-
Want to remove ads? Register an account and login to see fewer ads, and become a Supporting Member to remove almost all ads.
Long-Term Fundamentals of Tesla Motors (TSLA)
- Thread starter Robert.Boston
- Start date
-
- Tags
- elon is an ass investing TSLA
Krugerrand
Meow
When you frame the situation in this manner with the math - well, I can't even put it into words how far ahead Tesla is in their planning and preparations, and I can't decide if I'm crazy to be able to see so clearly what Elon's laid out going forward or if I'm crazy to believe it's going to happen. It seems so obvious, I just don't understand how (as an example) GM could announce the Bolt (and presumably be 'serious' about producing it per their announced FULL SPECS) and NOT also be laying the groundwork (battery factories or some such, charging infrastructure or some such etc...). To not be doing so suggests to me they are either blowing nothing but hot air, or are mentally crippled. Perhaps both. We're witnessing and amid a colossal (world) domination by one or a colossal blunder of epic proportions.
adiggs
Well-Known Member
Isn't investing in Tesla grand?
I find myself hoping for more of a dip from the current level, as an excuse to add some more shares.
Pretty much comes down to ability to generate demand and produce vehicles. GF is major part but also ability to scale factory and generate demand. GF seems to be going well.
In terms of demand generation we are already ahead of Elon's 2012/ 2013 estimates for Model S (~30k total WW) so I am less worried about impact of slower than hoped uptake in China and Germany getting in way of long term plan. Based on Elon's comments it seemed that total WW demand for S + X in the 50k range would be sufficient to get to GF and Model 3.
Of course Tesla has to be able to make the cars. Given the recent analyst note (this week) of 1000-1100 cars/ week it looks like they should be able to meet 40-45k demand for Model S this year. The big question (to me) is do they have enough WW demand this year for 40-50k cars?
In terms of demand generation we are already ahead of Elon's 2012/ 2013 estimates for Model S (~30k total WW) so I am less worried about impact of slower than hoped uptake in China and Germany getting in way of long term plan. Based on Elon's comments it seemed that total WW demand for S + X in the 50k range would be sufficient to get to GF and Model 3.
Of course Tesla has to be able to make the cars. Given the recent analyst note (this week) of 1000-1100 cars/ week it looks like they should be able to meet 40-45k demand for Model S this year. The big question (to me) is do they have enough WW demand this year for 40-50k cars?
Krugerrand
Meow
This has to be a dream, no? How is anything else possible? I keep pinching myself, and running it over and over in my head.
Long and strong, but constantly questioning my sanity.
- - - Updated - - -
I'm unsure how Tesla could be more clear than they already have been for the past year: Demand is not an issue. Demand is not an issue. Demand is not an issue. I think there needs to be a new Tesla t-shirt available at stores that says: Stay calm, demand is not an issue. Seriously.
Another question is can they service that many? Non emergency service appointments have a 5 month waiting list in Norway & 1 month in California with the current size of the fleet, I don't see a lot of discussion regarding service capacity expansion to handle the impact of adding 60k in 2015 & 100k in 2016.
RobStark
Well-Known Member
jhm
Well-Known Member
How much self-funding could finance the Gigafactory?
Tesla has raised about $2B for the Gigafactory, and Panasonic has committed itself to invest $2B spread out over 8 stages. Now if the Gigafactory requires a $5B investment, where does the remaining $1B come from? The Gigafactory itself, I will argue. Let's have a little fun with math to see how much self-financing is plausible.
To keep things simple, let's look at this from a Gigafactory JV perspect so we don't get bogged down with how pays for what between Tesla, Panasonic and any other partners who may join in. Let's assume that, to reach 50GWh annual capacity, the Gigafactory requires a $5B investment, $1B for property and plant and $4B for equipment. Thus, $1B is needed upfront and the $4B can be rolled out 1GWh at a time as capacity is needed. So the marginal investment is $80M per incremental GWh.
Let's further assum that 1 kWh of battery pack can be sold from the JV for $200 at a cost of $140 to the JV. Thus, the JV gross profit per GWh is $60M. Lest furthe assume that the JV retains $52M per GWh to self-fund the roll out of equipment. Thus, the JV is able to grow at a self-funded rate of 65% = $52/$80 per year. To arrive at 50 GWh capacity in 2020 on a self funded basis, it needs 30.30 GWh capacity (=50/1.65) in 2019. And to get this, it needs 18.37 GWh in 2018, 11.13 GWh in 2017, and 6.75 GWh in 2016 (= 50/1.65^4). So kick this off the JV needs external financing (from Tesla, Panasonic, and other partners) for 6.75 GWh worth of equipment in 2015 at a cost of $540M plus property and plant at a cost of $1B.
In this first stage, Panasonic is investing $300M. This leaves to Tesla an investment of $1.24B which it began last year and may conclude this year. The remaining $3.46B investment can be self-funded by the JV.
