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

[Antares Nebula]

This came out right before the 276 spike:

Tesla Motors, Inc. (NASDAQ:TSLA) - Tesla Spokesperson Says Will Continue To Make New Investments In Gigafactory 1, As Needed; Thinks There Is Far More Output To Be Gained From Improving Existing Production Equipment Than Earlier Estimate

Tesla Spokesperson Says Will Continue To Make New Investments In Gigafactory 1, As Needed; Thinks There Is Far More Output To Be Gained From Improving Existing Production Equipment Than Earlier Estimate

 

[SpeedGoat]

This appears to be a completely unsourced article, so I figure it's just false.

Panasonic has already effectively confirmed. So no, it isn't "just false."

 

[schonelucht]

I don’t want to be glib but this doesn’t sound very hard at all if you anywhere believe 10k/week Model 3 this year.

What do we do in the meantime when we are not yet there? Pana is ready to stuff 35GWh down Tesla's pipe today. 5k extra SR is not going to happen for at least 3 quarters (and any previous experience suggests it is going to be more like 4 or 5 quarters)

 

[SpeedGoat]

"the Nikkei said without citing its sources"
So ignore what Nikkei said, it's a rumor. Let's see what Panasonic said.

"“Panasonic will study additional investments over 35 GWh in collaboration with Tesla,”

That's not confirmation of anything.

Perhaps Tesla and Panasonic have revamped their ramp-up plans. Which were probably pretty nebulous to start with and have changed a dozen times already. I don't think we can trust the way Nikkei reported its unsourced article, however.

(I never heard of any definitive plans to exceed 35 GWh at Nevada before now anyway. Carsonight has been saying that the labor market makes it a bad place to expand at the moment. We already heard that Tesla was planning to use non-Panasonic battery suppliers in Shanghai. Which, incidentally, supported my belief that the reason for making only SRs there is to use inferior battery cell tech to avoid Chinese IP theft.)

This is pure wishful thinking/denial and is emblematic of the echo chamber effect of this forum.

TSLA is valued as a growth stock. Any sign that TSLA won't continue to grow at a high rate calls that valuation into question.

A freeze on new investment in both GF1 and GF3 most certainly raises valid questions about Tesla's growth going forward.

We have had official projections of production rates as high as 500k/year by the end of 2019, of which roughly 70% were to come from the US. (7k US, 3k China). Where are the batteries going to come from?

 

[Pras]

This is pure wishful thinking/denial and is emblematic of the echo chamber effect of this forum.

TSLA is valued as a growth stock. Any sign that TSLA won't continue to grow at a high rate calls that valuation into question.

A freeze on new investment in both GF1 and GF3 most certainly raises valid questions about Tesla's growth going forward.

We have had official projections of production rates as high as 500k/year by the end of 2019, of which roughly 70% were to come from the US. (7k US, 3k China). Where are the batteries going to come from?

Tesla is truly undervalued as a growth stock, if at all. Even with the existing production plan GF1 and GF3, it is undervalued.

 

[SpeedGoat]

If you do the maths on Panasonic / Tesla's output.
5500 model 3 cars a month x 65kwh average capacity (some 75's some 65's a few 50s) x 52 weeks a year - you get 18,947,500 (about 19kWh). That's only 60% of 35kWh. I doubt that Powerwall and Powerpack capacity are anywhere near that equivalent given all the delays customers are reporting in getting their Powerwalls (remember that 18650's are made elsewhere and supplied to Fremont)
The problem might be Panasonic installed 35kWh of capacity years ago. Then Tesla and Elon on a conference call announced their infamous problems with assembling the batteries into a pack (the 3-6 month delay). So Panasonic have had all this capacity to do 35kWh and maybe Tesla has only had demand and capacity to use max 25 for the last 1-2 years. So no surprise Panasonic might not expect Tesla to need 50+ kWh capacity - and have put on hold their plans. Panasonic reported a massive loss on their battery manufacturing division. If your profit is based on producing 35GWh - but you only end up producing a fraction of that for the first year, then 60% after 2 I can imagine Panasonic aren't happy with Tesla!

