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

[larmor]

I love this post, but one thing is missing: Giga India. There's no way Tesla is not going to expand to India in the next 5 years, unless the government is really prohibitive.

If Giga 5 is Texas for batteries and/or Cyber, and if Giga 6 is going to be a second factory in China, I'd be really surprised if neither GIga 7 nor 8 were to be located in India.

Definite need to supply the subcontinent, needs solar and batteries and smaller factor form cars. I would throw in Gwadar as a site, it is a natural deep sea port and terminus of the CPEC (chinese pakistan economic corridor) and would have direct road access to interior China. Gwadar investment may all ready be spoken for, as i found posters from a investment presentation (in mandarin and english) in the hilton garden inn palo alto-- that was 4 years ago....

 

[Dare]

Dirty Money | Netflix Official Site

Check out “Hard NOx” , on the Netflix series “Dirty Money”, if you haven’t already.

 

[jhm]

Who's going to want to make an operating system for an industry that's dying though? Doesn't seem like a good idea to build operating systems for traditional auto, which is going to face enormous financial difficulties over the coming years, and whose existence is being threatened by Tesla.

Fair point. But even if Tesla were to take 80% of the EV market (and I don't think that is a good idea), the competitors holding the other 20% will need operating systems too. Software will be even more critical where vehicle autonomy dominates the market. So while I don't think Tesla with 80% market share is a good outcome for the world, Tesla could own that sort of share of the automotive software market. Moreover, if that privileges Tesla for other components like AI chips for FSD, so much the better.

The basic point I've been trying to make is that there is a valuable software and hardware market that Tesla could dominate even if they only have a 20% share of branded vehicles.

The reaction that I got from most people was that this effort is nigh impossible. Well that is exactly what the rest of the automotive industry is up against. If the problem is that hard to solve, then solving it gives Tesla a huge advantage. The next question is how to monetize that advantage while accelerating the world to a sustainable future. Selling SaaS is probably the most easily scalable of anything Tesla does, and it marks it clearly as a tech company.

 

[sdtslafan]

They can go one step further too!
"Are you sure you understand to keep your hands on the wheel? Please tap screen to verify."
"Are you really sure you understand you can not play video games? Please tap screen to verify."
"Have you read the limitations of autopilot? Please tap screen to verify."
"Do you understand you should be aware of your surrounding? Please tap screen to verify."
"Do you know Autopilot is not self driving software and must be monitored? Please tap screen to verify."
.......
three hours later......
"Ok, you may enter your destination."
"Do you understand your destination includes areas not cleared for autopilot use? Please tap screen to verify."
"Do you understand there was a heavy rain and flooding and you should not drive on flooded roads? Please tap screen to verify."
.....
3 hours later....

Crap my coffee is cold. Guess I'll go inside and get a fresh cup.

sitting back down in car.

""Are you sure you understand to keep your hands on the wheel?........"

NO!!!!!

Maybe I didn’t think this through...

 

[FrankSG]

Definite need to supply the subcontinent, needs solar and batteries and smaller factor form cars. I would throw in Gwadar as a site, it is a natural deep sea port and terminus of the CPEC (chinese pakistan economic corridor) and would have direct road access to interior China. Gwadar investment may all ready be spoken for, as i found posters from a investment presentation (in mandarin and english) in the hilton garden inn palo alto-- that was 4 years ago....

But the reason that Tesla isn't currently in the country is because import costs are so prohibitive. The only way I see India lowering these import costs for Tesla is if it includes a promise from Tesla to build a Gigafactory in the country after a certain level of demand and supercharger/store/service presence has been established.

I don't see how a factory or presence in Pakistan helps Tesla get into India. It also doesn't particularly help Tesla in its goal of localized production.

 

[FrankSG]

Fair point. But even if Tesla were to take 80% of the EV market (and I don't think that is a good idea), the competitors holding the other 20% will need operating systems too. Software will be even more critical where vehicle autonomy dominates the market. So while I don't think Tesla with 80% market share is a good outcome for the world, Tesla could own that sort of share of the automotive software market. Moreover, if that privileges Tesla for other components like AI chips for FSD, so much the better.

The basic point I've been trying to make is that there is a valuable software and hardware market that Tesla could dominate even if they only have a 20% share of branded vehicles.

The reaction that I got from most people was that this effort is nigh impossible. Well that is exactly what the rest of the automotive industry is up against. If the problem is that hard to solve, then solving it gives Tesla a huge advantage. The next question is how to monetize that advantage while accelerating the world to a sustainable future. Selling SaaS is probably the most easily scalable of anything Tesla does, and it marks it clearly as a tech company.

