2017 Investor Roundtable:General Discussion

[winfield100]

From about 2000- to 2007, PV doubled every 2 years, then from 2007 – 2012, it tripled every 2 years, from 2012 to present, it slowed to doubling every 2 years, and seems to be doubling ever 3 years to 253 TERAWATT hours/year produced (not counting behind the meter)

Wind went in 2001 from doubling every 3 years, to doubling every 4 years to present, making about 841.2 TERAWATT hours/year, for a total of at least 1,094.2 TERRAWATT hours, by end of 2015.

I would say, perhaps, “the cat is out of the bag”, or “when the avalanche starts, the pebble no longer has a vote”

Get your copy of the 2017 excel data sheet here in a week or so, or get the 2016 available now

Downloads | Statistical Review of World Energy | Energy economics | BP Global

almost forgot PV was 1.1 terawatt hour and wind was 38.5 terawatt hours in about 2001

 

[Reciprocity]

The more I think about the potential Osborne effect the more I ask myself why? Osborne effect is essentially people holding off purchase because a new version is coming out. But wouldn't that impact have started 12+ months ago?

I'm not an expert in automotive marketing but I have a very strong marketing background and I just can't imagine someone in the market for a $50,000 car putting off the purchase for 18+ months because it's the next version. To me it's more people who can't afford $69k and must wait for the $35-45k car. If anything, the 3 had pulled people up to the S already like me with the X. I wouldn't have bought the X if I could have gotten the 3 much sooner.

Any Osborne effect should have happened closer to the reveal. By this time, the 3 should be pushing more people into the S then holding people back as part of some kind of Osborne effect. That or people are way more patient than I ever give them credit for.

Certainly having the 3 in the line up will canabolize those people who would have stretched their budgets to get an S and can now afford a 3. But that group should be fairly small, either you can afford the S or your can't and can only afford the 3, the overlap can't be more then a few percent. For someone like me who could afford an S but didn't want to spend that much, I did it anyway because the allure was so great. That's another small group which should offset the budget stretchers group. In short, there shouldn't really be a true Osborne effect or much canobalization until the 3 is as readily available as the S, which by then you can option the 3 from $35k right up to the price of the S, so there would be no negative impact from canobalization.

Only way to tell us if Tesla gives us some kind of previous for deliveries for 2H2017. Until then, we are all just guessing. My current thinking to very little Osborne followed by massive demand from successful 3 launch and expiring credits 2H2018 with Tesla maxing production regardless of orders to capitalize on the demand. 50k produced 2H2017 S/X with 60-70k in guest half of 2018 and most of that 120k delivered by the end of the second quarter.

 

[geneclean55]

View attachment 228617

April 2013 short squeeze was the take-off phase.

First sell-off happened from September 2014 through October 2016, elongated by the short propaganda. Thanks shorts!

With the recent positive commentary at SOHN Conference, we have entered the Media Attention phase.

As public learns more about Tesla (see my earlier shuttle comments), we will soon embark into the Enthusiasm phase.

This is when the short squeeze will happen.

Who are the public that you are referring too that doesn't understand the basic gist of Tesla, Musk, SpaceX? Musk lands re-usable rockets back to earth, and dates Hollywood types. I don't know anyone that doesn't know who Musk is or his companies, especially among millennials. Are you referring to rural farm owners in Nebraska maybe? I don't see these people being the drivers of future Tesla prosperity.
As for media attention? Musk runs the gamut from daily mail type gossip stories, to relentless business/finance articles.

 

[geneclean55]

The more I think about the potential Osborne effect the more I ask myself why? Osborne effect is essentially people holding off purchase because a new version is coming out. But wouldn't that impact have started 12+ months ago?

I'm not an expert in automotive marketing but I have a very strong marketing background and I just can't imagine someone in the market for a $50,000 car putting off the purchase for 18+ months because it's the next version. To me it's more people who can't afford $69k and must wait for the $35-45k car. If anything, the 3 had pulled people up to the S already like me with the X. I wouldn't have bought the X if I could have gotten the 3 much sooner.

Any Osborne effect should have happened closer to the reveal. By this time, the 3 should be pushing more people into the S then holding people back as part of some kind of Osborne effect. That or people are way more patient than I ever give them credit for.

