tinm
2020 Model S LR+ Owner
Ugh don't get me started with WLCDF. I'm only holding on until it gets back in the .40s, if ever, so I can dump this we-say-we're-lithium-but-we're-really-a-fracking-company stock.
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Tesla Gigafactory Investor Thread
- Thread starter teddyg
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A question to consider is what Tesla will do with the batteries made in the Gigafactory from when production starts in the second half of 2016 until the start of production of Model 3 in late 2017. Could we be getting a 100 kwh or 110 kwh battery for Models S and X by the end of 2016? More likely, early batteries will end up in storage modules.
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chateauoaks
Member
The more recent (October) drone footage was removed from YouTube and the RGJ hasn't been taking close up pictures recently, something about an assault with an SUV, or rock depending on your view.:tongue:
The Fool has various independent authors (much like SA and many other sites), quality of submitted material therefore differs wildly. I linked to a single article that imho is worth reading.
Tesla wants to produce (this is direct quote from CEO Musk from Jan 2015) "millions of cars per year" by 2025, a mere decade from now.
Even just a production expansion to a battery capacity for about 1M cars/year requires $10bn in cap-ex - and that is of course on top of "normal" cap-ex needed for actual car production.
Vertical integration isn't a magic panacea, especially not in cap-ex intensive sector like cars and especially not when battery technology is still evolving rapidly - see the many solar panel makers going bankrupt over the last decade even as revenues in the solar (panel) sector exploded globally. That was the article's main point ( Could Falling Costs Be a Bad Omen for Tesla Motors' Gigafactory? -- The Motley Fool ).
There's a reason why pioneers in a new sector often die or are marginalized with arrows in the back, for example once "fast followers" with large financial means enter the new sector, technology matures and price wars start.
Tesla so far only invested a fraction of the $10bn (or $5bn if we assume 500k/cars per year) in its Gigafactory (it's Giga by name only for now), i.e. Tesla and Panasonic miss $9.7bn for battery investments alone (!) to arrive at a battery capacity of 1M cars per year.
PS: 1M cars/year of course roughly is about 1% global passenger car market share assuming modest growth in the sector until 2020 or 2025.
At least Tesla and Panasonic have begun to build battery capacity to manufacture a million BEVs. We don't see the same level of growth in their competitors. The catch-up time is widening and there doesn't appear to be any public information that indicates it will be closing for the foreseeable future. Also, the potential market is so large that early entrants that can compete with ICE vehicles are unlikely to be squeezed by each other.
Krugerrand
Meow
It's erroneous to think 500,000 cars per/yr Gigafactory costs $5B therefore 1M cars per/yr Gigafactory will cost $10B. Indeed, that's not how it works at all. I can't decide if that's purposeful obtuseness or real, honest to goodness ignorance.
No, it is not because
a) the required battery capacity per car likely keeps increasing in the near future (so the economies of scale are evened out)
b) huge projects often have cost overruns until they are completed. $5bn was the initial estimate, I wouldn't be surprised at all if the final bill is higher in 2020.
The additional economies of scale per cell/pack are becoming also very small in the GWh scale.
In any case, even if a complete GF (or rather two of equal size) for 1M cars/year is "only" $8-9bn, the fact remains that Tesla and Panasonic so far only invested a fraction of the funds needed - and that the factory buildings/shells constructed so far are only a fraction (about 14%) of what's needed for the first "complete" GF (around 500k cars/years plus some capacity for local storage products = 100%).
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Chickenlittle
Banned
cant believe I am bothering to respond to you but here goes
1. The required battery capacity is not increasing per car yet. There are larger options for batteries BUT the introduction of the 70 option and it popularity actually decreases the average capacity. The model 3 projected to be the vast majority of cars sold will very likely have smaller battery capacities with smaller size and price hence lower capacity
2. Huge projects have cost over runs. Not always true. Look at space X cost per rocket. I believe about 25% that of Boeing consortium. Clearly musk Is aware of limiting cost. Completion of giga factory will be done when cash positive and second factory would be a lot lower cost probably in Asia
MitchJi
Trying to learn kindness, patience & forgiveness
The article makes a completely irrelevant point. The GF will allow Tesla to produce battery packs for less than $120 per kWh by the end of 2017. Meanwhile GM is bragging about cell costs of $145! And there are studies by utility's showing that replacing peakers with batteries is profitable at pack prices of $850 per kWh! The only problem with the GF is that it isn't big enough to meet the huge demand. It's going to be almost like having permission to print money. If you think that matches the history of the failed companies in the solar industry don't quit your day job in hopes of earning a living in the financial industry.
