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

[Tslynk67]

How strange is it that Diess says he's all in for electrification and commits to reducing VW emissions by 30% in next five years,
yet also says he is committed to reducing it to zero over the following 25 years! That doesn't strike me as a very aggressive time frame!

"At Volkswagen’s ceremony celebrating the start of ID.3 production, CEO Herbert Diess made several comments on the electrification of the industry. In particular, he stated that batteries, as opposed to hydrogen, are a quicker and cheaper way to reduce automotive industry emissions. He also called for a price on carbon and committed to reducing his company’s fleet carbon emissions by 30% by 2025, and to zero carbon by 2050."

It's a lot more aggressive than any of the other incumbents. As @KarenRei has previously stated, Diess appears to be a good guy, but he's in a tricky situation of balancing the transition against the greed of the shareholders and fears of the (very strong) unions.

I give him more than the benefit of the doubt.

 

[woodisgood]

It’s entirely possible for there to be a little bit of shenanigans (if that’s what is going on) without it being a completely unstable situation. As an investor I’m not particularly worried about it.

Just have to accept that as a part of doing business, and understand that there are going to be a lot of cultural and political factors at play, maybe some at the local level, even if the overall direction of the nation is pro-EV and pro-foreign businesses.

 

[M3Rider]

Bribes required?

The nice thing about China is that they will put a bullet in your head for taking bribes. Keeps corruption down.

 

[ggr]

I'm amazed. We have parallel discussions:

FUD is everywhere. It's killing Tesla. No it isn't, we've developed FUD immunity. Maybe FUD herd immunity.

Oh, no, Tesla hasn't been licensed to manufacture in China! Yes it has, but there are other regulatory hurdles still to cross. They'll have to stockpile cars. It might happen before the end of the year. Which could be next week.

I think we're overthinking it...

 

[CorneliusXX]

Where in your quote i said "fremont was planning 10k just for NA" ? Though I expected 10k/w demand only for NA should happened already. GF1 still not at target rate because they refused to let panasonic to increase capex, again due to slower demand growth.

Karen is waiting for her car, why? Because the current demand is only marginally higher than the current capacity so extra production capacity is not built.

Your position is not unreasonable. Although it's difficult to gauge just how much of the change in direction is due to lower demand than expected and how much is due to strategic changes.

Supporting the low demand thesis:

• Why would Elon cut rates on the M3 in Q1 when they were facing a substantial loss? Because he's a nice guy? There are mitigating factors around the loss, but it's likely he only cut the price because he had to. That forgone additional revenue could have been used in hundreds of different ways to accelerate the EV transition.
• Why was the introduction of the SR rushed and the store closures not thought through. Again it appears to be trying to drive demand and cutting costs.
• Why didn't Tesla do a cap raise in Q4 18 at the higher share price. Probably because they didn't think they needed to. It was only when the demand worm turned that they realised they needed an additional funding buffer.

As has been said many times before demand is based not only on consumer interest but also on price and relative value. As Elon has said, it doesn't matter how much people want the car if there's no way to afford it.

Points against the thesis:

• Tesla were cell constrained in Q1/2 for the M3 and didn't get Panasonic to build new lines. This could be driven by a change in strategy. Why get deeper into bed with someone you are going to dump.
• Tesla always pent up demand for stationary storage. Why didn't they get Panasonic to expand for this purpose if they could make money from it? Again, this point to a strategy shift rather than a demand issue.
• If Tesla knew they wouldn't have cells available, why expand production capacity at Fremont.

Either way, they appear to be supply constrained for the M3 now. Prices are increasing, lead times are stretching out. There's virtually no inventory available globally at the moment.

 

[sundaymorning]

I think you are misinterpreting the term. The vehicles produced need to be validate to meet China's requirements. That certifies their manufacture and allow sales.
Tesla already have approval to build cars:
Tesla Gets Government Approval To Build Electric Vehicles In China

The same process happened with the made in Fremont 3s that were imported.

This makes sense.

 

[humbaba]

Elon actually said it would be a better sports car than a 911, which would presumably mean a quicker lap time and handling at least close to.

I have much trouble believing this, since the pickup will be much larger, taller and heavier. A feat like this strains credulity and would almost certainly require breakthroughs in suspension and tires (could this be possible?).

My guess is merely better acceleration. If it really was a better sports car, as well as a better pickup than an F150, then LOOKOUT!!!

That's because Tesla hired off the best and brightest from Apple's Team Titan causing the implosion in that project and the new pickup will be carried like a palanquin by four BB-8's.

 

[Tslynk67]

Sorry folks, but I don't buy all these conspiracy theories about GF3 being delayed for political or other nefarious reasons. Throughout the whole process, the Chinese authorities have bent-over-backwards to speed everything up and to all appearances have been beyond accommodating. The contractors and workmen that have done the work have been amazing and I do believe that Elon has taken every opportunity to thank everyone over there for the massive effort they've put in and the amazing schedule they've achieved (finally he found someone that can work to "Elon time"!!).

