Tesla Gigafactory Investor Thread

[doctoxics]

wouldn't the implication be that they have even more than expected ability to reduce costs?

A. Tesla says high capacity of the Gigafactory can drop costs by 30%

B. Panasonic increases cell technology and reduces prices with existing plants

A + B = C Tesla uses Panasonics improvements with the expansion of the gigafactory and make the cost drop more than the previously expected 30% with lower start up costs because Panasonic reduced the need to pay higher construction costs for expediting.

Article reports Tesla executive recently said battery pack costs will now be reduced 50 % at Gigafactory1 rather than the previous estimate of 30 %.

Tesla President reveals key insight into company forecasts; Gigafactory will cut battery costs in half [Video]

 

[Oil4AsphaultOnly]

Article reports Tesla executive recently said battery pack costs will now be reduced 50 % at Gigafactory1 rather than the previous estimate of 30 %.

Tesla President reveals key insight into company forecasts; Gigafactory will cut battery costs in half [Video]

Mr. McNeil seems to be a good candidate for COO (and possibly next in line to be CEO). As much as I like JB, he's not yet seasoned enough as an executive. Larry Page did the right thing for Google, when he stepped aside to let Eric Schmidt lead for a while. JB will get his chance, but not in time to replace Musk after the model 3.

 

[Fallenone]

Article reports Tesla executive recently said battery pack costs will now be reduced 50 % at Gigafactory1 rather than the previous estimate of 30 %.

Tesla President reveals key insight into company forecasts; Gigafactory will cut battery costs in half [Video]

The 30% comes from vertical integration. More would be from scale of economy. So the 50% total isn't really new target IMO.

 

[electracity]

but not in time to replace Musk after the model 3.

I doubt Musk leaves the CEO job. He can step back from implementation details and still remain CEO. I doubt SpaceX has enough evolving product features to hold his interest as his primary job. Tesla won't be "safe" as a company for many years.

Article reports Tesla executive recently said battery pack costs will now be reduced 50 % at Gigafactory1 rather than the previous estimate of 30 %.

Tesla President reveals key insight into company forecasts; Gigafactory will cut battery costs in half [Video]

I'm unclear if he was talking about battery pack improvements in the Model X or the gigafactory.

 

[Oil4AsphaultOnly]

I doubt Musk leaves the CEO job. He can step back from implementation details and still remain CEO. I doubt SpaceX has enough evolving product features to hold his interest as his primary job. Tesla won't be "safe" as a company for many years.



I'm unclear if he was talking about battery pack improvements in the Model X or the gigafactory.

You got his words mixed up. He said that he'd still be with Tesla, just not as CEO. Just need to find a transcript of the Q3/Q4 conference call somewhere.

Edit: Addendum: Mars, and thus SpaceX, is his ultimate goal. He was originally involved in Tesla only as a source of start-up funds. It wasn't until he needed to kick Martin E. out did he take over as CEO. No such abiguity with SpaceX.

 

[Oil4AsphaultOnly]

I doubt Musk leaves the CEO job. He can step back from implementation details and still remain CEO. I doubt SpaceX has enough evolving product features to hold his interest as his primary job. Tesla won't be "safe" as a company for many years.



I'm unclear if he was talking about battery pack improvements in the Model X or the gigafactory.

This was the original biography of Musk, before Ashley Vance's book: The Engineer

 

[Krugerrand]

I doubt Musk leaves the CEO job. He can step back from implementation details and still remain CEO. I doubt SpaceX has enough evolving product features to hold his interest as his primary job. Tesla won't be "safe" as a company for many years.

SpaceX is closest to his heart. He never wanted to be CEO of Tesla, he did that out of necessity. He plans on dying on Mars so there's no doubt it'll hold his interest for the rest of his life. If he felt he could, he'd do that as his primary job instead of splitting the vast majority of his time between that and Tesla.

Initially he said he'd stay at Tesla to see Model 3 through to mass production, then he'd leave it (mostly) in someone else's capable hands but still be involved/keep an eye on things. That has changed a bit and he's made a number of subtle and not so subtle hints and statements that suggest he's changed/thinking about changing his mind, like references to making it a family owned and run company like Ford.

The idea of him remaining CEO, yet stepping back from implementation details: ahahahahahahahahaha.

 

[neroden]

Article reports Tesla executive recently said battery pack costs will now be reduced 50 % at Gigafactory1 rather than the previous estimate of 30 %.

Tesla President reveals key insight into company forecasts; Gigafactory will cut battery costs in half [Video]

One of the problems with statements like this is that they never say what the reduction is *relative to*. 30% reduction relative to what price? Clearly their production cost in 2013, which they never published.

