I need zero charging infrastructure for day trips. If I'm taking a day trip I don't like to spend the whole day driving, and the Model S has more than enough range for anywhere I'd want to go for a day trip.
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Long-Term Fundamentals of Tesla Motors (TSLA)
- Thread starter Robert.Boston
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- elon is an ass investing TSLA
I need zero charging infrastructure for day trips. If I'm taking a day trip I don't like to spend the whole day driving, and the Model S has more than enough range for anywhere I'd want to go for a day trip.
kevin99
Member
I saw someone suggested Tesla can strike again to raise a new round of capital. Not a bad idea considering it could allow them to scale up the production more rapidly than previously planned, not to mention the possibility of building a battery plant. These are fairly new developments that were not in the picture when Elon said no plan for additional funding.
CitizenT, like to do another speculation on that? I enjoyed your thriller last time. :smile:
CitizenT, like to do another speculation on that? I enjoyed your thriller last time. :smile:
Citizen-T
Active Member
I don't see any good reason to do a capital raise right now. Money isn't a limiting factor, so throwing more money at their problems won't do any good. They need to keep their heads down and focused on executing right now. They already have a huge task at hand. I am very wary of companies that try to grow too fast (see Starbucks). It often doesn't end well.
JRP3
Hyperactive Member
kevin99
Member
I think it totally depends on their progress on battery cell production. As we deduced in the battery thread (and later confirmed by Elon), they have a huge challenge with production ramp-up, as they are on their way to consume the entire global production of 18650 cells. If they have to make an acquisition, build a battery fab or contribute to financing someone else's plant, they might need a good chunk of extra cash.
If I were Elon and saw a 50/50 probability of needing, say, $500m for this purpose, I would raise it now. The financial market may close next week and make it impossible to raise anything for the next 1-3 years, and in any case this is a very good valuation to raise money on.
If I were Elon and saw a 50/50 probability of needing, say, $500m for this purpose, I would raise it now. The financial market may close next week and make it impossible to raise anything for the next 1-3 years, and in any case this is a very good valuation to raise money on.
Then again if, as reported, Panasonic is investing 200 million into reopening closed lines, Samsung SDI and BYD are coming in as suppliers, they don't need to invest themselves. I look at the basic cell they buy as any other raw material. They don't build a foundry to produce aluminium rolls either or start their on fabric production line for carpets.
Having said that, their own internal wizard department turning those cells into these state of the art battery packs will need to be expanded, much like the rest of the production lines.
Tesla would be very foolish to dismiss this issue in such a cavalier way. Luckily they are not.
I think a key strategic skill is to recognize what is commodity and what is strategic sourcing. Aluminum is clearly a commodity - you order a certain amount and pay the going rate. Tesla can grow 100-fold without making a huge dent in the global supply.
On the other hand, battery cells are not a commodity for Tesla. On the one hand, you are right that, ideally, Tesla should not invest in capacity. On the other hand, the cell suppliers are almost certain to under-invest in capacity in the current scenario. If they build as much capacity as Tesla needs to grow according to the most optimistic projections, they are almost certain to be stuck with excess capacity. They are much more likely to invest just enough to meet conservative demand scenarios. Which means that Tesla's growth rate gets restricted to those scenarios.
"But", you may object, "the recent announcements are proof that this is not a problem!". However, I am not sure $200 million will buy anywhere near the capacity that is needed - that is more likely to be in the billions (again, ref the battery thread).
I think Tesla will need to be closely involved in building the capacity they need for fast growth. This may take many forms - they can guarantee volumes, they can buy options on production capacity, they can provide loans or equity, and so forth. Elon said that a giga-factory needs to be built, and when asked said that they would consider building it themselves if suppliers didn't.
The combination of those two beliefs will likely form the investment thesis for many TSLA investors over the next few years.
I'm thinking that the main investment thesis for TSLA investors in the next few years will likely be centered around these two main train of thoughts:
1. Belief that majority of new cars sold will be electric by 2030.
2. Belief that Model E (Gen III) will outperform its competitors (ie., BMW 3 series, Audi A4, Lexus IS, etc) and eventually outsell them.
(as #2 is fulfilled, people will start envisioning how Tesla can conquer the Camry market)
#1 focuses on the huge disruption coming to the ICE vehicle market. While #2 focuses on Tesla's ability to design and execute a mind-blowing car at the $35k price point.
For #2, when I test first test drove the Model S in late 2012, I immediately thought "Tesla just needs to shrink the Model S and make it cheaper, and they'll rule the auto world." That's the dream/vision of the Model E (Gen III) vehicle, and it's a very powerful vision especially since Tesla has already delivered a stellar Model S vehicle that outperforms its competitors.
