General Discussion: 2018 Investor Roundtable

[mikevbf]

With the factory as a product concept, Tesla should be able to build on the knowledge learned with GF1 to scale even more rapidly with future Gigafactories, allowing it to take advantage of its leading position in the EV and storage markets.

I wonder if other car manufacturers will ever outsource to Tesla/Panasonic to build them their very own Gigafactories? Will Tesla/Panasonic be better at it than anyone else in lets say 10 years, for example?

 

[Reciprocity]

With the factory as a product concept, Tesla should be able to build on the knowledge learned with GF1 to scale even more rapidly with future Gigafactories, allowing it to take advantage of its leading position in the EV and storage markets.

I used to think that as well. The problem with Tesla is that they do not leave well enough alone. Meaning they wont take the easy way out and always seem to be tweaking and inventing and pushing the limits. I could see a scenario where each Gigafactory is almost unique. For sure, future Gigafactories should build the vehicles and probably even solar roofs. Certainly some learnings will apply, but they will be making V 2.0 and V3.0 and so on with each factory and certainly those will be based on V1, but will be different enough to make it hard on us investors. But it certainly is required to stay ahead of the competition.

 

[schonelucht]

Producing the Model 3 at volumes targeted and with the current performance, efficiency and expected cost would not have been possible.

Ironically, so far is has indeed proven impossible for Tesla too. Tesla is just not there where you all project them to be. Today, battery pack production from Tesla is 1) not at volume, 2) not available in a car with positive gross margins (let alone net profits) and 3) is not available in the benchmark 'affordable EV'. LG through the Bolt pack scores 2/3 for 18 months now on those metrics. Which should be even more remarkable than it already is because 2) and 3) are supposedly impossible without 1)

And Tesla would likely not be the leader in storage pricing or battery cost generally.

Well no, it simply sells at a net loss.

 

[AudubonB]

We also need solar-powered ships. I think those could become feasible before aircraft.

We have had solar-powered ships, very very efficient ones, for a very very long time. 'Course, we call them by another term but wind is just one force removed from their solar-derived energy. And as Old Zeb said, according to Gordon Bok: At least for me, the wind is free, and they haven't run out yet

 

[schonelucht]

I wonder if other car manufacturers will ever outsource to Tesla/Panasonic to build them their very own Gigafactories? Will Tesla/Panasonic be better at it than anyone else in lets say 10 years, for example?

Of course It's also increasing output at home

 

[MP3Mike]

LG through the Bolt pack scores 2/3 for 18 months now on those metrics.

Where are you getting information that the Bolt has "positive gross margins"?

 

[Waiting4M3]

I used to think that as well. The problem with Tesla is that they do not leave well enough alone. Meaning they wont take the easy way out and always seem to be tweaking and inventing and pushing the limits. I could see a scenario where each Gigafactory is almost unique. For sure, future Gigafactories should build the vehicles and probably even solar roofs. Certainly some learnings will apply, but they will be making V 2.0 and V3.0 and so on with each factory and certainly those will be based on V1, but will be different enough to make it hard on us investors. But it certainly is required to stay ahead of the competition.

For all we know, GGF#1 is already on V1.5, with the alien dreadnought upgrade.

 

[Big Earl]

Volkswagen pours $25 billion into electric-car batteries, challenging Tesla

"Manufacturing the powerpacks themselves is not in the cards. “This is not one of our core competencies,” said Mueller, who has faced pressure from employee representatives to invest in battery-cell production. “Others can do it better than we can.”"


Shouldn't the headline read "Volkswagen preparing for $25 billion cash burn"? Or does investing in the future equate to 'cash burn' for only one company on Earth? I'm confused.

VW is just buying time while they wait for their diesel renaissance.

 

[schonelucht]

Where are you getting information that the Bolt has "positive gross margins"?

Go here for a complete analysis

 

[Reciprocity]

For all we know, GGF#1 is already on V1.5, with the alien dreadnought upgrade.

They pretty much said that already. If you recall the original target was 35GWh of cells and 50GWh of packs, more then doubled a few months later. They still need to hit those targets, but certainly, they iterate very quickly and they dont wait to do it.

 

[kbM3]

and 3) is not available in the benchmark 'affordable EV'. LG through the Bolt pack scores 2/3 for 18 months now on those metrics.

Benchmark affordable EV is a Chevrolet concept. They thought the real race was the first to a long range sub $40k EV. That is not, and never was, the race. The race is to create vehicles that dominate their price segments. Only Tesla has accomplished this so far.

 

[schonelucht]

I think you're also reaching. I doubt someone like VW would ever outsource their engine R&D and design, which is equivalent to what they're doing here. They're leaving the functionality of the cell completely up to their suppliers.

You are right, they would never and that's why they don't 1) VW is involved in the cell make up, R&D and chemistry, just not the production. 2) the cell is just the starting point. afterwards there is the pack assembly, the management system, the invertor, the motor itself and the software to manage it all. Each of those VW will have a varying level of inputs, design decisions or inhoused competences. Sure Tesla may be more vertically integrated in some areas, but it is unclear what the real world difference is let alone if in totality it will be the overall better strategy.

 

[Waiting4M3]

They pretty much said that already. If you recall the original target was 35GWh of cells and 50GWh of packs, more then doubled a few months later. They still need to hit those targets, but certainly, they iterate very quickly and they dont wait to do it.

