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Tesla, TSLA & the Investment World: the Perpetual Investors' Roundtable
- Thread starter AudubonB
- Start date
I posted on my reasons for suspecting a switch to 2170 a few weeks ago, a few updates to this below:
- In November 2018 Panasonic reported it aims for 35Gwh/year production run rate at GF1 by March 2019. 7k Model 3s per week needs c.22-24GWh assuming SR model launch. Storage requires 2-4GWh depending on ramp and additional supply from Samsung. This leaves 7GWh to 11GWh of unaccounted for production at GF1 in just 6 weeks time. 10 GWh hours is enough to move S & X to 2170 at GF1 with a 100KWh average pack size (which could be 70% 90KWh, 30% 120KWh).
- Panasonic aims to move battery production to the US in April 2019 (according to Asian Nikkei Review). This is possibly the media misinterpreting a planned change of corporate and business unit structure, rather than physical production, but I don't see a reason for its Japanese factory to be owned by a US based Panasonic entity.
- Tesla's initial purchase commitment for 18650 cells likely completed late last year.
- The 75Kwh Model S&X has been discontinued and it is very hard to sustain 100k volume without a new product release, even with a significant price cut to the 100KWh pack. It may not be possible to achieve >100KWh with 18650 cells.
- Elon says new S&X models will be named "Long Range" etc, rather than categorised by pack size. This would make sense if new more efficient 2170 packs were launched and a new 90KWh pack outperforms range on the current 100KWh 18650 pack.
- Photo evidence (both on these forums & shorty airforce) suggests Fremont has been operating at very low production levels this week. This would make sense if the S&X line had been shut down for retooling to accommodate a new battery architecture.
- Supercharger version 3 is coming out in early 2019 according to Elon. There's a reasonable chance this charging capability requires some type of upgrade to Model S/X cells/packs.
- New more automated Grohmann module/pack production lines started to be installed at GF1 in Q4 and aim to ramp up in late Q1. If model 3 module/pack production is transferred to these new cheaper more highly automated lines, with some modifications the current semi-automated model 3 lines at GF1 may be used for the new S/X packs at limited capex.
- Panasonic cell production is also constrained by its supply chain, and particularly cathode purchases from Sumitomo. Sumitomo is operating at max capacity and doesn't appear to have yet signed off on new capacity. Therefore if Panasonic moves S/X cell production to GF1, it is likely going to have to divert its cathode supply to GF1 and close down its Japanese line - therefore there may not be any 18650s diverted to competition.
- Moving S/X production to GF1 can increase economies of scale and reduce the cell cost for model 3 production, contributing to profitable release of the base model 3.
- With increased competition for S/X in 2019 from I-Pace/E-tron etc, a battery upgrade with increased range and performance would be helpful to take them another level ahead of the competition.
- Many new concept EV vehicles were just revealed at the Detroit Auto Show. It is a great time for Tesla to announce production has already started of new cars which blow away the specs of competitor cars that are still 2-3 years from production.
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This is very true. I have worked aboard a Ro-Ro (roll on - roll off carrier), and we had a route with about 7 port stops. The ship held roughly 6,000 vehicles with one or two of the 8 or so decks dedicated to heavy equipment. We hauled lots of BMW's back and forth across the Atlantic and many other vehicles back from Europe.The ship did not start in SFO, and nor will it just be stopping once it unloads its Model 3s, and nor can one assume that all vehicles on it are new vehicles going straight from a manufacturer to a distribution depot.
The Glovis Captain's most recent ports of call were Ulsan (South Korea) -> Richmond (Canada) -> Portland (OR) -> San Francisco (CA). Ulsan is the home of one of Hyundai's plants (said to be the largest auto plant in the world). Yes, there could be Konas in there
I also agree with @KarenRei about moving to 2170 being the last thing Tesla would choose to do. In addition to possible reasons she mentioned, a few more reasons I can think of.
- 18650 is not fundamentally worse than 2170; changing cells of a battery pack for such an incremental improvement doesn't make sense.
- 18650 is made in Japan at separate factories, totaling 8GWh. Why concentrate and invest more money into GF1 to do the same thing?
- if Panasonic planned to move to 2170 in Japan, that would mean they have to amortize the equipment completely and invest in a whole new set of assets. Would they do that?
- if Panasonic decided to move production of 2170 to Nevada, what do they do with employees in Japan? Remember they can't fire a single employee in Japanese law.
- 18650 is not fundamentally worse than 2170; changing cells of a battery pack for such an incremental improvement doesn't make sense.
- 18650 is made in Japan at separate factories, totaling 8GWh. Why concentrate and invest more money into GF1 to do the same thing?
