Tesla Gigafactory Investor Thread

[JRod0802]

Blast it all!

I DESPISE sloppy writing.

On the internet, one understandably gets labeled pedantic if one tries to correct another's solipsisms. But I'm not talking about that - rather, I am referring to the wording of AB2. I was hoping that Chickensevil was paraphrasing when he wrote this some three pages back, but he wasn't.

Here is the relevant text from AB2:

...only manufactures passenger cars that are powered solely by one or more electric motors; (2) only sells at retail new or new and used passenger cars that it manufactures; and (3) does not enter into a franchise for the sale of its passenger cars. For the purposes of these provisions, the term “passenger car” is defined by existing law to mean a motor vehicle designed for carrying 10 persons or less, except a motorcycle or motor-driven cycle.

The problem is that pesky initial adverb. This wording means that the qualifying entity is one that can perform one AND ONLY ONE function: "build electric passenger cars". Not design them. Not build electric submarines. Not investigate Hyperloops.
The text even is internally self-inconsistent. An entity that "only manufactures..." CANNOT also "...only sell...".

Am I being histrionic? I am not. Lawyers make fortunes over these errors, and progress is thwarted for decades over same.

Is there respite? There is. Moving "only" three words to the right will have the text read "...manufactures passenger cars that only are powered..."

Using your wording, if I decided to start a landscaping company or a computer company or just about any company, couldn't I just manufacture and sell two electric cars and then qualify for the tax break? I would be a business that "manufactures passenger cars that only are powered by one or more electric motors". That just wouldn't be my primary focus. In fact, I would have only manufactured them for the purpose of getting the tax break.

The specific AB2 bill and the proposed amendment are in regard to the issue of franchised dealerships, not tax breaks.

Oh ok. Didn't realize that. So in that case, using AudubonB's wording would mean that a car manufacturer that doesn't yet have dealerships in Nevada could make two electric cars then qualify to sell without dealerships?

Perhaps the following wording would be better:

A manufacturer is not subject to the provisions of NRS 4 482.36311 to 482.36425, inclusive, if:
(1) all of the passenger cars that the manufacturer makes are powered solely by one or more electric motors;
(2) all of the passenger cars that the manufacturer sells at retail are made by the manufacturer; and
(3) the manufacturer does not enter into a franchise for the sale of its passenger cars.


Edit: By the way, I agree with AudubonB's assessment that using the original wording of the bill, if Tesla gets into the energy storage business, dealership lawyers could try to say that Tesla no longer qualifies for this due to the fact that they don't "only manufacture passenger cars".

 

[evme]

2 interesting notes so far.

1 - Tesla is working with the state on education to create curriculum for qualified jobs.

2 - The governor's office is claiming they got patriotic businesses interested in buying the tax credits at face value instead of a discount. It is not a legal guarantee but more money for Tesla.


Edit:

AB1 passed the assembly with 39 Yes. 0 No. Good sign so far in the assembly.

 

[chickensevil]

2 interesting notes so far.

1 - Tesla is working with the state on education to create curriculum for qualified jobs.

2 - The governor's office is claiming they got patriotic businesses interested in buying the tax credits at face value instead of a discount. It is not a legal guarantee but more money for Tesla.

at point 1: From what I was gathering they are actually ALREADY working with like the community colleges on what they need in order to get people qualified straight out of college. I mean we have 3 years to get the initial people through school and trained up, so there is a lot of time here if they get things moving. But I wanted to stress that it is not "if" they are going to get kids from schools, but "how many", because they are already moving forward regardless of what is decided by the government.

 

[AudubonB]

I have done the quickest solution I could come up with: I wrote IR and copied essentially all in my earlier post, and suggested they alert someone at TMC in Carson City to get the bill's wording altered asap. Am not expecting a response, but let's see if the bill's final wording is changed.

 

[evme]

I have done the quickest solution I could come up with: I wrote IR and copied essentially all in my earlier post, and suggested they alert someone at TMC in Carson City to get the bill's wording altered asap. Am not expecting a response, but let's see if the bill's final wording is changed.

They have multiple locations that accept public comment, including in Las Vegas and I think Reno but not sure.

 

[chickensevil]

Please excuse the broken speech and text here as I was trying to get these down as they were coming in. since they were REALLY great questions.

Location decision why in the north?

