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

LN1_Casey

Draco dormiens nunquam titillandus
Supporting Member
Mar 6, 2019
2,059
10,305
Oahu, Hawaii
Nope, it means they are about to raise again. With Fremont closed till June they'll burn through billions. Demand could also drop over next 3-4 Q's leading to a cash crunch

I disagree; I don't think they'll burn through billions, not with everything closed. They're not paying their top execs, others got a pay cut, and a lot of the hourly workers are furloughed--all of which are one of the the largest expenses a company has. Further, the other large expenses are materials, which they're also not getting, since supply lines are cut down and they're not stock piling at this time (that we're aware of).

I don't think they'll do another raise, not so quickly after their last one in February--a mere two months ago.
 

Prunesquallor

His cardinal virtue? An undamaged brain.
Supporting Member
Dec 19, 2018
3,671
41,783
Houston/Galveston
Just to expand on my earlier comments on energy storage batteries:-
Solar, wind and battery storage now cheapest energy options just about everywhere | RenewEconomy



Utility-scale battery (four-hour storage duration) $145-167 per MWh - if this number is based on a 10 year battery lifetime a simple change to a 20 year lifetime halves that cost.

The whole suite of measures that will be introduced by Battery Day is very likely to halve that cost...

If we apply that reduced battery cost, we can see all other forms of electrcity generation and storage are being challenged by RE+batteries:-
Onshore wind plus storage $41-$104
Fixed-axis PV plus storage $44-$129

Lithium-Ion Energy Storage Cost vs. Pumped Hydro Or Flow Battery Cost Are Dependent On Time | CleanTechnica

If we look at this chart the only bad news for Tesla is that Pumped Hydro and perhaps Sulphur flow batteries out complete Tesla batteries on > 4 hours of energy storage...



But again the halving of the cost probably pushes lithium-ion to break even at around 6-8 hours.

In fact CleanTechnica is more bullish:-


Perhaps there is even a virtuous cycle of Wrights Law allowing ithium-ion to keep lowering costs and unlocking more and more of the market as prices fall. CleanTechnicia has reached a similar conclusion.

The good thing is PV and Wind while being the cheapest for of electricity generation need storage and battery storage can do a lot more than just provide storage, for example it can help maintain stable frequency and voltage and reduce the need for transmission line upgrades.

So how big is the opportunity for Tesla in energy storage batteries?

We might get the answer at Battery Day.

I do hope we see more discussion of Tesla financials and market opportunities in here, fewer arguments and less pseudo-political discussion.
Excellent summary. I’ve bookmarked those articles.
You comment about a virtuous cycle points out something to watch for. It appears that renewable/storage is approaching all kinds of cost breakpoints. It reminds me of this article from last year:

Another Texas power plant is mothballed, raising concerns over reserves and prices

"In recent years, however, additional supplies from other sources, particularly wind, have moderated the summer price spikes that made it worth the cost of keeping peaker plants ready to go into operation. Peaker plants now face the growing likelihood that they may never be called upon to produce power, even as they maintain and staff them."
 

Artful Dodger

"Ducimus, lit"
Aug 9, 2018
10,511
142,354
Canada
I saw some people on twitter yesterday showing some screen shots saying there were no more shares available to short. I’m not sure if that changed what they could do yesterday haha
According to FINRA daily reporting, yesterday's "Short Exempt" volume was just 0.66% of all Short volume. This is at the 45th Percentile ranking of Shorts reported since Jan 31, 2020.

This means there was no particular difficulty locating shares for shorting yesterday. MMs (are supposed to) use their Exemption only to provide liquidity, and NOT in support of their own proprietary trading.

If certain Brokers were placing restrictions on potential short sellers, then they're actualy doing that client a solid.

Good Broker. :cool:
 
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ZachF

Banned
Mar 31, 2016
2,269
25,243
Park City, UT
Excellent summary. I’ve bookmarked those articles.
You comment about a virtuous cycle points out something to watch for. It appears that renewable/storage is approaching all kinds of cost breakpoints. It reminds me of this article from last year:

Another Texas power plant is mothballed, raising concerns over reserves and prices

"In recent years, however, additional supplies from other sources, particularly wind, have moderated the summer price spikes that made it worth the cost of keeping peaker plants ready to go into operation. Peaker plants now face the growing likelihood that they may never be called upon to produce power, even as they maintain and staff them."


Batteries are going to replace peaker plants. They are already more economical, and only getting more so as batteries drop in price.

