ValueAnalyst
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Ok, thank you for clarifying.
How do you expect Model 3/Y battery size/cost/range etc. to evolve over the next three years?
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Ok, thank you for clarifying.
How do you expect Model 3/Y battery size/cost/range etc. to evolve over the next three years?
The last dealer I worked with came very close to committing fraud against its service customers, claiming they tested things which they didn't test, misdiagnosing problems and replacing parts which were fine without fixing the actual problems.... they also have practically a local monopoly on sales. And were so understaffed that they were advertising on the radio for service techs. People are driving 4 hours away to buy from other dealers.
I actually agree entirely with you. The sheer awfulness of the existing dealers gives Tesla a low, low bar to cross.
However, I'm told dealers aren't this bad in *every* country and that it is mainly in the US that they are this terrible... so it could be a headwind in other countries!
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I do have one. But the error bars on the model are very high, giving a very wide range of possible results. Variations in terminal number of cars they can produce per year in each segment make a substantial impact on the result, and guesses regarding costs / margins also affect it.
$1000 is, specifically, the price at which I go back and try to develop a tighter model which gives narrower price targets.
By then I figure there may be more public information to make the factory capacities and cost structure more clear. There's just no point for me in trying to narrow the model down now, since I don't want to increase my exposure (I currently do have a timeframe for some of my money and I need to be hedged against short term market drops) and I certainly don't want to sell any stock. Might as well wait and redo it when I need to.In other words, a pretty good move, if you had the sense to buy back in 2012?
I doubt I'll ever be that good at valuation, but those who are can make fortunes reliably.
Funny question. Actually, yes! My portfolio's only mature company is Berkshire Hathaway, who are NOT behaving this way. It doesn't happen to *every* mature company, just 99% of them.
Hate to say it, but people's attitudes can often be predicted by their life experiences. I tend to discount those highly predictable attitudes because they are not based on reason.
It's known neurobiology that people come up with opinions and then rationalize them afterwards, well over 90% of the time. Separating those rationalizations (or "motivated reasoning") out from actual reasoning is hard for anyone (because everyone works this way!) and any tool which can be used to discount rationalizations is helpful.
In particular, I've noticed two very common biases among Tesla bulls:
-- an overly optimistic, overly aggressive investing attitude which has been documented in studies of Wall Street to be linked to high testosterone levels. Perhaps unsurprisingly, this happens *way* more often with men than with women (though it does happen with some women, and of course there are also conservative men).
-- a technoutopianism regarding "self driving" which is common among people who are (a) younger than roughly my age +- 10 years, and (b) have relatively little experience in math or CS research. (Yes, many of these low-experience people are programmers or work on "AI" -- they still have relatively little experience. Experience with several failed AI research projects would qualify as experience.)
I discount claims about these topics from people fitting the relevant profile and don't bother to try to get information from them, because 99.9% of the time I know what I'm going to hear, and it's worthless garbage.
When I hear such a claim from someone who doesn't fit the profile, by contrast -- a "we can actually do this part" claim from someone who understands the major historic AI and CS failures, or a "no, this is really worth going all in on" from someone who doesn't have the macho risk-taking profile in the stock market -- they are more likely to have useful information or reasoning about why this one is actually different.
It's like... well, in politics, it's like you expect Republicans to call for tax cuts for the rich -- I just ignore any arguments they make in favor, I know it's the same old bull. If Bernie Sanders called for a specific tax cut for the rich, I'd listen, because I might learn something new.
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(And for what it's worth: I was striving for clarity, no offense intended)
JB has pointed out that energy density improvements are practically synonymous with cost reduction... as material costs are a function of materials mass, for the most part. So that means that energy density goes up, cost per kWh goes down.
Given that Tesla is focused on cost reduction, I'd guess that they will strike some balance of reducing price by some degree and increasing capacity by some degree.
Initially I expect they will bias that toward cost reduction. That is to say that if after 3 years they can get a 25% increase in energy density, that they'll introduce a 10% larger pack, but it will cost them 15% less than previously.
Once the cost gets down to "commodity" levels, then I expect they'll bias it the other direction. For another 25% increase in density, they introduce a 20% larger pack, but that costs them 5% less. There are still some usage cases where the existing range afforded by ~100kW packs isn't enough, and eventually getting pack sizes up will help.
Pure conjecture on my part...
The degree of confusion involved in this reporting is very high. Musk's supposed "smaller" tunnels are larger than London Underground tunnels, to point to the most easily debunked part of this.
If he manages to make cheaper tunnelling technology, great, but it certainly won't be by making the tunnels "smaller", not when they're actually larger.
