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With greater production capacity, Tesla can now go both ways: made to order and inventory. It's welcome news, wise, inevitable and good to know that production and marketing have finally reached a point at which they can better cooperate to get more cars into the hands of both patient and impatient consumers. I have been posting for years on this message board that this eventuality would be most welcome and a boost to share price. The market gets it and is showing its appreciation.
FredTMC
Model S VIN #4925
DurandalAI
Member
I do worry that Model S and X owners that are nearing the end of a lease may scoff if their potential S and X upgrades don't have the new battery cell format, even though it's just a battery cell size question, and should not offer any difference in functionality. All they will hear is that the Model 3 has "bigger battery cells." Tesla may need to counter that with some other argument, such as Model S and X getting faster charging than what is currently offered. Honestly it's not a functional pinch, but a PR/Marketing pinch that this makes.
Now, on the realm of speculation regarding Panasonic, is there any reason why Panasonic cannot upgrade their JP production lines to produce the new cell format?
Reciprocity
Active Member
I get what your saying, but if there is no demand for 18650, you really lose cost savings benefits because its all cost and no revs. My assertion is that this fact is already baked in, meaning that Panasonic and Tesla have known for a while they where not going to be using 18-650 beyond this year (~280k cars worth) and that they would be working together to build 21-70 even if at the time they didn't know exactly what the format would be, they knew that it would be different because a car is not a camcorder. Is there still a market for 18650 beyond Tesla? Other electric cars potentially? Is there an exclusive deal between Panasonic and Tesla for cars, as it relates to 18650?
Two pieces of information.
If I want to do something like that I start by calling Vanguard. (Or your brokerage firm)
I read here? that Tesla did some sort of hedge to limit the convertibility gains with that method.
I did not understand as my sandbox is big enough already. (There are lots of things I do not understand, could become prey if not overly conservative).
Reciprocity
Active Member
If you build something and it takes 5 days to build, which they dont. Why would you wait 20-30 days to start? You are getting constant orders, they do not stop. You dont have any downtime in order flow, not even weekends. This was our problem that we solved by producing almost everything within 24 hours or order. It become a competitive edge and there was no reason to wait. You might wait a few days to get some groupings that make sense, but that still points to more demand because they are having to wait less and less time to get groupings that are more efficient or they have become so efficient at producing that they dont bother waiting. Either is a good result.
You could be right and maybe people all the sudden stopped wanted the best car made. That is as possible as solar roof being sold out well into next year.. oh wait. That just shows the kinda fervor people have for these products, demand is not slowing down.
Reciprocity
Active Member
I have an X, just a small sample, but I wont be to hurt if my 3 has bigger cells..
ValueAnalyst
Closed
Let me play devil's advocate for a hot second:
1. Why can't competitors also design such equipment? Has Tesla patented these? Can't competitors' existing manufacturing partners design similar manufacturing equipment?
2. Somewhat agreed. Can't Panasonic, or another battery manufacturer, also collocate with other manufacturers? It's not like Panasonic is human; they can build similar factories.
3. Agreed, but that's still in process for Tesla as well. I'm very very curious about the level of vertical integration for next-gen Gigafactories.
4. We're still yet to get some numbers around production rate for next-gen Gigafactories. I'm very excited about this, but for now, I'm being conservative with 1-1.5m/yr per additional Gigafactory.
Why would they keep MS/MX at old battery technology if they're concerned about osborning from Model 3? What am I missing here?
I can't play devil's advocate on this. I'll leave such ridiculousness to bears.
ValueAnalyst
Closed
Tesla essentially created a structure similar to "bull spread" for the benefit of existing shareholders to limit dilution from convertible bonds if the stock rises substantially. You can find the details on this in the latest Form 10-Q.
But that wouldn't affect the upside for convertible bondholders.
Not experienced in bonds, and hate options because of expiration dates, so I'm sticking with all stock with a moderate amount of margin.
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DurandalAI
Member
1. Competitors COULD if they were forward thinking enough. They're crippled by legacy equipment and short-term profit motivation. What the bears call cash burn, we call future investment.
2. Panasonic could co-locate, but again, this relates to #1, not having a 10-20 year plan but instead a 3-5 year plan.
3-4. Tesla is applying what it learns on GF1 to future GFs. Hopefully they do no cloning, but instead refine, otherwise they'll be hit in the long-term with what competitors have on #1 with legacy equipment.
It's my understanding (and someone correct me if I'm wrong) that the GF won't ramp up fast enough to accommodate Model 3, TE, and S&X cell production, hence why S&X will be sourced from current sources, as the profit margins produced from GF1 aren't as critical on S&X.
