2017 Investor Roundtable:General Discussion

[neroden]

Texas is a different market then rest of the US. In many ways, the Texas market is like Australia and not so much like rest of the US.

The wholesale market structure is not very supportive of storage. Even in Australia, big coal has been obstructionist when it comes to regulation, disadvantaging storage.

One needs to spend a few weeks understanding the electricity market structure, regulation, some physics and engineering considerations of electricity transmission & distribution, and the obstructionist politics to understand the landscape.

TE has a bright future in the long-term, the next 5 years of it is not in the US. Australia could be huge for TE. Remember we are under a anti renewable FERC under the coal puppet Neil Chatterjee for the next 3 years.

If you want to dig more, I highly recommend subscribing to the energy transition show podcast by Chris nelder. It's worth every dollar.

Australia has the most openly hostile-to-renewables national electricity regulation I can think of, and the result is massive adoption of batteries.

If you think about it, the strongest markets for battery sales are the ones where the grid regulations are most hostile to solar power, because batteries allow escape from the grid regulations. This puts Tesla in a fascinatingly excellent position: everywhere the solar business is attacked, the battery business does better. I can't think of another solar installer in as good a position.

 

[ValueAnalyst]

It does have the "feel" of a large accumulator, doesn't it? Could just be a lot of individuals with a "buy around $300" price target, but it could also include a big accumulator. I'm now firmly of the belief that the drop from $360 was driven by the replacement of the fired sexual harasser running Fidelity OTC, and that we'll see a lower Fidelity OTC position at the next report... it'll be interesting to see who accumulated. If they stay under 5%, of course, we won't find out.

1. Investment teams' position in a long-term holding does not change so quickly at the firing of one person;
2. If a position is under 5%, it would most likely still show up at NASDAQ's Institutional Holders page;
3. Positions as of Sep 30 are already public.

 

[ValueAnalyst]

I agree with all points except the last. I'm doubtful that building factories the size of GF1 ever becomes relatively easy. Especially as to how long they take from shovel in ground to reach half of planned capacity. This time may be half what GF1 has taken for all the valid reasons members have long posted.

Skilled labor will be the limiting factor.

 

[ValueAnalyst]

There are still fairly high odds that the worst tax bill ever written in US history dies, because the Freedom Caucus in the House hates the provisions added by the Senate to bribe the most worried Senators, and likely nothing which can get votes from the awful Freedom Caucus guys will retain all the Senators. (On top of that, by the time it gets out of conference committee, the Republicans might have lost a Senate seat -- we'll see on December 12th.)

But if it passes and the electric car tax credit is eliminated for everyone, as Musk has explained before on multiple earnings calls, this benefits Tesla. (Though it's bad for the world.) Under existing law, every latecomer auto manufacturer would get the tax credit, while it would expire for Tesla next year. So existing law was giving the latecomer incumbents an up-to-$7500 advantage over Tesla in pricing. All the incumbents have been counting on the tax credit in their pricing and business models; Tesla has been assuming it will disappear and planning accordingly.

If it's removed entirely, then Tesla gets a $7500/car leg up on BMW, Mercedes, etc. in US sales. GM has to cut the price of the Bolt immediately or be totally uncompetitive. You get the idea.

Musk is really thinking several steps ahead of most of the "competitors". This says more about the "competitors" than it does about him.

Mostly agreed, but EV tax credit expiration at end-17 would still hit Model S/X order rates in 2018 vs. 2017, unless Tesla takes steps.

 

[dc_h]

.

There are still fairly high odds that the worst tax bill ever written in US history dies, because the Freedom Caucus in the House hates the provisions added by the Senate to bribe the most worried Senators, and likely nothing which can get votes from the awful Freedom Caucus guys will retain all the Senators. (On top of that, by the time it gets out of conference committee, the Republicans might have lost a Senate seat -- we'll see on December 12th.)

But if it passes and the electric car tax credit is eliminated for everyone, as Musk has explained before on multiple earnings calls, this benefits Tesla. (Though it's bad for the world.) Under existing law, every latecomer auto manufacturer would get the tax credit, while it would expire for Tesla next year. So existing law was giving the latecomer incumbents an up-to-$7500 advantage over Tesla in pricing. All the incumbents have been counting on the tax credit in their pricing and business models; Tesla has been assuming it will disappear and planning accordingly.

