2017 Investor Roundtable:General Discussion

[neroden]

Sure, redesigning it is non-trivial. That's what the R&D team is there for.

Changing over the production line, though, to start putting a differently designed pre-assembled dashboard assembly into the same mounting brackets, is trivial. So far as I know, the dashboard is assembled outside the car, and then put in with a few bolts into the A pillars in a single step. No reason you couldn't put a different one in there (with differently designed/routed ductwork) fairly easily.

Agreed. I believe the R&D team has been focused on Model 3... and on Autopilot... and on simplifying Model X production... and on Semis and Pickups... and then there's Model Y... and the new Roadster...

I'm just guessing that they *haven't* finished the R&D for the retooling of Model S to have a HUD, and that it will take long enough that it won't be ready by the time Model 3 comes out. I could be wrong.

 

[graphix25]

Fun little battery graphic I found in one of the early Gigafactory documents. To me everything about Tesla future success hinges on the little ole battery. It's chemistry, how it's placed into modules and doing so at the lowest cost possible and at giga-scale is key to Tesla future profitability. I'm very happy Tesla decided to partner with Panasonic and didn't try to go alone into battery cell manufacturing. The power of two will be instrumental in getting this process to scale efficiently and spreads the risk. The only drawback is if chemistry innovation is made by a competitor Tesla could be put in a disadvantage being so tightly coupled with Panasonic.

 

[neroden]

It's actually the opposite. They would have switched if they saw a clear advantage to large format pouch cells.

Why would they reinvent the wheel (years of experience and r and d) if they believed that larger format pouch cells are only "potentially equal" to small cylindrical cells.

After really looking at it for a while, large pouch cells are an awful design. It took me a while to figure out why cylindrical cells were superior to button cells (...also a cylinder) until I figured out that the materials expand and contract in a particular direction -- expansion in a button cell would *lengthen* it along the axis, where expansion in a cylindrical cell puts pressure on the *outside circle* which is stronger against the pressure.

 

[neroden]

I suspect GM will loose a lot more than $9,000 on every Chevy Bolt sold. The Chevy Bolt will likely have one of the worst resale value of any vehicle GM has ever produced.

I doubt it. In 5 to 10 years everyone and his brother will be desperately trying to get an electric car, any electric car. The handwriting will be be on the wall for ICE cars. The Bolt will have resale value, as will even the worst first-generation Leafs. Once the gas stations go away, the resale value of gasmobiles will drop to scrap value very fast.

 

[neroden]

Of course, if it something simple, replacing the supplier should be simple, too.

Yes, certainly... which is why I figure it's only a 2 to 3 month delay.

It's often impossible to get *anything* in large volume on shorter notice than that.

Hopefully, they require samples of the parts, and hopefully can predict failures before the deadline, and either produce in house, or find another supplier. I suspect teh suppliers will be motivated not to accrue the bad publicity for missing the deadline.

 

[30seconds]

I'm biased because I live in the Land Of Obscure Corner Cases, featuring wonderful things like one-lane bridges, blind corners, parking lots made of grass, and so on. I think it'll take 10 years + out *here*.

(The "is the other guy going?" problem at a 4-way stop or a 1-lane bridge seems particularly hard. Frankly most humans are quite bad at it.)

I'm also a bit skeptical because in "shadow mode" the cars are training themselves based on average human driver behavior. Which sucks. I think it's going to be necessary to feed in some data for corner cases based on *expert* human driver behavior before we get good results, and that hasn't been done yet.

Interesting but I think the "other guy problem" is easily solved with algos. The 4-way stop situation has a legal algo to go with it (at least in California) and the car can stop before a collision. One way bridge as well - 1. Let the other car go first, 2. Go 3. If there is a conflict back up.

Eventually, and probably not that long from now, autonomous vehicles will probably just signal to each other and sort it out.

 

[neroden]

That’s it. The index includes 500 of the largest (not necessarily the 500 largest) companies whose stocks trade on either the NYSE or NASDAQ. Like popes and Oscar winners, the components of the S&P 500 are selected by committee. And, like the College of Cardinals and the Academy of Motion Picture Arts & Sciences, the S&P 500 committee operates within specific criteria. To qualify for the index, a company must have:

• a market cap of $5.3 billion
• its headquarters in the U.S.
• the value of its market capitalization trade annually
• at least a quarter-million of its shares trade in each of the previous six months
• most of its shares in the public’s hands
• at least half a year since its initial public offering
• Four straight quarters of positive as-reported earnings.

