Shorting Oil, Hedging Tesla

[Sparky]

...This is because it is ultimately cheaper and because EV owners will own most of the batteries, which are the productive assets comparable to a well but displacing other the cost of an engine. This latter point is important because ownership of wells is in the hand of relatively few investors but EV batteries will be owned by all vehicle owners. Likewise, rooftop solar shifts asset ownership from a few investors to a broad class of homeowners. So even if EVs were not any cheaper than ICE (which will not remain the case for long), there is still a huge shift in the ownership of energy assets from investors to consumers. Buying fuel is just paying rent on assets owned by investors. But the EV-renewable future economy will empower consumer to have more ownership and pay less rent.

Exactly this. In 2008 I did a self-install rooftop PV. In 2011, I bought a Nissan LEAF. I had to convince my bio-fuel loving brother of the extreme inefficiency of biofuels for transport compared to PV-EV. It was easy, since he's smart and quickly connected the dots starting with; photosynthesis is about 2% efficient then you have "refining" losses and crappy ICE efficiency and he got it. But the real trick was explaining to friends that I had my own oil well on my roof. "Each panel produces the equivalent of 40 gallons of gas every year. My oil-well roof now has a return of 14%/yr. What does your roof produce?"
Most got it that I wasn't merely a starry-eyed tree hugger but there is a cold capitalistic side too.
There's also the imagery, neighbor puts solar on roof, gets EV, talks about roof as investment.
One, then two Tesla's show up in driveway. (Wow, honey, they must be making bank!).
These "empowerment" stories chip away at the old paradigms and people begin to see it and then the land rush ensues.
I have not yet integrated the idea of battery as oil well yet. Need to work on that for next block party.

 

[jhm]

I have not yet integrated the idea of battery as oil well yet. Need to work on that for next block party.

Shorting Oil, Hedging Tesla
We were developing this Gigafactory as virtual oilfield idea in early 2017. See this post and others around it.

Shorting Oil, Hedging Tesla
Also here, I had developed a Twitter feed to explain the concept. I should probably update this with what we've learned about Tesla Semi. The reserve size gets a whole lot bigger with semis because a 5000 life cycle can be well utilized.

 

[ggies07]

So the new announcement from Tesla wanting to produce 500,000 cars in China by say 2023/2024 is a nice treat that lines up nicely with the few of those in here that have been so kind to share their analytics on when oil demand will peak. Love it!

 

[jhm]

So the new announcement from Tesla wanting to produce 500,000 cars by say 2023/2024 lines up nicely with the few of those in here that have been so kind to share their analytics on when oil demand will peak. Love it!

I get the impression that this GF is only for the domestic Chinese market. Otherwise, I would be disappointed in its capacity. Telsa sold about 15k vehicles in China last year. If they can boost this to 500k by 2023 this is a mere 79% annual growth rate over 6 years.

 

[ValueAnalyst]

So the new announcement from Tesla wanting to produce 500,000 cars in China by say 2023/2024 is a nice treat that lines up nicely with the few of those in here that have been so kind to share their analytics on when oil demand will peak. Love it!

Timeline/capacity was underwhelming.

I get the impression that this GF is only for the domestic Chinese market. Otherwise, I would be disappointed in its capacity. Telsa sold about 15k vehicles in China last year. If they can boost this to 500k by 2023 this is a mere 79% annual growth rate over 6 years.

500,000 annualized units by 2023 won’t dent oil demand, unless it comes with FSD ridesharing network, in which everyone participates, and one million unit annual output from Fremont. Today’s announcement was surprising.

 

[RobStark]

Timeline/capacity was underwhelming


500,000 annualized units by 2023 won’t dent oil demand, unless it comes with FSD ridesharing network, in which everyone participates, and one million unit annual output from Fremont. Today’s annoncent was surprising to me, both on capacity and timeline.

So 50 mio units per year in 2025 is off the table?

 

[jhm]

So 50 mio units per year in 2025 is off the table?

I don't know about 50M, but my outlook for the total EV market in 2025 is 20 to 30 million. To push the rest of automakers to this pace, I think that Tesla needs to be prepared to deliver 20% of the EVs, so 4 to 6 million Teslas.

So how do we get there? Fremont/Gigafactory 1 will cap out at about 1M, while Gigafactory 3 caps out at 0.5M. Thus, we have visibility into only about 30% of the capacity Tesla needs 2025. That's not nearly enough.

In terms of a production schedule, we need to get to about 300k in this year, and grow 50% each year after that. This reaches 675k in 2020, 1.5 in 2022, 3.4M in 2024, and 5.1M in 2025. So along this path, the cap of Fremont, GF1 and GF3 may be just large enough for 2022, but GF3 will not likely be at full cap until 2024. So GF4 (Germany perhaps) will also need to be developed in parallel with with GF3 and of nearly the same ultimate capacity. This is needed just to hit 1.5M in 2022.

I do think that Tesla may be giving thought to the right scale for a Gigafactory. I wonder if 500k vehicles will prove to be a standard capacity. How much battery capacity will that be paired with? Seems 50 GWh would be a minimum, but supplying TE and Semi batteries could push this up to 75 GWh or more. Even so, over the next 4 years at least another 7 GFs with 500k vehicle capacity will need to come online.