If it's removed entirely, then Tesla gets a $7500/car leg up on BMW, Mercedes, etc. in US sales. GM has to cut the price of the Bolt immediately or be totally uncompetitive. You get the idea.

Musk is really thinking several steps ahead of most of the "competitors". This says more about the "competitors" than it does about him.

is there a site setup yet to email our congressman and senators?

 

[Bobfitz1]

Why is supply so important? There are 100 models coming int he magic year of 2020, but no batteries. Well at least no batteries for anything more then a few thousands cars per model. Who cares what cell density or solid state battery you have if you have no supply. There has not been nearly enough commitment to this from other suppliers. It will be more clear in 2019-2020 when these cars finally hit the market.

Very true for all the ICE auto makers. Their neglect of batteries they would need (if they were serious about selling millions of EVs not tens of thousands) spells their doom or marginalization over the coming years. Except for Tesla. Cell energy density improvements have been the major reason or sole reason MS cells have 40% more capacity than Roadster cells. JB a year back in a public talk said M3 had 30% more energy capacity than S/X. It's not clear if he may have been including efficiency improvements from better pack design in that 30% or not. Fred at Electrik believes the Semis specs can't be explained by anything other than a substantial cell density breakthrough.
Increasing energy density benefits everything associated with it. You need substantially fewer cells for the same range. Fewer cells mean less vehicle weight. Since cell chemistry/design improvement doesn't usually require more expensive raw materials, the cost of a pack per Kwh drops correspondingly. These cell/pack cost decreases are what will soon make equivalent EVs cheaper than ICE.

I think many of the cell based moats you identify are exaggerations. The reason is the Chemistry within the cell has limitations tied to physics. There is only so much they can squeeze out of Li-Ion and magic secret sauce is only going to contribute small incremental improvements over the coming years. What I think they are really focused on now that density is all but maxed out, is charge rate and longevity. Making the batteries more resilient to temperature changes has a two fold benefit of making them charge faster, for longer, and degrade slower over many years. JB and Elon have always discussed battery prices at the Pack level and there is a very good reason for that. I cant recall which exact call it was where they discussed that much of the improvements driving future costs/density would be at the pack level.

You have very good knowledge of these related technical topics and doubtless expend serious time and effort to dig deeper and understand more. You are correct to say "There is only so much they can squeeze out of Li-Ion" but don't realize current Li ion batteries including Tesla's are no where close to the theoretical maximum energy density. I'll site one recent and important reference.
https://phys.org/news/2017-07-battery-breakthrough-nobel-prize-molecule.html

It begins: "Silicon anodes are receiving a great deal of attention from the battery community. They can deliver around three to five times higher capacity compared with those using current graphite anodes in lithium ion batteries." The full article explains how a new and unusual compound cures the poor lifetime cycles which have previously prevented silicon from replacing carbon.

Here is a link to JBs late 2016 presentation.

Cell improvements and the pack level improvement which derives from them are so closely linked that it can be really challenging to be sure when someone like JB comments on pack density improvements, whether they are actually speaking about cell or non cell pack improvements leading to improved pack energy density and cost.

 

[Curt Renz]

.

is there a site setup yet to email our congressman and senators?

For residents of Naperville, Illinois:

Here are the webpages for emailing your 2 US senators:
Durbin: Email | U.S. Senator Dick Durbin of Illinois
Duckworth: Contact Senator | Senator Duckworth

One of these is your US Representative. Blame gerrymandering for having choices:
Foster: Contact
Roskam: Contact
Hultgren: Contact

 

[EnzoXYZ]

There are still fairly high odds that the worst tax bill ever written in US history dies, because the Freedom Caucus in the House hates the provisions added by the Senate to bribe the most worried Senators, and likely nothing which can get votes from the awful Freedom Caucus guys will retain all the Senators. (On top of that, by the time it gets out of conference committee, the Republicans might have lost a Senate seat -- we'll see on December 12th.)

But if it passes and the electric car tax credit is eliminated for everyone, as Musk has explained before on multiple earnings calls, this benefits Tesla. (Though it's bad for the world.) Under existing law, every latecomer auto manufacturer would get the tax credit, while it would expire for Tesla next year. So existing law was giving the latecomer incumbents an up-to-$7500 advantage over Tesla in pricing. All the incumbents have been counting on the tax credit in their pricing and business models; Tesla has been assuming it will disappear and planning accordingly.