Interesting list. It does seem that typically you don't get kicked out if you lose money for years on end as long as you had positive earnings for 4 quarters once, sometime back in the 1950s.

It's the last item that is the sticking point. Think it would be a no brainer if Tesla has positive earnings 4 quarters in a row. I will be buying speculative calls when we are 3 quarters positive.

Thanks for that detail.

Well, Q3 2016 was positive.

Actually, this gives Tesla an incentive to make earnings come out positive for Q4 2016, Q1 2017, Q2 2017 if they can pull it off. If there's a spike after being entered into the S&P 500 *and* a spike due to Model 3 coming out, then *that's* the time to issue stock to pay down debt and derisk the company. (I'm still expecting an equity raise *after* Model 3 comes out.)

 

[adiggs]

The S&P 500 is actually decided by committee, bizarrely. TSLA would have been added some time ago if it were a mechanically defined index, but the committee has its own particular biases. It does seem kind of unavoidable that TSLA will be added sometime in the next few years, and it'll go up ridiculously the week it happens, because there's *so much money* in S&P tracking funds.

I wonder if we'll see TSLA added due to an existing car maker being acquired or going bankrupt, giving the S&P 500 committee an easy this-for-that swap? And if so, who do we think it'll be?

 

[neroden]

When Musk says FSD will come "hell of a lot faster than anyone is expecting", I believe him. When he says it will be 'technically' done (baring regs) by end of 2017, I believe he will get done maybe by end of 2018, but probably not much more.

It'll be years later than that when it comes to my "wonderful" rural environment. Count on it.

FSD is mostly AI.

AI is a meaningless phrase. I actually know what they're *doing*. They aren't anywhere close to collecting the right data sets for the corner cases I care about. They don't seem to have even figured out what the problems they need to *solve* are, although they're starting to figure out what they are (just in the last year or so).

It'll probably work fine in the vicinity of Fremont by late 2017. I don't live there.

The 80/20 rule applies. They're 80% done now! Great! That means we've only spent *20% of the time* necessary to get 100% done. Based on that, I figure it'll be 10 years.

In the broad scheme of things, of course, that's actually not that far away. That's probably around when I'll need to replace my car.

 

[graphix25]

Ludicrous is what we do!

By the way I was not implying earlier that simply because the volume of the 2170 vs 1865 was 46.58% that it translates to equivalent pack capacity increase. Your point about the important of height was good one in single plane pack. My question was specific about the 30% I keep seeing but don't know the source. Clearly based on Powerpack v2.0 they have made big improvements across the board that translated to a pack density of 2x from v1 in the same physical footprint. The cell format plays a roll but maybe just a small one in the big scheme of things which I believe is your underlying point.

v2 210 kWh per Powerpack
v1 100 kWh per Powerpack

Gaining Momentum with Tesla Powerpack

The changes in cooling are not dependent on the format change except that with a larger diameter format there is a smaller number of gaps between the cells which reduces the possible advantage of the 2170's, which supports the fact that a 30%-48% increase in pack capacity due to the larger format is ludicrous.

 

[neroden]

You should watch the Sterling Anderson's TED talk. Towards the end he makes the remark that 1 fully autonomous car can displace 4 or 5 regular cars (as they can be made to run pretty much all the time).

This is just fundamentally wrong -- Sterling Anderson doesn't know what he's talking about and is exposing his own ignorance. He's missing two major characteristics of auto traffic:
(1) Rural areas. The value of your own car is that it is ready to go immediately. A shared autonomous car has to come to you first, and in a rural area, that's a *long* delay.
(2) Rush hour. The number of cars is sized for *peak* demand, not average demand. There will always be cars sitting around doing nothing at midnight, being used during rush hour.

Now, if you happen to live in a big city where there is likely to be a car nearby at any moment, (1) doesn't apply as much... unless you're in rush hour and all the autonomous cars have been taken already. And if you happen to live in a city which is very active 24/7 and has widely staggered shift starts and stops, then (2) applies less than it does to, for example, the Gigafactory with the entire shift arriving and leaving at the same time.

But these two factors are huge, and dominant. How many cars are really sitting idle *during rush hour*? That is the MAXIMUM number of cars that autonomous vehicles can permanently remove from the roads. Then subtract from that all the cars which are at isolated ranch houses or farms where it would take ten minutes to get to the next house. That even lower number is the MAXIMUM number of cars you'll see displaced. You'll actually see fewer than that displaced because many people will choose to have their own car for other reasons (not wanting smokers to use the car, etc.)