For #1, I think it's helpful to use the tech adoption curve to see where we might be in the bigger picture. Elon mentioned he's made a bet with someone that the majority of new cars sold by 2030 will be electric. So, I'm using that to signal the 50% transition point (from early majority to late majority). From that I'm tracking backward to estimate 2022 as the beginning of the early majority (34% of total), and then tracking back to 2017 as the beginning of the early adopters (13.5%). Many of us think we might be further along than the "innovators" phase since Tesla's been around for a while with the Roadster and the Model S is the second generation vehicle. But we're still talking about miniscule numbers compared to the total # of vehicles sold every year (ie., 35mm+ vehicles sold in just China and U.S.). So, we're well within the first 2.5% of the eventual EV market (which should be as large as the current new ICE car market eventually).
The biggest challenges IMO will be scaling production for Gen III (ie., 2017-2022) and also NOT underestimating demand for the 2022-2029 period, which should be off the charts (2022-2029 Gen III demand could be an order of magnitude greater than 2017-2022 demand). The pace of adoption of EVs will be so fast (ie., growth trajectory) in the 2022-2029 period that I don't think there's really any way Tesla can meet all the demand (even Tesla producing 5mm+ vehicles/yr wouldn't be enough). They'll need other auto manufacturers to make compelling EVs as well.
By 2029, if 50% of new car and commercial vehicles sold in the world are electric, then that would be approximately 65 million EVs per year (world car and commercial vehicles grew 54% from 1997 (54 million) to 2012 (84 million). If we assume another 54% growth from 2012 to 2029, then we'll have 130 million new cars & commercial vehicles sold in 2029. Automotive industry - Wikipedia, the free encyclopedia).
ps., I shared these thoughts a few weeks ago in the short-term thread but though I'd expand them here on the long-term fundamental thread.
I'm thinking that the main investment thesis for TSLA investors in the next few years will likely be centered around these two main train of thoughts:
1. Belief that majority of new cars sold will be electric by 2030.
2. Belief that Model E (Gen III) will outperform its competitors (ie., BMW 3 series, Audi A4, Lexus IS, etc) and eventually outsell them.
(as #2 is fulfilled, people will start envisioning how Tesla can conquer the Camry market)
#1 focuses on the huge disruption coming to the ICE vehicle market. While #2 focuses on Tesla's ability to design and execute a mind-blowing car at the $35k price point.
For #2, when I test first test drove the Model S in late 2012, I immediately thought "Tesla just needs to shrink the Model S and make it cheaper, and they'll rule the auto world." That's the dream/vision of the Model E (Gen III) vehicle, and it's a very powerful vision especially since Tesla has already delivered a stellar Model S vehicle that outperforms its competitors.
For #1, I think it's helpful to use the tech adoption curve to see where we might be in the bigger picture. Elon mentioned he's made a bet with someone that the majority of new cars sold by 2030 will be electric. So, I'm using that to signal the 50% transition point (from early majority to late majority). From that I'm tracking backward to estimate 2022 as the beginning of the early majority (34% of total), and then tracking back to 2017 as the beginning of the early adopters (13.5%). Many of us think we might be further along than the "innovators" phase since Tesla's been around for a while with the Roadster and the Model S is the second generation vehicle. But we're still talking about miniscule numbers compared to the total # of vehicles sold every year (ie., 35mm+ vehicles sold in just China and U.S.). So, we're well within the first 2.5% of the eventual EV market (which should be as large as the current new ICE car market eventually).
The biggest challenges IMO will be scaling production for Gen III (ie., 2017-2022) and also NOT underestimating demand for the 2022-2029 period, which should be off the charts (2022-2029 Gen III demand could be an order of magnitude greater than 2017-2022 demand). The pace of adoption of EVs will be so fast (ie., growth trajectory) in the 2022-2029 period that I don't think there's really any way Tesla can meet all the demand (even Tesla producing 5mm+ vehicles/yr wouldn't be enough). They'll need other auto manufacturers to make compelling EVs as well.
By 2029, if 50% of new car and commercial vehicles sold in the world are electric, then that would be approximately 65 million EVs per year (world car and commercial vehicles grew 54% from 1997 (54 million) to 2012 (84 million). If we assume another 54% growth from 2012 to 2029, then we'll have 130 million new cars & commercial vehicles sold in 2029. Automotive industry - Wikipedia, the free encyclopedia).
ps., I shared these thoughts a few weeks ago in the short-term thread but though I'd expand them here on the long-term fundamental thread.