By the late 2020s, IMHO, solar+ storage in the southwest will be able to beat hydro in cost.
 

Artful Dodger

"Ducimus, lit"
Aug 9, 2018
10,511
142,354
Canada
I disagree; I don't think they'll burn through billions, not with everything closed. They're not paying their top execs, others got a pay cut, and a lot of the hourly workers are furloughed--all of which are one of the the largest expenses a company has. Further, the other large expenses are materials, which they're also not getting, since supply lines are cut down and they're not stock piling at this time (that we're aware of).

I don't think they'll do another raise, not so quickly after their last one in February--a mere two months ago.
All true, but you hurt the part where Elon says "pedal to the metal"?

Go for the throat. Sweep the leg. Wax on, wax off.
 
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FrankSG

Active Member
Jun 27, 2019
1,615
21,662
Singapore
Are those $140 million from the deferred credits balance already sold so to speak? In the sense that the value is locked in and can be used no matter what happens with demand?

I'm thinking that would be an easy $140 million for Q2? Or are they valued at $140 million because of likely value when sold? In that case they could be harder to sell in Q2 because fewer ICE cars are sold so the ICE companies wouldn't need as many.

Those are still on the balance sheet. They are proceeds from credits sold to FCA in 2019.

Yes, I believe the Q4'19 10-K also said they would be recognized within the next 12 months. Q2'19 seems as good a time as any. That could mean as much as $500M in revenue from credits sales in Q2, and combined with the temporary halt of stock-based compensation and 10-30% reduction in salaries and furloughs, this is making S&P 500 inclusion after Q2 seem more and more likely.
 

ZachF

Banned
Mar 31, 2016
2,269
25,243
Park City, UT
I disagree; I don't think they'll burn through billions, not with everything closed. They're not paying their top execs, others got a pay cut, and a lot of the hourly workers are furloughed--all of which are one of the the largest expenses a company has. Further, the other large expenses are materials, which they're also not getting, since supply lines are cut down and they're not stock piling at this time (that we're aware of).

I don't think they'll do another raise, not so quickly after their last one in February--a mere two months ago.

I think doing a raise now would actually be pretty prudent. The SP is high, and a successful one, even though it's dilutive could easily increase the SP by reducing uncertainty of harm by a larger percentage than the SP was diluted.. If they don't end up needing the money for COVID related stuff, they'll have a fat stack of cash to get started early on GigaTexas.
 

vikings123

Supporting Member
Supporting Member
May 27, 2019
1,192
8,882
MN
So pre-market seems to be trending downwards, but there’s no way we don’t shoot up after the MMD right? Especially given all the upgrades that are coming in. Although it is TSLA, so you never know....

It does take the market a few days to digest all the awesome things they heard yesterday so keep that in mind. You heard that guy on CNBC basically throw up his hands in the air and say I don't know how to valuate this stock anymore which speaks to the lack of understanding of Tesla's potential.
 

Ellec

Member
May 12, 2018
307
1,640
Uk
I disagree; I don't think they'll burn through billions, not with everything closed. They're not paying their top execs, others got a pay cut, and a lot of the hourly workers are furloughed--all of which are one of the the largest expenses a company has. Further, the other large expenses are materials, which they're also not getting, since supply lines are cut down and they're not stock piling at this time (that we're aware of).

I don't think they'll do another raise, not so quickly after their last one in February--a mere two months ago.

The longer the factory is shut the more cash that's burned, they can make cutbacks but they still need to pay suppliers for all the parts they've used. Accounts payable is $4 billion and $2 billion is tied up in China so even if they burn $1 billion they are very close to the line. Remember companies don't just wait to cash goes to $0 to raise they need to have a decent cushion which is why I think they raise within weeks.
 

Nocturnal

Supporting Member
Supporting Member
Aug 23, 2018
6,874
38,649
Deepening Crisis!
Solar installations were down but I suppose between covid and seasonality that makes sense. I wonder if they have a large backlog of completed and/or sold solar roofs ready to be deployed in Q2/3 in large numbers. It would be great to see a bump in solar or energy make up for Q2 slower auto sales.

Batteries are going to replace peaker plants. They are already more economical, and only getting more so as batteries drop in price.

By the late 2020s, IMHO, solar+ storage in the southwest will be able to beat hydro in cost.
Add wind into that equation too. Here in Kansas we are at 41% wind power now. The great plains could easily power the entire nation on wind alone if scaled and stored properly.