Reciprocity
Active Member
Future GFs will be vastly different because they will have raw materials coming in one side and finished cars and solar products coming out the other end. The current GF does batteries and some power train. That is why I think we might see one of the next 3 GF in the US for the Model Y. Fremont will be maxed out with oh so much dirty S3X, they will a new clean factory for the Y.
JRP3
Hyperactive Member
I'd think cost would be the only obstacle. The sizes are so close some line machines may be able to adapt with only adjustments, and some of the machines aren't size dependent, (slurry mixers). On the other hand they may want to change everything to optimize speed of production depending on how old the line is.
Yuri_G
Member
His paycheck says no.
Oh, a note...
If Tesla has been building Model 3 battery modules for months now, I expect that they've been building them with Panasonic's 2170 output. I doubt the Gigafactory Model 3 cell production has been up and running for months. I expect that it won't ramp until July-August and that the first Gigafactory module is making TE product (NMC). Of course, they could make runs of NCA on it, but it would make sense to use Panasonic's production lines first.
We should start to consider what we would think is a success for Model 3 output in the months ahead, as well as what the market will perceive.
One of the possibilities is for Model S/X to use Panasonic's 2170 production capacity during the cut over while the Gigafactory ramps. The cost structure is already there in the S/X to support Panasonic's Japanese output anyways. I had always surmised that Panasonic's output could be directed to TE since that tolerates a higher cost per kWh.
If Tesla has been building Model 3 battery modules for months now, I expect that they've been building them with Panasonic's 2170 output. I doubt the Gigafactory Model 3 cell production has been up and running for months. I expect that it won't ramp until July-August and that the first Gigafactory module is making TE product (NMC). Of course, they could make runs of NCA on it, but it would make sense to use Panasonic's production lines first.
We should start to consider what we would think is a success for Model 3 output in the months ahead, as well as what the market will perceive.
One of the possibilities is for Model S/X to use Panasonic's 2170 production capacity during the cut over while the Gigafactory ramps. The cost structure is already there in the S/X to support Panasonic's Japanese output anyways. I had always surmised that Panasonic's output could be directed to TE since that tolerates a higher cost per kWh.
I am wondering if there is some detail that was lost in translation from the battery module article. If they are hand packing 20 modules a day (5 cars worth a day) how does that match up with 1k parts ordered per week for July, 2k parts ordered per week for August? Maybe the automated cell lines will come online quite early.
RobStark
Well-Known Member
The Workhorse PHEV pickup truck with 60 kWh battery pack is using Panasonic 18650s.
And several electric skateboards are using Panasonic 18650s. They advertise they are using "Tesla battery cells."
As of now that is an itty bitty tiny market but......
Personally I am more interested in the quality of early production models than the quantity although it may be difficult to get useful intel until non-employees start getting their cars. In terms of volume, market expectations still seem to be relatively low compared to Tesla's plans but it is difficult for me to predict market reactions.
Part of the challenge in predicting the market reaction is that while the Model 3 ramp is obviously critical context is important. There are a large number of potential market moving events on the horizon. How these play out could have a significant effect on how impatient/forgiving the market is for the Model 3 rollout.
Here is a list I jotted down recently for my own purposes:
Potential positive events:
June 2 factory VIP event
June 6 SH meeting
July 2/3 Q2 deliveries
M3 launch (July/August 2017)
Initial FSD differentiation (6-9/2017)
Aug. 2017 Q2 results
Semi launch (9/28/2017)
350+kw Supercharger (possibly 9-10/2017)
TE ramp (2H 2017)
4 new GF location announcements and updated long-term plans/goals
M3 initial ramp to 5000/month (12/2017)
FSD demo (12/2017)
M3 initial margins (mid-late 2018)
TE margins (mid-late 2018, possibly later)
FSD functional with human oversight in some real-world settings such as delivery of goods from warehouse to warehouse near freeways (mid-late 2018)
Initial Solar Roof ramp (late 2018 or 2019)
wild cards include analyst upgrades, new "brand name" investors, new products, EV/solar/storage mandates or regulatory changes, etc., solar roof order info/ramp, Semi reservation info/Model 3 updated reservation info
Potential negative bumps:
Problematic M3 launch (timing or quality)
Problematic M3 ramp (ditto)
4 new GF location announcements and updated plans/goals (if cap needs perceived negatively)
FSD demo delays (needs to be major to matter)
FSD competition proven to be tracking ahead of Tesla
AP2/FSD serious injury accidents
Semi is a flop (unlikely)
Excessive cash burn/cap raises
Wild cards include macros, personnel/union issues, macros, tax law and other regulatory changes esp in US or China, macros, unknown product defects, macros, bullish analyst downgrades, macros, more effective FUD.
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