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

[Chickenlittle]

Then what made Musk decide to place Tesla European Headquarters and Assembly Plant in The Netherlands in 2012 instead of the UK?

Fact is the UK was never going to get the first European GF. It needed to be centrally located inside the EU not on the fringe for easy transport throughout the Eurozone. Not loaded on ships or through the Chunnel.

Will they close this assembly plant when German factory opens

 

[Fact Checking]

Will they close this assembly plant when German factory opens

Tilburg will not be affected, it assembles Model S/X units which will be made in Fremont even after 2021.

GF4 will start with Model Y production.

 

[Fact Checking]

Imagree. That's when the 2B Euro's run out from the FCA deal. I think by then Tesla has production fully wound up at GF4, INCLUDING bty cells.

The EU Co2 emissions penalties will start in 2021, the current legislation runs until 2025 and 2030, but might be extended:

Carmakers near CO2 cliff-edge in electrification race​

PSA-FCA will probably be forced to pool with Tesla, to avoid billions of Euros of fines per year, for years to come.

 

[Prime_Number]

Elon threw out that quote recently about wanting to get to the point of replacing 1% of the global fleet each year (so 20 million deliveries a year).

Assuming 40% annual growth rate and if you figure 500k units per factory, by early 2023 he'll need to have ramped up Fremont, Berlin and Shanghai to half a million each and have two more ready to open in the following year. Or more likely those three plus a new Giga5 in North America for the Pick Up likely to be announced around this time next year?

Giga 6 is in my view likely a PV/battery plant in Australia, Battery Day might tell us more.

Giga7 probably in Northern China (Beijing area) so long as its economy keeps plodding along.

Giga8 presumably another plant in Europe.

There are rumors circulating of discussions involving various levels of government about a gigafactory in Quebec, Canada, focused upon batteries.

 

[LN1_Casey]

The EU Co2 emissions penalties will start in 2021, the current legislation runs until 2025 and 2030, but might be extended:

Carmakers near CO2 cliff-edge in electrification race​

PSA-FCA will probably be forced to pool with Tesla, to avoid billions of Euros of fines per year, for years to come.

Since the FCA is base in the EU, and the fines are to avoid Euro payments, is the money given to Tesla in Euro or US Dollar? If Euro, having the GF4 in a country that makes payment to employees in Euro also may help Tesla avoid the loss of conversion amounts.

 

[lklundin]

I have been looking at google maps to find the exact spot, too. The grassy area you guessed might fit is way too small IMHO, not even half a mile long. I googled for "BMW Freienbrink" and with a bit of luck found an official document for the former BMW project including a map, which should now describe where GF 4 will be: north of the place you picked between the freeway A10 and a railway line

Interesting find.

Is it known whether the WW2 war-effort had any use for this area?

Because in that case there is a much increased likelihood of finding live ordnance there, e.g. 250kg aerial bombs. Even today such bombs are regularly found during construction work, they are typically deemed to unstable to move, so they are destroyed in place, a process that typically puts the construction (of the factory foundation) on hold for some days.

One would hope that Tesla has negotiated this point with the authorities, that the reaction to the discovery of any such bombs will be prompt and not cause a prolonged standstill at the site.

 

[Fact Checking]

Since the FCA is base in the EU, and the fines are to avoid Euro payments, is the money given to Tesla in Euro or US Dollar? If Euro, having the GF4 in a country that makes payment to employees in Euro also may help Tesla avoid the loss of conversion amounts.

Yeah, I guess the fines and payments are in EUR too.

So I was reading through the recent FCA Q3 ER conference call transcript, and FCA executives absolutely didn't want to talk about how much they'll be paying to Tesla in 2020:

Edited Transcript of FCA.MI earnings conference call or presentation 31-Oct-19 1:00pm GMT


Adam Michael Jonas, Morgan Stanley, Research Division - MD [46]

"First, I just want to say I just have this image in my mind of Sergio up above, taking a nice long drag looking down on you and saying, Mike, Richard and John, proud of you, well done. A couple of questions on -- couple of questions on EVs. Can you possibly be specific on how much you're actually paying Tesla for the pooling credits? There's just so many while I have seen numbers ranging from EUR 200 million to EUR 2 billion. Can you just help us and genuinely to help with that delta from '19 to '20 on that? My first question, and then I have just have one follow-up."

Michael M. Manley, Fiat Chrysler Automobiles N.V. - CEO & Executive Director [47]

Love you to death, but no.​

And I believe FCA doesn't want to talk about those costs is because they are variable and FCA considers it a hedge:

"So I viewed the Tesla relationship somewhat as a hedge because we begin to launch obviously our electrified vehicles next year and into '21, technically, we could with very high penetrations in '21 reach compliance on paper. The reality is, it's still not entirely sure, even though I made positive comments, which I do believe at the beginning of this call, still not 100% sure of take rates [in] real price and recovery. So for me, the Tesla was a hedge, but it's done in '21."​

Reading between the lines, FCA doesn't know how much they are going to pay Tesla in 2020: it depends on the emissions of the fleet they are going to sell, it depends on how well their own EVs are going to sell. They'll only purchase the absolute minimum number of credits from Tesla, to move them into compliance to reach 90g/km emissions in 2020 across all their EU sales.

