Short-Term TSLA Price Movements - 2016

[GBleck]

tipical Monday bump up or break out?

 

[sunhelm]

This article is quite good: Tesla Races to Finish ‘Gigafactory’ in Time for Model 3 Rollout
But the comments suck, as per usual .. complete trash and FUD.

Did Mike Ramsey of WSJ have a change of heart towards Tesla after having been granted an exclusive interview by EM? It appears so. Looks like EM and Mike have become bros, exchanging video game experiences via Twitter after the interview.

 

[madodel]

But what is fueling this? 4 weeks ago everyone (except a few of us) was down on TSLA/SCTY. If that is reaching the point of a done deal why would the SP be zooming up? Do people care about the GF opening party? ;-) My guess is the bears are scanning all police channels for the word Tesla at this point.

 

[yesla]

We have been so neglected recently, 3% makes us so happy

 

[jhm]

I'll take a whack at checking your math by estimating a different way.

Aerodynamic & rolling resistance, power & MPG calculator - EcoModder.com

Rolling resistance - Wikipedia, the free encyclopedia

That link shows the ecomodder drag and rolling resistance calculator for an 80000lb fully loaded semi with optimistic Crr and Cd, with a frontal area of a little over 9 m^2 https://www.the-blueprints.com/blue...-4x2-semi-trailer-tractor-streamspace-cab.png

Using that table, somewhere right around 69mph it takes 150kW to overcome the drag.
150kWh = 69mi, therefore that's a fair bit more pessimistic than your example, at 2.17kWh/mi

Because the trailers are a standardized size and shape, I don't think you can appreciably change the A component of the drag equation, and .0045 is already pretty optimistic on the Crr. And sure, 80k lbs is a fully loaded worst case. Tesla does have experience with producing vehicles with low Cd, though, so maybe they can do better than my optimistic estimate of 0.6

Truck drivers are allowed to drive for 11 hours in the US, and 69mph * 11 hours = 759mi.

759mi * 2.17kWh/mi = 1647kWh. You could probably have 8x 200kWh modules.

If I use the Panasonic NCR18650B datasheet http://www.batteryspace.com/prod-specs/NCR18650B.pdf which is the cells Model S used to (still does?) use: 243Wh/kg, and you seem to be WAY optimistic on cycle life.

200kWh modules would be 823kg or 1810 lb. 8 of them would consume 14,485lb or about 18% of the load capacity.

The data sheet suggests 300 cycles to 80% capacity. This article Tesla Model S Battery Life: How Much Range Loss For Electric Car Over Time? claims 94% capacity after 50k mi on 85kWh Model S. S85 had 240mi EPA range, so that would suggest 208 cycles to that point. 80% cycles, times a more conservative 500 cycle life = 400kWh lifetime output per kWh capacity.

400kWh / 2.17kWh/mi = 184.3mi lifetime / kWh capacity. Using a more typical semi average fuel economy of 6mpg, that's about 30.7 gal of fuel displaced.

30.7gal * $2.50/gal = $76.80. - ($40/MWh energy cost * 0.4MWh) = $60.80 -- not enough to even reach optimistic gigafactory cell pricing.

Slowing down to 55mph cuts the energy requirement to around 89kW. Or 1.61kWh/mi
55mi * 11 hours = 605mi
605mi * 1.61kWh/mi = 974kWh
Use 8x 120kWh modules instead.
120kWh = 493kg or 1086lb * 8 = 8691lb or around 11% of the payload capacity.
400kWh / 1.61kWh/mi = 248.4mi lifetime / kWh capacity. Displaces 41.4 gal of fuel
41.4gal * $2.50/gal = $103.51 - $16 energy cost = $87.51 -- closer, but still not quite there.

I don't think you need to pay for the cell cost with the fuel savings though. Semi's are expensive vehicles, and I'm guessing the cost savings of not needing a big diesel engine will buy a fair number of batteries.

Thanks, Racer. I think your analysis shows why battery swapping is really the way to go. In an 11-hour shift, swapping (or charging after shift) 3 to 4 times can dramatically cut down on the amount of batteries needed, reduce the displacement of payload capacity to about 5%, and cycle the batteries several times per day to minimize cost of capital (speed up time to break even on the batteries).

Your analysis is substantially more conservative on battery performance attributes, density and life cycles. This is fine, but we also have reason to believe that density can increase around 7% per year and that life cycle performance will also improve. In deed it is hard to find other applications where the value of improved life cycle performance would yield substantial financial gains. That is without high daily cycling, financing and obsolescence undermine the value of high cycle life. But here with battery swapping we see an application that can burn through cycle life at maximum speed. This makes batteries more of a consumable that can compete with oil than capital expense which must be heavily financed. Indeed, if the swap fleet got cycled 3 times daily, it would burn through a 1000 cycle life in less than a year. So clearly pushing the cycle life from 500 to 1000 can double the value of these batteries on near term earnings. Regardless of our starting point, this is a proving ground where advances in battery tech can yield big results quickly.

Thanks for taking a look at this!

