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

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You have said this before, that SpaceX is working on ythis, but you seemed to base this on reading between the lines. Curious if you actually know more definitely that they are actively trying to make synthetic fuel this way.
I had been reasoning from physics first principles that this would be the only reasonable way to get atmospheric CO2 (on Earth or on Mars) converted to methane for Raptor propulsion.

Elon said just last week in the Tim Dodd/Everyday Astronaut interview:
  1. Minimizing the fully considered cost per ton to orbit is the only goal for designing the launch system
  2. When Starship/Superheavy is fully and rapidly reusable, the propellant (methalox) becomes the largest portion of the cost structure
This implies that propellant production will be the focus after the launch vehicle and reusability is working well.

In December Elon had Tweeted:

Even as far back as 2018 he said:

Drew Baglino in his recent Stanford interview was discussing the importance of hydrolysis technology for making hydrogen, although not in a SpaceX context. However, that indicates that one of Elon’s closest colleagues who was representing Tesla publicly believes electrolysis is the path for green hydrogen. Assuming solar cost trends continue, I agree with him because I don’t see any other physically and economically viable option.

But then, after seeing your question I remembered where I first heard about this: the famous 2016 SpaceX presentation for Making Humans a Multiplanetary Species. Here we have clear confirmation that they’ll use water electrolyzers and Sabatier reactors. I probably originally got the idea from this and forgot about it.

4B03C819-B68A-4FD3-ABCC-4CF8C3E9BABF.png


The part that remains my speculation is:
  • Lime calcination kilns will be used for the CO2 capture, at least on Earth
    • Generally the same industrial process and supply chain used for making cement (releasing 2.5% of human CO2 emissions in the process)
    • There are other options but this one is simple and energy-intensive and requires no exotic materials, making it ideal for exploiting cheap solar energy
  • SpaceX is so good at engineering that they’ll be the strongest player in the CO2 capture, H2 synthesizing and CH4 synthesizing industries
  • If SpaceX can produce the most H2 and CH4 at the lowest cost, SpaceX will leverage that strength into selling these commodity chemicals in the broader market and possibly will integrate into existing petrochemicals industry in Texas and neighboring Louisiana, with Fischer-Tropsch synthesis of other chemicals being a long-term potential
    • Increase economies of scale and innovation (Wright’s Law)
    • Increase probability that civilization on Earth survives because the goal isn’t just Mars, it’s actually making life multiplanetary
    • Get lots of $$$ to fund Mars terraforming
The part that they haven’t said outright but must be true due to the Laws of Thermodynamics:
  • This will require a lot of energy per kg of methane produced, mostly from making the H2
  • At scale of current natural gas and petrochemicals industry this would require at least an order of magnitude more electricity than humans use today
Tesla Energy is in the electricity business and even has a subsidiary in Texas registered as a utility, as the forum was discussing this week.
 
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Listen, I had a dream, and everything became clear. Don't worry about the current volatility. This is what is going to happen:

June: Stock is volatile and drops back into mid 650's on news that Elon doesn't brush his teeth in the morning. @cwerdna finds a webpage that points out all of Musk's hygiene flaws

July: Delivery numbers surprise to the upside leading to share price into $900s, but earnings take a bit of hit as some 1 time costs are added to this Q and 4680 ramp is not clear. Stock ends up back in low $700s. @StarFoxisDown! is not amused. Taylor Ogan enjoys the momentary pleasure of the idea that 4680 production is still low, and takes a sip of wine in his office, alone at night, while realizing his investment fund has less money in it than many TMC posters.

August: The market corrects the overreaction to Q2 earnings as they realized production is ramping up at every site and Q3 will be huge. Voter approval of share split finishes. CPI data shows signficant decline in inflation Tesla balloons to over $1000 on top of a recovering Nasdaq. @StealthP3D posts some fishing story analogy to let you know he is a GOAT investor and well endowed.

September: Tesla AI day is impressive to TMCers, but as usual the market doesn't understand and Tesla dips back to $900. @heltok and @Discoducky write long posts on the amazing AI software and hardware Tesla is doing and we all nod our heads, but really wonder "when $2000?"