I think it's either FUD or the due process having to be taken.

In any case, I think it's what's depressing the SP today - classic SP walk-down by the manipulators.

 

[ZeApelido]

Shortsville Times:

China demands Treelon Musk burns 1 treellion trees in the Amazon and provide 1 billion sugar cane packets for use in China's true alternative fuel love - sugar cane cars. Oh that sweet sweet smell of burning sugar cane.

P.S. Yes I know those Sambaistas actually do run cars on sugar cane

 

[SpaceCash]

Sorry folks, but I don't buy all these conspiracy theories about GF3 being delayed for political or other nefarious reasons. Throughout the whole process, the Chinese authorities have bent-over-backwards to speed everything up and to all appearances have been beyond accommodating. The contractors and workmen that have done the work have been amazing and I do believe that Elon has taken every opportunity to thank everyone over there for the massive effort they've put in and the amazing schedule they've achieved (finally he found someone that can work to "Elon time"!!).

I think it's either FUD or the due process having to be taken.

In any case, I think it's what's depressing the SP today - classic SP walk-down by the manipulators.

Due process in an authoritarian communist regime is not remotely close to what it is in actual free countries. I still find this extremely suspect, especially coupled with previous rumors about Oct 14 production start etc.
This doesn't feel right to me but I'm wrong every blue moon

 

[omgwtfbyobbq]

Do you have a source for the claim that semi's in platoon are more efficient than rail? Is that a cost/mile metric, an energy / mile metric, or something else? I went looking for a site that provided comparable metrics between the two and couldn't find anything. What I could find is that the train industry is moving a ton of cargo 430-450 miles per gallon of diesel pretty consistently (that's an average calculated from total industry miles and total industry cargo (in tons) moved) and includes all of the switching and shuffling trains and cars that doesn't directly contribute to ton-miles.

If a commercial truck is moving 30 tons (60,000 pounds) at 6 mpg, that sounds like each ton is being moved 5 miles per gallon of diesel (30 tons / 6 mpg = 5 tons / gallon-mile). I readily admit I couldn't find a source for this and I could be doing the math quite badly - if I'm approximately right, then trucks are about 2 orders of magnitude short of trains on energy efficiency. Truck platooning will be a big help but it's not going to increase the second truck's fuel efficiency to 1200 mpg from 6 mpg (so overall pair of truck efficiency is ~600 mpg).

I ask because I'm dubious - the rolling resistance of steel on steel is awfully hard to beat, and train cars tucked in so closely between each other makes for some seriously good wind resistance with each incremental car.


On a cost/mile metric, in the US, I wouldn't be surprised to find that a platoon of semis can compete with trains. In the US though, society subsidizes truck expenses (road maintenance) pretty heavily, while companies that operate trains have to fully fund their track maintenance themselves.


Some obvious limitations of train - trains do a poor job of stopping at every address to make deliveries (they don't ). And apparently trains can still burn relatively high sulfur fuel, while semis have made the switch to low sulfur fuel (leading to lower pollution from trucks than trains). The difference in fuels is changing or has changed.

Tesla's trucks should be really efficient. My estimate is that they can get to around 1.5 kWh/mile at 55mph.

Tesla Class 8 Semi Truck Thoughts

At that point the trucks would be at about 20 ton-miles/kWh. There are about 38 kWh in a gallon of diesel, so a train at 450 ton-miles/gallon would be at about 12 ton-miles/kWh.

The thing is, at $2.50/gallon, diesel is only about 6c/kWh, compared to paying retail for electricity, so the costs are likely similar there. If the truck's operator can invest in their own generation I imagine they could get near or even below 6c/kWh and their fuel costs would be about half of rail.

 

[humbaba]

Tesla's trucks should be really efficient. My estimate is that they can get to around 1.5 kWh/mile at 55mph.

Tesla Class 8 Semi Truck Thoughts

At that point the trucks would be at about 20 ton-miles/kWh. There are about 38 kWh in a gallon of diesel, so a train at 450 ton-miles/gallon would be at about 12 ton-miles/kWh.

The thing is, at $2.50/gallon, diesel is only about 6c/kWh, compared to paying retail for electricity, so the costs are likely similar there. If the truck's operator can invest in their own generation I imagine they could get near or even below 6c/kWh and their fuel costs would be about half of rail.

When I rewatched the recently reposted Semi reveal I noticed Elon guaranteed a price rate of $0.07/kWh for the semi. If he can make good on that it would cost far less to operate.

 

[sundaymorning]

you have this entirely wrong. They have changed and adapted plans a lot as they learned from the Model 3 ramp. They shifted to China after the model 3 ramp because it was easier to do so. The cost and difficulty to make 10k a week out of Fremont was a lot higher than making a new factory in China. Especially with China rolling out the red carpet.

After they made the GF3 china decision, the default plan for Y was at GF1. They figured out a way to make space available at Fremont to squeeze in Y, but it wasn't a simple process and relatively recent decision. A lot of this likely came about due to the lessons they learned in the construction of GF3.

