Tesla, TSLA & the Investment World: the Perpetual Investors' Roundtable

[db93]

People think that Elon was just playing when he said he will move Tesla out of CA. Fremont will be shut down on phases and hopefully for CA, another TeraFactory will be built there. Or maybe not.

Edit: that would explain Gavin’s bs about Ford also!

As a proud native Californian
At least I got my CA MY, before they've moved

 

[bubb]

Highly recommend this.
There are some especially good insights @13:58 with Vivas Kumar who used to work at Tesla.

Thanks for sharing, will watch it in full this weekend. I'm guessing some here might not appreciate their cautious tone but as far as I can tell they are serious analysts trying to unpack everything in a methodical and dispassionate way. They spent some time on two big things that I've been mulling since BD: 1) silicon anode (any graphite? cycle life implications? check out TLF w/ Prof. Shirley Meng for background on anodes) and 2) raw materials (nickel in particular, which Elon has mentioned several times). The video gives a back of the envelope estimate on a lower bound for TSLA nickel demand and global supply estimates in 2030. The cathode topic is also extensively discussed and there is a lot of complexity there that I had not appreciated.

Anyway, a lot of helpful info towards tracking TSLA progress w/ their new master plan for the next decade, couldn't be more excited to see how the puzzle eventually fits together.

 

[jhm]

Thanks for your well reasoned comment. Together with some modeling, I think we can arrive at a good estimate.

To be clear, Tesla's goal for bty cell production in 2022 is 100GWh, The figure cited of 200 GWh includes Tesla's bty cells AND another 100 GWh purchased from 3rd parties (Pana, CATL, LG, maybe a few others...)

So our Model must produce a production curve that passes through 100 GWh in 2022, and 3,000 GWh by (or slightly before) 2030.

I'll put some more effort into it this weekend.

Cheers!

Thanks.

A curious thing about exponential growth is that you must start at some positive value. I'm aware that other vendors are supplying the first 100GWh of cells. Starting at 200 makes the ramp a little more gentle than starting at 100. Specifically, growing from 100 to 3000 in 8 years implies 53% annual growth rate, rather than 40% starting with 200. To see how this makes a difference in steepness, consider where the two geometric curves are in 2026 (mid point between 2022 and 2030). Starting at 100 gets to 548 in 2026, while starting at 200 gets to 775 at the mid-point. So I'm drawing the curve forward a bit.

Eventually contracts with suppliers will expire. So in the longer term, the initial 100 GWh cell supply is not so critical. I believe it will ultimately be replaced by more advanced cells. But numerically 100 out of 3000 is just not terribly important. So I think the 40% growth rate in combined production (internal + external) is better aligned with the growth of automotive and stationary products.

Translating this growth rate into an ROA needed for self-funding makes 40% much more doable than 53%. That is I think Tesla could indeed grow at 53% or higher, but it would obviously need more external capital than what 40% growth would require.

Someone should check the feasibility of 40% ROA on gigafactories. I backed into it as a requirement for self-funded growth at 40%, but that does not make it realistic. There is a way of expressing this hurdle as a cost of capital to apply to other costs of batteries. I'll play with this when I have a clear head.

 

[ZeApelido]

Honestly, I’m tired of people thinking they know more. The whole ‘I have questions because I don’t understand how they can possibly do what they say they are going to do’ is a yawnfest for me.

I’ve heard all these concerns and questions before multiple times. Ie., Tesla says we’ll build our own battery factory and everyone else spews all the reasons it can’t or won’t happen. Tesla says it’s going to do a Supercharger Network, omg! can’t be done. Tesla says it’s going to have FSD. Hell no, that’s 100 years away if ever. Now Tesla says we’re going to make our own cells, tells how they’re going to do it and out come the all these carebear experts with ‘questions’.

I don’t care who you are, be prepared to eat your hat. I also don’t care if they miss the timeline. This is happening folks, regardless what you think.

All the criticism is just on anode / cathode stuff.

Even if Tesla did not improve anode & cathode processing, they still will reap

1) > 1/2 of energy density improvements
2) Most of cost / kWh reductions
3) Most of capex reductions

Myopic

 

[bkp_duke]

All the criticism is just on anode / cathode stuff.

Even if Tesla did not improve anode & cathode processing, they still will reap

1) > 1/2 of energy density improvements
2) Most of cost / kWh reductions
3) Most of capex reductions

Myopic

Agreed. Also, Tesla is most likely intentionally mum on exactly HOW they plan to implement those cathode and anode improvements. Obviously to not tip off the competition as to how they plan to leapfrog everyone.

This obviously bugged these analysts as they wanted more information for their models, etc.

