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China Gigafactory

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I hope you realize the hard part of this is going to be installing all the equipment and training the workers. The factory is not so much a building you occupy, but a machine that you have to design, construct, test and calibrate to get working the way it is intended.

Once the building is up and the drone videos go dark, we will only have reports from Tesla to go by... and the number of cars being pushed out the door.
 
Musk said in the conference call they expect to produce 1,000 model 3's a week by the end of the year with target production rates of 3,000 a week. Given they have only sold 20,000 cars a year in China, I wonder how many they can sell there after the factory is pumping them out?

Price cuts are certainly important, but in China they have competition. I wonder if any of the Shanghai gigafactory cars will be shipped to the US?
 
I hope you realize the hard part of this is going to be installing all the equipment and training the workers. The factory is not so much a building you occupy, but a machine that you have to design, construct, test and calibrate to get working the way it is intended.

Once the building is up and the drone videos go dark, we will only have reports from Tesla to go by... and the number of cars being pushed out the door.
Are you predicting that Fremont Tesla factory will never make Model 3 back in 2017? How about Model S back in 2013? Give your track record now for past events so we can gauge what you think of future events.
 
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Small relevant tidbit from the quarterly : Tesla has drawn $11M from the $520M loan facility for the Chinese gigafactory and is paying 3.9% interest.

That interest is about $20 million a year which is not really so much.

Any idea how much of the loan will be for the building, etc, and how much for the equipment to be installed? I'm wondering how much they will be paying the workers to train them and get them up to speed on the assembly line?

I'm not totally sure what Tesla is claiming will be the milestone at the end of the year, but it seems they are forecasting that automobiles will be produced in more than token quantities. I'm pretty sure it has been claimed that they will be producing at least 1,000 a week by end of 2019. I'm also not clear where the batteries will be coming from. I've read they will be getting batteries from a Chinese company (forget the name). Will they be the same as Panasonic makes? The Panasonic batteries seem to have a pretty good track record. I wonder if a new company will be able to match that?
 
Small relevant tidbit from the quarterly : Tesla has drawn $11M from the $520M loan facility for the Chinese gigafactory and is paying 3.9% interest.
Considering how much of the factory was done at the end of March (A LOT), I'm fairly impressed that Tesla has only spent $11 million on it so far. Did they get a very good deal from the construction firms?
 
Considering how much of the factory was done at the end of March (A LOT), I'm fairly impressed that Tesla has only spent $11 million on it so far. Did they get a very good deal from the construction firms?

Considering how fast it's being built, even payment terms of say 60 days means they can get a lot of construction done with payment still due. Weird to be thinking of payment terms that would apply on parts for manufacturing stuff, in the context of building a really massive manufacturing plant.
 
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Groundbreaking was on January 6. Even with 90-day terms, they should have been paying for those dozen giant pile drivers by April.

Here's where they were on Jan 26th:
Either that grading and pile driving -- including the site offices and 24-hour work -- only costs $11 million, or they're getting very generous payment terms.

I suspect they're getting very generous payment terms.
 
Groundbreaking was on January 6. Even with 90-day terms, they should have been paying for those dozen giant pile drivers by April.

Here's where they were on Jan 26th:
Either that grading and pile driving -- including the site offices and 24-hour work -- only costs $11 million, or they're getting very generous payment terms.

I suspect they're getting very generous payment terms.

I hesitate to draw too specific of a conclusion, but one relevant observation is that USD goes further in China than the US.

Cost of Living Index by Country 2019

So that $11M might have purchased something more like $22M or $33M in US terms worth of construction work.


However exactly it's happening, there's clearly a lot of activity and forward progress, for not a lot of money out of pocket so far. I anticipate there will be more money out of pocket coming :)
 
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I hesitate to draw too specific of a conclusion, but one relevant observation is that USD goes further in China than the US.

Cost of Living Index by Country 2019

So that $11M might have purchased something more like $22M or $33M in US terms worth of construction work.


However exactly it's happening, there's clearly a lot of activity and forward progress, for not a lot of money out of pocket so far. I anticipate there will be more money out of pocket coming :)
Tesla's 500m capex estimate basically covers tooling. Building and equipment seem more like build-to-suit lease assets.