If it's removed entirely, then Tesla gets a $7500/car leg up on BMW, Mercedes, etc. in US sales. GM has to cut the price of the Bolt immediately or be totally uncompetitive. You get the idea.

Musk is really thinking several steps ahead of most of the "competitors". This says more about the "competitors" than it does about him.

I worry about the tax credit for my M3 order and not the company like most everyone else here. I’m not paying full price. I’m way too cheap and want my money in the stock.

A used S now looks a little more attractive with the tax credit out of the way. It’ll be a RWD and maybe AP1 if I’m lucky and if I’m willing to fork out another 10K.

This sucks for people like me but excellent news for Tesla’s competitive advantage.

 

[ggies07]

There are still fairly high odds that the worst tax bill ever written in US history dies, because the Freedom Caucus in the House hates the provisions added by the Senate to bribe the most worried Senators, and likely nothing which can get votes from the awful Freedom Caucus guys will retain all the Senators. (On top of that, by the time it gets out of conference committee, the Republicans might have lost a Senate seat -- we'll see on December 12th.)

But if it passes and the electric car tax credit is eliminated for everyone, as Musk has explained before on multiple earnings calls, this benefits Tesla. (Though it's bad for the world.) Under existing law, every latecomer auto manufacturer would get the tax credit, while it would expire for Tesla next year. So existing law was giving the latecomer incumbents an up-to-$7500 advantage over Tesla in pricing. All the incumbents have been counting on the tax credit in their pricing and business models; Tesla has been assuming it will disappear and planning accordingly.

If it's removed entirely, then Tesla gets a $7500/car leg up on BMW, Mercedes, etc. in US sales. GM has to cut the price of the Bolt immediately or be totally uncompetitive. You get the idea.

Musk is really thinking several steps ahead of most of the "competitors". This says more about the "competitors" than it does about him.

At this point, this is far more about dirty energy vs EVs than anything else. EVs have not fully taken off yet and people still need the incentive. TESLA was almost done with theirs, but not the other automakers. This sets everyone back and pisses me off. Forget about Tesla, we all know they are ahead of everyone else, this is about moving towards renewable energy and making the world a better place.....and the Republicans just ****ed it up.

 

[Lessmog]

There are still fairly high odds that the worst tax bill ever written in US history dies, because the Freedom Caucus in the House hates the provisions added by the Senate to bribe the most worried Senators, and likely nothing which can get votes from the awful Freedom Caucus guys will retain all the Senators. (On top of that, by the time it gets out of conference committee, the Republicans might have lost a Senate seat -- we'll see on December 12th.)

But if it passes and the electric car tax credit is eliminated for everyone, as Musk has explained before on multiple earnings calls, this benefits Tesla. (Though it's bad for the world.) Under existing law, every latecomer auto manufacturer would get the tax credit, while it would expire for Tesla next year. So existing law was giving the latecomer incumbents an up-to-$7500 advantage over Tesla in pricing. All the incumbents have been counting on the tax credit in their pricing and business models; Tesla has been assuming it will disappear and planning accordingly.

If it's removed entirely, then Tesla gets a $7500/car leg up on BMW, Mercedes, etc. in US sales. GM has to cut the price of the Bolt immediately or be totally uncompetitive. You get the idea.

Musk is really thinking several steps ahead of most of the "competitors". This says more about the "competitors" than it does about him.

I don't follow US politics religiously, but it was reported over here that the tax bill had been voted through in both houses (senate 51-49) and now awaits one Sharpie signature in a different building. How is that affected by the special election in ten days? Can the new senator cast another vote? Seems doubtful to me.

Too bad outcome. Not entirely unexpected. Will this precipitate the Next Yuge Crash, like previous tax "cuts"? How soon? (Asking for all my relatives) ):

 

[3Victoria]

Sorry this is totally wrong. Demand for utility storage over the next decade or so in the U.S. alone has recently been estimated as equivalent to more than 2000 of the S Australian battery project. Energy producers and utility companies care about making money, not so much about how they do it. That is why a huge amount of wind power has been built in north Texas and why solar PV is on an exponential upward curve. These things are driven by the dropping costs changing the economics of what they use.

Yes, surely having a battery-bank would make wind and solar power more useful, since it can provide power and line stabilzation, even when the source is not generating at full power.