- if Panasonic planned to move to 2170 in Japan, that would mean they have to amortize the equipment completely and invest in a whole new set of assets. Would they do that?
- if Panasonic decided to move production of 2170 to Nevada, what do they do with employees in Japan? Remember they can't fire a single employee in Japanese law.
bhtooefr
Active Member
Another thought: could the equipment possibly be adapted to a compromise cell size - for instance, 18700 or 21650? (I'm guessing 18700 is probably more likely to work, whereas 21650 is more likely to fit into the S/X unibody without compromise.)
A few potential answers to these:
- The cost saving across both 3 & S/X may be significant. A new higher performance S/X may not be possible with the 18650 pack design and Elon is going to want to always have the highest performance car available on the market. Supercharge V3 charge rates may not be possible with current pack.
- It is not fully Panasonic's decision. Tesla should have completed its commitment to purchase 18650s by now and if Tesla says they want to stop buying them, Panasonic has to stop selling them.
- Panasonic's equipment was likely depreciated over the length of Tesla's purchase contract. So it may be 100% depreciated already.
I found the American Experience Silicon Valley show to have a lot of parallels to the Tesla story.
"American Experience" Silicon Valley (TV Episode 2013) - IMDb
https://www.amazon.com/American-Experience-Silicon-Valley/dp/B00AK51OFK
"American Experience" Silicon Valley (TV Episode 2013) - IMDb
https://www.amazon.com/American-Experience-Silicon-Valley/dp/B00AK51OFK
Indeed -- Density means precisely density. It is a SEVERE DETERRENT to purchasing a Tesla when the nearest service center is 5 hours drive away, or 8 hours drive away, or 12 hours drive away.
Sales in upstate NY will skyrocket when there's an actual Syracuse service center.
The last time I suggest that this 2170/18650 conversation be branched off into its own thread so that we don't spam this one I got flooded with disagrees and had one person block me.
Dare I make the same suggestion again? :Þ
Dare I make the same suggestion again? :Þ
Sorry about nit picking but if it is 100% depreciated then why it's more cost effective to invest in new equipment?
Hmmm. Tesla, Geely, BYD, BAIC... VW appears serious now... and then there's all the smaller Chinese manufacturers... I don't think it'll take 11 years, though I don't think it'll take 4 years either. 6-7 years?
Cash costs of producing with scale of 35GWh per year on latest generation design is likely significantly lower than producing 8GWh per year and shipping across the ocean on 5 year old technology lines. True, the depreciation expense will be 0 on the old lines and >0 on the new lines, but overall cost should still be a lot lower and should have a good return on investment of new capex. Also, the possible 100% depreciation means no non cash one off write downs to the 18650 lines will be needed. It may also be that the old lines are in need of significant maintenance cost after exceeding their initial designed lifespan.
Tesla has decided that people converting will get half cash and half stock. IIRC, that Feb stock price average is used solely to determine the cash half.
Worth noting that savvy bond investors might convert even if the average February stock price is *below* the conversion price (meaning, it would seem better to take the cash) if they expect the stock price to go up quickly after that. For US taxpayers, the holding period for stock acquired by converting a convertible bond starts on the date the bond was purchased, so you can generate long-term capital gains without holding the stock long-term. The losses on the cash half could be outweighed by the tax-advantaged gains on the stock half.
The S/X pack is fundamentally worse than the 3 pack design. The cell count is worse also, so the materials and labor cost are higher.
GF1 already makes 2170s, GF1 is closer to current S/X manufacturing.
The following two points assume abandoning 18650, which is not necessary.
Because the new equipment makes cells that are more profitable and the old equipment has a finite lifespan. At this point, the equipment should be fully depreciated, shoudn't it?
2170 production in Japan can supply GF3 (and other regionally co-located future GFs)
Buckminster
Well-Known Member
OT
And of course, these perhaps only need to cover a period of time up until the refresh kicks in. Further demand but not sales could come from rotation of what is in stores (are some 75Ds?) plus loaners plus rangers.
What amount will holders who decide not to convert, but merely wait until March 1 to redeem their notes, receive?
Todd Burch
14-Year Member
(Please, no "Brexit Good" / "Brexit Bad" stuff - just news updates that may affect the macros on specific dates)
Tory MP pledges second referendum amendment to May's Brexit plan
It looks like MPs will be forced on 29 Jan. to debate and vote on on an amendment on whether to hold a second Brexit referendum.
Germany and France signal willingness to delay Brexit
Subscribe to read | Financial Times
Will Brussels give the UK more time?
