Short-Term TSLA Price Movements - 2016

[doctoxics]

The exchange on the subject of increased GF production between Andrea James, Elon and JB Straubel took place during the Q1 2015 ER Just to make clear, the discussion was more like kicking the idea of the increase of production around, rather than revealing specific plans. My interpretation of JB's response is that GF output could probably be increased by at least by 50% from the 35GWh cells / 50GWh packs to 56.25GWh cells / 70GWh packs. Given that increase was totally attributed to the increase in anticipated BES demand, I think that this means that overall pack production will be split evenly between the TE and TA, i.e. 35GWh each.

As for the batteries for the MS/MX, you have to remember that the original 4 year agreement with Panasonic remains in force, i.e. Tesla still required to buy cells from the Panasonic factories in Japan, which is totally logical, as Panasonic would not agree to invest in the GF1 otherwise.

My understanding as well. Also, the expansion of Gigafactory1 is underway by the addition of additional floors to increase the area by almost 40 %. This figure could increase further as Tesla and Panasonic become more efficient at production output per area of floor space, so 50 percent may well be a reasonable final increase for Gigafactory1. As several have said in the past, the footprint will remain as in the original plan. Tesla's dilemma is the strong demand for both energy storage and Model 3. Elon has said that Model 3 would have priority since battery production is essential to maintain production of Model 3 at Fremont and, potentially, at other Tesla car factories.

 

[vgrinshpun]

When did the four years begin?

See here for the statement that Tesla will continue to buy cells from Panasonic factories in Japan (end of second paragraph).

Here is Tesla's October 2013 write up on the four year agreement with Panasonic.

 

[lango]

I guess that explains why Tesla never mentions the MS-MX when they talk about the GF .

When did the four years begin?

To add to this I don't expect GigaFactory 1 to replace the Japan production even when it is fully operational. Tesla will need all batteries it can get and GF1 will not be enough to satisfy demand so they will probably continue to buy from Japan and maybe even bigger quantities than now. One scenario is that S and X batteries will come from Japan and GF1 will be used for TE and Model 3.

In any case I think it would be bad for Tesla at this point to only make batteries in Gigafactories assuming TE actually is as big market opportunity as it appears to be.

 

[vgrinshpun]

To add to this I don't expect GigaFactory 1 to replace the Japan production even when it is fully operational. Tesla will need all batteries it can get and GF1 will not be enough to satisfy demand so they will probably continue to buy from Japan and maybe even bigger quantities than now. One scenario is that S and X batteries will come from Japan and GF1 will be used for TE and Model 3.

In any case I think it would be bad for Tesla at this point to only make batteries in Gigafactories assuming TE actually is as big market opportunity as it appears to be.

I agree with this; in time, Tesla might also push Panasonic to upgrade their equipment at these factories with the production lines similar to GF in order to capture cost savings related to more efficient manufacturing process.

 

[Johan]

I agree with this; in time, Tesla might also push Panasonic to upgrade their equipment at these factories wit the production lines similar to GF in order to capture cost savings related to more efficient manufacturing process.

MitchJi had a great reply in the other thread to me about this, i.e. the "Gigafactory as a product":

I believe that the actual product is the first GF Production Line (GFPL1), utilizing Custom Cell Manufacturing Equipment. Tesla and Panasonic will be using that custom cell manufacturing equipment at the GF, and it will have a big impact on the cost reductions.

Elon Musk - Chairman and CEO
In your question you had [indiscernible] should be corrected, like the -- so the 30% savings is not just due to logistics. Logistics is a big factor. We are --

JB Straubel - Chief Technology Officer
It's not even the biggest though.

Elon Musk - Chairman and CEO
Logistics [indiscernible] the fact that it's just go to one station to the next instead of going from multiple entities to multiple entities. But really when you get to the kinds of scale that we're talking about, you really get to design custom equipment that's much better at processing each step. And you really get to design the machine that makes the machine, not just do so with off-the-shelf equipment. So it took -- everything about it is going to get a whole lot better. That's why we think the 30% number when the Giga Factory is at full production is a conservative number.

Several implications of that:
Colocation and the use of custom equipment and starting with and getting good prices on raw materials are the main reasons for the GF cost reductions.

Designing and building the custom equipment only make sense financially because of the massive scale of the GF, (they need to build more than one of these production lines). I believe that this equipment is designed and optimized to be used in integrated production lines. The first line will be GF Production Line 1. As soon as that’s completed and working satisfactorally, they will start be able to start producing more production lines. These can be installed anywhere that Tesla needs a multiple of one or more of the number of cells as GF Phase One. In other words the major product is not GF1, it’s GF Production Line 1 (GFPL1). This has huge implications for the flexibility of setting up smaller factories, or setting up factories in phases to obtain most of the cost benefits of a 35-50 gWh factory. It means that the GFPL1 will capture most of the cost benefits of the completed GF, and that for example Panasonic will be able to set up factories in Japan using the GFPL equipment.