 

[Singuy]

All the criticism is just on anode / cathode stuff.

Even if Tesla did not improve anode & cathode processing, they still will reap

1) > 1/2 of energy density improvements
2) Most of cost / kWh reductions
3) Most of capex reductions

Myopic

Yes but the speed of production will be reduced dramatically and will not hit 3twh by 2030 due to a lack of raw material.

 

[ZeApelido]

Previously I had high confidence that Tesla would eventually reach 1 trillion dollars in market cap.

After digesting Battery Day, I have high confidence Tesla will eventually reach 2 trillion dollars in market cap.

This is a profound realization for my projected investment, as it would in theory go from "very nice" to "definitely could retire even if I spent it on hookers and blow".

 

[Artful Dodger]

I think using the $28M/GWh for total cost is misleading, as Panasonic AFAIK is upgrading their existing lines. So unless this is basically touching every process step by the same amount, we are only seeing part of the cost per GWh with this estimation....

No, Panasonic announce in mid-August that they are adding an entirely new battery cell line at Giga Nevada. The capital expense for the new line was announced at $100M and Panasonic further said that this new line would add 10% capacity at Sparks, NV vs the existing 13 battery cell lines.

Tesla Gigafactory Nevada is getting another battery production line, Panasonic invests extra $100 million - Electrek

"Aug 19, 2020 - Tesla Gigafactory Nevada is getting a new battery cell production line as ... Panasonic will add another line, increasing capacity by 10% to 39 ... in September also matches Tesla's planned “Battery Day,” which ... a production capacity “13 million battery cell per day,” Panasonic said ... but not for whole year."​

Cheers!

 

[Robocop]

Previously I had high confidence that Tesla would eventually reach 1 trillion dollars in market cap.

After digesting Battery Day, I have high confidence Tesla will eventually reach 2 trillion dollars in market cap.

This is a profound realization for my projected investment, as it would in theory go from "very nice" to "definitely could retire even if I spent it on hookers and blow".

I think $1T will sneak up on us quick. $10T somewhere in 2030-2035.

 

[bkp_duke]

I think $1T will sneak up on us quick. $10T somewhere in 2030-2035.

10T around my retirement date. That sounds fantastic.

 

[BrownOuttaSpec]

I'm too lazy to look it up. But could the battery chemistry switch/modification have anything to do with the composition of the minerals on Mars? Just wondering if Musk is playing the REALLY long game of making batteries on mars.

P.S. I looking forward to 'Moon Monday' once investors have the weekend to digest the BD news and get on board the TSLA HODL train.

 

[Singuy]

10T around my retirement date. That sounds fantastic.

Pretty sure there's no point in working if Tesla is above 5T for anyone on the forum here.

 

[Robocop]

I'm too lazy to look it up. But could the battery chemistry switch/modification have anything to do with the composition of the minerals on Mars? Just wondering if Musk is playing the REALLY long game of making batteries on mars.

P.S. I looking forward to 'Moon Monday' once investors have the weekend to digest the BD news and get on board the TSLA HODL train.

You're right somewhat, there is magnesium! And various salts (to assist with getting at lithium, if there is any present). And there's a ton of iron, hence the red planet! May have to settle for LFP batteries on Mars, so please plan on your martian Cybertruck have a less range. That said, the 1% atmosphere and lower gravity should allow for several thousand kilometers in range for all vehicles?

 

[petit_bateau]

They can't overlap, since your assumption explicitly said "excluding cells". But, IF you mis-wrote and you meant "the $1bn per 10GWh of battery packs may partially overlap", then yes that's possible, and would align with what I wrote in response to Dodger.

By "additional capex to enable 40-50% yoy growth", did you mean "on top of the $3B" that they budgeted for 2020? I don't think that would be necessary, since the capex can only go into factory/production expansion. Once all the factories are done (whether it's 800k this year, or 20 million in 2030), the capex budget would be zero. By its nature, any budgeted capex is for growing production.

They can overlap. The old number was assuming Pana et al did the cells, but Tesla did the pack and everything else. The BD number is for dirt through cells to pack. So there is an overlap in the cells/pack area. To what extent that is material in capex terms I do not know, but it may be significant as an error term in the models which is why I trouble to point it out, as it may affect capital raises. At the end of the day (setting aside the stationary storage revenues) what is really needed is an understanding of total Tesla capex exposure in $/$ terms, or $/vehicle terms, or $/GWh-on-wheels-terms.

 

[TheTalkingMule]

While we're all guessing, I'll say I think we'll hover around $.5T for the next 2-3yrs depending on if it matters that we've been running on free money for 12 years. If we're truly in a new post-fossil post-scarcity economic reality, which I give 50/50 odds, then maybe we hit $1T before 2023. Rationally, the wider investing world is gonna want to see continued dominance and all these Battery Day things fully scaled.