Happened last December!!! Met in southern NV for meetings and site visits showing all qualified sites (big long list of things that they had for criteria, they send that criteria out to the whole state and then get info back, company receives info and decides on location). They did this in Southern and Northern NV for a total of about 9 potential sites and then they narrowed that down to a couple of choices which then got finalized to the site they are at today.

First decision Musk made was in Southern NV with SCTY, and it is going really well. This is a significant announcement for Northern NV. This deal provides stuff for all of NV not just north or south.

The decision to cut out the two transferable tax credits, they analized the efficiency and effectiveness of them vs this current project and bill. The state has a limited amount of resources. He did not want this deal to have an impact in the state's general fund now or in the future. Because of this, they needed to find a way to pay for this that was justified by the dollars available in more efficient and effective way.

The effectiveness of the previous tax credits is a multiple more effective between the job creation and the permanency.

about 2% for Tesla vs 30% for home office (which was permanent) vs a ratio that is somewhat higher on the film credit. Meaning they are getting about 15x more effective use of this tax credit between both programs that are getting reduced. They left enough money in the Film credit to allow that to be brought up again in the new session in 2015. They pushed the start of the home office changes back as well, which will give the legislature the option to retain those programs if they choose at a later date but they will be able to repurpose the 70M better.

Sales tax on the new vehicles sales? yes. this is not a retail sales tax abatement. This just impacts the sales of the batteries themselves... so transferring the packs from NV to CA would be considered a "sale" and this is what is being abated.

 

[chickensevil]

Transportation funding getting brought up now.

They are looking to fund this through state and federal funding, current projects will not be affected. Sounds like they already have money they can use for this that isn't going to be a big impact.

Railroad spurs would not be under the DOT and would not be an impact and paid for by the 60 million they are looking to put forward. It would be a private transaction that might get federal funds but there is no state involvement with this one. But there is one planned.

clarification on the tax credits... again... looking for best bang for the buck and efficiencies. Enumerator is the amount of the incentive and the Denominator is the payroll. For Tesla they made the calculation over 20 years, 6500 jobs 22+ an hour, It comes out to 2.7% ratio. Home Office tax credit, put in place in 1971, information is anecdotal, but the 32% ratio is a rough guess but is between 30-34. There is about 1400 jobs, credit is up to 26.5 mil, grow to 30 mil, it is about 19k per job, per year, and there is no sunset to this. Chopped it off at 20 years even subsidy would go forward past 20 years, and it came to the 32% ratio. Film Tax applies to 4 possibly a 5th film, 5.8 million credit, it has produced about (including the 5th) 10 million for nevada, so the ratio would come in at about 59%.

So 2.7% vs 32% vs 59% meaning that giving the money over to Tesla is by and far a better use of this money.

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Environmental concern question about lithium, cobalt, and such especially on water. Through the permitting and the monitoring process this has been determined to be clean and safe and Tesla has it's own stressed commitment to the environment.

Desire is to keep inventory low as well so there is less concern about storage and such.

 

[evme]

at point 1: From what I was gathering they are actually ALREADY working with like the community colleges on what they need in order to get people qualified straight out of college. I mean we have 3 years to get the initial people through school and trained up, so there is a lot of time here if they get things moving. But I wanted to stress that it is not "if" they are going to get kids from schools, but "how many", because they are already moving forward regardless of what is decided by the government.

Kind of but not really. Tesla will already hire 700 workers in 2015. 3 years means they would be only in the last hiring round