I think that it’s pretty clear the idea to use customized equipment was Tesla’s idea, and that Panasonic’s hesitancy to invest ended when they were convinced that a 30% cost reduction was a conservative number.

TL;DR: Panasonic will be able to upgrade their factories with the improved manufacturing equipment, techniques and production chain that has been developed for the GF.

 

[MitchJi]

See here for the statement that Tesla will continue to buy cells from Panasonic factories in Japan (end of second paragraph).

Here is Tesla's October 2013 write up on the four year agreement with Panasonic.

Thank you! We need a "Thank you " button.

To add to this I don't expect GigaFactory 1 to replace the Japan production even when it is fully operational. Tesla will need all batteries it can get and GF1 will not be enough to satisfy demand so they will probably continue to buy from Japan and maybe even bigger quantities than now. One scenario is that S and X batteries will come from Japan and GF1 will be used for TE and Model 3.

In any case I think it would be bad for Tesla at this point to only make batteries in Gigafactories assuming TE actually is as big market opportunity as it appears to be.

I agree with this; in time, Tesla might also push Panasonic to upgrade their equipment at these factories wit the production lines similar to GF in order to capture cost savings related to more efficient manufacturing process.

I partially agree. I think in time (as soon as they possibly can) Tesla will only purchase cells manufactured with similar equipment. Either from Panasonic or GF's. The savings are too much to ignore. If the Panasonic continues to sell cells produced on the old equipment it will be to someone else, maybe another OEM at a higher price.

This is pathetic:
VW won't release diesel scandal investigation report

Volkswagen will no longer publicly release an interim report about the dieselinvestigation from law firm Jones Day. In a statement, the German automaker cited "unacceptable risks" as a reason for not publishing the information, despite previously saying it would issue the documents by the end of April. The company's two US law firms advised it that releasing the data could hamper negotiations with the US Department of Justice.

According to VW, the company needs "to maintain the highest degree of confidentiality" while negotiating with government offices, including Environmental Protection Agency, California Air Resources Board, Federal Trade Commission, Attorneys General from 50 states, and the DOJ. Money also plays a role because the information in the report might "jeopardize the credit that Volkswagen may expect to receive in the event of its full cooperation with the Department of Justice," which could "have very substantial negative financial consequences." In addition, the company has concerns that the data could allow workers not yet interviewed by Jones Day to make their statements fit with the report.

VW hired Jones Day in late September 2015 to conduct the investigation. So far, the firm has collected 65 million documents and conducted 450 interviews. Recent reports have hinted at problems with the detective work because VW allegedly used dozens of code words to hide the emissions cheating. The lawyers don't expect to finish the full report until the fourth quarter of 2016.

We are guilty as he** and we intend to hide that, as much as possible, while we are doing our best to avoid making a fair settlement.

 

[aznt1217]

the press with their tesla sucks articles, or else this EV will kill tesla,
has been going on for years. Actually a precondition for success is the
press being against, as postulated by the motley fools years ago.

It's the biggest circle jerk. Tesla sucks so much that we are using them as the benchmark to beat. LOL so dumb.

 

[Cattledog]

Remember in the movie 'Contact' where they were secretly building a second 'Machine' in Japan as a back-up to the main one in the US? OK, not hoping for the same outcome to the US Gigafactory as the US 'Machine' in the movie, but Elon's such a geek about scifi that I wouldn't be surprised if there was already a second Gigafactory underway somewhere else, like, say, Japan. Maybe it's why Panasonic has been slow to invest here, perhaps they are the majority funder for the other. Fun to speculate.

 

[FredTMC]

Remember in the movie 'Contact' where they were secretly building a second 'Machine' in Japan as a back-up to the main one in the US? OK, not hoping for the same outcome to the US Gigafactory as the US 'Machine' in the movie, but Elon's such a geek about scifi that I wouldn't be surprised if there was already a second Gigafactory underway somewhere else, like, say, Japan. Maybe it's why Panasonic has been slow to invest here, perhaps they are the majority funder for the other. Fun to speculate.

Panasonic has been an awesome partner. They've been very supportive and it's helped their financials greatly too.

That being said, tesla is integral in building the machines that build the cells (JV?). If (and only if) Panasonic is unable to invest fast enough for tesla's new cell ramp schedule, I assume tesla has the freedom to add their own capital. Not sure who owns the IP, but I assume Panasonic.

 

[MitchJi]

Panasonic has been an awesome partner. They've been very supportive and it's helped their financials greatly too.

That being said, tesla is integral in building the machines that build the cells (JV?). If (and only if) Panasonic is unable to invest fast enough for tesla's new cell ramp schedule, I assume tesla has the freedom to add their own capital. Not sure who owns the IP, but I assume Panasonic.

Jointly developed and jointly held?

Anyone who hasn't watched this video of Dave and Jesse should definitely do it:
Google+ video hangouts (TSLA & other investments)

Just finished the hangout with jesselivenomore. The video is up at this link. Thanks to jesselivenomore for sharing his time and also AlMc for suggesting the idea to me.