I don't think Tesla is going to undertake this for the foreseeable future for the same reason that I don't think they'll license any battery tech for the foreseeable future. Traditional auto has shown itself to be unwilling and slow to change over the past decade. During the Model X unveil Elon still seemed very optimistic that traditional auto would follow in Tesla's footsteps, but I think that has changed. I think it's clear that the fastest way to transition the world to sustainable transportation and energy for Tesla is to do it by itself. I believe Elon realises this.

Therefore, I expect Tesla to be laser focussed for the better part of the 2020s on ramping up their own battery and vehicle production until they're able to produce 10-20M EVs annually, huge amounts of batteries for storage, and a crazy number of solar roofs. Helping traditional auto with their battery and/or software problems will only distract Tesla from this core mission.

Maybe a company other than Tesla will build an operating system for traditional auto, but it's often not the best idea to start a new line of business in a shrinking market. Traditional auto and the software systems they use are currently shrinking markets, and their upcoming financial difficulties means they will not have spare cash to pay high premiums for great software.

 

[FreqFlyer]

It is the US and anyone can sue over anything but..... What is their legal argument? The NTSB clearly stated and found that drivers know the limitations of Autopilot. Is their legal argument going to be, "Yes he knew the vehicle had a flaw and veered towards to gore point multiple times but that day video games were more important than his life?" I mean I am sitting here as a juror and trying to understand why someone is driving a car with their hands off the wheel knowing full well their hands should be on the wheel. As a juror I am trying to wrap my head around a California law making cell phone use by the driver illegal but yet this guy was playing a game on his phone. This really doesn't work out well but as they say, juries can do strange things sometimes. Maybe they use the family sympathy play and go for the pity reward for the kids? Rich evil company?

You make a great logical case, but as you know and stated in your post, these things turn emotional and reason goes out the window.

 

[FrankSG]

SEC FORM 4


Source Mark B. Spiegel on Twitter

Is it true the CFO dumped half his shares

Looks like he still holds the same amount of shares, but just exercised some options and sold the proceeds?

Also, this is the CAO (Chief Accounting Officer), not the CFO.

 

[Unpilot]

SEC FORM 4


Source Mark B. Spiegel on Twitter

Is it true the CFO dumped half his shares

If you can see mr. smeegols twitter feed ( I'm blocked and so are my 14 followers)...and feel the need to post it here.....hmm... hell I have had a few beers....be gone with you!

 

[ggr]

Mod: clearly false statement, poster is no more. So no need to answer further. --ggr

 

[Mo City]

I love this post, but one thing is missing: Giga India. There's no way Tesla is not going to expand to India in the next 5 years, unless the government is really prohibitive.

If Giga 5 is Texas for batteries and/or Cyber, and if Giga 6 is going to be a second factory in China, I'd be really surprised if neither GIga 7 nor 8 were to be located in India.

Your thought really seems logical because of India's population but the regulatory environment and infrastructure in a country are more important than you might think. India is pathetic on both counts.

My wild guess is we'll see 3rd gigas in the USA and China and a 2nd one in Europe before the first one in India.

Way down the road, might even see one in Brazil or Japan before India.

China, Europe and the USA will anchor the GF train for some time.

There is the possibility India's government wakes up and offer Tesla the red carpet. Fat chance that happens.

 

[Dare]

India needs electric cars in the worst way. Delhi on a hot summer day is horrific. Any day for that matter.

 

[EV forever]

It was already announced back at earnings that Model Y would be shipping in Q1, so it shouldn't be market moving news that model Y is starting deliveries in the last 2 weeks of March.

But but but but Elon is never supposed to be on time with any product, so how was that baked in already? In time delivery first time ever deserves at least a 10% boost in SP.

 

[anthonyj]

Tesla and Panasonic end joint solar cell production

 

[Prunesquallor]

So here's the previously undisclosed data embedded in that chart, which @Prunesquallor or others might help decode:

• 2019 "Tesla Pooling Arrangement Contribution", already paid: 6 pixels high
  
• 2020 "Lower diesel mix" minus eco-improvements: 16 pixels
  
• 2020 "Compass, Renegade, Wrangler PHEVs, [Fiat] 500 BEV": 20 pixels
  
• 2020 "Tesla Pooling Arrangement Contribution", planned: 18 pixels
  
• 2020 "5% Compliance Exemption": 5 pixels
• Height difference between 125 g/km and 95 g/km bars: 59 pixels

Based on this, Tesla's pooling contribution in 2020 would be worth about (125-95)*18/59 = 9.1 g/km, or about 30.5% of the 30 g/km emissions reduction FCA is targeting in 2020 to be completely penalty free.

If it's accurate that FCA is facing total penalties of €1.7b, which penalty figure I took from @Prunesquallor post from December, then Tesla's penalty reduction benefit is about €518m - which is lower than what we speculated about before. The reason for the discrepancy is probably that we missed the many other tools the EU left open for FCA to game the emissions statistics.