Year	Jobs	Payroll	Construction	Equipment	Installation
2015	700	$39,817,456.00	$335,000,000.00	$592,500,000.00	$88,875,000.00
2016	1700	$96,699,536.00	$345,000,000.00	$1,382,500,000.00	$207,375,000.00
2017	4700	$267,345,776.00	$320,000,000.00	$1,382,500,000.00	$207,375,000.00
2018	6500	$369,733,520.00	$0.00	$592,500,000.00	$88,875,000.00
2019	6500	$369,733,520.00	$0.00	$100,000,000.00	$15,000,000.00
2020	6500	$369,733,520.00	$0.00	$250,000,000.00	$37,500,000.00
2021	6500	$369,733,520.00	$0.00	$250,000,000.00	$37,500,000.00
2022	6500	$369,733,520.00	$0.00	$500,000,000.00	$75,000,000.00
2023	6500	$369,733,520.00	$0.00	$500,000,000.00	$75,000,000.00
2024	6500	$369,733,520.00	$0.00	$500,000,000.00	$75,000,000.00
2025	6500	$369,733,520.00	$0.00	$500,000,000.00	$75,000,000.00
2026	6500	$369,733,520.00	$0.00	$650,000,000.00	$97,500,000.00
2027	6500	$369,733,520.00	$0.00	$750,000,000.00	$112,500,000.00
2028	6500	$369,733,520.00	$0.00	$1,000,000,000.00	$150,000,000.00
2029	6500	$369,733,520.00	$0.00	$0.00	$0.00
2030	6500	$369,733,520.00	$0.00	$0.00	$0.00
2031	6500	$369,733,520.00	$0.00	$0.00	$0.00
2032	6500	$369,733,520.00	$0.00	$0.00	$0.00
2033	6500	$369,733,520.00	$0.00	$0.00	$0.00
2034	6500	$184,866,760.00	$0.00	$0.00	$0.00
20	Year	Total	6500	$6,504,465,848.00	$1,000,000,000.00

...

 

[chickensevil]

Question regarding getting water for this, apparently there is a need to dispose of the water that comes out of the treatment plants and there has been a raise of standards in what can be dumped into the river, as such Tesla will be able to take this water, treat it themselves, use it in the manufacturing process, treat the water again, and then it will be able to be disposed of safely.

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Kind of but not really. Tesla will already hire 700 workers in 2015. 3 years means they would be only in the last hiring round

Thank you for that chart, it has a lot of interesting information posted there.

I wasn't trying to contest what you were saying but augment it, because I see a lot of people (not you) posting about how Tesla needs to do their part to hire locally and contribute to education and such... and I just mostly wanted to stress that it isn't a matter of if they are going to do this, and what the gov needs to do to make that happen... the reason being? They have already reached out to the local community colleges and such in order to tap potential talent.

My take on that was that they would work with the college to identify current and future graduates in order to pull directly into this factory. They are definitely going to have to do a lot of training on site. I don't think anyone expects otherwise... maybe in 10 years as people cycle out of their positions and jobs open they will have "advanced battery" science degrees or some such, but I am sure that they will take anyone who has an aptitude to learn and a willingness to learn very quickly, since we don't have a lot of battery engineers out there. For the production level they are outputting these jobs are very technical... It isn't some pull a lever type job... but requires a lot of skill and intellect that a machine cannot handle.

Anyway, it was just something I wanted to get out there, in case there was any confusion, that Tesla isn't waiting for rules to be put in place requiring them to do something but is moving forward with the verbal commitment to hire local. Which, IMO, is very commendable, and makes me love Tesla all the more for it.

But, great chart, I would love to know where you got these projections from, or are they just educated guesses?

 

[evme]

Thank you for that chart, it has a lot of interesting information posted there.

I wasn't trying to contest what you were saying but augment it, because I see a lot of people (not you) posting about how Tesla needs to do their part to hire locally and contribute to education and such... and I just mostly wanted to stress that it isn't a matter of if they are going to do this, and what the gov needs to do to make that happen... the reason being? They have already reached out to the local community colleges and such in order to tap potential talent.

My take on that was that they would work with the college to identify current and future graduates in order to pull directly into this factory. They are definitely going to have to do a lot of training on site. I don't think anyone expects otherwise... maybe in 10 years as people cycle out of their positions and jobs open they will have "advanced battery" science degrees or some such, but I am sure that they will take anyone who has an aptitude to learn and a willingness to learn very quickly, since we don't have a lot of battery engineers out there. For the production level they are outputting these jobs are very technical... It isn't some pull a lever type job... but requires a lot of skill and intellect that a machine cannot handle.

Anyway, it was just something I wanted to get out there, in case there was any confusion, that Tesla isn't waiting for rules to be put in place requiring them to do something but is moving forward with the verbal commitment to hire local. Which, IMO, is very commendable, and makes me love Tesla all the more for it.

But, great chart, I would love to know where you got these projections from, or are they just educated guesses?

I understand that, just saying 3 years is not realistic. But what might work is a 2 year program. They already have people who have associate/bachelors degrees in engineering, a 2 year program getting them specialized would work in my opinion. In the first year I expect most people to come from Japan and California and then be swapped out once they train other people. Tesla can probably hit their quotas by having a larger % of construction workers from Nevada early on.

