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

[Krugerrand]

I hate to ask the question, as I know there were crazy theories from the shorts, but does anyone know what the story is with the scar on Elon's neck? It's very visible during the third row podcast, and appears to be somewhat recent. My wife had part of her thyroid removed and has a similar scar, but it has significantly lessened over the years.

I vaguely recall he did have a hospital day surgery visit a year? or so ago.

 

[ggies07]

GF4 (Germany) - project could be delayed by 9 months

there is always some food for the shorties somewhere outside, indeed...

Come on Germans....you're letting my blood line down. schnell! schnell!

 

[Todd Burch]

LOL if Germany drags its feet and Tesla hasn't signed the final agreement (has it?) then I could see it pulling up shop and saying "see ya suckers, we ain't got time for slowness."

 

[Pezpunk]

Never mind I see what’s happening
View attachment 506304

we're gonna end green today.

 

[electracity]

In the Podcast that dropped last night, Elon all but told us that the new battery architecture won't have modules. So it'll be just cells in a giant battery pack. As far as getting rid of the actual cylindrical cells themselves, well, there is a good reason for that form factor. Tesla uses a very reactive chemistry that does have the side effect of every once in a while doing a thermal runaway and essentially burning up. Every cell has a small wire attached to it which is both the main current conductor and a fuse for the cell. When a cell "explodes", the fuse breaks and the cell is cut off from the pack. Meanwhile the cell "explosion" itself is contained in the aluminum cylinder, so no harm done to the rest of the pack. Tesla lives with such a reactive chemistry because in the final analysis, it works better than having a lower energy density pack.

I mean, Tesla is smart, maybe they've figured out a better way to handle runaway reactions, I just don't know what that would be. My bet is more of the same, but no modules.

In that same podcast I felt like asking Elon, why can't you fix problems you see when you've found them? He gave an example of the battery pack having a lid so that it is a self contained box. But the underside of the car also has a floor. So you end up with a double lid on the battery. I guess it is very hard to make changes like that, getting rid of the battery lid, mid way through production. I guess it depends at what point you find out about it. Elon was in Model 3 production hell, so fixing an engineering optimization mistake was way down on the priority list.

What was the podcast?

Sounds to me like they are pre-making the structure, including interconnects, and then adding the reactive components.

The welding they do now probably has to go to push pack costs under $100.

Your comments about the podcast makes me wonder if the model Y will actually have the same pack as the 3, which I had assumed it would.

 

[SOULPEDL]

LOL if Germany drags its feet and Tesla hasn't signed the final agreement (has it?) then I could see it pulling up shop and saying "see ya suckers, we ain't got time for slowness."

I just read yesterday (somewhere) that this delay was old news, the contract was signed (this week?), on track. Sorry, no citation.

 

[KarenRei]

Third Row Podcast Part 2 summary:

