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

[Singuy]

I don’t think it’s due to the chip shortage so much as an inevitable side effect of the transition to 4680.

Panasonic is producing huge numbers of 2170 cells. Tesla has replaced the need for a big chunk of those with LFP. Now they are replacing the need for many of them with 4680 cells. Powerwalls are going to LFP. Where do these excess cells go?

This gives Tesla the flexibility to mix and match cell types based on what they have on hand.

China's LFP 2170s is causing nickel 2170s from Nevada to have an over supply. They would like to open up more lines to feed nickel 2170s into LR model Ys but Fremont is full...hence they are adding the line in Texas.

 

[Ogre]

Megapack is LFP
Powerwall is cylindrical

Also, being compatible with non-structural 2170 packs means being compatible with non-structural LFP packs.

During the 2021 Q4 Conference call Musk said all stationary storage was going to shift to LFP.

Not sure what the timeline is on that, but it makes tons of sense.

Elon Musk -- Chief Executive Officer and Product Architect

Yeah. To be clear, we do think that oldall stationary storage, Powerwall and Megapack, will be -- will transition to an iron-based system, basically a non-nickel system. Manganese is also, you know, could be part of the future, but primarily iron. It just comes out iron-nickel.

We need something that is, you know, formed in a star before a supernova, ideally. So, you know, iron is. So that's because there's a ridiculous amount of iron on earth as is a ridiculous amount of lithium. So you can really expect all stationary storage to transition to iron over time.

EDIT: Made a small edit to the transcript I pulled from The Motley Fool's site. "All" makes a lot more sense in this context and it was likely a transcription error.

 

[mongo]

I've been thinking about Elon's decision to participate in the 2021Q1 Conference Call on Wednesday. Now, a lot of you may say (and rightly so) that CFO Zach Kirkhorn is more than capable of leading a Conference Call, and that Elon's announcement of Robotaxi by '24 was not urgent (at least for the short-timers who we laughingly call 'analysts').

I think it needed to be Elon talking Taxi to counter Elon talking no 25k car on the Q4 2021 call. Lack of that future volume product was part of the negative narrative.

 

[SmokyPeat]

China's LFP 2170s is causing nickel 2170s from Nevada to have an over supply. They would like to open up more lines to feed nickel 2170s into LR model Ys but Fremont is full...hence they are adding the line in Texas.

Is Tesla using 2170 LFP cells? I thought the LFP cells they are getting from CATL were prismatic.

 

[Speedr117]

I don't look at the use of 2170 packs as not scaling 4680s but it's Tesla having an excess of 2170s due to chip shortages. Elon have said during last call that battery supply is NOT an issue for 2022 and that was before the shanghai shut down. He said that chip shortages is still the current issue that is preventing them from ramping to 100% capacity. So 2170s out of Nevada is ramping at max speed and is now having an excess as chips are the rate limiting step. When asked if 2170s is an issue for Berlin due to China shut down and the answer is no. All signs point to 2170s having an excess supply right now.

I think it's also about the massive amount of LFP batteries they were able to secure. They said HALF of all vehicles used LFPs. That means they may have a surplus of 2170s. What to do with them? My understanding is LFPs are better for local storage than 2170s, and if all Standard range vehicles use LFP (with better margins), what's left for the 2170s? Model Ys is appears.

 

[Speedr117]

I don’t think it’s due to the chip shortage so much as an inevitable side effect of the transition to 4680.

Panasonic is producing huge numbers of 2170 cells. Tesla has replaced the need for a big chunk of those with LFP. Now they are replacing the need for many of them with 4680 cells. Powerwalls are going to LFP. Where do these excess cells go?

This gives Tesla the flexibility to mix and match cell types based on what they have on hand.

Should have read the rest of the replies first. Almost verbatim to what I just posted. Great minds think alike!

 

[Ogre]

Further, year-end guidance could not have been better, and is actually MORE bullish than Tesla guided for just 3 months ago.

Which is super impressive considering they lost 4+ weeks of production at their most productive factory. Reiterating their end-of-year targets was as important as the actual beat.