Likewise, 50% reduction relative to what price? The 2013 price? The production price last year? The $190/kwh price quoted a few weeks ago?

The vagueness means that I haven't been able to interpret these statements as meaning more than "yes, we will cut costs by using the Gigafactory".

 

[Gerardf]

Ok tftf, it is now official. That 14% you keep repeating is actually 3x 14% = 42% of inital plan.

So please spare us your 14% babble from now on, not just here but on any forum on the internet that you keep repeating this.

 

[tftf]

Ok tftf, it is now official. That 14% you keep repeating is actually 3x 14% = 42% of inital plan.

So please spare us your 14% babble from now on, not just here but on any forum on the internet that you keep repeating this.

The 14% is about the floor space and that revised number (more floors etc.) has been known for months:

1.8 to 1.9 million sq ft out of a total of 13.6 million sq ft of operational space. 14%.

Source from Nov 2015: Elon Musk Powers Up: Inside Tesla's $5 Billion Gigafactory

Maybe they revised that number upwards again in the meantime? Plans are cheap, execution is not.

In the end it's all about actual money invested. Battery manufacturing for current cells is well understood, equipment has its price. If you believe Tesla (and Panasonic) can magically produce 50, 100 or 150 GWh worth of cells and batteries a year soon without first investing billions more into the factory, then do so.

PS: This is similar to Musk talking about the Fremont factory 'potentially' producing up to 1 million (compare that number to what NUMMI produced on the site in its heydays, about half that output!) cars a year. Also note how Musk and other Tesla execs never talk in details about the additional cap-ex needed to get there one day...

 

[Johan]

Hmm.... In fact it's 14%^2. Elon doesn't think floor surface area but factory volume in 3 dimensions.

(Yes I understand that 0.14 squared is much lower and I'm just pulling the Future's leg here)

 

[tftf]

Likewise, 50% reduction relative to what price? The 2013 price? The production price last year? The $190/kwh price quoted a few weeks ago?

The vagueness means that I haven't been able to interpret these statements as meaning more than "yes, we will cut costs by using the Gigafactory".

That's the magic of it, isn't it? Believe, don't ask too many questions.

Instead Tesla prefers talking about what 'could' be. Like feeding the press with numbers of 1 million cars produced a year out of California or a gigantic $5billion battery factory with 13+ million sq ft - when the current output and cap-ex is magnitudes smaller.

Whenever someone asks for more details on financing and keeping the overly ambitious timeline projections, there are usually only evasive answers on conference calls or in interviews.

 

[Gerardf]

The 14% is about the floor space and that revised number (more floors etc.) has been known for months:
1.8 to 1.9 million sq ft out of a total of 13.6 million sq ft of operational space. 14%.
Source from Nov 2015: Elon Musk Powers Up: Inside Tesla's $5 Billion Gigafactory
Maybe they revised that number upwards again in the meantime? Plans are cheap, execution is not.
In the end it's all about actual money invested. Battery manufacturing for current cells is well understood, equipment has its price. If you believe Tesla (and Panasonic) can magically produce 50, 100 or 150 GWh worth of cells and batteries a year soon without first investing billions more into the factory, then do so.
PS: This is similar to Musk talking about the Fremont factory 'potentially' producing up to 1 million (compare that number to what NUMMI produced on the site in its heydays, about half that output!) cars a year. Also note how Musk and other Tesla execs never talk in details about the additional cap-ex needed to get there one day...

My point is that the 14% floor space is no longer a relevant reference to the initial planned capacity of 50 GWh. You have more than once implied here and on various other forums that 14% floor space is not enough room for the cell & pack capacity required for the early Model-3 production. As of yesterday it is confirmed that that 14% floorspace (as they have already today) could very well be enough not for 14% but for 42% of the old plan of 50 GWh = 21 GWh. That 21 GWh alone would be enough capacity for 300.000 cars with even 70 kWh. And that is additional capacity to the currently available proven cell capacity available for Tesla of at least 75k / 100k cars a year. So even assuming Tesla will not extent the floorspace between now and 2018, there is not issue.

Thus my respectful request to not use this 14% or floor space argument again, not here, not on other websites, as you now know this is not a an honest statement.


You have often spread doubt on the investment already made into the GigaFactory...
I am not sure you followed the whole websession yesterday, but I now inform you that Elon Musk stated at the shareholders meeting that already today a total of 2B have been invested by Tesla and partners in the GigaFactory. That is 40% of that 5B investment already between site selection announcement in September 2014 and May 2016. 2B of the total 5B investment promised to be made until 2020. So no magic required, but lots of hard work and real money as both have indeed already been invested by Tesla and partners.