• Big change going on in the background of Autopilot: instead of having planning, image perception, etc all being separate, they're all being combined, with all camera imagery being handled jointly rather than running image recognition, etc on each one. Big change in both quality and efficiency.
• This is not Dojo; Dojo is about training speed. Comes out late this year or early next year.
• Sees computer vision as being like navigation was in the 1990s - a very hard problem due to the limitations of your hardware combined with early-generation software. Expects autonomy a decade from now to feel easy like navigation is today.
• Auto industry is used to slow rates of improvements. Still not really a car today that matches the 2012 Model S, from a price-for-capabilities standpoint.
• The founding principles of Tesla were basically completely wrong. Notion was we'd take a Lotus Elise, put an AC Propulsion drivetrain in it, but them together, we'll have an electric car, and it'll be great! Sounds pretty easy. But the AC propulsion technology basically couldn't be industrialized. Handcrafted electronics with an analog motor controller. It'd respond either completely or not at all. It just couldn't be scaled; it would have been basically finicky super-expensive prototype cars.Ended up using basically nothing of it. And basically 7-10% of the Lotus Elise. Would have been better just to make a car from scratch.
• But things are often like that. What matters is that you can iterate quickly and adapt.
• Mass manufacturing difficulty is underappreciated. Only at peak made 10 or so Roadsters per week. If two got made in day, that was a good day
• Final assembly was at an old Ford dealership in Menlo Park. The "test track" was just normal driving around the area.
• NUMMI plant was just a big box. Only broken equiment left. Some literally weren't even the scrap value. You couldn't get a scrap dealer to come take them for free. Tesla made a lot of them work, though (such as the plastic injection moulding machine, paint robots, etc). Body line had to be made from new, it was fully stripped.
• Worked out, but it was very difficult, esp. since top suppliers wouldn't work with them, or they'd get their "D-Team". It was vertically integrate or die.
• Tried outsourcing - battery was going to be made at a place that made BBQ grilles in Thailand. They realized this was a crazy idea, for all of the transport, how long it'd take to find out if there was a problem and iterate on it, etc etc etc. They could have ended up with 5 months of scrap inventory for a problem.
• There's no logic to having battery packs be made of modules anymore - they plan to move away from it. The initial idea, from the Roadster days was that if something broke, you'd swap out a module, like swapping out a dead server in a server room. But it's becoming less economically reasonable of a proposition now.
• Went through a lot of trouble designing the S pack for pack swap. But now even phones are going away from battery swap. Makes more sense just to increase the range and makes charging faster. It seems obvious now, but back then it wasn't as clear. But you still have atavism - just like Model 3 still has modules, Model S/X still have swappable batteries.
• The structure of an organization is reflected in the structure of the production. Tesla had a module team, so Model 3 has modules (this has been restructured to just a "battery team"). And then you end up with a box in a box. Because this team wanted an enclosure, and this team wanted an enclosure, so you have a box within a box. And then on the Model 3 you have the pack, and then an underbody, a third enclosure, because the body team wants to have an enclosed body. Lots of brackets on brackets. The teams historically haven't been integrated as much as he'd like to see.
• Building a production system is 100 times harder than a prototype. The reason that companies like Tucker died is because production is way harder than hand-building to show off.
• "Here's a real important point that is not well appreciated, this is a point that should be advanced by short-sellers, but I've not seen it articulated - but it should be: the incumbent car companies make most of their money by selling spare parts to their existing fleet at high margins. And they sell the new cars at a de-facto zero margin or even at a loss. It's kind of like printer cartridges and razor blades: you sell the razor at a loss and the blades at a profit, or the printer at a loss and the cartridges at a profit, or video game consoles - the actual cost of say, an X-box may be $600 but you can buy it for $300-400 because they make up for it on the games that are bought. So if you're a new company, you do not have a fleet. You have no fleet from which to subsidize the sale of your new cars. This is the primary reason there has not been a successful car company startup in the United States. Most car companies have 80%, 70% of their fleet out of warranty. ... Even if they stopped selling new cars, they would still... (laughs) their profits would increase!"
• Innovation rarely comes from insiders, who are complacent with their status; it usually takes outsiders. Such as with SpaceX: it's actually surprising how little innovation there's been in rocketry, despite SpaceX showing landing and reusing rockets many times.