 

[Cattledog]

Panasonic has been an awesome partner. They've been very supportive and it's helped their financials greatly too.

That being said, tesla is integral in building the machines that build the cells (JV?). If (and only if) Panasonic is unable to invest fast enough for tesla's new cell ramp schedule, I assume tesla has the freedom to add their own capital. Not sure who owns the IP, but I assume Panasonic.

I was a bit obtuse in my metaphoric posting. On Gigafactory 1, Tesla didn't announce their partnership with Nevada until July 2014. However, they were already designing the industrial process and actual factory well before that, and almost certainly had picked the site in their own minds months before July (they were being catered too all around the US in March and April - I know first hand from their forays to San Antonio).

So I think they already have a country, likely a location, and plans underway (as in they have hired architects, building engineers and process engineers) for Gigafactory #2. April 2016 is very equivalent to April 2014 for Gigafactory site #2, except they have a blueprint from Gigafactory #1. So perhaps ahead - that would mean cells are coming out of Gigafactory #2 in less than 2 years, since cells are coming out of Gigafactory #1 right now.

Elon wouldn't have hinted in his tweet 'gonna have to rethink production for Model 3' if they had not already done so months before. Don't you think they thought through various scenarios for the Model 3 reveal (A. Low uptake, damage control; or B. Moderate uptake, proceed as on Secret Master Plan from last 10 years; or C. We're going to hit a grand slam, what do we need to implement on April 1 to make it happen if it's true.)? Elon hints and giggles when he knows he's got something we're all going to like when he reveals it in a few months or years.

Like I said a thousand posts ago, we (or at least I) invest in TSLA for their ability to see the future. I don't know what that future is, but I look to make sure it seems like they do. Right now, on many fronts, it seems like they do.

 

[BornToFly]

From Barron's article on GS upgrade. "Archambault writes that the changes come after doing a deep dive on the addressable market sizes for Tesla’s Model S, Model X, and Model 3: While he doesn’t expected the former two to become market leaders in their categories, he sees a scenario where the Model 3 could “grow to top market share within the segment by 2025.”

What?!? Doesn't expect Model S to become market leader in it's category?!? IT ALREADY IS!!!!! It outsells everything, including Mercedes in the US and Europe. It makes Audi A8 and Panamera sales look absolutely pathetic. Where do these "Expert" analysts come from???

 

[Cattledog]

From Barron's article on GS upgrade. "Archambault writes that the changes come after doing a deep dive on the addressable market sizes for Tesla’s Model S, Model X, and Model 3: While he doesn’t expected the former two to become market leaders in their categories, he sees a scenario where the Model 3 could “grow to top market share within the segment by 2025.”

What?!? Doesn't expect Model S to become market leader in it's category?!? IT ALREADY IS!!!!! It outsells everything, including Mercedes in the US and Europe. It makes Audi A8 and Panamera sales look absolutely pathetic. Where do these "Expert" analysts come from???

It's why he's always the 17th question on the earnings call.

 

[Julian Cox]

FYI GS have pulled damning with faint praise downgraded upgrade stunts before on numerous occasions. It's a market signal for a slide with plausible deniability to flip at a later date - essentially trying to get their clients a better price for a future runup. Nothing new under the sun.

 

[Irishjugg]

Correct

More Tesla shareholders must be doing as I have done, and have placed GTC (good-till-cancelled) orders to sell at 50% above the current price. That should make those shares unavailable for borrowing by short sellers.

Correct me if I'm wrong, but wouldn't more people selling short be better for the eventual squeeze? Or is this just a keep the price higher by removing short ammo type play?

 

[Jonathan Hewitt]

P100D admitted by Tesla now?
Tesla - | Facebook

 

[Muaddid]

P100D finally coming ?

edit : Jonathan beat me by a few seconds !

 

[Johan]

Goldman Sachs note time. Historically GS have often tried to talk the stock down in order for their big clients getting in cheaper, when they feel it's getting away from them or need to get out of short positions. Bullish notes have been used in advance of capital raises, which have typically been brokered by GS and Morgan Stanley for the most part (those have been Tesla's main underwriters every time, I believe for the IPO too?). Also, let's not forget that GS is more or less Elon's personal bankers, they provide him personally with liquidity so that he can exercise options (without having to sell straight away), buy secondary offerings himself, buy large chunks of SCTY when it drops, give personal guarantees on resale value for lease cars etc.

Bottom line: if we interpret this note as semi-bullish, but in line with GS history of cautiousness, I think this could signal the capital raise is happening soon. Before ER???

 

[MitchJi]

So perhaps ahead - that would mean cells are coming out of Gigafactory #2 in less than 2 years, since cells are coming out of Gigafactory #1 right now.

Whoa .

That's the first time I've heard that's cells are being produced at the GF. Do you have a source for that? Great news if it's true.

But I'm skeptical,.

 

[30seconds]

P100D finally coming ?

edit : Jonathan beat me by a few seconds !

odd, i would have expected the facelifted version