For me, yesterday's conference call provided the justification for bringing under the aegis of this thread the topic of a battery plant - it wasn't before, in my opinion.
I remain opposed to it under normal circumstances and, were I sitting on TMC's board, would play the role of the Loyal Opposition.
Normal circumstances means that TMC is a majority owner, operator and beneficiary of the output. Co-owner/operators could be Panasonic, Samsung, LG, perhaps I Chinese player I'm not aware of.
My reasons for opposition are primarily for the difference of business from TM; secondarily for the disruption of capital flows. That latter soaking-up of capital normally would be paramount, but it is very easy to imagine a Panasonic, etc., being the Deep Pockets for such a venture, so it is easy for me to dismiss it out of hand. Thus we need look into the difference of business.
TM is a manufacturer of a highly complex end product and it is in this field that it excels. A battery is metallic (usually) tube enclosing an extremely simple set of basic chemicals, slightly enhanced by a very modest packet of electronic circuitry. It is never appropriately considered as a final product, rather, is very much a component. Batteries, thus, are a commodity product - the successful manufacturer is the one able best to design and operate its sourcing and production line marginally better than the competition, and the devil take the hindmost. Margins are minuscule; market share is everything. A fine business for some; NOT the business for an end-product corporation. In my experience, the market is littered with companies that attempted to incorporate swaths of differing businesses - the great experiments of the 1960s and 70s all came to bitter ends for ITT, LTF, Sears and even, I can argue, GE. And in this era, the financial markets despise them for its inability properly to price them.
Now, let's perform a gendankenexperiment and assume that Toyota and Mercedes also come in as partners. How might this change the environment? For me, this creates a spreading of risk and so mollifies my opposition somewhat, but it doesn't change the overall unattractiveness of the business proposition.
Now, let's assume this plant is set up to produce 18650-style batteries. Mr. Musk and company have been very careful over time to reiterate these are the most appropriate power packages for the moment, but almost certainly to be eclipsed eventually. To me, that says I dig in my heels even further until I can be convinced that, FOR NEGLIGIBLE COST, this giga-factory would be able to alter production to put out The Next Best Thing.
Now, let's further refine my earlier caveat about "normal circumstances". Here, my opposition begins to melt. Mr. Musk has been unwavering in stating his goal: to bring the world to replacing transport from an individually-powered hydrocarbon-fueled model to an all-electric (except for rockets, of course and wonderfully ironically). Tesla Motors and whatever financial success it enjoys is a player in this very grand scheme, but it is NOT the goal. So, if this gigafactory is structured as to be instrumental in this latter Big Picture, rather than as to be fundamental to the medium- and long-term success of TMC, then I have to backpedal and re-assess - as should the market. It would, I should thereupon hope, most definitely include Toyota, MB and whichever other of today's automobile companies are appropriately forward looking as partners in one way or another.
Gotta go - the day is on us.
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