Reciprocity
Active Member
YES! I had a ignition coil seize in the block. I took it to the dealer and they had a bill for about $4k for me. It was my wives old beater minivan that I basically use as a work truck now because its paid for. It wasnt worth $3K before it had issues. I took it to a local guy and he spent all day cutting the seized coil out and replaced it for 1/10th the price. I now take my car to him for everything I need, even simple oil changes. Because I know they are honest. Not that I think the dealer was being dishonest, but certainly taking the easy route.
MitchJi
Trying to learn kindness, patience & forgiveness
That sentence doesn't make sense.
M3 reveal could possibly provide hugely encouraging color on the M3 ramp or not.
That cost figure was based on the current (at that time) energy density.
No that's not correct! Energy density directly impacts the costs . Ten percent income in energy density means the you need about ten percent less materials to produce the same kWh capacity. Also the factory production increases by about ten percent etc.
This is actually an extremely wise quote. Here's a key point: Do they listen to experts? Yes, to know where to expect trouble
Tesla has actually screwed this up *repeatdly*, walking straight into trouble which could have been avoided easily by listening to experts.
SolarCity is the only case where this has been material to financial performance so far. An expert could have told them the "bank-run" dangers of running a banking operation without Fed backing. They could have organized a Fed-backed banking subsidiary and simply *solved* the problem rather than becoming financially unstable.
But there have been several others. License compliance with open source licenses is straightforward, costs almost nothing, and any expert could have told them how to do it. They instead are walking into a large (if not material) financial and reputational liability by not complying.
The necessity for geographic coverage of service is so obvious you barely need an expert to explain it, but it still doesn't seem to have gotten through their heads.
Experts (hell, journeymen!) could have told them how to run their programming team procedures to avoid regressions. I know the standard techniques used for this, which involve bug tracking systems and testsuites. It's obvious they have not been using them.
Ignoring experts is a good way to drive your company bankrupt when it's otherwise golden. I'm not saying you have to agree with experts. You absolutely should listen to them though. They will be able to tell you a bunch of stupid pitfalls to *avoid*. Tesla's actually been falling in some of those pits.
There's a sense in which experts are not there to tell you what to do, but to tell you what has been tried before, and specifically which things *failed*. If you're going to retry something which is known to have failed in the past,... you'd better know about that and know what you're doing differently. By not listening to experts, you repeat the same mistakes of the past.
An example in which Musk and Tesla did listen to experts is the entire company's business strategy. They studied the history of all the automotive startups in the late 19th century, and the expert opinion regarding them, and concluded that the only survivors started at the top of the market and worked down. Most electric car startups were stupid -- they did not listen to the experts -- they attempted to start right off with a "car for the masses" -- they went bust.
Wait, that's not right. 7000 EUR * 1.12 $/EUR / 22 kwh == $356/kwh. Do I have one of the numbers wrong?
....yes, I do have it wrong. You're referring to the 41 kwh battery.
7000 EUR * 1.12 $/EUR / 41 kwh == $191/kwh. Right?
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MitchJi
Trying to learn kindness, patience & forgiveness
You believe that the M3 will have more advanced cell chemistry than the MS-MX?
Why, keeping in mind that changing cell chemistry is relatively trivial?
MitchJi
Trying to learn kindness, patience & forgiveness
That's actually correct, even though your method of getting there doesn't make sense.
The Gigafactories produce a certain number of cells. As the volumetric energy density increases the same number of cells contain more energy, as measured in kWh. So the Gigafactory capacity increased proportionally.
Since you believe that your DCF is important and you believe that understanding battery costs is a critical component of your DCF you should learn more about batteries.
This forum and the battery university web site are not good places to do that.
MitchJi
Trying to learn kindness, patience & forgiveness
Reciprocity
Active Member
Speaking of Gigafactories, an interesting article on Lithium supplies that references Tesla a lot:
Kirill Klip.: International Energy Agency: In Order To Limit Temperature Increase Below 2º C The Number Of Electric Cars Needs To Reach 600 Million By 2040.
Kirill Klip.: International Energy Agency: In Order To Limit Temperature Increase Below 2º C The Number Of Electric Cars Needs To Reach 600 Million By 2040.
ValueAnalyst
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The bolded paragraph is the major way through which battery costs affect my DCF. So as long as we agree on that, that's good for now.
There are of course other ways knowledge of battery chemistry/physics affect my understanding of the company, which is why I'm looking to learn more.
I think Tesla is already letting employees who reserved a Model 3 drive around the release candidates. More than just the test validation engineers. People not part of the test program are driving the cars home. Tesla is already getting feedback from these folks. There are so many Model 3 pictures posted every week. One individual on Reddit even spoke with one of the folks driving the Model 3. He was at a supercharger. Got the mileage/charging picture. The guy driving the Model 3 said he just took it home for the night, and he wasn't part of the test team (or so he claimed). I wouldn't put it past Tesla already putting these cars in the hands of employee reservation holders the last couple of months accelerating the feedback loop to make final changes to the production line/cars.
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