-
Want to remove ads? Register an account and login to see fewer ads, and become a Supporting Member to remove almost all ads.
Tesla Gigafactory Investor Thread
- Thread starter teddyg
- Start date
-
- Tags
- Gigafactory TSLA
There's something tftf has missed regarding capital raises.
Tesla has repeatedly taken out secured loans against their land, buildings, and equipment. This is a form of capital raise. However, Tesla hasn't been doing it the traditional way, which is to take out a mortgage *before* purchasing; they've been purchasing in cash and then taking out loans against the equipment afterwards.
The Gigafactory will be no exception. A lot of cash has been spent building it. However, expect a bunch of that cash to be recovered by promptly taking out a loan against the constructed building. Not great for earnings, but great for cashflow.
Tesla has repeatedly taken out secured loans against their land, buildings, and equipment. This is a form of capital raise. However, Tesla hasn't been doing it the traditional way, which is to take out a mortgage *before* purchasing; they've been purchasing in cash and then taking out loans against the equipment afterwards.
The Gigafactory will be no exception. A lot of cash has been spent building it. However, expect a bunch of that cash to be recovered by promptly taking out a loan against the constructed building. Not great for earnings, but great for cashflow.
They are depreciating the building costs regardless of the financing. If/how they finance the building is primarily only a question of liquidity and cost of capital. The had plenty of cash when they started the project, so they funded the first stages internally.
Well, basically any debt is not great for earnings, because interest. But there's a tradeoff between paying interest and dilution.
Just saw this pop up:
Scott Lucas @ScottLucasNV 21m21 minutes ago
Did @elonmusk play Nevada over lithium mining? Or did state lawmakers just fail to do their homework?http://lasvegassun.com/news/2015/sep/02/tesla-lithium-deal-mexico-has-state-lawmakers/ …
Elon Musk @elonmusk 6m6 minutes ago
@ScottLucasNV Lithium deal is not exclusive & has many contingencies. The press on this matter is unwarranted.
Scott Lucas @ScottLucasNV 21m21 minutes ago
Did @elonmusk play Nevada over lithium mining? Or did state lawmakers just fail to do their homework?http://lasvegassun.com/news/2015/sep/02/tesla-lithium-deal-mexico-has-state-lawmakers/ …
Elon Musk @elonmusk 6m6 minutes ago @ScottLucasNV Lithium deal is not exclusive & has many contingencies. The press on this matter is unwarranted.
The critical issue is the rate of return on the assets. If it is greater than the cost of debt then the shareholders benefit from the leverage.
A well managed company would not take on debt if the return on that cash was less than the cost of that money.
Well, that's a question I raised before:
Even if Tesla got cash-backs in Q2 2015 (e.g. state incentives, sell and lease back operations...) basic accounting rules call for cash expenses to be booked and _not_ netted out directly, no?!
The numbers therefore still don't make sense to me:
In any case, assuming upper numbers, this will only amount to a total investment of around $400 million until 2016 (since Tesla announced they will only spend "up to $190 million" in Q3 and Q4 of 2015 on the GF project) and their total investment according to the latest 10-Q is as follows:
That is obviously only a fraction of what the GF is supposed to cost in total until 2020 ($5 billion).
In summary, here's a huge gap to be filled between 2016-2020: About $4.4 billion!
That's assuming that Panasonic invests $200 million until the end of 2015 (see Paulo Sousa's recent SA article for sources or quoted below*) and Tesla the upper $400 million until the same date (both are rounded numbers).
___
* "Panasonic was committing to little around $200 million or so in Gigafactory investment (tens of billions of yen - forget about the $480 million number that's bandied about as that refers to the investment in the entire automotive operations). If Tesla cuts its own investment, why would the other suppliers keep their own commitments?"
Last edited:
It is probably more instructive to examine the Gigafactory in phases. Originally, the Gigafactory was 35 GWh of cell production, 50 GWh of battery production. Originally in 5 phases, which is 7 GWh each. Presumably Panasonic supplies at least 7 GWh of this from the existing Osaka plants.
Total cost was to be $4 to $5 billion, with $1 billion coming from the state in terms of tax cuts, rebates, etc. So the actual construction costs were to be $3 billion to $4 billion. Part of this is Tesla's part, around $1.5 to 2 billion. There's up front land and clearing cost and infrastructure to get started, say $100 million. Since then, Tesla has added a floor in there, so the costs are probably on the higher side since this is going to be a bigger factory than originally proposed.
So taking the high side... $4 billion in construction costs, $780 million per phase + $100 million up front clearing and land. That means this first portion for Tesla is probably about $490 million and Panasonic's is $390 million. The timing is such that Tesla's spend for this phase is front loaded, with Panasonic's being back loaded with the first phase opening sometime in Q2, 2016. The actual breakdown is expected to be $1.1 billion in the factory itself and another $3.9 billion in equipment.
Costs for the Gigafactory include construction costs, land costs, equipment costs, labor costs and so forth. In Tesla's filings, they refer to construction costs, to opex labor costs, to land costs, and so forth.
From the latest 10-Q, the capex cash spend for the Gigafactory construction is expected to be $300 million for 2015.
Here are the construction costs listed so far from their reports:
end of 2014: $106.6 million
Q1: $146.2 million
Q2: $206.6 million
I think there is confusion because construction costs != total costs. Also, there are places where they talk about spending cash towards the Gigafactory, but that's just showing how much of their cash pile went to it, not a total spend amount. Total costs obviously include land and opex (Tesla employee labor), but that hasn't been broken out.