Tesla has raised about $2B for the Gigafactory, and Panasonic has committed itself to invest $2B spread out over 8 stages. Now if the Gigafactory requires a $5B investment, where does the remaining $1B come from? The Gigafactory itself, I will argue. Let's have a little fun with math to see how much self-financing is plausible.
To keep things simple, let's look at this from a Gigafactory JV perspect so we don't get bogged down with how pays for what between Tesla, Panasonic and any other partners who may join in. Let's assume that, to reach 50GWh annual capacity, the Gigafactory requires a $5B investment, $1B for property and plant and $4B for equipment. Thus, $1B is needed upfront and the $4B can be rolled out 1GWh at a time as capacity is needed. So the marginal investment is $80M per incremental GWh.
Let's further assum that 1 kWh of battery pack can be sold from the JV for $200 at a cost of $140 to the JV. Thus, the JV gross profit per GWh is $60M. Lest furthe assume that the JV retains $52M per GWh to self-fund the roll out of equipment. Thus, the JV is able to grow at a self-funded rate of 65% = $52/$80 per year. To arrive at 50 GWh capacity in 2020 on a self funded basis, it needs 30.30 GWh capacity (=50/1.65) in 2019. And to get this, it needs 18.37 GWh in 2018, 11.13 GWh in 2017, and 6.75 GWh in 2016 (= 50/1.65^4). So kick this off the JV needs external financing (from Tesla, Panasonic, and other partners) for 6.75 GWh worth of equipment in 2015 at a cost of $540M plus property and plant at a cost of $1B.
In this first stage, Panasonic is investing $300M. This leaves to Tesla an investment of $1.24B which it began last year and may conclude this year. The remaining $3.46B investment can be self-funded by the JV.
RobStark
Well-Known Member
The State of Nevada gave Tesla $195M in transferable credits.
Which various Nevada companies agreed to purchase from Tesla at full value before the deal was finalized.
Plus, Panasonic suppliers are supposed to purchase their own equipment. Companies like Hitachi that already supply Panasonic in Japan in making cells for the Model S. That is supposed to be the other $805M. Tesla, as the landlord of the GF, takes care of any cost overruns.
Which various Nevada companies agreed to purchase from Tesla at full value before the deal was finalized.
Plus, Panasonic suppliers are supposed to purchase their own equipment. Companies like Hitachi that already supply Panasonic in Japan in making cells for the Model S. That is supposed to be the other $805M. Tesla, as the landlord of the GF, takes care of any cost overruns.
jhm
Well-Known Member
Rob, will these suppliers of Panasonic also manufacture at the Gigafactory? And if so, will they allocate the $805M over the 8 stages along with Panasonic?
So this basically could explain where the entire $1B investment comes from, while the self-funding argument speaks to how the JV partners can pay for their share of the investments.
In my previous post I forgot to mention that the $2600M of retainable gross profit in 2020 can in principle pay off all the initial investment and leave $1B to invest in the next Gigafactory. I do, however, believe that a second Gigafactory will be built before the Sparks Gigafactory reaches full capacity.
JRP3
Hyperactive Member
RobStark
Well-Known Member
1)Yes, Panasonic suppliers will turn raw materials into battery precursor materials and components at the GF. The point of the GF is not only scale but centralization of production to save on shipping cost.
2) No contracts have been signed yet but I would assume so. What is the point of Hitachi having 35 GW installed capacity if Panasonic only has 4.375 GW installed capacity?
jhm
Well-Known Member
I was assuming a price of $200 with cost of $140. So a 50 kWh would be just $7k, just 20% of the base price of the Model 3. A complicating issue here, however, is that $140 is the cost to the JV, so the GM on that is shared among JV partners. Suppose the $36 out the $60 GM/kWh must be shared back to JV partners. This brings the full cost to Tesla to $176/kWh or $8800 for 50kWh pack, 25% of the $35k base. I've heard that the battery pack of the Model S is 1/4 the price of the car. So I think we're in the right neighborhood.
Even so, the critical assumption I am making for the self-funding argument is $52 GM/kWh to the JV. So other price points get you there, for example, $172 price at $120 cost. Musk has been expecting a cost below $100 by 2020.
I see it the same way - it's obvious what needs to be done but no one else is doing it. I've come to the conclusion that it's because of the structure of corporations. The incentive for top level management is to keep the status quo with very small incremental steps forward and collect your pay - the board/shareholders won't fault you for running the company into the ground even disruption kills the business, therefore in such a case you still get a nice golden parachute. Think of it this way - the old execs of Nokia did just fine for themselves, despite botching the massive Nokia market share by not responding to the iPhone. It's kind of sad it works this way, but at the same time provides the opportunity for new companies to enter.
A friendly advice to some; it is dangerous to fall in love with a stock.
Famous quote from one long time successful Swedish investor “De är alla samma skit” meaning “they are all the same sh*t”.
Don’t fall in love.
Famous quote from one long time successful Swedish investor “De är alla samma skit” meaning “they are all the same sh*t”.
Don’t fall in love.
Last edited:
Similar threads
- Locked