My point is that autonomous cars aren't really going to reduce the number of cars much. If you have data which shows that there are a lot of cars, in dense urban/suburban areas, sitting idle *during rush hour*, I would love to know how many there are. Maybe it's more than I thought.

The effect of autonomous cars on *cost* is another matter. I've often thought that big cities ought to have a lot higher usage of taxis (or the taxi-like Uber and Lyft and so forth) than they actually do, and the reason is probably the cost. Autonomous cars, once you've got enough corner cases working, are strictly superior to taxis in every way while simultaneously being much cheaper to operate. They won't just replace the taxi market, they'll substantially enlarge it.

But there are no taxis or Ubers in rural areas and it isn't for lack of drivers, it's for lack of practicality.

 

[doctoxics]

(This thread definitely go much faster than I can keep up with, sorry if now this post seems OT, it wasn't when I started writing it).

One thing that I realized, after two years of investing in Tesla, is that it's really hard for people to get it.
If they get EVs, they don't get how extraordinary is Elon Musk, his vision, his work ethic, his brain, his "first principle first" approach.
If they get the vision, they don't get economics of scale of batteries.
If they get both, they don't get AP.
If they get everything, they don't get how much and why there is no real competition.
If they get all that, the don't get BEV and Solarcity or the "Alien Dreadnought" or OTA updates.

After hundreds of hours reading this forum and articles and books about Elon, I keep on forgetting little crucial details: why Tesla technology is better, HUD, Panasonic involvement, Silevo tech, AP updates, ridesharing potential, and many other layers and facets.

I've spoken with many many people about Tesla, and many of them knew the auto industry (or engineering, or physics, or trading) much, much better than me. But they really didn't get it, they couldn't grasp the totality of it: both the vision and the details. It took me a lot of work to understand and then believe it.

Understanding Tesla is hard, and this is also why many insiders still don't get it. The market eventually will, and is. And this is why, I think, a factual miss on deliveries was received well. They are starting to understand this is real

Yes, understanding Tesla is hard, but working at it is pure joy. The more one understands about Tesla and Elon Musk, the more one realizes just how important this all is and how essential it is to a better life, and even survival.

 

[JGInnovation]

Clarification: gas stations ALREADY make no money on gas.

It's run as a loss leader to get people into the convenience stores.

Well, they often make a little gross profit, but I've read that it's under 1%. This certainly does not cover the capital costs of the tanks and pumps and so on, let alone the liability costs for spills.

They will be happy to get rid of the tanks and pumps and replace them with maintenance-free Superchargers which have no environmental liabiilties. Just as long as it brings people into the convenience stores.

Tesla's already got deals with at least two regional chains to do exactly this (Sheetz is one of them)

The business plan won't work. The overhead of a gas station is too high and the regular public (future Tesla owners) are very sensitive to fuel prices, as well they will be fully aware of what they pay for electricity at home. It won't be okay to charge significantly more than what Tesla charges at a Supercharger. Tesla pays for installation, maintenance and the electricity and doesn't need to make any profit at all on running the superchargers. It makes much more sense to build chargers in shopping/restaurant areas and let most gas stations die - most gas stations are located in the wrong place anyway with many people charging at home. Why would you want to pay more at a gas station then goto a supercharger with better amenities? Another network of fast chargers may compete with superchargers but the model will most likely follow what Tesla has done. Someone with deep pockets like Google, Apple or Amazon could do it but it is still clearly means the end of most gas stations.

 

[Waiting4M3]

Interesting but I think the "other guy problem" is easily solved with algos. The 4-way stop situation has a legal algo to go with it (at least in California) and the car can stop before a collision. One way bridge as well - 1. Let the other car go first, 2. Go 3. If there is a conflict back up.

Eventually, and probably not that long from now, autonomous vehicles will probably just signal to each other and sort it out.

On 4 way stop, yes we have a legal algorithm here in California, but some people still sit there and wait for a written invitation. I can't wait for all cars to have autonomous capability.

Speaking of, anyone know if Elon/Tesla has made any mention of V2V communication?

 

[neroden]

The business plan won't work....

You don't understand the business plan.

The former gas stations (now convenience stores) simply install FREE TO USE chargers.

Why would they charge money for using them? The gasoline was a loss leader for them anyway. The charger is going to be a loss leader too, but it'll burn less money than the gasoline tanks and pumps did.

Look, this is already happening even without electric car chargers! I can name three former gas stations in my area which ripped out the pumps and tanks but are still convenience stores.