As for the chart, I posted the report a bit back. It is an economic study done by University of Phoenix at the request of the Nevada Governors office and compiled by University of Nevada.

Here is again a link:

http://s3.documentcloud.org/documents/1291115/full-tesla-summary-report-analysis-letters.pdf

To be honest we probably would need a separate thread to discuss the ratification of this, especially what the 5 billion spending in 2019 is for. But I wanted to save that dicussion until after we get the final verdict on the bill.

 

[chickensevil]

I think we are on the same page here, it was just my choice of wording on saying 3 years. I was talking about the broader scope of the timetable to get up and running in 2017. So I meant that pulling kids now that have recently graduated or will graduate soon (say within 1 year) to be some of the first candidates for hire, and have them start now working toward learning and being trained what to do. The 3 years, was more me saying that they are going to be ready by 2017 in order to start production, so that included that training time. If it only takes 2 years, then that is even better. But I don't think they are going to get much on floor training in the factory until 2016 since there won't be a factory to train on, but they might be able to send these people to Japan for said training? If not then we are looking at a very rapid training session of about 1 year. (This is based on Tesla's produced timeline in their released PDF)

The NV 1.3B package and all that discussion could probably be moved over to keep this thread just on the factory itself... but there is going to be a messy split if they did that. Up to the mods, I don't have a preference. I only say this, because we are actually learning a TON of details about the project (or at least I am) that are related to the factory functionality and such, but it is getting all brought up while these bills are being debated... so it won't be a clean split and there would be a bit of crosstalk.

 

[CaptainKirk]

We gonna rock down to Electric Avenue. Gotta love the sense of humour for the address of the gigafactory

 

[GSP]

Advanced Automotive Battery Consulting has a new report on Tesla's battery focused mostly on the business impact. The full report costs $2800. Here is a link to a free extract on the AABC site:

http://www.advancedautobat.com/industry-reports/2014-Tesla-report/Extract-from-the-Tesla-battery-report.pdf

GSP

PS. It is my impression that AABC is highly respected in both the battery and automotive industries. Here is a link to AABC's home page:

Advanced Automotive Batteries - AAB - Official Site

 

[chickensevil]

I'm home now and tuned in again, Picked up with the beginning of public comments on SB-1. First two guys are pro-Bill, first guy wants an amendment which will mandate fair prevailing wage... I don't particularly see issue with this... but would likely need more details.

Second guy is hitting on the fact that there is no battery factory on the scale in the world like this nevermind the US, so training is a must. He is stressing that there is a tool that community colleges already have in place which will help with identifying people that are apt for these jobs. He hit on the fact that high schools in the south are actually in the 95th percentile. They are CTE schools (not sure what that is). But the problem is that while all these students are doing really well and high graduation rates, everyone is leaving the state. So this plant will actually help influence people to stay in the state once they graduate.

third guy - CEO of trucking association. Pro-Bill. He is excited because the trucking industry will be a major player in this. Their original idea for Tahoe was the idea of manufacturing and they had a study and wanted it to be the massive distribution and manufacturing... but they were thinking about small things... and here this project is which is more than anyone ever dreamed of for the Tahoe center. They were wanting to build out the roads back in 2009, and there were plans even back then, so Tesla is really helping to move this industrial center forward. They wanted this site to be the distribution and manufacturing center of the west. Looks like they might finally see that come to pass

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first negative guy -> but his concerns seem to revolve around wanting training and competing on level terms for pay (I think mostly dealing with contracting work... to avoid massive contracting from out of state) He overall doesn't seem opposed just wants certain securities put in place.

second negative guy -> his caution is about constitutionality (which I believe has been well answered already). His other caution is about picking winners and losers, which is a fair complaint. Next is the payment for highway 50 which is to be built, and he is concerned that the funding for this highway will be pulled from other necessary projects since we all know that roads are always in need of repair and expansion. He is concerned about illegal immigrants (I don't think that will be an issue...) [Mostly I don't see any of this as issues, except maybe the roads, but they have said it won't draw funding away from other projects, and picking winners and losers... which is just a general issue with our american government...]