And good luck investing on the basis of trying to turn a goal that Elon's stated a negative! Just a couple of days ago Spacex achieved a goal of his that every expert in the industry has stated is impossible.
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Right. One of the purposes in staging the Gigafactory is to generate cash flow (storage and Model 3 sales) to pay CAPEX for subsequent stages and Gigafactories. Once production begins, cash flow will catch up to CAPEX in an ever expanding market for battery packs. This scenario only works if you have superior products and cost competitiveness, both of which are the case.
JRP3
Hyperactive Member
Not even close to rational. kWh per car will only increase because energy density increases, which means more kWh PER UNIT. If your 18650 cell holds 12Wh and the new version holds 14Wh your cost per kWh just went DOWN. Come on tf, you're not even trying anymore.
jesselivenomore
Member
Some solar panel makers went out of business when panels became commoditized because their margins got squeezed, since their core business is selling those panels. While Tesla will be selling batteries too, their core business is actually consuming those batteries in their cars. So even if batteries get commoditized to the point where there is no margin in selling batteries, that would mean the margins in their core business, cars, would be going through the roof with such cheap batteries. Its not even close to a comparison with solar panel makers.
chickensevil
Active Member
To add to that, assuming they keep increasing their per cell capacity, this could be partly why they are projecting more GWh production in the factory than originally estimated? (aside from them making the plant itself bigger). They recently came out and stated that the cells coming out of the factory would be a new chemistry over anything used right now in their products.
Also as they continue to make improvements of 5-6% each year, that means that starting production at say 50GWh should mean they are producing over 80GWh in 10 years from the same plant. So how much more than this one factory do they *really* need to hit 1 million cars? That would all depend on what the new projections are for energy density and the weekly cell production rate...
Your statement that cars will need increasing battery capacity over time is erroneous. Tesla battery pack capacities have increased recently without increasing cost to the buyer because battery costs have come down (and that will continue) and battery chemistry has improved so the same number of batteries produce more kWh (and that will continue). With the growth of the Supercharger network, there is no need for Tesla to offer more costly battery packs in the future, though they are likely to offer larger packs as an option. The packs that Tesla has offered to date -- 60, 70, 85, 90 -- are sufficient for almost all use cases. Yes, larger packs will be offered in the future but they will not be more expensive to the buyer than the current top of the line packs because battery costs will continue to decline and chemistries improve.
And of course the Model 3, the real volume seller for Tesla, will use much smaller battery packs than the S or the X. So your assertion is completely unfounded.
Regarding the final cost of the Gigafactory: yes projects sometimes have cost overruns. Not exactly news. But your imagining that the factory cost will go from 5 billion to 8 or 9 billion is at this point exactly that: your imagining.
Really, you are grasping at straws in your ongoing attempt to convince the world that Tesla is doomed.
Krugerrand
Meow
Yes it is because...
a) Uh...no.
b) Also, no.
In any case, you just sit back and watch how the money shows up and the factory/s get built.
I used the $8-9bn as an optimistic assumption for a future battery capacity for 1M cars, not 500k cars - regardless of that, Tesla and Panasonic invested only a fraction of that so far.
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I doubt these 2017 numbers are public or verifiable (other than maybe vague goals, Tesla for example stated to reduce battery costs by "at least 30%" in the GF). Please provide links if you have any.
Most of the input and cell costs are on Panasonic's side anyway, that part of the equation is often forgotten. Tesla will not produce the cells.
tftf, let's go to the root of this. Let's say we get to the point that Model3's are being produced, and are using battery packs made in the "starter" version of the factory. Let's also assume it's utterly awesome, price is right and there's a half a million reservations on those. Do you have any doubt Tesla will have zero problems raising capital to finish this thing and maybe build a couple more while at it? There's a whole lot of money chasing very little real assets in this economy.
Krugerrand
Meow
So?
So?
You keep repeating these points. I believe you want us to arrive at the assumption that a) Tesla and Panasonic can't? won't? finish the Gigafactory due to running out of money - in your dreams!, and b) I'm not really sure what assumption I'm suppose to arrive at for that one. But we already have plenty of chatter coming out of Tesla that a) they have the lowest battery pack costs, and b) they are fully expecting to get pack costs down to a level that makes the whole battery equivalent in cost to a typical ICE engine. (That last should be a lightbulb moment for you.)
The game is over, tftf. You just don't know it yet.
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