So next time you make statements here or on other forums where you create doubt by implying otherwise, be honest and explicitly accuse Tesla of lying in the shareholder meeting, so we can call you out on that. IMHO you should not make such statement without very strong proof.

(*) 2016 Shareholder Meeting | Tesla Motors at time 02.13.30 and further.


EDIT / P.S. just to be one step ahead before tftf would now make up a new complaint that 2B was already spend on just 14%.. How to finance ???

Well 2B equals 40% of 5B.. Just like 21 GWh equals (about) 40% of 50 GWh. Coincidence ?
And I actually claim that every next 10 GWh capacity will cost much, much less than 1B each as many significant on-time costs are already paid for now. (land, infrastructure etc, etc).

 

[techmaven]

I think this is worth re-emphasizing:
Tesla's has already invested most of what is necessary to achieve 2018, 300,000+ Model 3 volumes at the Gigafactory

Some basic facts:
Original size of the Gigafactory, cell production: 35 GWh
Initial pilot phase thought to be 1/5th size: 7 GWh
Total investment: $4 to 5 billion
Tesla's investment: $2 billion (still - figure in latest 10-Q)
Tesla investment through Q1, 2016: $380 million
Additional Tesla 2016 investment: $468 million
Panasonic's committed investment: $1.6 billion
Panasonic's investment through Q1, 2016: $128 million
Total investment through Q1, 2016: $508 million
Suminoe Plant total cost: $1.1 billion
Suminoe Plant capacity: 600 million cells, about ~7 GWh

By dramatically decreasing the floor space/GWh at the Gigafactory, Tesla took a huge chunk out of their costs at the Gigafactory. Assuming the cell making equipment cost remains the same, the cost to supply the shell for a given GWh capacity is now apparently far lower than previously announced.

At the Gigafactory, Tesla is responsible for the shell buildings, the power hookup, the parking lots, and the battery pack making equipment that turns the cells into battery packs. At $2 billion dollars for 35 GWh, we can look at the phases like this:
$50 million for site preparation
$100 million for ancillary buildings, grid connection, etc.
$250 million for on-site energy production
$320 million per phase shell buildings and battery pack assembly

So $50+$100+$320 = $470 million to get the first phase up and running

Tesla already spent $380 million as of 2 months ago and they expect to spend another $468 million this year, for a total of $848 million. That presumably includes a 2nd phase and some on-site energy production.

Now a phase is somewhere up to 3x what we used to think, which means instead of 7 GWh, we're talking about 20 GWh.

20 GWh / 60 kWh per Model 3 = 333,000 Model 3's.

That's roughly the amount of Model 3 production run rate through the end of 2018. In other words, the first pilot phase is enough to get to the end production rate in 2018, the announced 500,000 vehicles/year rate by incorporating Panasonic's Osaka plants in cell production. Now, it appears that Tesla isn't going to stop there, they will be adding another phase.

That means that they are investing enough in 2016 to get to 40 GWh of production, or more than the original cell production estimate.

This is huge news.

Presumably Musk's comment on $2 billion invested includes the fact that Panasonic's $1.6 billion committed is already spent... just not fully installed. After all, there is a lag time between ordering the equipment, signing the installation contracts (spending the money), and then the actual equipment install (report of investment to Nevada). That means the investment thus far is already almost double the Suminoe Plant investment and well in line with 14 GWh of production in Osaka, Japan, but it is cheaper to build in Nevada and there are huge improvement to the design of the factory. While they are doing more at the Gigafactory, it does provide a check on the investment size. We had thought that the $1.6 billion committed was over more phases... instead, all of it is for the first phase.

So the first phase costs are more like:
$50 milion site prep
$100 million ancillary buildings, grid connection, etc.
$320 million shell building + battery pack
$1.6 billion Panasonic's cell making equipment

$2 billion total invested, 20 GWh of capacity. Tesla's investment is roughly $470 million, the State of Nevada added $20 million, and there are some tax abatements and the like.

That means that out of the $3 billion in cash ex-ABL, what is necessary for 2018 Model 3 volumes is merely $100 million or so. The rest is Panasonic's. The fact that they are building out another entire phase now is what they mean by 50-50, automotive versus stationary storage. The pilot plant is enough for huge Model 3 volumes, but not enough for stationary storage on top of that. They are building a 2nd phase for Tesla Energy. Now, the actual production is likely more granularly divisible between Tesla Automotive and Tesla Energy and initial cells might actually be for Tesla Energy and then production output goes towards Model 3 and they choose allocation at their whim.

