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

[Todd Burch]

Daum! That smarts @BMW @Mercedes @Audi @VW @everyoneelse.

Hard to say how much of this is the Gordon Johnson Effect though. Until European deliveries are more steady with output from Berlin, this may be unwarranted exuberance, just as Gordy exhibits unwarranted pessimism.

 

[Todd Burch]

Since 2022 is bizarro-year, I'm convinced the path to TSLA's ATH is to start failing at everything. Stop setting records, stop making money, stop making more cars this quarter than last, stop having industry-leading margins, stop announcing start of production for long-awaited products, etc.

 

[Singuy]

If long range semi = 3 packs * 16 powerwalls/pack = 48 powerwalls worth of batteries. Powerwalls retail for $8,000 to $12,500 (1st = $12.5k, 2-4=$8k, 5-10=$8.5k), so 48 * $8k= $384K. In batteries. I understand that their are some electronics and case, but I don't see how you guys get anywhere close to 30%+ GM% for semi...

Well based on that calculation a Model 3 AWD has $48000 of powerwalls in them.

 

[Ogre]

If long range semi = 3 packs * 16 powerwalls/pack = 48 powerwalls worth of batteries. Powerwalls retail for $8,000 to $12,500 (1st = $12.5k, 2-4=$8k, 5-10=$8.5k), so 48 * $8k= $384K. In batteries. I understand that their are some electronics and case, but I don't see how you guys get anywhere close to 30%+ GM% for semi...

This initial batch is small volume and based 2170 cells. The 30%+ GM comes after Tesla converts to 4680. At that point, Tesla's battery costs will be much much lower. Perhaps half the cost if they qualify for the Advanced Materials Manufacturing credit which is $45/ kWh.

 

[wipster]

He said specifically the LR has 3 packs, the SR has 2 packs. So that 648 & 432 KWh respectively.

I tweeted him to ask where he got this knowledge and let him know there is some controversy about battery pack size here at TMC... we'll see if he replies.

 

[Artful Dodger]

I tweeted him to ask where he got this knowledge and let him know there is some controversy about battery pack size here at TMC... we'll see if he replies.

Should we be betting on the controversy?

 

[StealthP3D]

Is the 4680 battery pack in the Cybertruck going to be structural or is it dead weight because the exoskeleton provides enough structural integrity?

I would be very surprised if the Cybertruck doesn't have a structural battery.

 

[CorneliusXX]

It's not a question of whether Chinese autos are "legitimate competitors" or not. The point is, they will have a very difficult time making inroads into N. America and Europe in high volumes over the next 4-7 years. The have almost zero presence currently. They will need to grow service and support networks at the same time they establish brand recognition and trust. Even if wildly successful at doing these things, the volumes would need to be very high, miraculously high, to slow down Tesla's expansion before 2030. To reach that kind of volume they not only need impressive supply chains, they also need to figure out how to substantially undercut Tesla on price when comparing apples to apples. That's harder than it seems because Tesla can lower prices as needed. Two more years is not going to tell us much more than we know right now. Which is that Tesla has a high-volume cost to produce advantage and the best Chinese makers will be able to displace ICE sales but will not fare very well if they have to battle head-to-head for market share with Tesla. And, guess what? For the next 7 years, they don't have to battle head-to-head with Tesla for market share, and they won't.

I would also be careful about taking analysis published on Reddit too seriously. Yes, potential outcomes must always be analyzed. But it baffles me why you think that is not being done before dismissing the idea that cheap, high quality EV's from China are going to provide a knock-down punch to Tesla's growth plans. You talk as if people are not aware of the growing EV production in China. Of course, quality and price are going to improve with time and higher volumes. But it's not clear why you think that's going to slow Tesla down. Tesla will continue to improve as well. That's what they do and how they got to where they are so quickly. I would be more worried about scarcity of raw materials slowing Tesla down than direct competition from Chinese automakers. One thing is clear, a lot of ICE sales will be displaced over the next 7 years.

You raise legitimate statements and to reiterate my earlier comments, the expansion of Chinese EVs causing margin compression by 2030 is within the range of plausible outcomes. That is not to say I have replaced a base (i.e. probable) case with this scenario, only that there is a plausible path to lower margin and potentially lower market share in China.