Certainly having the 3 in the line up will canabolize those people who would have stretched their budgets to get an S and can now afford a 3. But that group should be fairly small, either you can afford the S or your can't and can only afford the 3, the overlap can't be more then a few percent. For someone like me who could afford an S but didn't want to spend that much, I did it anyway because the allure was so great. That's another small group which should offset the budget stretchers group. In short, there shouldn't really be a true Osborne effect or much canobalization until the 3 is as readily available as the S, which by then you can option the 3 from $35k right up to the price of the S, so there would be no negative impact from canobalization.

Only way to tell us if Tesla gives us some kind of previous for deliveries for 2H2017. Until then, we are all just guessing. My current thinking to very little Osborne followed by massive demand from successful 3 launch and expiring credits 2H2018 with Tesla maxing production regardless of orders to capitalize on the demand. 50k produced 2H2017 S/X with 60-70k in guest half of 2018 and most of that 120k delivered by the end of the second quarter.

Completely agree

 

[MitchJi]

1. If you could replace one component and add up to $10,000 in GM to each car would you wait to do it?
2. I get that they have a commitment to Panasonic for 2B cells, but I am sure they can work around that commitment and could probably even offer to buy 21-70 from Panasonic made in Japan/China or wherever they make them. Could also see some demand for 18650 as replacements for existing cars so they could still consume the rest of the 2 billion cells they haven't already. The original contract appears to target end of 2017 anyway and around 280,000 total cars though that comes down with more 100KWh packs.

I was saying that I believe that they are going on make the switch sooner than they are hinting (sandbagging).

The format is mouse nuts in terms of reducing the cost of the cells. I listed the main reasons in the post that you replied to.

Panasonic in China is making prismatic cells. That fact supports my claims that the main advantage of continuing to use cylindrical cells is that Tesla has figured out how to cheaply use them to produce packs.

 

[neroden]

Have you already covered car rentals, car insurance, garages and mechanics and car parking?

Won't change much, won't change much, won't change at all, have to be electricians, won't change at all

 

[neroden]

There are people wondering about that? The answer is no. Because the taxpayer should never bail out any private company, for any reason.

Caveat. Should not bail it out *and leave it private*. Nationalization at a bargain price is totally legit in a lot of cases. If you bail it out and leave it private you're just giving money to private investors who were incompetent. If you nationalize it, the taxpayer has the ability to make money off it.

 

[MitchJi]

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?

You seem to be confused about the potential benefits of the formats vs the advantages of the Gigafactory.

 

[JRP3]

Errr .....
Elon Musk‏Verified account @elonmusk
Replying to @sethjacob19
Early next year. To start with, we're making the simplest Model 3 first, like we did with S. Didn't do it with X, because I was an idiot.
4:23 PM - 22 May 2017

Simplest could refer to RWD and still be highly optioned. Adding options to a vehicle designed for them shouldn't be complex, especially when some are software.

 

[neroden]

Interesting about S/X remaining on 18650s "for now."

I would venture a guess that they've already got the 21-70 redesign ready but are looking at supply constraints. When the Gigafactory is producing enough 21-70s to supply the full needs of Fremont *and* the Powerpack/Powerwall demand *and* more, that's when they'll switch the S and X over. I couldn't possibly guess when that will happen.

 

[Reciprocity]

You seem to be confused about the potential benefits of the formats vs the advantages of the Gigafactory.

Not really, quit the opposite. Happy to move on from the old format and onto the gigafactory, but can't do that if they are contractually obligated to Panasonic for the old cells. I get the advantages of building the largest factory in the world to build one thing, the cheapest most dense purpose built for auto, lithium ion cells and packs. My original point was that Tesla wants the margins from that new cell sooner then later for S/X but they might be contacted to continue to buy 18650 cells for some time.

 

[MitchJi]

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.

The question is not why can't any competitors do any of those things, but why aren't any competitors doing any of those things? Lack of vision and hubris. By hubris I mean not willing to learn from Tesla.

I forgot to add another huge advantage going forward. Tesla and Panasonic are going to be building a lot of instances of their crop manufacturing equipment. They are going to be able to produce that faster and cheaper than anyone else.