October: Amazing production and deliveries report. Then the stock split is announced and happens mid month before earnings. Stock begins climbing past $1100 then gamma squeeze happens. After amazing earnings report including positive 4680 ramping, stock reaches $1500. @juanmedina can finally retire. @BornToFly buys some Russian oligarch's yacht. Many threads about buying mountains and island are revived.

November: Stock corrects down to $1100 from gamma squeeze. TSLAQ gloats on Twitter on how much money they made because they magically shorted at the top and not other time before that. @Prunesquallor and @OrthoSurg cope by telling us how they road a bicycle for 5 hours. Elon Musk likes a tweet from Rand Paul as stock tips under $1100. @Pezpunk equates him to some murderous dictator.

December: FSD Beta is getting pretty good and released to all accessible customers. Market realizes the margin benefits and pushes stock back above $1300. @Gigapress convinces @KarenRei and @FactChecking to come back and they write a post how Tesla will create an infinite supply of all materials from solar + battery. @jbcarioca talks about the time he was an epidemiologist / accountant / James Bond and how all of lagacy auto is still living like it's the 1970s and done for.

January 2023: Another amazing P&D report, annualized production over 2 million cars / year. Cybertruck production commencing, battery supply limitations easing and Powerpack supply ramping. Everything is looking rosy. stock climbs up to $1800 after earnings report. Money is dripping out of TMCers. @Krugerrand builds an entire house for cats. @ZeApelido finally buys a house. The end.

February 2023: @Artful Dodger complains about naked shorting by Options Market Makers. Crickets infest SEC.

March 2023: Tesla upgraded to "Investment Grade" by Credit Rating Agencies. SP plunges 36% for 4noefnreasonatall.

Rince. Repeat. Ad naseum. :p
 
If Elon had simply said Tesla was reducing salaried employee headcount to improve margins and reduce waste the stock might have gone up. But he indicated the motivation was his “super bad feeling “ about the economy. This sounds like he worries that future orders may decrease due to a strong recession. The market reaction to this apparent change in CEO outlook is not surprising.

I think Elon is wrong about the state of the global economy and I hope that Tesla continuing to churn out regular, strong profits in line with previous guidance will return confidence in the stock. Hopefully the tone of the next quarterly earnings call will be confident and positive.
Can you imagine the backlash if Elon's motivation is to cut jobs just to increase margins when they already have industry highest?

Most companies cut jobs during a period of headwinds which cause an acceleration of losses. This is why it's good for the stock as it prevents the price from bleeding further. Companies guiding for higher growth than expected after having a knock out quarter usually doesn't cut jobs so this act definitely spoke investors.

Elon is always looking for efficiency as he is allergic to deficiencies. Wallstreet is not used to this kind of constant paranoia even when times are good.
 
Listen, I had a dream, and everything became clear. Don't worry about the current volatility. This is what is going to happen:

June: Stock is volatile and drops back into mid 650's on news that Elon doesn't brush his teeth in the morning. @cwerdna finds a webpage that points out all of Musk's hygiene flaws

July: Delivery numbers surprise to the upside leading to share price into $900s, but earnings take a bit of hit as some 1 time costs are added to this Q and 4680 ramp is not clear. Stock ends up back in low $700s. @StarFoxisDown! is not amused. Taylor Ogan enjoys the momentary pleasure of the idea that 4680 production is still low, and takes a sip of wine in his office, alone at night, while realizing his investment fund has less money in it than many TMC posters.

August: The market corrects the overreaction to Q2 earnings as they realized production is ramping up at every site and Q3 will be huge. Voter approval of share split finishes. CPI data shows signficant decline in inflation Tesla balloons to over $1000 on top of a recovering Nasdaq. @StealthP3D posts some fishing story analogy to let you know he is a GOAT investor and well endowed.

September: Tesla AI day is impressive to TMCers, but as usual the market doesn't understand and Tesla dips back to $900. @heltok and @Discoducky write long posts on the amazing AI software and hardware Tesla is doing and we all nod our heads, but really wonder "when $2000?"