I think 2ish years will give us a much better idea of whether these new compelling entrants can scale and what sort of margins they are prepared to sell at (That's roughly how long Tesla Shanghai took to go from first vehicle produced to 1m capacity). They are too newly released to know with any sort of confidence how quickly they can grow but they benefit from the worlds largest cell supply chain, China's manufacturing prowess and political will to see them succeed. Cleanerwatt estimates that from their factory announcements CATL alone will be producing 300GWh in 2025 - enough to produce ~5m EVs. That's only 18 months away. If "China EV" hasn't really made a dent in volumes by that time then Its far less likely they will be able to catch up with Tesla. How much of GigaShanghai's manufacturing ramp is due to Tesla and how much is due to China?

One of the other differences is that even though Tesla can cut margins, Chinese EVs to an extent, don't need 30% margins if the government will back them through their J curves to see their political goals met. It's an "unfair" competition in that regard. They could happily sit on break even for years. Since I am invested in Tesla I care about Tesla's value based on widget*volume*margin.

Chinese EVs don't need to do well outside China (certainly in the short term, although if their price points are legit at scale they obviously will), they just need to offer a cheap enough price/quality option in China to drag down Tesla's margins to have a valuation impact - how much better does a Tesla EV need to be for the average Chinese citizen to pay a 20%-30% premium? Tesla could be left with a choice to sell at a volume that maintains margins in China, or sacrifice margin for volume - but it depends on how well "China EV" scales. Vehicles are priced at the margin. Never has it been said that Tesla would receive a "knockdown punch" only potentially margin compression and not meeting a pretty aggressive market share of ~25%.

So why is this comment coming up now as opposed to 6 months ago - well it is a number of newly released examples of Chinese EVs that have the features to satisfy the needs of the average buyer at a far cheaper price point that Tesla - that's a new thing. A significant part of the market will just want the EV equivalent of a corolla or accord - which almost by definition is a cheap product.

I completely agree ICE is the first, best loser in this competition. The question, rather selfishly for me, is where does Tesla shake out in the mix in China.

 

[SN_8]

Since 2022 is bizarro-year, I'm convinced the path to TSLA's ATH is to start failing at everything. Stop setting records, stop making money, stop making more cars this quarter than last, stop having industry-leading margins, stop announcing start of production for long-awaited products, etc.

Yep. But you forgot: stop getting credit rating upgrades, and stop being disproportionately rewarded by government tax incentives.

 

[TheTalkingMule]

What about an integrated waterbed/powerwall product? For cooler regions.

 

[Prunesquallor]

Haha, "long-range" wireless transfer has now been extended to 16m (50 feet) In the laboratory. After which it's efficency drops precipitously.

Eid, A., Hester, J., & Tentzeris, M. M. (2022, March). Extending the Range of 5G Energy Transfer: Towards the Wireless Power Grid. In 2022 16th European Conference on Antennas and Propagation (EuCAP) (pp. 1-4). IEEE.​

P.S. Haha "flip.it"

It’s been looked at for years. Unless there are some engineering breakthroughs I am unaware of, the transmission from medium/high orbit was the tough part.

If microwave transmission is used, the ground rectennas would need to be very large, the beams would fry birds and aircraft would have to avoid them. If optical (laser) is used, cloud cover and atmospherics attenuate.

I strongly suspect that modern photovoltaic efficiencies and battery economics would win out.

 

[Gigapress]

Elon has shut down this idea many times in the past. Power satellites also need to be In very high orbit. Starlinks are too low.

Elon has shut down the idea of putting photovoltaic farms in space and beaming the power back down to Earth. However, I think he hasn't commented on this in several years and I'm not sure how much the math changes with the targeted launch costs for Starship and Superheavy.

This idea is different because the proposal is to use satellites for power transmission but put the solar panels on the Earth's crust. Another key difference compared to any previous space solar proposals I've ever seen is that they want to put the satellites in low-earth orbit instead of geostationary orbit.

That being said, after reading the article I think this idea will not be economically competitive, even if they could solve all the technical challenges, for the same reason that other long-distance power transmission with high-voltage direct current lines will not be competitive and even today's regional grids will lose their current competitiveness and eventually be retired. The fact that the company proposing this does not give an estimate of the cost per gigawatt per kilometer is not a good sign.

Dr. Casey Handmer has good explanation for the math behind why this is the case.