I very much doubt Panasonic had that amount of production capacity in place years ago because they were still adding lines amid a reported cell shortage as recently as the second half of last year.

If they overshot demand that is the most optimistic scenario because it would allow Tesla to continue increasing production absent new investment.

 

[EnzoXYZ]

This advertisement thing keeps coming up...
(Few hundred post behind).You can make a great car that advertise itself or you can make a mediocre car and advertise it as a great car. I know which route Tesla picked.

Heck it’s so great of a car that I advertise it to friends and family.

 

[Cosmacelf]

Why are people believing the 35 GWh number from the Nikkei article? It could easily be false.

 

[Fact Checking]

What do we do in the meantime when we are not yet there? Pana is ready to stuff 35GWh down Tesla's pipe today. 5k extra SR is not going to happen for at least 3 quarters (and any previous experience suggests it is going to be more like 4 or 5 quarters)

The question is, when are the purchase obligations going to become effective? Today's news might be Tesla punting on expanding to 50 GWh/year next year (which seems prudent and cautious given what we know so far), but does this extrapolate to Tesla having a 35 GWh/year obligation right now, or only by end of this year, or some other schedule?

The apparently rather unhurried approach to the Tesla Semi expansion (which could absorb ~1 GWh/year capacity per just ~2,000 units made) suggests that Tesla isn't under near-term obligations to expand.

 

[jhm]

There's reports of PowerWall orders made back in 2017 that still haven't been fulfilled in 2019. While I'm sure Tesla would prefer to use cells to sell 4x higher value cars, it's not like they don't know what to do with any excess supply.

But I do agree that Tesla would likely punt on having 50 GWh/year obligations in 2020. That's just too risky without first seeing how well automotive and Tesla Energy ramps globally.

Be careful with this assumption. If the return is 4 times higher on cars than PowerWall, it means that the PowerWall is substantially underpriced. That is, there is an opportunity cost in that is not be appropriately priced. If opportunity costs are appropriately priced, then we should be somewhat indifferent to the specific product mix sold. This is particularly important if grid battery growth really starts to take off.

 

[bdy0627]

What do we do in the meantime when we are not yet there? Pana is ready to stuff 35GWh down Tesla's pipe today. 5k extra SR is not going to happen for at least 3 quarters (and any previous experience suggests it is going to be more like 4 or 5 quarters)

Focusing on aggressively ramping TE seems like the obvious way to go here to try and utilize as much of the cell production as they can. From what Elon said in the Q4 CC I think, TE was cell starved due to model 3 ramp. That does not appear to be the case at all now. He mentioned that this will be the year we see TE take off. Q1 ER will be interesting on that front as we should definitely already see signs of that happening given the availability of cells.

 

[Singer3000]

What do we do in the meantime when we are not yet there? Pana is ready to stuff 35GWh down Tesla's pipe today. 5k extra SR is not going to happen for at least 3 quarters (and any previous experience suggests it is going to be more like 4 or 5 quarters)

We don’t know what other production bottle necks there are to get Fremont to 6k and then 7k. But intuitively, the demand is likely to be there given the launch of the SR/SR+ vehicles.

We can only guess how quickly the cell equipment can switch between Model 3 and Storage. But that’s always an option too and with hindsight seems to be what happened when Tesla suddenly did the Puerto Rico projects.

 

[SpeedGoat]

Tesla is truly undervalued as a growth stock, of at all. Even with the existing production plan GF1 and GF3, it is undervalued.

Time will tell, certainly I would benefit if this proved out. I expect Tesla will have to release some type of statement soon giving their side of the story. Given timezones it is unlikely they have anyone awake right now to offer any in depth commentary.

 

[bdy0627]

This is pure wishful thinking/denial and is emblematic of the echo chamber effect of this forum.

