Tesla Gigafactory Investor Thread

[dc_h]

Are you implying there is a public link to SpaceX financials, or that you have access to SpaceX financials? Typically only large 100MM plus investors would have such access to privately held SpaceX financials. Seems odd that Fidelity would pony up $1bn for an unsound, unsustainable enterprise, but perhaps you have more resources and privileged access than Fidelity?
You might want to stick to unsubstantiated claims about Tesla and the GF.

You obviously don't work at spacex. Got a link to their financials?

 

[BriansTesla]

Logic: a proper or reasonable way of thinking about something

I'm not convinced that mankind's transition to BEVs happens anyway without Tesla. I'm just not. And not until the Model 3 comes out do I think we can breathe a sigh of relief. I think without Tesla's push we choke ourselves to death. I'm also not convinced we get to reuseable rockets and to being a multi-planetary species without SpaceX.

+1

10 or 15 years ago, how many of us would have imagined the success of Tesla and SpaceX today. Not me! I would have said it couldn't happen but I am really enjoying the ride.

 

[Discoducky]

Gigafactory doesn't have the production volume to produce cells for Tesla Energy. Discussions about Tesla Energy margins seem to assume low cost cells.

I have a relative that is an engineer at spacex. With their turnover rate, eventually everyone will have a relative who works at spacex. Musk needs to demonstrate that he can build a large business where talented engineers want to work for more than a couple of years.

SpaceX and Tesla are pure innovation and yes, that may cause turnover but I see your definition of mess and mine differ

 

[Krugerrand]

You claim that it did not make economical sense to start Tesla yet Elon has made a lot of money doing it, so obviously you are missing something as it is not up for discussion that it did infact make economical sense.

I defined economical for you so that we could be on the same page. That definition had nothing to do with making a lot of money. But for argument's sake I'll go with your definition and repeat, Elon is not motivated by money/making money and that isn't the reason or a reason for why he invested in Tesla or started SpaceX. For Elon money is a means to an end, that end being sustainable transport and multi-planetary existence, not to line his pockets. He already was rich prior to starting SpaceX and investing in Tesla. He had it made. There was no logical reason for him to risk every last penny (which he did), except that he felt it was that important for the welfare of man. And again, investing in the two biggest capital intensive businesses to ever exist isn't economically logical. It's suicide and as we know, both companies were in fact about to die a horrible death if not for heroic efforts by a small group of people (and a bit of good fortune - thank you, Universe).

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SpaceX and Tesla are pure innovation and yes, that may cause turnover but I see your definition of mess and mine differ

Isn't part of the turnover rate also related to having a bunch of interns?

 

[Rarity]

At Glassdoor (past/present employees review their workplaces), SpaceX has employee ratings as high as Apple's. Well above its peers in the rocket business.

 

[Discoducky]

Isn't part of the turnover rate also related to having a bunch of interns?

Not saying the turnover rate is higher than it should be, but yes, would include interns that have been offered a full time position but declined.

 

[LargeHamCollider]

You obviously don't work at spacex. Got a link to their financials?

Not a serious answer, capability and the value of existing contracts are a good indicator of SpaceX' value.

 

[Perfectlogic]

I defined economical for you so that we could be on the same page. That definition had nothing to do with making a lot of money. But for argument's sake I'll go with your definition and repeat, Elon is not motivated by money/making money and that isn't the reason or a reason for why he invested in Tesla or started SpaceX. For Elon money is a means to an end, that end being sustainable transport and multi-planetary existence, not to line his pockets. He already was rich prior to starting SpaceX and investing in Tesla. He had it made. There was no logical reason for him to risk every last penny (which he did), except that he felt it was that important for the welfare of man. And again, investing in the two biggest capital intensive businesses to ever exist isn't economically logical. It's suicide and as we know, both companies were in fact about to die a horrible death if not for heroic efforts by a small group of people (and a bit of good fortune - thank you, Universe).

Elon's motivation has nothing to do with my original claim. I feel like I'm treading water so I'm just gonna leave it at that, it doesn't have much relevance to the thread subject anyway.

 

[Oil4AsphaultOnly]

You claim that it did not make economical sense to start Tesla yet Elon has made a lot of money doing it, so obviously you are missing something as it is not up for discussion that it did infact make economical sense.

"I'm not convinced that mankind's transition to BEVs happens anyway without Tesla. I'm just not. And not until the Model 3 comes out do I think we can breathe a sigh of relief. I think without Tesla's push we choke ourselves to death. I'm also not convinced we get to reuseable rockets and to being a multi-planetary species without SpaceX."

Sure, the beginning of the transition to BEVs just happened to coincide with the underlying tech maturing enough to let it happen, just like we wouldn't have the iphone or FB, or even google today if it hadn't been for the founders of those companies, nothing to do with the underlying tech really. There is a difference between technological breakthroughs and incremental innovation.

If you look at Tesla and Spacex's history, you'll find that they succeeded despite their businesses being unprofitable. Read "The engineer" by Erik Nordeus, or the biography by Ashlee Vance. You'll see the story of 2 companies and a man on the brink of destruction. It was due to the collective efforts of the entire company, Elon, AND their investors that they survived long enough to be the successes that they are now.

Also keep in mind that the Leaf and the Volt were both put on the drawing board as a result of the Tesla Roadster. Had that vehicle not existed, Lutz would never have gotten the greenlight to build the volt, let alone the bolt! http://www.newsweek.com/bob-lutz-man-who-revived-electric-car-94987
"When Lutz first proposed creating an electric car in 2003, the idea "bombed" inside GM, he says. "I got beaten down a number of times." ... "That tore it for me," says Lutz. "If some Silicon Valley start-up can solve this equation, no one is going to tell me anymore that it's unfeasible." "

With the business-as-usual attitudes of many major corporations, the EV transition would never have happened (or would've happened much later) without the tesla "thorn in their sides".