 

[JoRoMo]

Tesla’s decision on adding non-structural 2170 packs in Austin is not a positive. …

It is. Tesla’s abilities and planning processes for «Plan B»’s is exactly what makes them shine, throw anything at them - they will not fold.

 

[StealthP3D]

During the 2021 Q4 Conference call Musk said all stationary storage was going to shift to LFP.

Not sure what the timeline is on that, but it makes tons of sense.

I believe he said all stationary storage with the exception of Powerwall (probably remain non-ferrous).

 

[Ogre]

I believe he said all stationary storage with the exception of Powerwall (probably remain non-ferrous).

Posted the link to the transcript above. I thought he was pretty unambiguous.

I don't think it matters for the bigger point though. For a while here, they are going to have spare capacity for 2170 cells.

 

[Nocturnal]

Nice little note from Gene @loup

Tesla Is Putting Way More Than Traditional Auto in Trouble | Deepwater

It’s no surprise that my attention has been focused on the potential downfall of traditional auto as I’ve studied Tesla’s ascent. Why? Because the company has grown 4-5x faster than the traditional car makers. But that’s just the beginning. The sub-theme orbiting the conversation around Tesla is...

loupfunds.com

 

[StarFoxisDown!]

I get this wrong every time I try to calculate PE, but here goes.

At close today Yahoo and everyone shows us at a PE of 205, but we're actually sitting at 136.9

1008.9/7.37

7.37= 4.9 (listed TTM) + 2.47 (incremental increase in EPS 1Q22 v 2Q21)

Sound correct? Who in their right mind thought we'd ever close the day after 1Q22 earnings with a PE of 137!

Speaking of PE.....why have we not heard from @StarFoxisDown! ?

I'm still around. Was traveling in Europe there for a good 3 weeks so my time on the forums was greatly reduced and to be quite honest it was pretty nice

Was planning on being more active once I got back, but in reality with all the fear posts from fellow TSLA investors and especially the Wall St media about Shanghai and it's effects and impact on Q1 and Q2, I just decided it wasn't worth the headache to try and rationalize those fears. So I just kept to myself.

In reality, Q1 showed as exactly how scripted this whole thing is. Stock dropped to 700 when everything was going fine in both Fremont and Shanghai and then proceeded to avoid being sold off for 2 weeks as the Shanghai situation escalated. So the reality is it was always the "plan" to push TSLA down as low as possible in Q1 and then ride the stock back up. It didn't matter how much I complained about what was going to happen with P/E compression.

I do have some interesting choices to make.

I sold off some of my OTM Leaps when the stock hit 1150 a couple weeks ago to cover the huge tax bill from my stock to LEAP strategy in 2021. But given the huge beat on earnings, Shanghai ramping back up, what Q3/Q4 have in store, I tempted to delay paying that tax bill and then use that cash combined with margin to purchase upwards of 750k in stock. (Safer than buying Calls but using some leverage with margin). The amount of interest the IRS charges you is a joke so I'm content to just not pay until they send the first notice Usually you have 6-8 months before you even get a letter of notice to pay.


Decisions....Decisions

 

[StealthP3D]

Posted the link to the transcript above. I thought he was pretty unambiguous.

I don't think it matters for the bigger point though. For a while here, they are going to have spare capacity for 2170 cells.

I've heard Elon say that the size and weight of a Powerwall matters, unlike larger scale stationary storage.

This doesn't matter relative to the valid point you were making, but it matters from a factual perspective. People should not have the expectation that Powerwall is going to migrate to Fe based batteries.

 

[jbcarioca]

That's a question for @jbcarioca to expound upon. I hope he keeps his reply to less than 100 pages, though.

1. Yes, it makes sense, that is why they do it, but no real need for the ancient GMAC model;
2. as @CorneliusXX said, they already do leases, but that is nearly all securitized.
3. Most financing these days is done through securitizations, just like leases;
4. True captives wax and wane depending on external variables. For Tesla not much point since Tesla borrower creditworthiness is very high so third parties clamor for the paper.
5. Insurance is a very different matter. There they have competitive advantage, as we already see.