I will say that battery Day definitely made more things a certainty for Tesla. TSLA will definitely hit $1T at some point. I think there was just a good chance prior to this week, but now it's a certainty. Also agree that $2T is not out of the question if everyone is still lagging 2025-2030.

All that fresh certainty could drag the $1T valuation forward to literally any time, depending on the lunacy of the market. Elon's proved to me that their pace of innovation will never be matched.

 

[SarahsDad]

Pretty sure there's no point in working if Tesla is above 5T for anyone on the forum here.

Yeah if you really think TSLA will hit 5T market cap, that's 13X current market cap of 379B. So even if you have 'only' $75K in Tesla stock now, multiply that by 13X and you're a Teslanaire.

 

[Discoducky]

Yes but the speed of production will be reduced dramatically and will not hit 3twh by 2030 due to a lack of raw material.

Which mats and by how much and source of information?

I'd assert they'll have more than enough with contracts already in place based on projected chemistries.

 

[Zero CO2]

We discussed about this a few days back.

This solid state battery is worst in every way compared to their own non solid state batteries. In fact they offer regular batteries as another option due to better charging characteristics.

solid state batteries will eventually show up ~ 2027 -2030... Tesla will likely adopt solid state at some point in the future ... not for a while

 

[JustSaying]

So, is Teslaquila a real thing? Oh please let it be. If not, it should be!

Mexican laws state it can't be called Tequila unless the blue agave is primarily produced in the state of Jalisco.
Maybe Mexico will be the site of next plant ( and get the heck out of unappreciative CA ).

 

[Prunesquallor]

Battery day thoughts and the impact on Tesla financials. Summary: I'm HODL and continuing to acquire on dips

First off the presentation was geared way in the direction of engineering and thus has most likely gone over the heads of most people. This is not a bad thing, but rather a very normal thing for Tesla. As this was the most likely outcome; all is right with the universe. Tesla demonstrated the tech with The Plaid S and thus continued in the tradition of leading the acceleration of sustainable transportation.

What was wholly unexpected was the massive decrease in costs for batteries as well as manufacturing facilities. This, for me, was unexpected, and honestly brought me so much joy. The presentation might have well been called "We've set a date for the end of oil". As an engineer who is fairly versed in Tesla tech, the only thing stopping Tesla at this point are force majeurs and macros of the like.

The quick summary. Tesla showed tech that is well beyond anything that has been put in any presentation or white paper and will exist in the world in a time-frame that is even close to tech demonstrated. If anyone knows of anything better please forward.

The dry electrode innovation alone is at least 10 years ahead of anything else. Why 10 years? In order to do what has just been demonstrated, even though it is about 2 years away from mass production is this: To start this process you need to attract the top battery talent, establish a think tank/brainstorming/iteration lab, try and fail on soooo many possible ways to get more efficiency out of the process which involves great amounts of money, time and patience ( Why patience? So many options in batteries end up being low production value but are initially great due to potential).

Just this innovation alone would secure a lead in the EV industry. However, so much more was shown with very reasonable timelines. Crazy that they have also gone to the extent of greatly improving the cathode production process. I had no idea how involved this was.

I think my favorite hidden gem was the slide that separated the types of new batteries into long cycle life, long range and mass sensitive. It is a lovely easter egg to the million mile battery (aka 4000 charge/discharge cycles), which to Tesla, is already in production as LFP in China and not a huge deal for this presentation.

Oh, and one more thing. It seems that Tesla has taken every page out of Apple's playbook.

1. Custom ASICs, designing own boards
2. Building SW and service stack to fully communicate back to custom infrastructure
3. Make changes to the supply chain to the lowest common supplier

However, TSLA is now adding pages

1. Objectionable best in class product; measurable features like range, acceleration, cargo space, safety...etc
2. Objectionable best in class value; measurable from cost, margins, free cash flow
3. AI custom ASICs for both training (Dojo) and serving (in car ASICs)
4. Leader in glass tech (coming with Cybertruck)
5. Leader in car entertainment
6. Leader in subscription services
7. Taking core tech in the power grid with utility scale and residential scale storage
8. Credit money from other car companies
9. I'm sure I left out many others

Agree. The economics are massively important. Just as renewables are killing off coal on an economic basis (no altruism, subsides needed) in 2-3 years BEVs will begin killing off ICE on an economic (purchase cost, operating cost, maintenance cost, insurance cost) and performance (acceleration, range) basis.

The message behind battery day was pretty clear: a technically and economically viable strategy now exists for replacing fossil fuels worldwide in 10-15 years.