I also suspect that the maximum payments to Tesla might be so high that they didn't want to disclose them... Instead they have rosy expectations for 2020. Which payments to Tesla they might have to adjust, upwards.

I believe the payments involve a formula of how many CO2 emissions penalties the Tesla vehicles delivered save FCA: this is not something FCA can estimate in advance, as nobody knows how many vehicles Tesla is going to deliver in the EU in 2020, nor how bad the PSA-FCA emissions are going to be.

They also expect to not require Tesla's help by the end of 2021.

I believe FCA management might be deluding themselves if they think that a re-spun Fiat e500 is going to be competitive in 2020, that a BEV Alpha platform will be competitive in 2021, and they might also be overly optimistic about how much they can reduce emissions of their existing gasoline vehicles. This is true of the PSA-FCA merged company too I believe.

(Paging @Prunesquallor and @generalenthu.)

 

[Fact Checking]

Interesting find.

Is it known whether the WW2 war-effort had any use for this area?

Because in that case there is a much increased likelihood of finding live ordnance there, e.g. 250kg aerial bombs. Even today such bombs are regularly found during construction work, they are typically deemed to unstable to move, so they are destroyed in place, a process that typically puts the construction (of the factory foundation) on hold for some days.

One would hope that Tesla has negotiated this point with the authorities, that the reaction to the discovery of any such bombs will be prompt and not cause a prolonged standstill at the site.

Live WWII bombs and ammunition are a valid concern, and this is a hazard to construction projects all across Germany (and most of Europe).

This is a hazard map I found for Brandenburg:

GF4 is near the bottom right corner of Berlin, and is marked as a relatively low risk area.

Fortunately this is not a complex urban environment with lots of historic remains in the ground, with nearby population, surrounded by high value structures.

This is 200-300ha of low grade forest on sandy soil (no rockbed), with no previous structures known, far away from residential areas, where the metallic casing of bombs and ammunition should light up on a metal detector like a Christmas tree.

There's the also the risk of phosphorus bombs that are harder to detect - but this is a pretty routine topic in Germany. I'd expect an expert team to sweep the area before bulldozers are allowed on the premises.

Additionally, a highway was recently constructed just next to this plot, so they probably have a pretty good idea about what to expect.

 

[Artful Dodger]

Elon channelling Carl Sagan: "Look again at that dot..."

Let's roll!

 

[ReflexFunds]

There are rumors circulating of discussions involving various levels of government about a gigafactory in Quebec, Canada, focused upon batteries.

I like the idea of a Quebec factory. I presume the rational would be access to Nickel and Lithium resources.
This would be most important if Tesla is going to in-house cathode powder production as well as cell production. The Nickel Sulphate and Lithium Hydroxide cathode powder feedstock both only contain around 20% Nickel and Lithium respectively. So I believe the cathode powder feedstock will weigh a lot more than a finished cell. So to optimise transport costs this should be manufactured close to the metal plants.

Nemaska Lithium is building a large lithium plant in Quebec (though with poor execution)) and it looks like there are Nickel plant plans in Quebec too: RNC puts forward plan for $1bn Quebec nickel/cobalt project
NanoOne is a cathode powder R&D startup also based in Canada.

If I was Tesla and they don't already have similar alternative plans, I would do due diligence on all three of these projects and if all good, buy them. Then potentially Tesla can also build an integrated cell & pack factory in Canada. While at it, why not build the Pickup & Semi factory here too?
Any locals know what labour cost/availability would be like for a project of this scale in Quebec?
The other positive is very high renewable energy % in parts of Quebec.

 

[FrederickBound]

Let's not waste any more time talking about "competitors" who don't exist. I'd suggest no one respond to this or any future polls about this total speculation, waaayyy too much space has been taken up on this forum today on this subject.

I don't understand. Are you saying no one else makes EVs? I'm pretty sure I test drove a Chevy Bolt and Have seen any number of Nissan Leafs.

 

[Artful Dodger]

The other positive is very high renewable energy % in parts of Quebec.

Not just renewable, but highly-available 24/7/365 hydro power. Did I mention abundant? James Bay hydro practically powers NYC. And cheap, cheap too:

"Electricity prices are lower in Québec than anywhere else in Canada or North America. In Montréal, residential customers pay 7.13¢ per kilowatthour (kWh), compared to 11.42¢ in Vancouver and 13.24¢ in Toronto. The same quantity of power costs C 31.52¢ in Boston"​

Cheers!