 

[sundaymorning]

The $300 million finance scty received last week likely fueled Wall Street's confidence in its business viability. It couldn't have came at a better time to cement strength for Tesla's proposal. This deal is more than likely to go through.

 

[racer26]

Thanks, Racer. I think your analysis shows why battery swapping is really the way to go. In an 11-hour shift, swapping (or charging after shift) 3 to 4 times can dramatically cut down on the amount of batteries needed, reduce the displacement of payload capacity to about 5%, and cycle the batteries several times per day to minimize cost of capital (speed up time to break even on the batteries).

Your analysis is substantially more conservative on battery performance attributes, density and life cycles. This is fine, but we also have reason to believe that density can increase around 7% per year and that life cycle performance will also improve. In deed it is hard to find other applications where the value of improved life cycle performance would yield substantial financial gains. That is without high daily cycling, financing and obsolescence undermine the value of high cycle life. But here with battery swapping we see an application that can burn through cycle life at maximum speed. This makes batteries more of a consumable that can compete with oil than capital expense which must be heavily financed. Indeed, if the swap fleet got cycled 3 times daily, it would burn through a 1000 cycle life in less than a year. So clearly pushing the cycle life from 500 to 1000 can double the value of these batteries on near term earnings. Regardless of our starting point, this is a proving ground where advances in battery tech can yield big results quickly.

Thanks for taking a look at this!

Nothing I find more annoying than people that speculate without backing up their position with real, verifiable facts, or at the very least, explaining what lead them to the idea of why their estimates are reasonable. I liked your posts, because you at least followed through on the math to make your argument. It allows for a proper debate to happen, because I can pick apart why our numbers are different. I can't debate a number given with no reasons.

I'm not debating at all that there are probable improvements on the horizon that make the numbers more rosy. I was interested in doing the math and proving its viable today even without them.

In my opinion, facts of what is possible today > speculation about what might be possible tomorrow. In this case, its economically viable to build a Tesla Semi today, and the gains that tomorrow will make possible will only improve the profit margins.

 

[vgrinshpun]

The press only event ahead of the Friday's GF opening party is scheduled for tomorrow:

We’re in Reno/Sparks this week for Tesla Gigafactory Opening, starting tonight

 

[ev-enthusiast]

We need a bounce here to keep positive momentum.

 

[generalenthu]

For those looking at the mechanics of short selling and recalls for voting, this is probably a relevant but old article. It does look like there are issues with lent and re-lent shares and recalling them in time. And with SCTY particularly being heavily shorted as a % of outstanding shares, this recall process is bound to be messy and also somewhat scary as a dual TSLA & SCTY (long options position entered after the offer announcement) investor.

How Borrowed Shares Swing Company Votes

 

[rallykeeper]

Reading that article, I can't help but also think:

Isn't Q3 2016 when we should start seeing the ridiculously broken GAAP accounting of those sales from 2013 drop the huge phantom liability to the customer that basically doesn't exist, and record the remainder of selling those cars as profit now?

Exactly! (Julian seems to have missed this point -- although the article is characteristically lengthy and I may have missed it in my skim).

As long as the RVG existed and sales were increasing, Tesla was effectively digging itself a hole in trying to match GAAP revenues (delayed recognition) to non-GAAP revenues (immediate recognition). In other words, it would defer revenue recognition on more sales than it was recognizing from 39 months prior.

Of course, now with the RVG terminated, prior sales are gravy for the next 39 months. Tesla can recognize more revenue under GAAP (because of prior sales) than non-GAAP.

There are way too many variables at play to have much confidence, but it does seem like Tesla could achieve GAAP profitability in Q3 because of this change alone.

 

[BornToFly]

The press only event ahead of the Friday's GF opening party is scheduled for tomorrow:

We’re in Reno/Sparks this week for Tesla Gigafactory Opening, starting tonight

That is FANTASTIC! I didn't know about the press tours tomorrow. That should lead to some good press and a nice SP bump sooner than I expected.

 

[ev-enthusiast]

We need a bounce here to keep positive momentum.

Perfect, like in a textbook, and now up and away on increasing volume with a close above current HOD and resistance at $229.
BTW I love the idea that we will see a continuous information flow this week from TM as there are multiple events surrounding the GigaFactory opening event.

 

[vgrinshpun]

For those looking at the mechanics of short selling and recalls for voting, this is probably a relevant but old article. It does look like there are issues with lent and re-lent shares and recalling them in time. And with SCTY particularly being heavily shorted as a % of outstanding shares, this recall process is bound to be messy and also somewhat scary as a dual TSLA & SCTY (long options position entered after the offer announcement) investor.

How Borrowed Shares Swing Company Votes

This article highlights the reason why large institutional investors could not take it easy and let those who hold shares borrowed from them do the voting. There is very little chance that institutional shareholders will NOT recall their shares and essentially sit this merger voting out - it is just not a plausible scenario.

 

[Fallenone]

Exactly! (Julian seems to have missed this point -- although the article is characteristically lengthy and I may have missed it in my skim).