Looks like the EU is ready to grant a delay - unless the delay is just buying time without a plan or an attempt to negotiate on the issue of the Irish backstop, which they consider non-negotiable. They're even considering moving past the once-considered "immobile barrier" of the EU parliamentary elections (if so, the UK would have to take part in the elections and there would be budgetary effects).
Tory MP pledges second referendum amendment to May's Brexit plan
It looks like MPs will be forced on 29 Jan. to debate and vote on on an amendment on whether to hold a second Brexit referendum.
Germany and France signal willingness to delay Brexit
Subscribe to read | Financial Times
Will Brussels give the UK more time?
Looks like the EU is ready to grant a delay - unless the delay is just buying time without a plan or an attempt to negotiate on the issue of the Irish backstop, which they consider non-negotiable. They're even considering moving past the once-considered "immobile barrier" of the EU parliamentary elections (if so, the UK would have to take part in the elections and there would be budgetary effects).
OT
In school, Elon Musk was physically assaulted sufficiently to be hospitalized for two weeks.
Bryanston High School saddened by Elon Musk bullying
The school, as was common at the time, did nothing, and neither did the police. Even Musk's father was horrified and disgusted by the police reaction.
I recognize this: here in the US, I spent three years in a school where I was physically assaulted routinely by a small group of bullies. Luckily, I was in an overcrowded all-indoor school where it was nearly impossible for attackers to hide their actions, so all the attacks on me were "hit and run" -- knock me to the ground, trip me, or throw me against a wall and then run before the *other students* caught them. Thankfully I never needed hospitalization, though I needed bandages a few times. The school authorities (with one honorable exception) and the police refused to do anything. Which was normal at the time in the US as well as in South Africa.
The same school I went to had two rapes of students committed on campus during the three years I was there, by assailants who *had* found places to hide their assaults. The rapes were hushed up and covered up by the school -- I found out by filching the teachers' newsletters.
In fact, standard school authority practice was to punish the VICTIM for self-defense (this, by the way, is what "zero tolerance" means -- it means "punish the victim") -- which led to a district-wide student strike a few years later when the corrupt school district attempted to punish a girl who was the victim of years of race-based harassement and assault. I'm proud of the majority of students of my district for going on strike. The school district authorities belonged in prison, and were never punished for their criminal conspiracy.
This was in Ithaca. Supposedly a "good" school district.
This is bullying. I'm not so angry at the bullies -- sadistic bad people will always exist -- I'm angry at the authorities who didn't treat this as the violent crime spree which it was, and who essentially collaborated with the bullies. Those bullies got the message that they could get away with assaulting innocent people they'd never even met, and get at most a slap on the wrist. It must have been a shock when they turned 18 and their next assault landed them in prison. They should have been in court right after the first or second assault they committed, when they were 10, to learn how the real world worked.
In school, Elon Musk was physically assaulted sufficiently to be hospitalized for two weeks.
Bryanston High School saddened by Elon Musk bullying
The school, as was common at the time, did nothing, and neither did the police. Even Musk's father was horrified and disgusted by the police reaction.
I recognize this: here in the US, I spent three years in a school where I was physically assaulted routinely by a small group of bullies. Luckily, I was in an overcrowded all-indoor school where it was nearly impossible for attackers to hide their actions, so all the attacks on me were "hit and run" -- knock me to the ground, trip me, or throw me against a wall and then run before the *other students* caught them. Thankfully I never needed hospitalization, though I needed bandages a few times. The school authorities (with one honorable exception) and the police refused to do anything. Which was normal at the time in the US as well as in South Africa.
The same school I went to had two rapes of students committed on campus during the three years I was there, by assailants who *had* found places to hide their assaults. The rapes were hushed up and covered up by the school -- I found out by filching the teachers' newsletters.
In fact, standard school authority practice was to punish the VICTIM for self-defense (this, by the way, is what "zero tolerance" means -- it means "punish the victim") -- which led to a district-wide student strike a few years later when the corrupt school district attempted to punish a girl who was the victim of years of race-based harassement and assault. I'm proud of the majority of students of my district for going on strike. The school district authorities belonged in prison, and were never punished for their criminal conspiracy.
This was in Ithaca. Supposedly a "good" school district.
This is bullying. I'm not so angry at the bullies -- sadistic bad people will always exist -- I'm angry at the authorities who didn't treat this as the violent crime spree which it was, and who essentially collaborated with the bullies. Those bullies got the message that they could get away with assaulting innocent people they'd never even met, and get at most a slap on the wrist. It must have been a shock when they turned 18 and their next assault landed them in prison. They should have been in court right after the first or second assault they committed, when they were 10, to learn how the real world worked.
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