Tesla Semi

[ggr]

Upon further consideration of Model 3 vs. Semi pricing, I now think I'm either:

1. Overestimating Semi battery sizes at 600 kWh and 1MWh (WAG using the "< 2 kWh/mi" figure); or
2. Underestimating Semi gross margin at 25% once in volume production; or
3. Both.

With my previous assumptions, it does not make sense for Tesla to allocate batteries to Semi instead of further ramping Model 3 production.

I would appreciate it if someone could help me understand where my logic is falling short.

It makes sense if you want to move the world away from fossil fuels.

 

[Manton]

Good grief, Ontario, you voted for Tories once already and you got the crack-smoking Mayor Rob Ford. Haven't you learned?

Although crack certainly is wack, Rob Ford did a great job as Mayor. He was a high school football coach and businessman. Collected $1 salary and didn't take ish from any of the career politicians. He did Toronto well!

 

[Reciprocity]

Upon further consideration of Model 3 vs. Semi pricing, I now think I'm either:

1. Overestimating Semi battery sizes at 600 kWh and 1MWh (WAG using the "< 2 kWh/mi" figure); or
2. Underestimating Semi gross margin at 25% once in volume production; or
3. Both.

With my previous assumptions, it does not make sense for Tesla to allocate batteries to Semi instead of further ramping Model 3 production.

I would appreciate it if someone could help me understand where my logic is falling short.

As @ggr stated, the semi might be a mission vehicle. I think it's both that and an economies of scale vehicle. If you have a fully functional gigafactory at 150GWh/Y, that is 2.5 million model 3s. Tesla can't build that many cars, not possible with Fremont alone. Just 100,000 semis is equivalent to 20 model 3 SR x 100k, so 2 million model 3s worth of cells. Gigafactory is 30% completed, but the other 70% is not about inventing and more about replication and speed. More lines, running faster. Every vehicle should use the same modules that go into the pack. Only the packs should really very in how many models fit. So once to can made modules at a very high rate, then you can scale to quickly to make many different pack confirmations for every possible vehicle.

Also on a side note, we hear alot about prismatic batteries. And how autos like then more because they can fit more in the car. This is silly as you can just like the interior is the car with flammable, explosive batteries. They must be protected, cooled/heated and the complexity of wiring would make it un-automatable. Maybe, maybe.. if there was a prismatic cell that was solid state and safe and didn't require temperature management. Then you just have to deal with the wiring issues which are not trivial. Don't be fooled by the FUDsters.

 

[Reciprocity]

I was thinking purely from an income point of view. If semi does not come out for 2 years, and the bottom of the cash barrel is not needed, AND one expects stock price to go up, then turning deposits into stock would generate revenue.
Wild far-fetched case: here is your Founder's truck/ Roadster... and here is your deposit back, thanks for believing in us (would not happen for the same reasons that buybacks would not. But I can see the potential for dividends as a thank you (in the event they are constrained in terms of growth (perhaps dividends in the form of product credits?)))

Actually thinking more about it.. if Tesla used these funds to buy back stock, it would crush the shorts. I know this is different then what you are talking about but this was a tactic used to basically defeat ackman in his attack on Herbalife.

 

[zecar]

Upon further consideration of Model 3 vs. Semi pricing, I now think I'm either:

1. Overestimating Semi battery sizes at 600 kWh and 1MWh (WAG using the "< 2 kWh/mi" figure); or
2. Underestimating Semi gross margin at 25% once in volume production; or
3. Both.

With my previous assumptions, it does not make sense for Tesla to allocate batteries to Semi instead of further ramping Model 3 production.

I would appreciate it if someone could help me understand where my logic is falling short.

It looks to me like Tesla will continue to buy batteries from non-gigafactory sources. But Tesla won't need a lot of semi batteries until 2021.

The point of the gigafactory was primarily to guarantee battery supply. They may not have the capital budget to both build out the truck line and have battery manufacturing ready for that business on day one. Or perhaps Panasonic will make truck cells in the gigafactory and they will continue to supply Tesla energy with cells from others.

The semi looks priced to have zero margin at launch. The intention appears to be to make money on the Tesla Energy side of the transaction. I assume Tesla will ramp the model 3 and then sell equity to fund the truck line.