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Neutral- First guy is with the railroads -> He is confirming from earlier that the railroad spurs will be taken care of privately, not by the state

Second guy (economist) -> GOAD document he says seems really great and well researched, but wants to caution that the output is only as good as the assumptions you make when computing your data. He says this facility is just a builder of components and not an assembly plant which tends to lead to a smaller multiplier. He says the more conservative multiplier might be better to say 1.5 for extra job creation. If this is the case, the total jobs created would come out to over 100k per job. He is stressing the issue of how little time there has been to really get a good review of this document and noone has really countered the document.

Third guy (President Urban Chamber of Commerce) - General rule they are always in favor of new jobs and economic growth. He is stressing that he really wants Tesla to ensure that they are reaching out being diversified to the Women, Disabled, and Minority groups. So he wants provisions to promote and encourage the use of these types of businesses and individuals.

And hearing is finished for public comment. Next stage!

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Advanced Automotive Battery Consulting has a new report on Tesla's battery focused mostly on the business impact. The full report costs $2800. Here is a link to a free extract on the AABC site:

http://www.advancedautobat.com/indu...ort/Extract-from-the-Tesla-battery-report.pdf

GSP

PS. It is my impression that AABC is highly respected in both the battery and automotive industries. Here is a link to AABC's home page:

Advanced Automotive Batteries - AAB - Official Site

Thanks for this, I am reading through it now, But this slide really stands out and I want to use this in the future because it really puts it into perspective that noone is as committed to it as Tesla is and only 3 others are exploring anything serious... the rest are all compliance...

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oh, and I missed it, apparently the Assembly passed only bills AB1 and AB3... hrmmmmm What happened to AB2?

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Hmmmm status is listed as "Declared an emergency measure under the Constitution."

I have no clue what the hold up on that was... but it was apparently put off as of last night?

 

[evme]

oh, and I missed it, apparently the Assembly passed only bills AB1 and AB3... hrmmmmm What happened to AB2?

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Hmmmm status is listed as "Declared an emergency measure under the Constitution."

I have no clue what the hold up on that was... but it was apparently put off as of last night?

I didn't catch the whole thing but they said something about it being complex and will be addressed later.

My guess, other bills have been fairly generic and they want to tackle AB2 with/after SB1.

 

[chickensevil]

Wow, plant could be drawing as much of a load as 300MWh of power! That's a lot of power!

 

[chickensevil]

and AB1 and AB3 has passed the senate as well.

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Here is hoping that the important one SB1 gets through both houses just as easily

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SB1 - Passed! On to the assembly! 21-0

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BTW there was no major comments or pushback or debate or grandstanding or anything... everyone had their issues sorted throughout the session and the roll call went swimmingly. I think something bad would have to happen at this point for it not to pass the assembly.

 

[chickensevil]

So the assembly is up again, they are doing AB2 right now, and the amendment got added but not without it's share of nays. I heard about 5 or six people. This is the first opposition I have seen at all come out in a vote. Sadly it is going to be added anyway... if this is the amendment I think it is, limiting the "window" to Jan 1, 2016 for EV makers to enter the market. I am sure by then the whole thing will be overturned but we shall see.

 

[TSLAopt]

Advanced Automotive Battery Consulting has a new report on Tesla's battery focused mostly on the business impact. The full report costs $2800. Here is a link to a free extract on the AABC site:

http://www.advancedautobat.com/indu...ort/Extract-from-the-Tesla-battery-report.pdf

GSP

PS. It is my impression that AABC is highly respected in both the battery and automotive industries. Here is a link to AABC's home page:

Advanced Automotive Batteries - AAB - Official Site

interesting report, but I don't think their estimates and projections are accurate...for example, on page 31 they show their estimates of EV cars sold by company and while they show Tesla selling 35k this year, they only show 50k for 2015 and 80k for 2016 on their chart (anyone who listened carefully to Q2 conference call knows it should be at least 65k for next year).

To me these significant inaccuracies show that they don't really have their numbers or projections straight with regards to Tesla...while the report brings up a lot of good aspects of analysis, the actual numbers within the analysis are not to be trusted.

 

[chickensevil]

Sorry, got sidetracked, AB2 is passed with the amendment. So Tesla can at the very least get their license. I don't know if they modified or revised the text further... so it is very likely the same funky wording... Oh well, once they get their license try and take it away!