TSLA is valued as a growth stock. Any sign that TSLA won't continue to grow at a high rate calls that valuation into question.

A freeze on new investment in both GF1 and GF3 most certainly raises valid questions about Tesla's growth going forward.

We have had official projections of production rates as high as 500k/year by the end of 2019, of which roughly 70% were to come from the US. (7k US, 3k China). Where are the batteries going to come from?

It looks like the batteries will be available when production warrants it. Batteries do not appear to be constraining further production ramp in Fremont. Fremont appears to be the constraint to further production.

 

[davecolene0606]

This is pure wishful thinking/denial and is emblematic of the echo chamber effect of this forum.

TSLA is valued as a growth stock. Any sign that TSLA won't continue to grow at a high rate calls that valuation into question.

A freeze on new investment in both GF1 and GF3 most certainly raises valid questions about Tesla's growth going forward.

We have had official projections of production rates as high as 500k/year by the end of 2019, of which roughly 70% were to come from the US. (7k US, 3k China). Where are the batteries going to come from?

35GW is enough for 500K + TE and the article was “false” in that it used partial quotes. You might wanna slow down a bit.

Fire Away!

 

[Vitold]

Panasonic has already effectively confirmed. So no, it isn't "just false."

It is false in a sense that it spins good news - new battery lines are operational since March and that Tesla can begin consuming 35GWh of batteries without any new investment - into bad: no plans for future growth (at least as far as Panasonic contract goes).

 

[bdy0627]

Tesla is truly undervalued as a growth stock, of at all. Even with the existing production plan GF1 and GF3, it is undervalued.

It's undervalued as a growth stock and overvalued as a car company. That's the conundrum for the market right now and partly the reason for the crazy volatility.

 

[schonelucht]

The question is, when are the purchase obligations going to become effective? Today's news might be Tesla punting on expanding to 50 GWh/year next year (which seems prudent and cautious given what we know so far), but does this extrapolate to Tesla having a 35 GWh/year obligation right now, or only by end of this year, or some other schedule?

The agreement is heavily redacted but it suggests monthly reviews.

The apparently rather unhurried approach to the Tesla Semi expansion (which could absorb ~1 GWh/year capacity per just ~2,000 units made) suggests that Tesla isn't under near-term obligations to expand.

Or, more likely, that Tesla is far from ready to actually build non-prototype Semis.

 

[Fact Checking]

A freeze on new investment in both GF1 and GF3 most certainly raises valid questions about Tesla's growth going forward.

That's a false claim, Tesla never gave the GF3 cell supply contract to Panasonic. Here's the quote from the Q4 conference call:

Colin Langan

"And just as a follow-up. You commented that you expect China to be online by the end of the year, but there's a lot of articles that the battery supplier - you're looking at different battery suppliers. But, I mean, do you have a battery supplier? Because it seems kind of close to when production is supposed to start."

Elon Musk

"Well, there's really three things: the cell, the module and the pack. We will be making the module and the pack. So it's really just a question of cell supply. And we can essentially use any [high density] [ph] 2170 chemistry. And we expect to be a combination of cells produced at our Gigafactory in Nevada and cells produced in Japan and cells produced locally in China. And we feel confident to have a sufficient supply to hit the 3,000 units."​

I.e. on January 30 Elon Musk already disclosed that Shanghai GF3 cell production will be served from GF1 initially, and from local sources of 2170 cell production.

TL;DR: You are just concern trolling.

 

[schonelucht]

Focusing on aggressively ramping TE seems like the obvious way to go here to try and utilize as much of the cell production as they can.

Seriously? Guidance is 2GWh, that in itself would be more than doubling deliveries, when we take into account that they won't have a large Australian project this time around. No. I see three possibilities

1) S/X revamp using GF cells this quarter
2) selling cells to other manufacturers
3) getting to an agreement with Pana to push back purchase obligations