Sunnyday
Member
If TSLA can produce the same WOW among GenIII customers as they do with MS customers, then these projections are likely too conservative. Ray Kurzweil speaks about how linear progress doesn't apply to tech-driven innovations, which tend to be more exponential. The more an innovator innovates, the more they can innovate on top of their innovations. If TSLA can crack the production nut, Elon will beat his 2030 target by 5-10 years. Here's Kurweil speaking about the law of accelerating returns:
Ray Kurzweil: The Law of Accelerating Returns - YouTube
Citizen-T
Active Member
Ray's law is for information technologies (auto manufacturing isn't there yet and neither are batteries), and speaks to price/performance improvement per unit time, not adoption.
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Having worked for an auto major for 5 years (Cadillac Programs) I see how different Tesla is, both in terms of what the car is made of and how it is made. However I know very little about the battery manufacturing process so can't comment on that specifically. The shear amount of complex hardware that is in a typical car is not there in a Tesla. I believe Elon is right in calling it a semi-tech company and I think it's future growth will track closer (although not exactly) to a tech company rather than a traditional auto manufacturer.
Thanks DaveT for the great thoughts.
I was looking up a little more information about the Technology Adoption curve and it mentions that adoption over time fits a normal distribution. So if 2030 is the mean, or start of "Late Majority", then the start of "Early Majority" will be one standard deviation out and the start of "Early Adopters" will be 2 standard deviations out. How many years are you using as the standard deviation? I got a little confused with your model using 2022 and 2017 because those time frames don't follow a standard deviation.
If we assume 16% of new vehicles sold will be EV at the start of the "Early Majority" phase (2.5% innovators + 13.5% early adopters) we will be looking at a figure of roughly 14 million vehicles. 14 million EV cars will translate into a whole lot of batteries; assuming 18650 format at ~5250 cells per car (~ 75% of MS) that would be on the order of more than 70 billion cells. The question to ask then is what is the pathway to building this kind of infrastructure? What is current worldwide battery capacity at? When there is a clear pathway to building that kind of infrastructure it might be easier to estimate where we are on the adoption curve.
I do not doubt Elon that we can reach 50% by 2030, but the battery piece of the equation has been keeping me up at night.
Originally, I was just working backward from a 2029 target where 50% of new vehicles sold would be electric. Someone earlier had mentioned that we're currently in the Early Adopter phase of the tech adoption curve, but when I looked at it it seemed like we're still in the Innovator phase.
If we used 6 years as a standard deviation, then Early Majority could start in 2023 (Early Adopter starts in 2017 and Late Majority in 2029). However, as you point out 16% of new vehicles sold would need to be electric in 2023 for that to happen. And the major constraint seems to be battery production. Another scenario is we could push out the 50% mark to 2030 and still use a 6 year standard deviation. Early Majority would start in 2024 and Early Adopter would start in 2018. Innovator would start at 2012 (0.1% of 84m vehicles is 84,000 EV/year. Estimates have it at 53k EVs actually sold in 2012) and pre-Innovator would start in 2006.
Even reaching 2.5% of new vehicles sales (ie., 2.5% of 84 million new vehicles sold in 2012 would be 2.1 million EVs per year) by 2018 would be very challenging with current global battery production constraints (unless some major investment in new factories happened very soon).
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InTheShadows
Active Member
Can we invest in any of these battery companies? I looked for Panasonic but couldn't find it on the US market. Are any of the others?
JRP3
Hyperactive Member
Panasonic to build new $366 million lithium-ion plant in China : zero emission motoring
Panasonic Inaugurates New Lithium-ion Battery Plant in China to Respond to Global Demand | Headquarters News | Panasonic Global
Yes, it was built on an existing site, but it took them 15 months to go from announcement to starting production. I think that suggests it shouldn't be that big a deal to ramp up production. The cell factories are automated so expansion should be a logistical issue rather than a major problem.
Citizen-T
Active Member
That may be true, but that doesn't make it an information technology. Tesla may grow like a tech company more than an auto company, but you can't use last year's cars to build better cars this year, so I don't see the exponential improvement in price/performance like you get with the tech that Ray talks about.
All the technology that Ray talks about follows this pattern. Faster computers are used to solve complicated problems that allow the next generation of computers to get faster. 3d printers can print 60% of the parts for a new 3d printer. Nano tools can be used to build the next generation of nano tools. I just don't see this characteristic in auto manufacturing, Tesla or otherwise.
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