 

[ValueAnalyst]

It looks to me like Tesla will continue to buy batteries from non-gigafactory sources. But Tesla won't need a lot of semi batteries until 2021.

The point of the gigafactory was primarily to guarantee battery supply. They may not have the capital budget to both build out the truck line and have battery manufacturing ready for that business on day one. Or perhaps Panasonic will make truck cells in the gigafactory and they will continue to supply Tesla energy with cells from others.

The semi looks priced to have zero margin at launch. The intention appears to be to make money on the Tesla Energy side of the transaction. I assume Tesla will ramp the model 3 and then sell equity to fund the truck line.

As of the bond debut earlier this year, Tesla no longer is limited by capital imho: Cash Balance Rollfoward

 

[zecar]

They show a photo of a guy hand-soldering a contact to a cell, and think that this can beat Tesla to the market? Maybe get a couple of early deliveries in, but I don't think they can do volume for some years yet.

Thor also has fewer than 20 employees. They make Nikola look huge.

Neither of these companies are relevant. Tesla has 33K employees and struggles to become a volume manufacturer.

 

[mongo]

Actually thinking more about it.. if Tesla used these funds to buy back stock, it would crush the shorts. I know this is different then what you are talking about but this was a tactic used to basically defeat ackman in his attack on Herbalife.

Yeah, not what I was thinking of in this post, but something I have been thinking of in general. Buy up the float and force a squeeze, then sell off remainder at a profit also. If one could use the stock as collateral, it might not be that hard (for certain values of hard). Mars funding for SpaceX?

 

[zecar]

As of the bond debut earlier this year, Tesla no longer is limited by capital imho: Cash Balance Rollfoward

Tesla has a lot of car business to fund. If they weren't capital limited factories In China, Europe and the eastern U.S. would be under construction today. They aren't even doing continuous building construction in Sparks.

I do expect the model 3 to fund another car line and Fremont and the model Y launch. But I don't expect Tesla to produce anywhere near 5000 M3/week in 2018 due to quality control. Perhaps they can exit 2018 at 4000/week.

The wild card is Tesla Energy becoming cash flow positive with the gigafactroy getting sorted out. Considering how quiet Musk is about powerwall and powerpack, I expect this area of manufacturing hasn't not been working as planned. All automated pack production is likely affected by the announced gigafactory problems.

 

[ValueAnalyst]

Could Tesla use the deposits to buy it's own stock?

Tesla SHOULD do this, and it certainly would be able to do so and crush bears for once and for all, but it WILL NOT.

Tesla could then issue shares, if needed, at $2,000+ SP, but I don't believe Tesla will need to raise equity capital ever again regardless.

All capital will be used to accelerate the world's transition to renewable energy.

 

[ggr]

Tesla SHOULD do this, and it certainly would be able to do so and crush bears for once and for all, but it WILL NOT.

Tesla could then issue shares, if needed, at $2,000+ SP, but I don't believe Tesla will need to raise equity capital ever again regardless.

All capital will be used to accelerate the world's transition to renewable energy.

I believe that would be illegal market manipulation.

 

[generalenthu]

Tesla has a lot of car business to fund. If they weren't capital limited factories In China, Europe and the eastern U.S. would be under construction today. They aren't even doing continuous building construction in Sparks.

I do expect the model 3 to fund another car line and Fremont and the model Y launch. But I don't expect Tesla to produce anywhere near 5000 M3/week in 2018 due to quality control. Perhaps they can exit 2018 at 4000/week.

The wild card is Tesla Energy becoming cash flow positive with the gigafactroy getting sorted out. Considering how quiet Musk is about powerwall and powerpack, I expect this area of manufacturing hasn't not been working as planned. All automated pack production is likely affected by the announced gigafactory problems.

The battery pack architecture for the 3 is very different from the architecture for powerwalls and powerpacks. Word is there is a decent amount of battery pack production going on in the gigafactory but all of it is being sent to Puerto Rico.

I for one am looking forward to the TE revenue numbers for Q4, as much as the 3 production production numbers. The count of 3s in Q4 is not very important. What matters is when they can hit 5k run rate.

 

[Curt Renz]

Electrek - this afternoon: Tesla Semi test program partner says that performance specs are for real

 

[jhm]

Wait, Monty Python ISN’T a religion?

Yes, it is.