 

[madodel]

What do people make of this? Chowdhry On Tesla: GigaFactory Valued At $50 Billion - Tesla Motors, Inc. (NASDAQ:TSLA)

 

[Lessmog]

Hmm.... In fact it's 14%^2. Elon doesn't think floor surface area but factory volume in 3 dimensions.

(Yes I understand that 0.14 squared is much lower and I'm just pulling the Future's leg here)

You know, it's cruel to pull legs off ftflies, right?
You also know, you probably mean 1.14^(3/2), right?
Sorry, but my abacus fell to pieces in the Hop Sing so I can't calculate how much that is in percent (given FX).

Edit: Oh, and thanks techmaven for pointing the finger!

 

[tftf]

(...)
I am not sure you followed the whole websession yesterday, but I now inform you that Elon Musk stated at the shareholders meeting that already today a total of 2B have been invested by Tesla and partners in the GigaFactory. (...)
(*) 2016 Shareholder Meeting | Tesla Motors at time 02.13.30 and further.

So how come the investments reported to Nevada by Tesla and Panasonic arrive at a totally different, much smaller number by the start of calendar Q2 2016:

In Q 1 2016, Tesla reports an investment of$ 67million, for a PTD investment of $380million; PENA reports an investment of $64 million for a PTD investment of $128 million; or a combined PTD investment of $ 508 million through Q1 2016.

Panasonic doubled its investment in the Tesla Gigafactory during the last quarter [Q1 2016 Activity Report]

So where does the sudden $1.5 billion difference come from?

I doubt PENA (Panasonic NA) installed over a billion worth of equipment between April 1, 2016 and yesterday.

For a comparison, the former Q4 2015 numbers and totals were:

In Q4 2015, Tesla reports an investment of $78 million, for a PTD investment of $310 million;
PENA reports an investment of $58 million for a PTD investment of $64 million; or a combined
PTD investment of $374 through year-end 2015.

(PENA = Panasonic North America)

Tesla gigafactory jobs and investment climb, still short of projections

Why not wait and see what Tesla files in their next financial reports in written and not what Elon says during a 3.5 hour rant?

Either way, it's Panasonic, not Tesla who owns the machinery and manufactures the cells.

But why doesn't Tesla take over all of that?

Hearing Musk speak it appears that the Panasonics and Toyotas of this world apparently know next to nothing about efficient, high-quality manufacturing for batteries and cars...

Elon Musk goes on a ‘machines building machines’ rant about the future of manufacturing

Looks like the next revolution in manufacturing is soon here thanks to Elon Musk. Time to finally throw away those old 1990 copies of The Machine That Changed The World.

That's it from my part. 2018 is here soon enough and we will see actual output and margins.

 

[neroden]

I think this is worth re-emphasizing:
Tesla's has already invested most of what is necessary to achieve 2018, 300,000+ Model 3 volumes at the Gigafactory

I think this is very important as well. Going off the Gigafactory topic, Tesla has also built the paint shop for 500,000+ Model 3 volumes already (and seems to know how to copy it if needed?). They've designed nearly all of Model 3 except the interior. In general Tesla has been spending capital money on Model 3 well before telling anyone about it. I would expect that the production lines for Model 3 are far closer to complete than most outsiders expect, which makes hitting the target date more plausible.

 

[techmaven]

So where does the sudden $1.5 billion difference come from?

You know where the $1.5 billion dollar difference comes from - Panasonic's $1.6 billion investment in the Gigafactory. They're in the middle of spending it... for all we know, they've already spent it all, just waiting for all the equipment to arrive and the contractors to install it. Therefore, the Nevada reports will necessarily have a delay in comparison to when the companies have to have spent the money on their books.

The difference now is that we know the $1.6 billion is not spread over other phases, it's all part of the pilot phase. Which means the investment in the pilot phase will be around $2 billion, and a bunch of that investment is actually for infrastructure for the other phases. So now, the cap-ex requirements and schedule you've been harping about is suddenly very different. The footprint argument you've been making is now moot as far as Model 3 launch and initial scale up through 2018 goes. Plus, the capex argument also is moot, as Tesla has already spent almost all they need to hit 2018 scale up.

 

[Model 3]

Going off the Gigafactory topic, Tesla has also built the paint shop for 500,000+ Model 3 volumes already

Is it not so that they even have installed the metal-presses it needs for the Model 3 volumes?