 

[Cobbler]

Tilburg will not be affected, it assembles Model S/X units which will be made in Fremont even after 2021.

GF4 will start with Model Y production.

I'm not sure.
My guess is that Tilburg today mainly exists to avoid importtax on model S & X. It's purpose will have to be redefined. I don't see it having a future merely as a final assembly line

Following contains a lot of IF's, not supported by facts :
Let's assume by the end of 2022, GF4 is up and running and is capable of producing battery cells/packs. It's likely the machines will be able to produce also S&X battery packs (S&X will have new designed battery packs. I do believe that model 3/Y/S/X battery packs will have more in common for ease of production in the future).

Why have the S&X final assembly lines 400 miles away? I think final assembly of S&X will move to Berlin. Maybe Fremont continues to deliver the required parts to Berlin to produce S&X, but I believe Tesla is working on a more "unified machine" (aka factory design) that is capable of producing S 3 X Y models in one place with the ultimate goal of: customer in Europe orders a Tesla and GF4 pops it out a day later.

 

[jerry33]

Next time write a poem.

We've heard of GF4 and Elon
It's best just to leave them alone
As Investors we hold
through FUD with our gold
Wherever our Teslas are shown

 

[SpaceCash]

I don't understand. Are you saying no one else makes EVs? I'm pretty sure I test drove a Chevy Bolt and Have seen any number of Nissan Leafs.

Exactly.
There is no competition.

 

[ZachF]

Yes, I do. First, it's not like the majors are starting at ground zero right now. They already have programs well underway and both companies have produced various EVs. But more than anything, the major auto makers have tons of money to throw at the problem and tons of experience in making cars. Look at the troubles Tesla had trying to ramp up production of the model 3. The difference is if GM or BMW have a delay in ramping production of a new model, they have no fear of running out of money and going out of business... in fact, GM did have a similar issue with the Bolt, slow getting out of the gate. Things seem to be going smoothly with the model 3 factory in china so that bodes well. We'll see how well the model Y comes online.

The current batch of competition is competitive with a 2012 Tesla on features and capabilities.

A good source of reading for you will be "The Innovator's dilemma".

They have lots of profits now, but when the EV transition hits the steep part of the S-curve that source of profits is going to turn into a huge source of losses. They are going to have to fund an expensive transition as their ICE sales and profits simultaneously plummet. Firms like Tesla and Rivian won't have the ICE albatross around their neck.

 

[SpaceCash]

Interesting post. I can't reply to all of that due to the shear volume, but let me point out something that is notable. The drag coefficient is mentioned as being significant. That is a pro and a con in Tesla cars. Why don't all cars have such low drag coefficients? It's not rocket science, they've designed cars and other objects with low drag coefficients before. Heck, that's even a factor in bullets! It is hard to get such low numbers in cars because it's a trade off. Such low numbers make the cars hard to get in and out of. I've gotten model S cars as loaners several times and I find them very hard to get in and out of. I test drove a model 3 and the same thing. There are times when I hit my head getting into the model X if I don't do it right. This is because the windshield is so raked back that it reduces the roof line over much of the door opening. I literally can't get into the model S without folding rather like a pretzel. Not only do I need to watch my head, but my shoulders because the width of the door opening at the top is a fraction of the width at the bottom.

So while the drag coefficient helps get better range and faster quarter mile times, it makes it harder to sell the cars to middle America. The question is which impacts sales more, the improved performance or the reduced convenience?

Dude you have to be super fat or old as hell to have any issues getting in/out of a Model S or X

 

[McMountain]

Don

Interesting find.

Is it known whether the WW2 war-effort had any use for this area?

Because in that case there is a much increased likelihood of finding live ordnance there, e.g. 250kg aerial bombs. Even today such bombs are regularly found during construction work, they are typically deemed to unstable to move, so they are destroyed in place, a process that typically puts the construction (of the factory foundation) on hold for some days.

One would hope that Tesla has negotiated this point with the authorities, that the reaction to the discovery of any such bombs will be prompt and not cause a prolonged standstill at the site.

Searching for unexploded ordinance is standard procedure for any large project in Europe, nothing special about it. They can do the investigations right after clearing the forest. It´s not just aerial bombs by the way, any area with ground combat in WW2 may have UEX.

 

[Fred42]

JustMe, Yesterday at 11:46 PM
While I see the trend I also think Greta would not buy a car to begin with.

Folks, this question is moot - the Governator already hooked her up with a Model 3:
Arnold Schwarzenegger sends Tesla Model 3 for climate activist Greta Thunberg

He arranged the use of a 3 while she was in America. She doesn't own a Tesla and given the environmental cost of any car, I will be surprised if she buys one of any make.

 

[STARR X]

"their", not his/her.

I would be interested in knowing what is the percentage mix of male and female among the active posters.