Texas is a different market then rest of the US. In many ways, the Texas market is like Australia and not so much like rest of the US.

The wholesale market structure is not very supportive of storage. Even in Australia, big coal has been obstructionist when it comes to regulation, disadvantaging storage.

One needs to spend a few weeks understanding the electricity market structure, regulation, some physics and engineering considerations of electricity transmission & distribution, and the obstructionist politics to understand the landscape.

TE has a bright future in the long-term, the next 5 years of it is not in the US. Australia could be huge for TE. Remember we are under a anti renewable FERC under the coal puppet Neil Chatterjee for the next 3 years.

If you want to dig more, I highly recommend subscribing to the energy transition show podcast by Chris nelder. It's worth every dollar.

These, unfortunately, are all good and pertinent points. Vested interests get in the way of good solutions.

 

[3Victoria]

I take that back. Looks real and I sure hope it is.
TheTeslaLife on Twitter

I note that 001910 appears twice in the photo, so less likely its fake. Would have been nice to have the resolution to read the actual VIN plate.

 

[neroden]

.

is there a site setup yet to email our congressman and senators?

No, but if you are represented by any Republicans, go directly to that Congresscritter's site and email them.

The Democrats are 100% united in opposition to this flaming trash fire of a tax bill, so although it doesn't hurt to email them, it's probably not necessary.

 

[Oil4AsphaultOnly]

Agree with you on "fake" -- how someone would think that a still-frame-photo (like this) wouldn't arouse suspicion is beyond me.

Such a simple question: Why wouldn't the person simply post a snippet video?

Simple answer: Because it isn't reality.

That photo looks fake.

Which makes me suspicious that the 1910 vin is photoshopped, too.

Either one of you paid enough attention to the reflection of the trees off the windshields? At least the end 4 are real, So why go through the trouble of doctoring those and not the others? The vin might be questionable, but the cars are not.

 

[neroden]

I don't follow US politics religiously, but it was reported over here that the tax bill had been voted through in both houses (senate 51-49) and now awaits one Sharpie signature in a different building.

Incorrect report. The House and Senate bills are wildly different (they're both awful bills, which create new loopholes for corporations and the ultrarich with fancy accountants to avoid taxes, while massively raising taxes on most Americans -- but they're wildly different in the details).

They now have to be "reconciled" in a conference committee to create a SINGLE bill. Then both houses have to pass IDENTICAL versions of the bill. If the changes needed to make a single bill lose two Senators' votes, or enough House members' votes, it's dead.

 

[ggr]

.

is there a site setup yet to email our congressman and senators?

You can use the ResistBot. It's really easy.

 

[Lessmog]

Incorrect report. The House and Senate bills are wildly different (they're both awful bills, which create new loopholes for corporations and the ultrarich with fancy accountants to avoid taxes, while massively raising taxes on most Americans -- but they're wildly different in the details).

They now have to be "reconciled" in a conference committee to create a SINGLE bill. Then both houses have to pass IDENTICAL versions of the bill.

Thank you! Explains away some of my confusion, at least.

 

[kelly]

It looks like Sen. Flake added an ammendment to the Senate tax bill last night to end the EV credit at he end of this month.

Does anyone know if tonight's Senate tax bill kept the EV credit? • r/teslamotors

Both Senate and House versions have ended the credit. It looks all but gone unless something dramatic happens to POTUS before the bill is passed.

Vox has a version of the tax bill that was supposedly passed up on their web site that is word searchable: https://www.vox.com/2017/12/1/16724800/senate-tax-bill-text

I was unable to find anything about the ev credit, but it is very possible that it is worded in a way that didn't occur to me. The word "vehicle" only shows up on three pages of the bill and none of them talked about the ev credit.

The reddit thread talks about it being in "section 1102" but I can't find "1102" in the Vox version. The reddit thread has a link to a congressional web site with a different version of the bill: Text - H.R.1 - 115th Congress (2017-2018): Tax Cuts and Jobs Act

I'm not yet convinced that the credit was killed. Can someone show me what I'm missing?

 

[powertoold]

Yes, you linked the bill before all the amendments that were added around midnight last night.

 

[kelly]

Yes, you linked the bill before all the amendments that were added around midnight last night.

I still think the credit is alive. See this post in the thread tax credit thread: Senate Tax Bill Eliminates EV Tax CreditSenate Tax Bill Eliminates EV Tax Credit