October: Amazing production and deliveries report. Then the stock split is announced and happens mid month before earnings. Stock begins climbing past $1100 then gamma squeeze happens. After amazing earnings report including positive 4680 ramping, stock reaches $1500. @juanmedina can finally retire. @BornToFly buys some Russian oligarch's yacht. Many threads about buying mountains and island are revived.

November: Stock corrects down to $1100 from gamma squeeze. TSLAQ gloats on Twitter on how much money they made because they magically shorted at the top and not other time before that. @Prunesquallor and @OrthoSurg cope by telling us how they road a bicycle for 5 hours. Elon Musk likes a tweet from Rand Paul as stock tips under $1100. @Pezpunk equates him to some murderous dictator.

December: FSD Beta is getting pretty good and released to all accessible customers. Market realizes the margin benefits and pushes stock back above $1300. @Gigapress convinces @KarenRei and @FactChecking to come back and they write a post how Tesla will create an infinite supply of all materials from solar + battery. @jbcarioca talks about the time he was an epidemiologist / accountant / James Bond and how all of lagacy auto is still living like it's the 1970s and done for.

January 2023: Another amazing P&D report, annualized production over 2 million cars / year. Cybertruck production commencing, battery supply limitations easing and Powerpack supply ramping. Everything is looking rosy. stock climbs up to $1800 after earnings report. Money is dripping out of TMCers. @Krugerrand builds an entire house for cats. @ZeApelido finally buys a house. The end.
Strange. I don’t dream about you or anybody here, but rather 🌈, 🦋, and 🦄.
 
This will require a lot of energy per kg of methane produced, mostly from making the H2
You have not included the energy cost of separating the oxygen from the carbon in the carbon dioxide. When carbon dioxide is captured by lime, the oxygen and carbon remain connected. To make methane you must still break this bond.

Bond strength between carbon and oxygen (double bond) is 741 kJ/mol; between hydrogen and oxygen the strength is 464 kJ/mol, so the energy cost is not mostly from making the H2 but from freeing the carbon. (9.4 Strengths of Ionic and Covalent Bonds - Chemistry: Atoms First 2e | OpenStax)

When plants capture carbon, they use sunlight to break this bond. Plants did the work for us when we use coal or oil.

You are right that a great breakthrough will occur when energy is extremely cheap, but the other key cost part of synthesizing useful carbon compounds is lowering the cost of splitting up the CO2.
 
You have not included the energy cost of separating the oxygen from the carbon in the carbon dioxide. When carbon dioxide is captured by lime, the oxygen and carbon remain connected. To make methane you must still break this bond.

Bond strength between carbon and oxygen (double bond) is 741 kJ/mol; between hydrogen and oxygen the strength is 464 kJ/mol, so the energy cost is not mostly from making the H2 but from freeing the carbon. (9.4 Strengths of Ionic and Covalent Bonds - Chemistry: Atoms First 2e | OpenStax)

When plants capture carbon, they use sunlight to break this bond. Plants did the work for us when we use coal or oil.

You are right that a great breakthrough will occur when energy is extremely cheap, but the other key cost part of synthesizing useful carbon compounds is lowering the cost of splitting up the CO2.
That's the theoretical energy efficiency but an electrolysis plant specifically designed to exploit cheap electricity in order to lower all other costs will have much worse energy efficiency at making H2.

The chemical energy in the H2 bonds is used to rip the oxygen atoms from the carbon. The Sabatier reaction is exothermic, meaning that after it's activated it can sustain itself without external energy input.

CO2 + 4 H2 --> CH4 + 2 H2O
∆H = −165.0 kJ/mol

"Since the ΔHº represents the total energy exchange in the reaction this value can be either positive or negative.