I don't understand why you keep stating that Tesla will be able to produce substantially more cells per square feet of factory space than they are able to produce at the GF1! Doesn't make any sense unless you can explain how they can do that.

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 was trying to say that I think *speculation* that they are planning to convert the MS-MX to 2170's about the same time as the M3 production happens. They don't want to announce that now because they don't want to Osborn current MS-MX sales.

I'm not positive about that but I'm absolutely convinced that they are planning to make substantial price reductions, and possibly enhancements to the MS-MX when they introduce the M3.

 

[3Victoria]

Simplest could refer to RWD and still be highly optioned. Adding options to a vehicle designed for them shouldn't be complex, especially when some are software.

Yes, true, BUT options are called options because they are optional. Therefore, a non-optioned car should be available. I worry that Tesla will get lambasted if it doesn't actually have a $36k car available. Single motor, small battery, no options = $35k. If rumours are accurate, we are going to see single motor, large battery +/- options, so not $35k. I am not too concerned personally, since we do not have a long wait now, and I will be happy with what comes. I am hoping for a few surprises. I am in Canada, and given we likely won't see cars until 1Q2018, I may be able to select dual-motor and other options

 

[FredTMC]

Errr .....
Elon Musk‏Verified account @elonmusk
Replying to @sethjacob19
Early next year. To start with, we're making the simplest Model 3 first, like we did with S. Didn't do it with X, because I was an idiot.
4:23 PM - 22 May 2017

Yes. But this is not contradictory. Yes, no performance model yet and no dual motor, but they may require you to purchase loaded interior options.

 

[3Victoria]

Yes. But this is not contradictory. Yes, no performance model yet and no dual motor, but they may require you to purchase loaded interior options.

Yes, there may be feature sets, to simplify production. But I expect one will be able to order a la carte, but will have to accept a longer lead time.

 

[neroden]

Not sure if this has been posted before, but haven't found anything on it on TMC.
From November 2016:
Tesla signs permanent magnet supply deal | Industrial Minerals


Only shows a preview of the article.

I wonder what they're planning to use these for? Neodymium, though not per se rare, is in limited enough supply that it isn't a good idea to use large quantities of it. I hope they're sticking with induction motors for the traction motors...

 

[MitchJi]

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.

I believe that they will produce the cell manufacturing equipment on an assembly line. Somewhat like the MS-MX lines because they will be able to continually add refinements. At some point they needed to stop refining the MS-MX designs and start producing them as efficiently as they could at the time. Same thing with Gigafactory cell production equipment. Their ongoing advantage for quite some time will be the fact that nobody else will be making anywhere close to the same volume of equipment that they will be making.

You could be correct on your assumption, but nobody outside of Tesla knows for sure, I hope that either you are incorrect, or that Panasonic is pretty far along with producing 2179's with a similar technology to the GF1. They could build a smaller factory in Japan that would have a big percentage of the cost benefits of the Gigafactory.

 

[22522]

I wonder what they're planning to use these for? Neodymium, though not per se rare, is in limited enough supply that it isn't a good idea to use large quantities of it. I hope they're sticking with induction motors for the traction motors...

They may sprinkle a little in the front motor. (I don't know what I am talking about).

 

[neroden]

By the way, listening to some O'Neill guy, he says what matters is how the stock performs in the last month/(time period) rather than what you paid for it. So the view above, and the view you are asking for, teaches bad trading practices. Better to leave out what you paid, altogether.

In taxable accounts, taxation considerations make this incorrect; it's often worth holding a weaker (but still good) stock and retaining deferred taxation rather than rotating to a better stock and paying the taxes now. It's also *very* often worth retaining stock long enough to get the long-term capital gains treatment, assuming it's good enough to not crash during that time period. If you're a large investor, these are not small effects: they are large effects.

 

[Reciprocity]

was trying to say that I think *speculation* that they are planning to convert the MS-MX to 2170's about the same time as the M3 production happens. They don't want to announce that now because they don't want to Osborn current MS-MX sales.

It's not just idle speculation, Elon said I think in a post earnings call that they would come to S/X by the end of 2017. The reason? How about 10,000 reasons, which is roughly how much the gross margins go up with 2170, assuming gigafactory1 is running smoothly.