per year estimate, unless if you're including a bunch of other things aside from semi trucks. I'm pretty sure the global annual unit sales for semi trucks is less than 2 million, and maybe even closer to 1 million than 2.

https://www2.deloitte.com/content/d...ck-study-the-truck-industry-in-transition.pdf

Deloitte agrees on size of current market. Says 2/3 heavy duty and 1/3 medium duty. CAGR 1.3% through 2021.

 

[MitchJi]

Why does it cost them more?

Tesla has done an outstanding job of automating the pack production.

 

[MitchJi]

I had already read that post before and "loved" it because I agree to a certain extent. Keep in mind, however, outinnovating is not a durable competitive advantage. Yes, Tesla is running faster today, but depending on who comes and who goes, that may change in the future.

I believe that that's the best you are going to get and I also believe that it's more than sufficient.

 

[schonelucht]

Tesla has done an outstanding job of automating the pack production.

1) How do we know this?
2) Does this also hold for packs (TE and TA) assembled at the gigafactory up to and including 2017Q2? How does current state of pack assembly at the GF compare with Fremont S/X pack assembly?
3) Is there anything in this outstanding job that is particulary difficult to duplicate for potential future competitors?

 

[RobStark]

1) How do we know this?
2) Does this also hold for packs (TE and TA) assembled at the gigafactory up to and including 2017Q2? How does current state of pack assembly at the GF compare with Fremont S/X pack assembly?
3) Is there anything in this outstanding job that is particulary difficult to duplicate for potential future competitors?

You are asking for granular explanation of Tesla's IP?

Anyone who knows can't say.

 

[AcesDealt]

Even the press and the industry reporters/insiders haven't figured it out...

Even them?! Impossible.

I look forward to the other elements you have identified. I've been harboring a suspicion that something will be discovered that renders the model Y a far better TN candidate simply because it's so early to envision the requirements correctly. For instance, I'm not sure wherefore they have confidence their sensor suite is sufficient.

But like you, I am a believer that TaaS is the real prize.

 

[Gerardf]

I see several mentions of Apple/Foxconn/CATL cooperation as potential competition to Tesla on automotive.
Did I miss something ?

As far as I am aware there has not been a single announcement anywhere on a cooperation between these three companies. There is an announcement of Foxconn planning to invest in a display factory for Apple. No link to CATL other than Foxconn investing in CATL, but who says that is related to Apple automotive plans ?

Also note that none of these three have ever build a car, and I do not expect them to be able to produce BEV's in relevant numbers for at least 5 years.

 

[22522]

I see several mentions of Apple/Foxconn/CATL cooperation as potential competition to Tesla on automotive.
Did I miss something ?

As far as I am aware there has not been a single announcement anywhere on a cooperation between these three companies. There is an announcement of Foxconn planning to invest in a display factory for Apple. No link to CATL other than Foxconn investing in CATL, but who says that is related to Apple automotive plans ?

Also note that none of these three have ever build a car, and I do not expect them to be able to produce BEV's in relevant numbers for at least 5 years.

There are a couple of things.

Apple has a brand and represents a non granular customer that can drive supplier investment. With these particular suppliers.

What else has the annual sales volume?

Apple will pay the bonus money to get who they want.

They kind of have to do it, or integrate their tech into an existing big three vehicle. Maybe Ford.