Panasonic's costs cannot have been very significant up until the point where the plant is ready to take equipment. As it turns out, the completion date of the first phase is soon after Panasonic's 2016 fiscal year (April 2015 to March 2016). According to Panasonic's latest annual report, they are going to spend 165 billion yen in strategic investments in their Automotive and Industrial Systems (AIS) company. 60% of that is automotive related. That's $832 million dollars using today's exchange rate. Assuming the Ficosa International acquisition comes from that amount, we subtract $275 million. That leaves $557 million left for the Gigafactory and other investments. That leaves plenty of room for the roughly $400 million necessary for phase 1 of the Gigafactory. Here is the direct quote from the annual report:
Panasonic, like many companies in the Asia does not provide much specifics beyond the current fiscal year.
So, in summary, for phase 1, we're looking at maybe $900 million in costs for phase 1. Tesla has already spent $206.6 million in construction costs + a chunk of opex. They are looking to spend about $200 million more this year, bringing their part to about $410 million of the estimated $490 million. Panasonic is looking to spend $557 million in strategic investments through March 31, 2016, of which the Gigafactory is presumably a huge chunk of that. So phase 1 looks like it's shaping up.
Just watched a video of JB Straubel an found this slide, which says GigaFactory will be producing battery packs already this year - is this new or did I miss it? To avoid confusion, it still says cell production 2016. Talk is from May 20 at Seoul Digital Forum.
https://youtu.be/4D9erJtiwuU?t=12m3s
https://youtu.be/4D9erJtiwuU?t=12m3s
Trev Page
Member
Panasonic could be sending finished cells to the Gigafactory for final Model S/X battery pack assembly and also the Powerwall and Powerpacks to increase production of current the final assembly being done at the Fremont plant.
Actual cell production won't begin until next year as they still have to outfit the Gigafactory with the machinery to do so. What is still unknown however is if they will make 18650 cells there or the new rumoured 20700 cells for Model 3 or maybe both.
New to me at least.
He also said that the Model 3 will have a ~40% volumetric energy density improvement over the first Model S (~950 Wh/l in that graph)
Tesla Reimagines the Century-old Power Grid - JB Straubel | SDF2015 - YouTube
Trev Page
Member
Yeah, this comes from a new cell form factor. The rumour going around is they will increase the size of the current 18650 cell to something like 20700 which should yield around 35% more capacity and be produced for the same cost as the 18650s thus the much bandied 30% cost savings of the battery technology.
On the Nevada lawmakers and the Mexican Lithium mine.
The deal with Nevada never said anything about mining because Nevada didn't need it to make it work out. The lawmakers are just being politicians, feigning outrage at a populist topic. In reality, the Mexican "mine" is just a spreadsheet right now. It will take a while to start production, meanwhile Tesla needs to buy Lithium from somewhere else.
The deal with Nevada never said anything about mining because Nevada didn't need it to make it work out. The lawmakers are just being politicians, feigning outrage at a populist topic. In reality, the Mexican "mine" is just a spreadsheet right now. It will take a while to start production, meanwhile Tesla needs to buy Lithium from somewhere else.
StapleGun
Member
New drone footage. The walls are starting to come up! Tesla Gigafactory - Drone fly over - September 2015 - YouTube
Solarguy
Member
Great flyover update. It's hard for me to put the true size into perspective until I was able to relate the known size of the large earth moving machines on the far side to the size of the structure. Truly massive and magnificent!! Thanks for sharing.
Jefferies analyst Dan Dolev sees a gross margin tailwind of 1000bps due to, his estimated, incredible shrinking battery costs. Is the Gigafactory becoming more and more valuable even before is has produced a single battery pack?
http://www.streetinsider.com/Analyst+Comments/Jeffereis+Sees+1%2C000bps+of+GM+Tailwind+for+Tesla+%28TSLA%29%3B+PT+Up+to+%24365/10899606.html
http://www.streetinsider.com/Analyst+Comments/Jeffereis+Sees+1%2C000bps+of+GM+Tailwind+for+Tesla+%28TSLA%29%3B+PT+Up+to+%24365/10899606.html
brandude87
Member
I believe the analyst's estimates are too conservative. In this article from Monday, Elon claims that they will be capable of producing a 1,000 km (621 mi) range car by 2017, and a 1,200 km (746 mi) range car by 2020. This would imply a 217% and 261% range increase (as well as battery density) over Tesla's current top range of 286 miles for the Model S 90D. Assuming that Tesla's current pack cost is $200/kWh (not $250/kWh as the analyst suggests), the pack cost would be $92/kWh in 2017 and $77/kWh in 2020, not the $126/kWh ($88 cells + $38 pack components) that the analyst suggests. Based on these calculations, the 50 kWh battery for the Model 3 would cost $4,600 in 2017 and $3,850 in 2020.
This is consistent with Elon's claim that battery densisty will improve at 5 - 10% per year if you assume that they will double in 2016 once the Gigafactory starts producing packs. If you take today's range, 286 miles, double it for 2016, then increase that by 7.5% (average of 5 to 10% claim) for 2017, you get 615 miles, pretty spot on with Elon's claim of a 621 mile range by 2017. If you continue to increase the range by 7.5% per year, you get 764 miles by 2020, again, pretty close to Elon's claim of a 746 mile range by 2020.
phigment
Member
Please don't take his estimates out of context. That range was quoted relative to current hypermilers. i.e. the current record for distance on a given charge is 800km.
Similar threads
- Article