I think doing a raise now would actually be pretty prudent. The SP is high, and a successful one, even though it's dilutive could easily increase the SP by reducing uncertainty of harm by a larger percentage than the SP was diluted.. If they don't end up needing the money for COVID related stuff, they'll have a fat stack of cash to get started early on GigaTexas.
Raise now so that they can begin GigaMidwest (I'm not pulling for TX because they can't even sell cars there) and Giga____ at the same time, to be ready for when the world economy has started to wake back up.
 

Krugerrand

Enough of the 🐩, back to 🐈‍⬛
Jul 13, 2012
11,700
68,308
Tesla friendly place
If Fremont is not open and churning out cars by the bucketload in two weeks (two weeks before the latest Bay Area lock-down ends), I'll eat my words. Trust me, Elon knows EXACTLY what he's doing and he's a master at it. Watch and see.

Question: Will those be real words or replicas of someone else’s words?
 

Right_Said_Fred

Moderator
May 11, 2012
4,099
36,832
The Netherlands
The longer the factory is shut the more cash that's burned, they can make cutbacks but they still need to pay suppliers for all the parts they've used. Accounts payable is $4 billion and $2 billion is tied up in China so even if they burn $1 billion they are very close to the line. Remember companies don't just wait to cash goes to $0 to raise they need to have a decent cushion which is why I think they raise within weeks.

Excuse me if I take your alarmist messages with a grain of salt.

On 23 March (when TSLA had a low of 410) you wrote:

We are in unique times, I think Tesla is a great company, I'm just warning that we won't simply bounce back in 2 weeks as if nothing happened. The Fed is in panic mode trying to keep the market from cratering.

Tesla will be less than $100 by summer. The obvious move is to liquidate now and buy back when things look better.
 

FrankSG

Active Member
Jun 27, 2019
1,615
21,662
Singapore
Nope, it means they are about to raise again. With Fremont closed till June they'll burn through billions. Demand could also drop over next 3-4 Q's leading to a cash crunch

I actually think there'd have to be a prolonged 40-50% reduction in demand for autos on par with the 2008 financial crisis for Tesla to be meaningfully impacted by it:
  • Model Y. Demand for the Model Y is likely on the order of a million vehicles, perhaps more, per year. Even if this somehow dropped to 500k/year due to a recession, there is still no way the MY is going to be impacted whatsoever by demand constraints.
  • Model 3 Shanghai. According to @DaveT most luxury brands sell about twice as many vehicles in China as they do in the US. The M3 sells about 45k per quarter in the US, so that'd be 90k per quarter in China. Early signs for demand in China are also extremely strong, and Tesla has plenty of room in margins to lower prices if necessary. The M3 could be sold for less in China than in the US. Tesla is currently building out capacity for 65k M3 per quarter in China, so assuming there is demand for ~90k per quarter in China, there'd have to be a 30%+ reduction in demand for Tesla to see any type of impact to its China business, and a 40-50% reduction for Tesla to see any meaningful impact.
  • Model 3 Fremont. In the Q1'20 ER, Tesla stated that planned total capacity for 3+Y in Fremont is 500k per year, and that some production processes of the Y are shared with the 3. It sounds like that means the M3 production capacity will be reduced from 350k per year to 250k per year, with perhaps further flexibility if need be. Although this 350k/year used to include China, Tesla was also supply constrained. If these two more or less even each other out, Tesla would have to see a 30%+ reduction in non-China demand for the Model 3 to see any impact to its business. If there's more flexibility to produce MY instead of M3 at Fremont, it's even possible that a 50% reduction in demand would not impact this part of the business.
  • Model S+X. These are the only vehicles that will be significantly impacted by a reduction in demand from a recession. However, S+X now make up such a small portion of Tesla's overall business, that they don't matter all that much in the grand scheme of things.
In conclusion, Tesla is more supply constrained than it's ever been, and this is going to remain unchanged for years to come.
 

Nocturnal

Supporting Member
Supporting Member
Aug 23, 2018
6,874
38,649
Deepening Crisis!
In case anyone needs to hear it, a factory closure for a month or so doesn't cost billions of dollars.
What happens to the FCA credit's when FCA goes bankwrupt?

Good morning all...you folks remind me of a large dysfunctional family.
Except we don't have the awkward seating arrangement's
So who here is the creepy uncle?
 

dl003

Active Member
Nov 22, 2019
1,739
15,910
Texas
Excuse me if I take your alarmist messages with a grain of salt.

On 23 March (when TSLA had a low of 410) you wrote:
giphy.gif
 

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