If he were serious about his bid, I would expect a bit more effort, like buying a car. To me his effort now looks half baked if he used a hired car. If there are no superchargers, I am sure there are ways of getting Tesla car from A to B anywhere in US.
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Tesla Gigafactory Investor Thread
- Thread starter teddyg
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If he were serious about his bid, I would expect a bit more effort, like buying a car. To me his effort now looks half baked if he used a hired car. If there are no superchargers, I am sure there are ways of getting Tesla car from A to B anywhere in US.
jhm
Well-Known Member
Musk to Perry: Rick, I really like your state and all, but that driving out to Sacramento thing and a rented Model S, you're starting to creep me out.
CapitalistOppressor
Active Member
Also, keep in mind that all of the investor prospecti, conference calls, etc are using 2020 as the reference date for when all of these metrics will be valid. So 35GWh of cell production in 2020 might mean only 27GWh of production in 2017 with all the same machining, processes, etc.
So when we model costs to set up the factory we need to perform the same translation from current costs, so if Tesla was hypothetically putting this factory online tomorrow it would need enough CapEx to produce ~22GWh of batteries, and then natural improvements in chemistry or whatnot would "ramp" up the capacity of the factory to the promised levels in 2020.
Focus Should Be At Cell Level Economics
Because of how these changes in capability occur over time, the better way to model all of this is to focus on the individual cells. The basic manufacturing costs haven't changed in some time, and the materials costs vary only depending on the specific chemistry.
For some time now those costs have averaged out to ~$1.70/cell +/- some modest amount. In fact, the manufacturing costs of a 2.2Ah cell is virtually the same as the 3.0Ah cells right now, which neatly illustrates this rule of thumb in real time. There is every reason to suspect that cell costs in 2020 will still be somewhere close to $1.70/cell, with minor reductions due to scale.
Mob Economics 101
Anyways, when Elon promises a ~30%+ reduction in per kWh pack costs by 2020, my assumption is that the real improvement at the cell level is greater than that, and the balance is the Vigorish that Tesla is paying Panasonic to entice them into a huge investment.
When Panasonic counters that they're not sure they can make a 30% reduction, this is just the public face of a negotiation where Panasonic is demanding a greater profit.
Plus, if you read the Panasonic quotes closely you see that they are offering to "help" Tesla with development of
Note that the article also states that
When you factor in the likelihood that most of the commentary in the press about achieving production "efficiencies" is actually just the public face of a Panasonic shakedown, it becomes much more comprehensible. There are clearly efficiencies to be had, but the natural increase in energy density predicted by 2020 totally dominates when you are talking about super-mature cylindrical cell production processes.
The real story is, and always has been, what it will take to get Panasonic to take a huge risk on Tesla. The simple answer is, and has been, money. Gobs and gobs of money. A 30% "decrease" in cost per kWh in 2020 implies a major increase in profit margins over what Panasonic is making right now, once you factor in the possibility that the batteries are likely to be 40%+ better.
That story makes sense when you consider the bargaining power of the participants. Panasonic wanting to "help" with power electronics is exactly like Samsung wanting to "help" with touchscreen technology during the failed negotiations for the 2 billion cell contract for the S Platform.
Essentially they are trying to use their leverage in the battery negotiations in order to capture a larger percentage of Tesla's business, up to and including discussion of power electronics, an area where Tesla likely has greater expertise than Panasonic does. This would allow Panasonic to grow their parts business with Tesla beyond the cell level and into the drivetrain which is Tesla's core area of expertise and value.
The vanilla interpretations of public announcements that are floating around fail to properly characterize the relative bargaining power dynamics of the negotiation, as well as the very well studied rates of improvement in Li-Ion tech likely to be realized by 2020.
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I do wonder how much of the 30% is reduction in cell production costs vs. other costs. For example, I wonder how much is just shipping costs. It might be that obtaining raw materials is cheaper in the U.S. Even though cell production costs are roughly the same between like kinds of cell production processes, obviously the cell producer would like to make a bigger profit on the newest technology. I am assuming that Panasonic is willing to forgo a higher profit because they are unwilling to bankroll a gigafactory by themselves at this point. It will be interesting to see as Tesla blazes this trail if others are willing to approach Panasonic and work out the same kind of arrangement.
CapOp, do you have details on the BMW i3 cells? I think they are Samsung SDI's NCM in a prismatic form factor. I would love to know if anyone has production details on that cell.