 

[jhm]

http://www.nasdaq.com/article/longterm-investors-should-keep-on-trucking-cm893856

Perhaps we should have a dedicated thread to discuss which trucking companies will be the best play for exploiting AEV tech. UPS just got in the game with an order for 125 Tesla Semis. But the tech race in more interesting than that. The companies that deploy the tech in the smartest ways will depend on many factors. Size of AEV fleet and charging network will be leading indicators.

But as Martin Tiller points out, not all the cost savings will be passed onto customers. So the savings largely accrue to shareholders. I suppose eventually the cost savings will be passed on to customers, but I suspect this would require AEVs to saturate the market. So the longer the transition takes, the longer leading edge adopters can enjoy superior earnings. Conversely, a faster transition is likely better for AEV truck makers. So it might be a nice play to complement owning Tesla shares.

 

[adiggs]

http://www.nasdaq.com/article/longterm-investors-should-keep-on-trucking-cm893856

Perhaps we should have a dedicated thread to discuss which trucking companies will be the best play for exploiting AEV tech. UPS just got in the game with an order for 125 Tesla Semis. But the tech race in more interesting than that. The companies that deploy the tech in the smartest ways will depend on many factors. Size of AEV fleet and charging network will be leading indicators.

But as Martin Tiller points out, not all the cost savings will be passed onto customers. So the savings largely accrue to shareholders. I suppose eventually the cost savings will be passed on to customers, but I suspect this would require AEVs to saturate the market. So the longer the transition takes, the longer leading edge adopters can enjoy superior earnings. Conversely, a faster transition is likely better for AEV truck makers. So it might be a nice play to complement owning Tesla shares.

The shipping / logistics business is so competitive, I expect that the bulk of the savings from electrifying the fleet to make its way into the hands of consumers in cheaper shipping costs, and to NOT stick to the pickets of the shippers. I do expect the early days will see increased profit for shippers, but a few years into the electrification, I expect enough volume of these new trucks being delivered that the benefit switches, prices go down, and this becomes a huge investment in staying in business for shippers - not an investment that increases profit.

Which is just one reason I want to see Tesla supplying vehicles to other companies, rather than Tesla trying to become a logistics company themselves.

 

[EinSV]

CleanTechnica has published a helpful article regarding the strong prospects for the Tesla Semi: Tesla Trucks Will Dominate The Market | CleanTechnica

The author comes to a similar conclusion as I have regarding the significance of long-range use cases, not just the short haul applications that seem to be the primary focus of most commentators so far:

At the unveil, I saw what I expected Tesla to deliver: A semi-tractor optimized for coast-to-coast transportation, with 500 miles on the initial charge and another 400 miles during the mandatory 30 minutes break. With high upfront costs but lower operational costs per mile, long-haul trucking is obviously the best case scenario for these vehicles.

​

 

[jbcarioca]

Wait, Monty Python ISN’T a religion?

IT. IS. THE. ONLY. TRUE. RELIGION.
now the mods will want to delete this. My first ever deletion if it happens

 

[jbcarioca]

Upon further consideration of Model 3 vs. Semi pricing, I now think I'm either:

1. Overestimating Semi battery sizes at 600 kWh and 1MWh (WAG using the "< 2 kWh/mi" figure); or
2. Underestimating Semi gross margin at 25% once in volume production; or
3. Both.

With my previous assumptions, it does not make sense for Tesla to allocate batteries to Semi instead of further ramping Model 3 production.

I would appreciate it if someone could help me understand where my logic is falling short.

I suspect there may be multiple factors. One, we know that the Semi battery is more similar to the stationary storage ones than to the Model 3. That means that the chemistry and cell materials are cheaper. Two, there are several factors influential in making ranges of which kWh is always dominant, but a variety of lesser factors can help a lot. Three, were I to speculate I'd guess that GM may actually be higher because amortisation fo R&D will be lower, less development cost for batteries since they are derivative and the design itself is probably quite simple, so it will not be so hard to do. Four, Tesla may well have higher margins because bespoke modifications will be much less than are those of competitors.

We don't know enough to be sure, but all those points are certainly true and they do argue for higher returns, shorter lags between order and delivery so GM's could go higher.

 

[MP3Mike]

One, we know that the Semi battery is more similar to the stationary storage ones than to the Model 3. That means that the chemistry and cell materials are cheaper.

How do we know that? (Do you have a link to a source?)