Also, it doesn’t make any sense to build 3s in the US (higher cost of labor) and then ship it to China and get slapped with tariffs, then have Trump act up irrationally and then pay higher import tariffs for parts coming from overseas.

It’s much more efficient to build the 3s in China as it offsets the risks associated with a trade war. The other huge bonus that Tesla would receive from having a local factory is enormous: huge tax incentives for buyers such as free license plates.

Anyone trumpeting the demand conspiracy is a nutcase. Would Tesla build more factories due to low demand? Duh... who do these short nutcases think we are? A bunch of rookie investors?

 

[EVNow]

I think you are misinterpreting the term. The vehicles produced need to be validate to meet China's requirements. That certifies their manufacture and allow sales.
Tesla already have approval to build cars:
Tesla Gets Government Approval To Build Electric Vehicles In China

The same process happened with the made in Fremont 3s that were imported.

Yes - I think before people talk about "shenanigans" and "delay" - what is the normal time China takes to approve new vehicles for sale ? Are they taking more or less time ?

For all we know, Chinese regulators are working overtime to test and approve the car in half the time they normally take.

 

[mongo]

Due process in an authoritarian communist regime is not remotely close to what it is in actual free countries. I still find this extremely suspect, especially coupled with previous rumors about Oct 14 production start etc.
This doesn't feel right to me but I'm wrong every blue moon

The process:

1. Build a factory
2. Build a line
3. Get line/ factory approved to build thing
4. Start building thing
5. Get good at building thing
6. When happy with line and product, submit to regulators for approval (may involve inspecting the line and processes)
   
7. Regulator does their testing
8. Regulator approves or requests changes (back to 5)
9. Start selling thing

We are likely in the 5-7 range

 

[SpaceCash]

The process:

1. Build a factory
2. Build a line
3. Get line/ factory approved to build thing
4. Start building thing
5. Get good at building thing
6. When happy with line and product, submit to regulators for approval (may involve inspecting the line and processes)
   
7. Regulator does their testing
8. Regulator approves or requests changes (back to 5)
9. Start selling thing

We are likely in the 5-7 range

Ok. I'm just going to chill on this for now because there's probably something about this process that I don't understand fully. This delay feels out of sync with all previous info/developments.

 

[jerry33]

Tesla's trucks should be really efficient. My estimate is that they can get to around 1.5 kWh/mile at 55mph.

Please show me a truck driver that only drives 55 mph (unless the truck is badly broken).

 

[mongo]

Ok. I'm just going to chill on this for now because there's probably something about this process that I don't understand fully. This delay feels out of sync with all previous info/developments.

In the US, cars are self certified so there is no extra step from production to sale. When Tesla enters a foreign market, those regulators check for themselves.
GF3 swamped the search results, but I recall the same thing when Model 3 went to China including Fremont being inspected (someone please fact check me on this).

 

[humbaba]

Also, it doesn’t make any sense to build 3s in the US (higher cost of labor) and then ship it to China and get slapped with tariffs, then have Trump act up irrationally and then pay higher import tariffs for parts coming from overseas.

It’s much more efficient to build the 3s in China as it offsets the risks associated with a trade war. The other huge bonus that Tesla would receive from having a local factory is enormous: huge tax incentives for buyers such as free license plates.

Anyone trumpeting the demand conspiracy is a nutcase or a desperate shortseller. Would Tesla build more factories due to low demand? Duh... who do these short nutcases think we are? A bunch of rookie investors?

There, fixed that for you

They don't think much of anything, that's why they're still shorting Tesla. But they are getting increasingly desperate.

See, Tesla is building more factories because it is part of Elon Musk's elaborate deception, its all a ponzi scheme, and -- dang it -- why can't we beat the stock down like we could a year ago? We need Musk to give us a juicy tweet so we can file complaints with the SEC and with all of the non-combusting Tesla's on the road, eventually people are going to realize that they don't spontaneously combust like a gasoline car in a 1950's movie.

 

[jbcarioca]

In the US, cars are self certified so there is no extra step from production to sale. When Tesla enters a foreign market, those regulators check for themselves.
GF3 swamped the search results, but I recall the same thing when Model 3 went to China including Fremont being inspected (someone please fact check me on this).

Yes, and there is a time honored English word for that step in the process: homologation: Homologation (from the verb homologate, meaning "to approve or confirm officially") is the process of certifying or approving a product to indicate that it meets regulatory standards and specifications, such as safety and technical requirements.
homologation

That process exists in nearly all countries. For some unfathomable reason people are suddenly perceiving taht this perfectly normal routine process is something nefarious. It is not...

Every new factory or major change in production goes through such a process. Sometimes there is a different word used, teh procedures range from self-certification (Boeing!) to series testing and validation externally for production processes. The first choice is a bit iffy (I guess we know that now) the second can be cumbersome. Either way this is a good and necessary final step prior to retail deliveries.