  • A positive ΔHº value represents an addition of energy from the reaction (and from the surroundings), resulting in an endothermic reaction.
  • A negative value for ΔHº represents a removal of energy from the reaction (and into the surroundings) and so the reaction is exothermic."
CO2 --> 2 C-O double bonds --> 2 * 804 kJ/mol = 1608 kJ/mol (note, 741 kJ/mol not used because C=O bond is actually about 10% stronger in carbon dioxide)
4 H2 --> 4 H-H single bonds --> 4 * 436 kJ/mol = 1744 kJ/mol
CH4 --> 4 C-H single bonds --> 4 * 415 kJ/mol = 1660 kJ/mol
2 H20 --> 4 O-H single bonds --> 4 * 464 kJ/mol = 1856 kJ/mol
∆H = 1604 + 1744 - 1660 - 1856 = -164 kJ/mol (almost exactly the -165 cited above, probably within rounding error)

In practice, the Sabatier reactor will need a way to maintain the right temperature and pressure and for blowing in fresh reagents and removing the products. This portion will need energy if they're using industrial machinery like fans or heat pumps. However, it's possible SpaceX or a competitor will find a economical way to use the Sabatier reaction heat to create a passive heat engine that does the job without machines. The laws of physics don't prohibit it and it would improve reliability and reduce CapEx requirements.

In any case, I still predict that making green H2 to fuel hydrocarbon production will be a big consumer of electricity and gigantic driver of market growth for Tesla Energy. So will liquefying the H2 and/or CH4 whenever the application calls for it, such as fueling Raptor combustion.
 
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Listen, I had a dream, and everything became clear. Don't worry about the current volatility. This is what is going to happen:

June: Stock is volatile and drops back into mid 650's on news that Elon doesn't brush his teeth in the morning. @cwerdna finds a webpage that points out all of Musk's hygiene flaws

July: Delivery numbers surprise to the upside leading to share price into $900s, but earnings take a bit of hit as some 1 time costs are added to this Q and 4680 ramp is not clear. Stock ends up back in low $700s. @StarFoxisDown! is not amused. Taylor Ogan enjoys the momentary pleasure of the idea that 4680 production is still low, and takes a sip of wine in his office, alone at night, while realizing his investment fund has less money in it than many TMC posters.

August: The market corrects the overreaction to Q2 earnings as they realized production is ramping up at every site and Q3 will be huge. Voter approval of share split finishes. CPI data shows signficant decline in inflation Tesla balloons to over $1000 on top of a recovering Nasdaq. @StealthP3D posts some fishing story analogy to let you know he is a GOAT investor and well endowed.

September: Tesla AI day is impressive to TMCers, but as usual the market doesn't understand and Tesla dips back to $900. @heltok and @Discoducky write long posts on the amazing AI software and hardware Tesla is doing and we all nod our heads, but really wonder "when $2000?"

October: Amazing production and deliveries report. Then the stock split is announced and happens mid month before earnings. Stock begins climbing past $1100 then gamma squeeze happens. After amazing earnings report including positive 4680 ramping, stock reaches $1500. @juanmedina can finally retire. @BornToFly buys some Russian oligarch's yacht. Many threads about buying mountains and island are revived.

November: Stock corrects down to $1100 from gamma squeeze. TSLAQ gloats on Twitter on how much money they made because they magically shorted at the top and not other time before that. @Prunesquallor and @OrthoSurg cope by telling us how they road a bicycle for 5 hours. Elon Musk likes a tweet from Rand Paul as stock tips under $1100. @Pezpunk equates him to some murderous dictator.

December: FSD Beta is getting pretty good and released to all accessible customers. Market realizes the margin benefits and pushes stock back above $1300. @Gigapress convinces @KarenRei and @FactChecking to come back and they write a post how Tesla will create an infinite supply of all materials from solar + battery. @jbcarioca talks about the time he was an epidemiologist / accountant / James Bond and how all of lagacy auto is still living like it's the 1970s and done for.

January 2023: Another amazing P&D report, annualized production over 2 million cars / year. Cybertruck production commencing, battery supply limitations easing and Powerpack supply ramping. Everything is looking rosy. stock climbs up to $1800 after earnings report. Money is dripping out of TMCers. @Krugerrand builds an entire house for cats. @ZeApelido finally buys a house. The end.