• Not very warm on Rocketlab's idea of catching boosters with a helicopter, both from logistic and economic perspectives. But still thinks it's good they're working toward reusability.
• Earth-to-Earth: Main constraint is noise. Coming in for landing, the double sonic boom is very loud. Have to do offshore. But definitely can be done. And thinks that the economics can be made to work as well, to make it economically competitive with air travel.
• Electric VTOL aircraft: "a lot of difficulty associated with that". You can't do them all at once, with respect to allocating the resources. It can definitely be done, but it's where's best to put your resources, which are very constrained. Not just technically, but also, it's an entirely different regulatory regime. There are no car companies that are also aircraft companies.
• Asked if, due to the good financial health at Tesla, whether that means they can now start pumping a lot more focus on diverse R&D projects. Said it doesn't work that way. That if they know a factory that mass produces superb engineers, please let him know. It's not a money thing; there's a fundamental limit on "exceptional engineers" available.
• Asked about how priorities are chosen. They're usually dictated by necessity or choice. What do they absolutely need to make work E.g. with Model 3, there were so many mistakes with the production process that they had to dedicate pretty much the entire team to fixing Model 3 production problems. Said that it felt like the scene in Indiana Jones where they were being chased by the giant boulder
• Biggest focus now is to get to be making cars on each continent. Its insane to be making cars in CA and shipping them to Europe and Asia. Huge expense, high capital carrying costs due to at-sea inventory, tariffs, extra chance for damage, etc. Creates a lot of costs and is hard to manage. Increases factory complexity at California to deal with all different regulatory regimes. Including LHD vs. RHD, due to some random bureaucrat a hundred years ago And can't even have the same stickers, because not everyone speaks English.
• Having more factories will really destress the company a lot and improve its economics.
• Had to ship cars to Europe where the supplier of the headlights for Europe couldn't match rate, so they'd ship cars with US headlights and then swap them out at the port, just to keep the inventory moving.
• The first quarter last year was a tragedy of errors. Belgium (where they were shipping the cars) went on strike! "What do to you mean, Belgium went on strike?! Okay, now what do we do???" Also mentioned the China sticker issue.
• Ships are also a pain. Time waiting to ship, to load it... ships break down, get delayed by storms, get stuck waiting for ports, etc.
• Tesla has had a massive uphill battle to sell cars in China, due to no subsidies (unlike local manufacturers), facing tariffs, shipping, etc. Proud of how well they did despite the barriers they were up against.
• Cars in the US, they'd get paid by customers before having to pay suppliers, which is great for scaleup. For EU and China, it's reversed. Europe is much harder, due to the Panama canal delays. Esp. when the canal gets backed up. In the worst case they can be forced to go around Tierra del Fuego, which is a transit nightmare scenario.
• Asked what's the best reason for choosing Berlin rather than other places in Europe: (joking) "They have the best nightclubs" (everyone laughs). Says that they they investigated numerous locations, but needed to move quickly, and Berlin allowed that. The fact that BMW had been looking to build a plant there meant that there'd already been a year's worth of environmental paperwork been done on that location for an auto plant. Made it much faster. Local and state governments were also very supportive. Close enough to Berlin that people can still live in the city and commute to the factory. Train station will be moved to where you can hop right off the train and into the factory; no need to even drive in. Goes back to joking: "GigaBerlin sounds like the name of a great night club. I'd for sure work for a company that had a great nightclub"
• Asked about the roller coaster. Still wants to do that eventually. Would just have it be modified Teslas designed to ride rails.
• Asked whether he expected that many orders for Cybertruck. "No, no really?"
• Kimbal: "Elon told me that this was a daring design. I'm more excited about this design than any other design. And I saw it and I was just taken aback. Not by the design, just by the pure aggression that the truck.. you just stand in front of it, and it's like, "ooookay, I'm afraid". Elon: "Well, it seems that a lot of the reason that people buy trucks in the US, it's like, what's the most bad*ss truck. Like, which one's the toughest truck. Well, what's tougher than a truck? A tank. Like, a tank from the future!" ... "How do you out-tough a truck? You make a futuristic armoured-personnel carrier."
• "I wasn't sure whether nobody would buy it, or lots of people would but it. I told the team that if nobody buys it, we can make a truck that looks like every other truck".