Now we don't know how much of this €518m figure Tesla would be getting - but back in April 2019, when the deal was signed, Tesla also marked ZEV credits as deferred revenue - which they recognized in Q4'2019. This is how they accounted for these supposed FCA credits in Q1'2019:

"Deferred revenue related to sales of automotive regulatory credits was $140.0 million and $0 as of
March 31, 2019 and December 31, 2018, respectively."​

So if the 6 pixels high bar in FCA's 2019 Tesla pooling cost was $140m, then the 2020 bar of 18 pixels would indicate a planned payment of $420m - or about €380m. This would suggest that Tesla gives FCA an about 25% discount on the ZEV credits they are selling in Europe - i.e. they keep about 75% of the penalty reduction benefit.

Note that the 2019 bar is particularly small, and depending on how I measure it might be 7 pixels high, in which case the calculation is 18/7*140 = $360m, or €327m - a 37% discount and a 63% recovery rate for Tesla.

Finally, these estimates also depend on the €1.7b FCA penalties figure being accurate - do we have any other estimates that we could compare it against?

I'll add my detective work to yours.

Using your pixel-to-CO2 conversion, FCA estimates that starting from 125 g/km emission, they can get the following reductions:
1) 8.1 g/km by eco-innovations despite lower diesel-to-petrol mix of vehicle sales
2) 10.2 g/km by selling their own PHEVs and BEVs. Note this will use up all the Super-Credits (if the PHEVs emit <50 g/km)
3) 2.5 g/km by excluding the worst 5% of the polluters (this would correspond to the equivalent of ~150 g/km for those vehicle).

That leaves 9.2 g/km - a penalty of €770 million - to be reduced by pooling with Tesla to reach 95 g/km.
I used a FCA fleet size corresponding to JATO's 919,000 (I may have been in error with my lower estimate - was using Fiat only). My calculations say this would take 85,000 Teslas with a penalty reduction value of €9,000 per Tesla (no Super-Credits).

edit: clarified 1)

 

[sparcs]

Tesla and Panasonic end joint solar cell production

have we heard this before that Tesla is using chinese cells in the solar roof?

Called the Solar Roof, the Tesla product is designed to look like regular black roof tiles. But Panasonic-made cells are believed to have failed to achieve this look while also maintaining the efficiency and cost sought by the U.S. company.

The latest version of the Solar Roof launched last fall uses Chinese cells.

 

[Sudre]

Tesla and Panasonic end joint solar cell production

This article seems to be trying its best to mislead the reader. One example is trying to insinuate there is a problem for Tesla because Panasonic is not getting the right to make Tesla’s cells in China. It is pretty clear to everyone else Tesla is going to use local Chinese manufacturers and I have never heard anything different yet. At battery day we may hear about Tesla’s endeavor to make their own cells.

 

[TheTalkingMule]

I don't think Tesla is going to undertake this for the foreseeable future for the same reason that I don't think they'll license any battery tech for the foreseeable future. Traditional auto has shown itself to be unwilling and slow to change over the past decade. During the Model X unveil Elon still seemed very optimistic that traditional auto would follow in Tesla's footsteps, but I think that has changed. I think it's clear that the fastest way to transition the world to sustainable transportation and energy for Tesla is to do it by itself. I believe Elon realises this.

Therefore, I expect Tesla to be laser focussed for the better part of the 2020s on ramping up their own battery and vehicle production until they're able to produce 10-20M EVs annually, huge amounts of batteries for storage, and a crazy number of solar roofs. Helping traditional auto with their battery and/or software problems will only distract Tesla from this core mission.

Maybe a company other than Tesla will build an operating system for traditional auto, but it's often not the best idea to start a new line of business in a shrinking market. Traditional auto and the software systems they use are currently shrinking markets, and their upcoming financial difficulties means they will not have spare cash to pay high premiums for great software.

It's becoming clear that decisions like these need to be made sooner rather than later, and IMO Elon has zero interest in diving into all that. The mission is too speed transition and that might be better handled on the automotive side by another party.

I'm doubling down on my prediction that the automotive business gets sold off to AAPL and Tesla focuses on Gigafactories, various pack products, and Energy.

 

[JRP3]

This article seems to be trying its best to mislead the reader. One example is trying to insinuate there is a problem for Tesla because Panasonic is not getting the right to make Tesla’s cells in China. It is pretty clear to everyone else Tesla is going to use local Chinese manufacturers and I have never heard anything different yet. At battery day we may hear about Tesla’s endeavor to make their own cells.

This is about solar cells, not battery cells.

 

[JRP3]

have we heard this before that Tesla is using chinese cells in the solar roof?

Some of the bears have been carrying on that Tesla's Solar Roof is made in China. Obviously what's really happening is some of the components are made in China, apparently the solar cells.