RobStark
Well-Known Member
I have seen 30% reduction by 2017 and 40% by 2020 was GF is fully operational.
Johan
Ex got M3 in the divorce, waiting for EU Model Y!
Elon on CNBC just now Re Gigafactory: "We're not setting up states against each other, our goal is to have the factory ready when we start producing the mass market car". "Moving forward with at least 2, maybe 3, locations"
Hmmm...real estate agent offers free land to attract a business that will employee hundreds of people who will need to buy...houses, and the gigafactory will boost real estate values.
I suspect finding land is not the big challenge for Tesla. The challenge is regulatory hurdles that must be surmounted and being near a railroad rote.
I suspect finding land is not the big challenge for Tesla. The challenge is regulatory hurdles that must be surmounted and being near a railroad rote.
chickensevil
Active Member
Well he did say that it was in the Albuquerque Metro area with close access to rail, so I would assume it is already near populated land. But yeah, I agree it seems fishy...
Not fishy at all, he specializes in real estate. Giving out so much land for free is not that expensive in return, his real estate will increase in value exponentially. Especially since he will own all the closest properties next to it.
Overall though, there is not enough land for Tesla. He only has 400 acres of land to offer, Tesla needs 500 acres. His suspicion is that Tesla doesn't need that much due to solar/wind but being powered fully by renewable energy is kind of the point.
Close access to rail can just mean an old depot next to a rail yard. Not uncommon that such land would be cheap so a major real estate developer would come in and try and turn it over. The problem for developers is that they pay taxes on the land they own, so with a site that's tough to sell, giving it away can mean tax savings and indirect benefits on the value of nearby land.
While electricity price is important, I thought Tesla is looking to put in a lot of their own renewables for the plant which makes the grid electricity pricing not as important.
Yeah, it was mentioned. But if Tesla was looking to install a substantial amount of renewables, it should push down on the priority list for grid electricity price. The carbon footprint aspect was not really discussed. What is more interesting is if a particular location already has a substantial renewable portfolio on the grid or is willing to JV the renewables.
For example, Arizona's electricity production is split between nuclear (29%), coal (40%), and natural gas (22%). Nevada is mostly natural gas. The carbon footprint of the nighttime energy sources was not really discussed. It could be that Arizona has a leg up just based on the nuclear component... nighttime could be mostly nuclear and wind, and daytime is with solar/wind/natural gas, some of which is Tesla installed.
I think San Antonio's angle is that our utility is municipally owned, so it can be creative in what it packages for rates, has a high % of renewables that are part of its generation mix, and it can actually be a customer for fixed storage. This would help Tesla prove the concept for renewable-heavy utilities that are looking to overcome the time of day generation issues with some renewables, and for any utility to offset peak loads by using fixed storage rather than 'Peakers'.
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I'm curious as to how municipal ownership enhances the ability of a utility to be rate-creative, or allowing it to offer the other advantages you mention over that of a privately-operated firm.
In all fairness, that curiosity, while genuine, also is coming from someone who views the entire concept of any grid-intertied electrical producer or distributor claiming that "you get to choose from what kind of source your electrons come" as being snake oil hooey of the worst sort.
In all fairness, that curiosity, while genuine, also is coming from someone who views the entire concept of any grid-intertied electrical producer or distributor claiming that "you get to choose from what kind of source your electrons come" as being snake oil hooey of the worst sort.
I'm no expert, but here is an idea. A privately owned utility has investors to answer to it, and economic development of their city or region probably doesn't come into play. A municipally owned utility is part of the same organization (city) who typically is looking for opportunities to enhance economic development for their city. So it would make sense for San Antonio's Economic Development Council to work with our Mayor and City Council and our utility (CPS) to structure a package that would attract businesses beneficial to San Antonio. They do this because they are all a related entity. They do some version of this all the time, it's simply that the Tesla GigaFactory is 3-4 times larger than any other thing they have ever lured (Toyota Factory 20 years ago).
As to renewable mix, I realize they are not directing electrons, but San Antonio does have a very high mix of solar and wind in it's portfolio. They also have 400MW production/purchase agreement with OCI and perhaps some of that might literally be channeled to roof/land at or near the GigaFactory. Guesses on my part on this.
As to renewable mix, I realize they are not directing electrons, but San Antonio does have a very high mix of solar and wind in it's portfolio. They also have 400MW production/purchase agreement with OCI and perhaps some of that might literally be channeled to roof/land at or near the GigaFactory. Guesses on my part on this.
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