These "gas stations" were located at spots along the road where people like to stop to get a bite to eat or a drink or go to the bathroom; they're still good convenience store locations.

Perhaps you don't understand the existing economic situation. The 'upstream' oil companies make money selling the oil they pump out of the ground; the refineries buy it, turn it into gasoline and sell that at a profit; the delivery companies charge a markup and truck it to the gas stations; but then the gas stations sell it at cost, or sometimes at a loss. In order to get people to come into the convenience stores. They hate it when you buy gas and don't come into the store to buy soda or candy.

The gas stations are not owned by the oil companies any more, with rare exceptions. They actually pay franchise fees to the oil companies to put the Exxon/Shell/BP/Sunoco name up, which makes the gas even less profitable.

If you offer the owners of the gas stations a different way to bring people into their convenience stores, with no franchise fee, no environmental liability, no tank inspections... they'll go for it. (As soon as they believe that there are enough electric car drivers that it will work.) The amount they pay for electricity for the free charging? Probably smaller than what they were losing on maintaining the gas pumps to EPA standards. As soon as the number of gas car drivers drops too low, so that the gas pumps are not bringing in enough business, they'll rip the gas pumps out.

 

[austinEV]

Thanks for clarification. Fewer gaps but they will each be larger. Still, the density per unit area of the new pack would seem to be increased. I can wait.

"Volume" does not capture what's happening inside the cell though. Ladies and gentlemen, we have a Jelly Roll. How many more Windings of film/coatings does each additional mm of diameter allow to fit?

(when these are dissected and able to be examined)
18650 cell Anode Surface Area:
18650 cell Cathode Surface Area:
2170 cell Anode Surface Area:
2170 cell Cathode Surface Area:
Carry on.

The cross-section density of the modules doesn't change with the radius. The density of circles is ~0.9: Circle packing - Wikipedia. The ENERGY density doesn't change (it does change due to the length, all things being equal a fatter pack has more energy, but that would be true of a "18700" as well. The COST density goes down since there is less manufacturing per cross sectional area. Just rolling the cells a bit more is less cost.

 

[TNEVol]

Paying for charging at neighborhood chargerr rather than charging at home is doomed. The Blink model makes no sense against home charging. For example I use only one Blink charger about once a month because it is in a very crowed parking lot and has several reserved places even though I don't need a charge. The last time I charged there I paid the equivalent of $3+ per gallon. Paying these prices in a neighborhood is foolish in a long range BEV if you have alternatives such as charging at home

 

[JGInnovation]

You don't understand the business plan.

The former gas stations (now convenience stores) simply install FREE TO USE chargers.

Why would they charge money for using them? The gasoline was a loss leader for them anyway. The charger is going to be a loss leader too, but it'll burn less money than the gasoline tanks and pumps did.

Look, this is already happening even without electric car chargers! I can name three former gas stations in my area which ripped out the pumps and tanks but are still convenience stores.

These "gas stations" were located at spots along the road where people like to stop to get a bite to eat or a drink or go to the bathroom; they're still good convenience store locations.

Yes some independent gas stations will decide to turn into a convenience store since the building already exists and may add superchargers. They will suffer though because the car throughput won't be the same as a gas station. Obviously if they have a unique location advantage they might survive as a convenience store. This won't likely happen at the Exxons and Chevrons etc... because they will resist until it is too late. Most gas stations will die because with EV's you don't need the chargers to be located at an existing gas station and EV drivers need to use Superchargers much less than a gas station because you charge mostly at home. This is called Disruption - you are stopping at refilling stations 1/10 as much as with an ICE and most aren't located at gas stations. Tesla doesn't care, they just want good supercharger locations.

 

[Krugerrand]

Toyota makes mediocre cars, albeit reliable ones. Keep in mind that this is a company whose core products (like Corolla, Camry, RAV4, maybe Prius) are are inspiring as cardboard. They've been resting on Prius laurels for a decade now.

If you're pizza you're definitely inspired by cardboard. Cardboard needs love too.

 

[3Victoria]

This is just fundamentally wrong --

You make good points. However, I not sure that everyones whole approach to travel will not change when autonomous vehicles arrive. Are people not more likely to carpool? Carpooling is a bit onerous on the car owner, as they have to get up earlier and drive around picking up their colleagues. With autonomous, the car does that. Perhaps rush hour gets better. Perhaps the small autonomous cars drop you at the autonomous bus, and it brings in 12 people at once.

Ummm, someone must be writing their thesis on this.