As long as the RVG existed and sales were increasing, Tesla was effectively digging itself a hole in trying to match GAAP revenues (delayed recognition) to non-GAAP revenues (immediate recognition). In other words, it would defer revenue recognition on more sales than it was recognizing from 39 months prior.

Of course, now with the RVG terminated, prior sales are gravy for the next 39 months. Tesla can recognize more revenue under GAAP (because of prior sales) than non-GAAP.

There are way too many variables at play to have much confidence, but it does seem like Tesla could achieve GAAP profitability in Q3 because of this change alone.

Only that GAAP revenue and eps weren't paid much attention in the first place. So I don't think the elimination of RVG will affect the stock price at all.

 

[jhm]

Nothing I find more annoying than people that speculate without backing up their position with real, verifiable facts, or at the very least, explaining what lead them to the idea of why their estimates are reasonable. I liked your posts, because you at least followed through on the math to make your argument. It allows for a proper debate to happen, because I can pick apart why our numbers are different. I can't debate a number given with no reasons.

I'm not debating at all that there are probable improvements on the horizon that make the numbers more rosy. I was interested in doing the math and proving its viable today even without them.

In my opinion, facts of what is possible today > speculation about what might be possible tomorrow. In this case, its economically viable to build a Tesla Semi today, and the gains that tomorrow will make possible will only improve the profit margins.

Hey, we're on the same page here. I clearly saw the intent of the conservatism in your analysis. Spot on to begin with what can be done now. I was just excited to see where this could go.

I think Tesla wants to enter a market like this just as it is becoming marginally profitable to do so. There will still be a learning curve, scaling issues, and other business development issues. So from what we can see now, it seems feasible. No doubt Tesla has much more visibility into the economics. So I've got to believe the economics will be really good in about three years.

BTW, a particular interest of mine is how this impacts the oil industry. You can see this in the Short Oil, Hedge Tesla thread. Tesla Semi has the potential to accelerate peak oil demand.

 

[AlMc]

The press only event ahead of the Friday's GF opening party is scheduled for tomorrow:

We’re in Reno/Sparks this week for Tesla Gigafactory Opening, starting tonight

Great info for a possible short term trade. I expect some good reports coming out in the next 2 days. Based on this I bought my first weekly calls in a long time. I will exit them quickly and go back to long term strategy.

I still question the stock price after Q2 as I am convinced it will not be good and (IMO..I am often wrong) that this has not been fully priced into the SP.

 

[andrerodpt]

Hey, we're on the same page here. I clearly saw the intent of the conservatism in your analysis. Spot on to begin with what can be done now. I was just excited to see where this could go.

I think Tesla wants to enter a market like this just as it is becoming marginally profitable to do so. There will still be a learning curve, scaling issues, and other business development issues. So from what we can see now, it seems feasible. No doubt Tesla has much more visibility into the economics. So I've got to believe the economics will be really good in about three years.

BTW, a particular interest of mine is how this impacts the oil industry. You can see this in the Short Oil, Hedge Tesla thread. Tesla Semi has the potential to accelerate peak oil demand.

Regarding that last bit, I was wondering if everything goes to plan (and right now it seems inevitable) and we'll be driving in a vast majority of EV in a near future, will there be any oil company in business just for semi-trucks? Is it feasible business wise?

 

[SW2Fiddler]

Exactly! (Julian seems to have missed this point -- although the article is characteristically lengthy and I may have missed it in my skim).

I first was educated about the "GAAP lease=loss" concept by Julian in his January posts in this very thread: Here and Here for example.

 

[racer26]

Hey, we're on the same page here. I clearly saw the intent of the conservatism in your analysis. Spot on to begin with what can be done now. I was just excited to see where this could go.

I think Tesla wants to enter a market like this just as it is becoming marginally profitable to do so. There will still be a learning curve, scaling issues, and other business development issues. So from what we can see now, it seems feasible. No doubt Tesla has much more visibility into the economics. So I've got to believe the economics will be really good in about three years.

BTW, a particular interest of mine is how this impacts the oil industry. You can see this in the Short Oil, Hedge Tesla thread. Tesla Semi has the potential to accelerate peak oil demand.

Kind of funny, isn't it. Just a few years ago, society was concerned that we were reaching the peak amount of oil we could produce, and that concern now seems to have given way to the concern that we're reaching the peak amount of oil we *want*.

I'm more interested in what happens to the other automakers. I think that once Tesla reaches the ability to provide as many Model 3's as the market will buy, the other automakers will have a very limited time to play catch up without dying. I'm especially concerned by the way a few of them are stubbornly sticking to their guns on FCEVs despite the mounting evidence showing that BEVs are better.

There are parallels to be drawn to the cell phone industry. Nokia and Blackberry were the kings of the castle, until Apple and Android came along, and turned the industry on its head. A couple of the older powerhouses like Samsung were able to adapt and survive, but Nokia and Blackberry changed too little, too late, and have been left in the dust. I expect the EV revolution to be the same. Some incumbent brands will adapt and survive, and some will be left behind if they don't adapt fast enough.