 

[Fact Checking]

GF4 (Germany) - project could be delayed by 9 months

Under German environmental regulations, the project in the town of Gruenheide could be delayed by nine months unless work begins before the breeding period for local wildlife this spring, Joerg Steinbach said in an interview with the Handelsblatt newspaper published Friday.​

there is always some food for the shorties somewhere outside, indeed...

Oh for fook's sake, Bloomberg is really a habitually criminal organization when it comes to Tesla reporting - they took that quote wildly out of context, in a way that completely inverted its meaning.

Here's the original article (in German):

Tesla: Brandenburgs Wirtschaftsminister Steinbach über Gigafactory​

The minister was asked very aggressively about the protests and all, and in that context he hedged a bit when asked whether the permits will be granted in time, but he also said:

"Sprechen Sie mit dem Unternehmen darüber, dass die Erwartungen vielleicht nicht erfüllbar sind?"

"Dazu sehen wir keine Veranlassung. Wir sagen auf der einen Seite nicht völlig selbstmörderisch: Alles ist möglich. Gibt es bei dem Projekt eine neue Lage, stellen wir uns der Aufgabe konstruktiv und sagen nicht von vornherein, huch, jetzt haben wir aber ein Problem, das können wir nicht mehr lösen. Wir versuchen, alle Probleme zu lösen. Und bis jetzt klappt das auch."​

Translation:

"Are you talking to [Tesla] that expectations may not be met?"

"We see no reason to do so. On the one hand, we don't say in a politically suicidal fashion that everything is possible. If the project faces a new issue, we face the task constructively and don't say from the outset, yeah, but now we have a problem, we can no longer solve it. We try to solve all problems. And so far it works. "​

I.e. Steinbach specifically took the effort to stress that they are within the timeline so far and that everything is working fine so far. But he's also an elected politician representing voters, so he will not promise that everything will happen 100% sure as long as there's external factors out of his control, such as Tesla submitting the paperwork and finishing preparations in time. The journalist pressured Steinbach aggressively to admit to problems - but there's none really at this point.

As to what the main milestones are to meet the mid-February deadline:

So what has to be completed by mid-February to start clearing the forest?

"The ordnance disposal must be completed by then. And a garbage deposit on the site must be completely disposed of. This work is currently in full swing."

Do the animals that live there have to be relocated?

"Yes, the anthills must also be relocated by then."​

(Btw., there was talk about a protected bat species before, but it turned out that they found none - not a surprise, pine forests are not their favorite breeding areas. So literally the only protected animals that have to be relocated are anthills.)

We do know that the explosives team is in full work, they possibly already completed their work.

Which leaves the removal of an illegal garbage deposit site, before the trees can be cleared.

 

[Mike Smith]

TD Waterhouse is down yet again. Their site doesn't work on busy days, and their trading desk doesn't answer the phone. Yes, they offer options trading but no, you can't always trade them. If you have expiring options you have to just hope for the best. No compensation offered.

 

[JRP3]

I hate to ask the question, as I know there were crazy theories from the shorts, but does anyone know what the story is with the scar on Elon's neck? It's very visible during the third row podcast, and appears to be somewhat recent.

Neural link.

 

[StealthP3D]

Cars do need a constant stream of fluids,filters, and brake pads every 20k-100k miles depending on use.

You don't need a constant stream of alternators, alternators belts and fuel injectors.

I'm not sure what your point is here. As a fleet, ICE cars most certainly do need a constant stream of alternators, belts and fuel injectors. That list is not complete, it's just skimming the top. A certain percentage of people even buy their tires, coolant and oil from the dealership.

Please look at the big picture. It's a big revenue stream overall compared to Tesla. And your point is?

My point was that short-sellers don't want to provide this as another compelling reason why Tesla won't be able to survive even though it's probably their single best argument from a dollars/cents perspective. Because telling people BEV's don't require a bunch of after-sales parts expenses might wake up people to just how superior BEV's are to ICE vehicles.

 

[neezer]

Look at the top comment on this clip, it is all. LOL (related to "what is battery day, Jim?")

The sad crap isn't just the "what is battery day?" but also the other guy, the anchor, thinking that hey, Tesla can easily end up getting a "Disney+ to Netflix" type of competitor. He has no clue about the moats Tesla has, and thinks that to ramp up the knowledge and then execution of what you need to launch a great content streaming platform is not any different from what Tesla's products and pipeline require.