I wonder if a couple of things that happened in the last 2 quarters changed Tesla's roadmap/timeframe for building new GGFs, possibly reducing the urgency

1) successful in using Samsung 2017 cells for SA TE project
2) in-house design M3 battery module production line can have 4x throughput and smaller footprint

 

[RobStark]

Anyway. I note that the previous claim on this board that "They would never find the batteries" was proven false and is now downgraded to "They may have a smaller R&D budget on battery cells but we don't actually know"

We don't know what they have secured.

How many GWh per year?

We know $25B. But over how many years? 5,10,15, 20?

 

[Waiting4M3]

You are right, they would never and that's why they don't 1) VW is involved in the cell make up, R&D and chemistry, just not the production. 2) the cell is just the starting point. afterwards there is the pack assembly, the management system, the invertor, the motor itself and the software to manage it all. Each of those VW will have a varying level of inputs, design decisions or inhoused competences. Sure Tesla may be more vertically integrated in some areas, but it is unclear what the real world difference is let alone if in totality it will be the overall better strategy.

I would disagree with the bold section. I think we're already seeing the benefit of in-house design of motor in M3, with improved efficiency, lower cost, we also had glimpse of Tesla's battery roadmap if they can put a 200kwh battery in the new Roadster.

 

[EinSV]

Ironically, so far is has indeed proven impossible for Tesla too. Tesla is just not there where you all project them to be. Today, battery pack production from Tesla is 1) not at volume, 2) not available in a car with positive gross margins (let alone net profits) and 3) is not available in the benchmark 'affordable EV'. LG through the Bolt pack scores 2/3 for 18 months now on those metrics. Which should be even more remarkable than it already is because 2) and 3) are supposedly impossible without 1)

Well no, it simply sells at a net loss.

You are switching to the argument that Tesla will not be able to make the Model 3, Semi, storage, etc products at the scale and cost they expect — basically that they will fail. If I believed that I would sell every share today.

Pointing to performance at early stages of product ramps is a non-sequitur. It ignores Tesla’s guidance and plans for volume and margins for Model 3, as well as specs for future products which have already been revealed like the Semi.

The point in my earlier post stands — Tesla’s battery pack engineering and production is a key competitive advantage and, unlike VW, a core competence. Without it, the Model 3, Semi, Roadster and storage products would be nowhere near as compelling.

 

[RobStark]

Ironically, so far is has indeed proven impossible for Tesla too. Tesla is just not there where you all project them to be.

This is asinine.

Tesla is in ramp up phase.

25k Bolts per year is not mass manufacturing a $38k car.

 

[Bobfitz1]

How? The cell fabrication process is proprietary to Panasonic and off limits for Tesla employees. It's a supply contract for output from a co-located factory. Tesla participates in securing raw materials (see his recent visit to Chili). Volkswagen is too. Tesla is participating in research & development, Volkwagen is too (notably to reduce Cobalt content) I fail to see the dramatic difference. There is just one : Tesla does pack assembly themselves, Volkswagen is outsourcing that as well. Given how well pack assembly is going, I am not sure there are huge rewards to reap there.

The following is just speculation, not anything I have great evidence to support.
Tesla and Panasonic have been joined at the hip the past 4 - 5 years because each had compelling reasons to partner.
How and if they may partner in future Gigafactories is uncertain and would be negotiated if both saw that as a continuing win/win.
There is no insurmountable obstacle to Tesla manufacturing the cells it needs in future GFs without Panasonic.
Given Tesla has a preference for vertical integration of critical component manufacture, they are likely to have been preparing to go it alone on new factories at some point. Panasonic patents on cell manufacturing processes are not an insurmountable obstacle.
Some will expire, others are likely to lose relevance due to Tesla innovating on the needed automation technology. U.S. patent law is arcane and experts constantly find novel ways around patent protections. When disputes are litigated, it can be years before they are resolved. It's understood Tesla is researching all promising potential battery break throughs and developing ones it believes are most likely to give them cost and performance advantages. Differences in cell design and chemistries make changes and improvements in manufacturing nearly certain, again undermining the value and relevance of Panasonic patents.
Finally I believe that Tesla innovates at a significantly faster rate than Panasonic. If you are going to be tied at the hip with a partner, they best be able to keep up and not slow you down.

 

[EinSV]

I used to think that as well. The problem with Tesla is that they do not leave well enough alone. Meaning they wont take the easy way out and always seem to be tweaking and inventing and pushing the limits. I could see a scenario where each Gigafactory is almost unique. For sure, future Gigafactories should build the vehicles and probably even solar roofs. Certainly some learnings will apply, but they will be making V 2.0 and V3.0 and so on with each factory and certainly those will be based on V1, but will be different enough to make it hard on us investors. But it certainly is required to stay ahead of the competition.

I agree that Tesla will innovate on the production side and future GFs will not be identical to GF1. Tesla constantly innovates on all of its products (thousand sod changes on Model S for example) so its GF “products” will be no different.

As you note GFs 2-10 do not need to be identical to GF1 for Tesla to benefit from its experience with GF1 to build future GFs more quickly and effectively and with better performance in terms of output, quality, cost, etc.

 

[Starno]

I think the argument of Amazon hurting Tesla can come from the fact that Amazon will ship stuff right to your house, and you won't need to leave your house to buy stuff. And so less cars will be used.