And without SpaceX, the ULA would've continued to charge the US Air Force cost-plus pricing for their rocket development and launches, as that's how all the incumbent "competitors" price their offerings!

 

[MitchJi]

Tesla pays about half the equipment cost and collects 15% GM on Power...

Tesla's GM is clearly higher than 15%.

 

[jvonbokel]

You claim that it did not make economical sense to start Tesla yet Elon has made a lot of money doing it, so obviously you are missing something as it is not up for discussion that it did infact make economical sense.

Just because you won the lottery doesn't mean playing the lottery made economical sense. The financial reward was large *because* the risk of failure was so high.

 

[ScepticMatt]

Tesla's GM is clearly higher than 15%.

For Tesla Energy products the target gross margin is 15% IIRC.

 

[MitchJi]

For Tesla Energy products the target gross margin is 15% IIRC.

Agreed that Tesla's claimed GM is 15% , but I think it's clear that Tesla's GM is higher than 15%.

 

[jhm]

How cheap can energy storage get? Pretty darn cheap : Renew Economy

Anyone who hopes to understand the economics of the Gigafactory needs to understand how experience curves work and the strategies for staying ahead of pack in terms of experience. This article does an OK job setting this out, and so is a good starting point.

The essential ideas of an experience curve is that manufacturing, innovation supply chain efficiencies scale with cumulative production. Spcifically, the cost of batteries are coming down 15% to 21% everytime cumulative production doubles. The implication of this scaling principle is that advantage goes to those manufacturers who scale production most quickly. Thus, adding Power products to EV battery production enables Tesla and its supply partners to gain experience faster than producing EV batteries alone. In fact, demand for stationary storage can scale so much faster presently than EV demand that to ignore this market could imperil the experience gain needed for EVs. That is, there is a risk a that another battery maker could gain so much experience with grid batteries that they cut costs for EV batteries faster than Tesla would, if they were to ignore the stationary market. In any case, Musk and Straubel understand the importance of leading on the experience curve. So staying ahead means being able to drive down the cost faster. At first this is really sweet for GM. However, as GM widens this also motivates more competion to enter and try to get ahead on experience. Thus a common strategy for preserving experience curve dominance is to keep driving down the price, and this of course limits GM expansion. However, it greatly accelerates the expansion of addressable markets and technology adoption. So one can have a discipline approach to GM. On is to target a specific GM and keep lowering prices as costs fall. The lower the target GM is set the more aggressive the path down the experience curve. Now one can question whether 15% GM on Power products is enough to support the profit of an entire business. An alternative view is that this agressive GM is intended to accelerate the path down the experience curve, that is Tesla and partners will get below $100/kWh well ahead of any automaker and this will yeild a very handsome GM in the auto segment for Tesla. It is the 30% GM in Tesla's auto business that covers the massive overhead of running Tesla Motors.

I have shown that 15%GM is sufficient for paying for the Gigafactory. Now I am arguing that experience gain of doing so will also pay dividends in giving Tesla a cost advantage in auto, such that 30% GM in autos is sufficient to assure 10% profit across the whole enterprise. 80% to 90% of Tesla's gross profit will come from EV sales, not Power product sales. If one allocates SG&A on the basis of gross profit, then clearly the auto segment will cover the bulk of overhead.

 

[electracity]

Just because you won the lottery doesn't mean playing the lottery made economical sense. The financial reward was large *because* the risk of failure was so high.

If Musk had known gas was going to be $2/gallon in 2015 he probably would not have invested in Tesla. Ten years ago he probably would have said, like everyone, that gas at $2/gallon was probably fundamentally impossible.

 

[Gerasimental]

If Musk had known gas was going to be $2/gallon in 2015 he probably would not have invested in Tesla. Ten years ago he probably would have said, like everyone, that gas at $2/gallon was probably fundamentally impossible.

Utterly beside the point.

 

[Johan]

If Musk had known gas was going to be $2/gallon in 2015 he probably would not have invested in Tesla. Ten years ago he probably would have said, like everyone, that gas at $2/gallon was probably fundamentally impossible.

I don't think Musk put any thought at all in to the price of oil before investing in Tesla.

 

[electracity]

I don't think Musk put any thought at all in to the price of oil before investing in Tesla.

So you think a cost/benefit analysis of EV vs. ICE ownership was never part of the investment decision? You would have never heard of Musk if he was an idiot.

 

[Krugerrand]

If Musk had known gas was going to be $2/gallon in 2015 he probably would not have invested in Tesla. Ten years ago he probably would have said, like everyone, that gas at $2/gallon was probably fundamentally impossible.

Um...no. Watch his interviews, he's always been consistent and clear about why he invested in Tesla - the need for sustainable transport to save the planet and thusly mankind.

Now that I know you think this, it makes all your other posts make sense. You don't understand the point of Tesla, nor the man.

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So you think a cost/benefit analysis of EV vs. ICE ownership was never part of the investment decision?

Definitely not a 'part of the investment decision'. Certainly a 'part of the marketing strategy' to convince others to get on board via investing, buying, supporting in whatever way they can.

 

[Johan]

So you think a cost/benefit analysis of EV vs. ICE ownership was never part of the investment decision? You would have never heard of Musk if he was an idiot.

I don't think it was an investment decision as in "what can I do that will make my fortune grow the most" but rather "how can I use the money I've accumulated best for the betterment of mankind". I know you perhaps don't believe anyone may think like this, but if you knew/read anything about Elon I think you would see that in his case this is actually the truth.