The future of electricity is local

I frequently read about proposals for new solar power developments where the resulting power is moved great distances to less sunny places, such as northern Europe from the Sahara, the US North Eas…

caseyhandmer.wordpress.com

I used to be intrigued by space-based solar power. I still think in the far future it might end up being the source of most of Earth's power because there's a gigantic amount of solar power available at a nice, uniform 1.4 kW/m^2 flux, whereas land on Earth's surface is finite and pretty limited. This is not coming any time soon though.

 

[FielderJones]

Since 2022 is bizarro-year, I'm convinced the path to TSLA's ATH is to start failing at everything. Stop setting records, stop making money, stop making more cars this quarter than last, stop having industry-leading margins, stop announcing start of production for long-awaited products, etc.

 

[Prunesquallor]

Elon has shut down the idea of putting photovoltaic farms in space and beaming the power back down to Earth. However, I think he hasn't commented on this in several years and I'm not sure how much the math changes with the targeted launch costs for Starship and Superheavy.

This idea is different because the proposal is to use satellites for power transmission but put the solar panels on the Earth's crust. Another key difference compared to any previous space solar proposals I've ever seen is that they want to put the satellites in low-earth orbit instead of geostationary orbit.

That being said, after reading the article I think this idea will not be economically competitive, even if they could solve all the technical challenges, for the same reason that other long-distance power transmission with high-voltage direct current lines will not be competitive and even today's regional grids will lose their current competitiveness and eventually be retired.

Dr. Casey Handmer has good explanation for the math behind why this is the case.

The future of electricity is local

I frequently read about proposals for new solar power developments where the resulting power is moved great distances to less sunny places, such as northern Europe from the Sahara, the US North Eas…

caseyhandmer.wordpress.com

I used to be intrigued by space-based solar power. I still think in the far future it might end up being the source of most of Earth's power because there's a gigantic amount of solar power available at a nice, uniform 1.4 kW/m^2 flux, whereas land on Earth's surface is finite and pretty limited. This is not coming any time soon though.

A guy I used to work with at NASA was a die-hard Solar Power Satellite proponent. It would indeed be interesting to see how his thesis would improve with Starship economics.

I don’t understand the rational for low orbits, though. This puts you into ~50% utilization, same as terrestrial PV. I must be missing something.

I’ll sign off on this OT.

 

[kbM3]

We've had reports of the test Semis performing as designed with 2170 cells. Semis won't use structural packs so I don't think they require 4680 cells in the short term.

Elon stated the Semi will have a structural pack.

IIRC it was on Joe Rogan.

 

[PeterJA]

...A significant part of the market will just want the EV equivalent of a corolla or accord...

A century or so ago, a significant part of the market just wanted a good horse.

Tesla robotaxis will likely disrupt the current cheap-car market the way Ford Model T disrupted the horse market. Before I worry about competition from Chinese EV makers, I need to see them developing vision-based driving AI equivalent to Tesla's. If anyone has evidence of that, please share.

 

[JRP3]

I would be very surprised if the Cybertruck doesn't have a structural battery.

I'd be surprised if it does. It's going to have heavy frame rails for load carrying. Idiot, I was thinking of the Semi

*Edit: Actually Elon said the Semi will use a structural pack according to this Tweet:

https://twitter.com/x/status/1331215354882895872

 

[kbM3]

SSSSHHHHHHH.

The joke about jinxing the stock price was funny the first few times, but after hundreds of repetitions, it has gotten incredibly old.

And if anyone on this forum believes that a TMC forum member can make the share price go down by simply posting that it has increased, well then I really don’t know what to say.

 

[Nocturnal]

Before I worry about competition from Chinese EV makers, I need to see them developing vision-based driving AI equivalent to Tesla's. If you have evidence of that, please share.

I'd be happy just to see proof that someone besides Telsa is building EVs profitably. Every company either admits they make nothing or close to it, or hides their EV data with their ICE business.

 

[Ogre]

I'd be surprised if it does. It's going to have heavy frame rails for load carrying.

*Edit: Actually Elon said it will use a structural pack according to this Tweet:

https://twitter.com/x/status/1331215354882895872

You are confusing/ commingling Semi & Cybertruck here.. and not even quoting Musk.

I have thoughts, but I'd like to know actually WTF you are talking about first. Semi or Cybertruck?