 

[CHGolferJim]

I'm still around. Was traveling in Europe there for a good 3 weeks so my time on the forums was greatly reduced and to be quite honest it was pretty nice

Was planning on being more active once I got back, but in reality with all the fear posts from fellow TSLA investors and especially the Wall St media about Shanghai and it's effects and impact on Q1 and Q2, I just decided it wasn't worth the headache to try and rationalize those fears. So I just kept to myself.

In reality, Q1 showed as exactly how scripted this whole thing is. Stock dropped to 700 when everything was going fine in both Fremont and Shanghai and then proceeded to avoid being sold off for 2 weeks as the Shanghai situation escalated. So the reality is it was always the "plan" to push TSLA down as low as possible in Q1 and then ride the stock back up. It didn't matter how much I complained about what was going to happen with P/E compression.

I do have some interesting choices to make.

I sold off some of my OTM Leaps when the stock hit 1150 a couple weeks ago to cover the huge tax bill from my stock to LEAP strategy in 2021. But given the huge beat on earnings, Shanghai ramping back up, what Q3/Q4 have in store, I tempted to delay paying that tax bill and then use that cash combined with margin to purchase upwards of 750k in stock. (Safer than buying Calls but using some leverage with margin). The amount of interest the IRS charges you is a joke so I'm content to just not pay until they send the first notice Usually you have 6-8 months before you even get a letter of notice to pay.


Decisions....Decisions

Make sure you’re not in a penalty situation, that ain’t peanuts.

 

[Ogre]

It is. Tesla’s abilities and planning processes for «Plan B»’s is exactly what makes them shine, throw anything at them - they will not fold.

Exactly. Having a backup plan is about as imprudent as:

- having a safety chute in addition to the main chute when you jump from an aircraft.
- wearing a life-vest when you go rafting.
- air bags in cars.

etc. etc.

Only in Teslas case, their Plan B is actually part of their Plan A. They are going to use those packs one way or the other and it's almost certainly been part of the plan from go. If you think about the way processes ramp, the idea that the two production lines would sync perfectly was never going to work. Add in the ramp of the Cybertruck, Semi, and Roadster, and you have a whole bunch of log curves colliding to make extremely lumpy demand for their new cells. Keeping the 2170 cells to fill in the gaps between curves is almost a requirement.

 

[bkp_duke]

I've heard Elon say that the size and weight of a Powerwall matters, unlike larger scale stationary storage.

This doesn't matter relative to the valid point you were making, but it matters from a factual perspective. People should not have the expectation that Powerwall is going to migrate to Fe based batteries.

Correct, weight VERY much matters since many installations are hung on walls, and there are code limitations on how much weight you can put on a wall.

 

[kbM3]

I think it's also about the massive amount of LFP batteries they were able to secure. They said HALF of all vehicles used LFPs. That means they may have a surplus of 2170s. What to do with them? My understanding is LFPs are better for local storage than 2170s, and if all Standard range vehicles use LFP (with better margins), what's left for the 2170s? Model Ys is appears.

If true, that would be an indication that they’re deliberately slowing 4680 production (a possibility I pointed out in my OTOH comment in the original post). That would indeed be a positive if slowing the ramp pays benefits downstream. I need to re-listen to the call to remember their comment on this.

 

[TSLA Siempre]

No one’s discussing the fact that Elon may be selling 21M shares to fund the tender offer for Twitter? That would be larger than what he sold a few months ago when exercising his options and paying tax for 2021. Long term it doesn’t matter but would definitely be important for those playing options

Can anyone explain why this received a bunch of down votes? It seems like a legitimate concern. I would like to not be worried about it, but haven't seen an argument about why Elon selling additional shares is not a possibility.

 

[Speedr117]

If true, that would be an indication that they’re deliberately slowing 4680 production (a possibility I pointed out in my OTOH comment in the original post). That would indeed be a positive if slowing the ramp pays benefits downstream. I need to re-listen to the call to remember their comment on this.

I don't perceive they're slowing 4680s, just making sure they can use all battery types available.