It seems like a pretty tall order, especially if shorts like Chanos succeed shutting Tesla out of the debt markets.

 

[RobStark]

I don't know about 50M, but my outlook for the total EV market in 2025 is 20 to 30 million.

VA has strenuously argued for 10M per year from Model 3 alone and 50M per year from Tesla as a whole in 2025.

In part because demand for BEVs would dramatically increase in order to replace the obsolete ~1.3B ICEv global fleet.

My base case is 2.5M Tesla vehicles produced in 2025 and 6.5M if everything aligns perfectly for Tesla.

European GF should be announced by end of this year and US 2nd GF early next year for Model Y and Pickup somewhere East of Denver.

 

[TheTalkingMule]

Tesla doesn't matter as much for EV transition as Chinese and Indian policy. Europe will transition without a massive push from tsla, really it's just domestic US that needs the shove.

Very excited to see how fast a Gigafactory clone can come online in China....and then get repeated.

 

[ValueAnalyst]

So 50 mio units per year in 2025 is off the table?

GF3's planned capacity/timeline will be revised, just like GF1, and many more will be built. 50m by 2025 is still on like donkey kong.

 

[RobStark]

GF3's planned capacity/timeline will be revised, just like GF1, and many more will be built. 50m by 2025 is still on like donkey kong.

Revised 3x like GF1 doesn't get us anywhere near 50M by 2025.

 

[RobStark]

Tesla doesn't matter as much for EV transition as Chinese and Indian policy.

Tesla totally matters.

It makes EVs desirable instead of a hairy shirt of environmentalism.

If you can't afford a Model S you might consider a BYD E6 and If you can't afford a Model X you might go for a Mahindra BEV SUV. Hell, there might not be an upcoming electric Mahindra SUV without Model X.

 

[ValueAnalyst]

Revised 3x like GF1 doesn't get us anywhere near 50M by 2025.

This is not the thread for this discussion, but let me quickly point out that I never said there would only be three GF's for 50M by 2025.

 

[RobStark]

This is not the thread for this discussion, but let me quickly point out that I never said there would only be three GF's for 50M by 2025.

And there will not be 34 GF making 1.5M vehicles each in 2025.

 

[ValueAnalyst]

And there will not be 34 GF making 1.5M vehicles each in 2025.

How do you know? And why do you assume each Gigafactory will be making only up to 1.5m vehicles in 2025?

 

[oneday]

Tesla totally matters.

It makes EVs desirable instead of a hairy shirt of environmentalism.

If you can't afford a Model S you might consider a BYD E6 and If you can't afford a Model X you might go for a Mahindra BEV SUV. Hell, there might not be an upcoming electric Mahindra SUV without Model X.

I totally agree with this. My fiancé and I bought a Nissan Leaf two years ago as a poor mans Tesla because of our new found interest in Tesla. I can almost guarantee electric wouldn’t have been on our radar if we didn’t see thousands of Tesla’s on the road here in the Bay Area.

 

[oneday]

GF3's planned capacity/timeline will be revised, just like GF1, and many more will be built. 50m by 2025 is still on like donkey kong.

I think you and Elon would get along. I also think you would be a bad influence.

 

[ValueAnalyst]

I think you and Elon would get along. I also think you would be a bad influence.

Two optimists lead to no results yea, not the best idea. Elon needs someone who will keep him accountable. I nominate @RobStark

 

[jhm]

@ValueAnalyst I think your 50M Teslas in 2025 is way out of scale with Tesla's growth history. To get from 300k in 2018 to 50M in 2025 means more than doubling production every year for the next 7 years.

It also implies that Tesla grabs more than 50% market share. The implication is that all other OEMs lose about half of their market share in the span of 7 years. It is hard to overstate just how traumatic that would be for all other automakers, their employees and local economies. That is likely to engender enormous political resistance. At a minimum we can say that about half of auto factories would shut down. This, of course, would obviate the need for Tesla to build new factories as they could buy old ones for a fraction of the cost and governments would be eager to see Tesla to employ displaced workers.

So while one can imagine such a scenario playing out, it is radically different than what Tesla has experienced to date. NUMMI acquisition comes close, but Tesla was not the driver of the downfall of NUMMI. I think your scenario would require a very different strategy than what Musk has articulated. That strategy would have to work out how Tesla interfaces with competitors. For example, it could used competitors to do contract manufacturing. Or they could license IP from Tesla. Or divest assets to Tesla. Or be acquired by Tesla. And on and on. To keep building new Gigafactories while half of the world's auto plants close down does not seem like an economical path to me.

 

[RobStark]

How do you know? And why do you assume each Gigafactory will be making only up to 1.5m vehicles in 2025?

I know because I wasn't born yesterday.

Your projections are past insane, past ludicrous, to maximum plaid nuts.

If for no other reasons anti-trust political concerns.

Europe,Japan,and China would not allow their domestic automobile industry to be taken over by Tesla.

Then there are dreary mundane issues. Like the logistics of producing more than 1M vehicles per GF. Getting the raw materials and parts in and then getting finished vehicles out.

The required Supercharger Network, Service Center Network, Collision Repair Network etc