 

[Fact Checking]

LOL if Germany drags its feet and Tesla hasn't signed the final agreement (has it?) then I could see it pulling up shop and saying "see ya suckers, we ain't got time for slowness."

Tesla already signed the GF4 deal, it got notarized by the state government - and there are no problems so far, they are within the expected timelines, see this explanation with quotes from the original article.

Bloomberg is trying to stir up the pot with wildly out of context quotes from a longer interview.

 

[JRP3]

In that same podcast I felt like asking Elon, why can't you fix problems you see when you've found them? He gave an example of the battery pack having a lid so that it is a self contained box. But the underside of the car also has a floor. So you end up with a double lid on the battery. I guess it is very hard to make changes like that, getting rid of the battery lid, mid way through production.

I was surprised when he said that. Seems as if it will be more difficult to make a sealed pack if the top cover is the vehicle floor, and, more importantly, I'd want the extra layer of protection and the small air gap between the pack top and floor bottom. A hard landing on an object could mean the top of the cells contact the vehicle floor, seems like a bad idea.

 

[Zero CO2]

Munster is interesting, and while I would not call him knowledgeable about Tesla, he is two cuts above the generic 'analyst.'

Munster is one of the better analysts i have run into in my 30 + years investing he was at Piper for many years and understood AAPL better than most ... i think he does get Tesla as he understood AAPL ecosystem well before most of the talking heads.

 

[Fobble]

TD Waterhouse is down yet again. Their site doesn't work on busy days, and their trading desk doesn't answer the phone. Yes, they offer options trading but no, you can't always trade them. If you have expiring options you have to just hope for the best. No compensation offered.

You should move to TD Ameritrade

 

[KarenRei]

Do tell. What stock?

Honestly, I'm not sure I want to tell at this point It's market cap is 3 1/2 orders of magnitude smaller than Tesla's, averages one trade every day or so, and you guys could ruin my cost basis while I'm still acquiring.

 

[StealthP3D]

Anybody notice how slow the brokers websites are ?
Takes forever, sometimes 30 seconds to bring up a Tesla buy or sell screen.
Was not like that a week ago.

Schwab seems to be operating as usual. How many broker's websites have you noticed are slow this morning?

 

[AudubonB]

$10trn sounds about right, its probably a bit higher. But this is capital benchmarked to the S&P - not just index funds. Around 2/3rds of this is Active funds that won't be forced to buy Tesla but will be pressured to start considering it. About 1/3rd is the ~15-20m shares of forced passive fund buying I mentioned.
Its also worth nothing that S&P is free float adjusted - so market cap for their purposes excludes Elon's shares.

I take issue with the red statement you made here, most specifically because it has been broadcast through many media - it is not you I am specifically criticizing.
It is the premise that is sloppy: that Mr Musks’s shares are not part of the free float.

“I will be the last to sell”, and such other well-known statements are not, to my firm knowledge, any contractual obligation Mr Musk has with Tesla Inc., with Standard & Poor’s, with Wall St or with you or me. It may and with an immense degree of likelihood is true but that ought not to enter into S&P’s calculus.

A friend of mine used to be wealthy. Ranked at #8 in the world, he dismissed fears the investment community had about one of his business projects, saying that if it turned south he would bail it out with his own assets.
The problem was, when it turned south, his $30 billion of assets also disappeared and his creditors had zero recourse. In this case, he didn’t so much sell his shares as simply had them dissolved away (it was some of both, in fact).

I have mentioned this before but the joke almost bears worth repeating. I’m now worth $1 billion dollars more than he....not because my TSLA has done that well but because his net worth is now -$1 billion.

@jbcarioca can confirm the generalities of that little story.

The takeaway is not, of course, that Mr Musk is a Mr EB, but that his shares are not encumbered: they are a part of free float.

Let’s see how S&P treats them when the time comes.

 

[LJS22]

we're gonna end green today.

Lots of time left and I think you’d be right if the markets weren’t tanking today and it wasn’t a Friday. We’ll see though.

Not worried though, I’m pulling for some fun on Monday and Tuesday