I think TSLA will be more volatile than depicted (and trending even higher) but I can't claim to be a GOAT investor. As previously mentioned, I had a weird extended brain-fart and was 90% cash/TIPS between 2000 and 2009. I left millions on the table. Terrible lack of conviction. Cash is bad! But the second part is right on! ;)
 
Kia EV6 plus ChargePoint and some random Kia dealership in Mississippi that had a weak charger.

Dumb article… they should have contrasted with Tesla experience but that would have highlighted how good Tesla is!
WSJ? Writing a positive piece about Tesla? Reminds me of Buddy Holly's biggest hit... "That'll Be the Day."
 
Elon has been thru so many near death experiences between space x and tesla,
That at the slightest feel of something seriously bad, such as a recession
he chooses to act rather than react.

He reduced outstanding long term debt to practically nothing,
Thus avoiding the possibility of bankruptcy, and now he is cutting non manufacturing
jobs to reduce operating expenses.

fundamentally positive actions to insure and secure survival if we
enter a severe and protracted recession.

Elon would have "thinned the herd" even if there were not fears of a recession. He has done it before and will do it again and again for as he long as he remains CEO.

The sooner the under-performing assets (employees) are off the books, the better. Having less than ideal employees continue to work is many times more expensive than simply getting rid of them because a marginal employee makes uninformed/poorly thought out decisions that can be costly.
 
January 2023: Another amazing P&D report, annualized production over 2 million cars / year. Cybertruck production commencing, battery supply limitations easing and Powerpack supply ramping. Everything is looking rosy. stock climbs up to $1800 after earnings report. Money is dripping out of TMCers.
Sell me 1800 puts for Jan '23 cheap. Put your money where your keyboard is.
 
Wind and solar in the US now have an LCOE below the fuel cost for natural gas.

View attachment 812525

Thermal plants’ efficiencies are measured in heat rate, which is the amount of btus it takes to produce one KWh. There are 3412 btus in one KWh, so if you divide that by the heat rate you find thermodynamic efficiency.

Gas turbines are basically jet engines attached to a generator. These generally have heat rates in the 10,000 range (~34% efficient). They are used to balance the grid because they spool up fast. They run off of NG or oil.

Combined cycles take the above and attach a steam generator to the exhaust of the turbine, and can be crazy efficient with heat rates under 6000.

Steam power has heat rates from 8500 to 11000 depending on the pressure. The higher efficiency numbers are basically using supercritical fluid water, and run on insane pressures. Nuclear plants are usually 10,000+ because the fuel cladding can’t handle that.

Now, if you look at NG prices, they are usually prices in dollars per million BTU, with the above knowledge you can calculate fuel costs. For example, a NG CCGT plant would need 6000 x 1000 BTUs to make 1 MWh of electricity (MWH is 1000 KWh). 6m btu of NG at current price of ~$8/mmbtu is $48 per MWh, which is above the total levelized costs in the graphs above!

There are a lot of other costs that go in to energy than just the fuel too.
I wonder if solar has reached minimum price for the BoM costs, not necessarily for the install & permitting costs. My concern is that energy costs in mfg of solar are now driving cost increases. As such this may be near bottom. For wind there are further scale benefits working their way through the system. The point being that each technology need not necessarily reach bottom at the same time. Batteries of course are much further back up the tech decline curve.
 
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Can you imagine the backlash if Elon's motivation is to cut jobs just to increase margins when they already have industry highest?

Most companies cut jobs during a period of headwinds which cause an acceleration of losses. This is why it's good for the stock as it prevents the price from bleeding further. Companies guiding for higher growth than expected after having a knock out quarter usually doesn't cut jobs so this act definitely spoke investors.

Elon is always looking for efficiency as he is allergic to deficiencies. Wallstreet is not used to this kind of constant paranoia even when times are good.
Same take here. General trading market participants yesterday completely misunderstood the subtext. Great TSLA buying opportunity for those with dry powder.