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

[Fact Checking]

Oh, there's spec advantages from that, too, not just cost reduction.

Weight is the big one, but one thing I'm curious about is the cold temperature performance - would the dry electrode technology eliminate the plating issues with charging lithium ion batteries below freezing? This could greatly improve efficiency in the cold parts of efficiency test cycles, and improve real-world winter range and charging speeds, if that's the case.

The other big benefit of Maxwell's dry cell technology is apparently cell longevity and durability.

 

[Heart Land]

Regarding the March bonds that are about due, wouldn’t the bondholders prefer the stock to be low as the bonds became due? Then they could use the cash from the bonds to buy cheap stock, essentially maximizing their profits on the arbitrage. Is this correct? If it is, then I would not be surprised to see the stock tick lower until the bonds convert to cash then reverse the trend after March 1.

Plus if the China trade deal progresses well, then that would help lift the stock. I’m thinking March could potentially be where we start seeing more positive trends.

Any thoughts?

 

[Dan Detweiler]

Right now we have in EU not a single car company present in the market that will bring a car or plans to before 2021 that can compete with Tesla.

The EQC will most likely only be produced in small amounts, Daimler does not really understand physics and remains in disbelief of BEVs.

Delays may happen to for instance with the VW ID but if it really gets good and that would be a first we may have a decent car in that range and specs available in higher volume around 2022 earliest. At that time Tesla will have likely fully made use of Maxwell capacitor technology propelling the specs on the next level alone again with no competition.....

Hydrogen is and always was a dump idea. I never would put myself on top of a bomb where explosion is only avoided by how this guys build cars and filling stations. Both have been proven not to be their core competence if you just look at all the millions of recalls lately. On top it does not make any sense from energy transfer as well not from a cost perspective. Its obvious since 10 years ... I don't get how you can waste all that money for a dead technology.

P.S. I should add that a large portion of the hydrogen development investment came form the German Government... its easy to fool politicians.

...and where will Tesla be in 2021? Certainly not sitting stagnant that's for sure.

Dan

 

[Reciprocity]

Rivian briefly came back up on CNBC.

Host 1: "Why isn't Tesla going into pickup trucks?! You'd think..."
Host 2: "They're trying! They're trying!"

Ignorance is bliss. Trucks are next of Tesla top down, highest margins to lowest margins assault. And isit working. GM and ford are reacting with investments. This is part of the master plan. Tesla cannot make every vehicle in time. The goal is to accelerate the transition. To accomplish this, Tesla is choking of competors by taking top line margin share and steadily working their way down the scales. From 40% margin cars to 30% then to 25%. This is the only way to force a reaction from competors, nothing else would have worked.

 

[KarenRei]

Ignorance is bliss. Trucks are next of Tesla top down, highest margins to lowest margins assault. And isit working. GM and ford are reacting with investments. This is part of the master plan. Tesla cannot make every vehicle in time. The goal is to accelerate the transition. To accomplish this, Tesla is choking of competors by taking top line margin share and steadily working their way down the scales. From 40% margin cars to 30% then to 25%. This is the only way to force a reaction from competors, nothing else would have worked.

Trucks are hard from an EV perspective because they're so thirsty. You need a very good cell price and very high charging powers to make them appealing. Thankfully, Tesla is getting to this point.

 

[lascavarian]

Weight is the big one, but one thing I'm curious about is the cold temperature performance - would the dry electrode technology eliminate the plating issues with charging lithium ion batteries below freezing?

It will be interesting to watch these improvements unfold. I think there are other ways to improve the cold weather performance like clever use of insulation to minimize or reduce chilling through conductive cooling when driving in frigid environments.

 

[shlokavica22]

Right now we have in EU not a single car company present in the market that will bring a car or plans to before 2021 that can compete with Tesla.

I don't know if people in the EU realize how frightening that reality is.
There is vast ecosystem surrounding the Auto industry.
VW, Daimler, BMW are the top 3 German exporters in general. Germany's Q4 economic results give a taste of what's to come.

All the negative press is not (only) from people hating TSLA- it's mainly from people fighting for their livelihood.

 

[schonelucht]

(I switched the order of sentences a bit to make my answer clearer)

Note the 'anticipated' language, and note how Tesla characterized the notes as recently as the Q3 10-Q:

It's anticipated only because if Tesla stock would exceed the strike on the warrants ($512) then there would still be dilutive effects due to having the dedliver 2.2M + 0.3M shares. But that price was sufficiently high for the company to expect it not be hit. Hence 'anticipated'.

(Tesla also settled all of their past notes prior to November of 2018 in dilutive shares where they had the option to do so. Every single one. So market expectation was for them to do so with the 2019 convertibles as well, if the stock price is high enough.)

Yes, because the stock price rose above the warrant limit ($180) set for that convertible.

But plans change and if the following source is accurate Tesla did actually plan to settle 50% of the $920m of shares in stock, the rest in cash:

"Tesla Inc. has notified holders of bonds due in March that if they elect to convert the debt, they’ll be paid with a 50-50 mix of cash and stock, according to a copy of the settlement notice seen by Bloomberg News.

The notice, dated Nov. 30, relates to the $920 million convertible bond due at the beginning of March."​

Settling half of $920m of debt in shares is obviously dilutive to the tune of about $460m, regardless of the hedges, which only offset the dilution caused by the increase beyond $360.[/QUOTE]

No, because Tesla has options to buy those shares in the first place from option sellers which was its intent all along.

 

[Lessmog]

Well.....

By a molar-percentage, humans are 62% hydrogen (by a mass perspective, only 10%), and by far, most hydrogen in the universe comes from Big Bang nucleosynthesis, not stellar fusion reactions. That doesn't mean that our hydrogen has never been in a star - most of it has surely passed through multiple stars - but little** of it was "born" in a star.

** Some hydrogen is produced in stars (although the original source is other hydrogen) - for example, via 3He + 3He -> 2 p + 4He (3He comes from D-p fusion). But that's a significant minority of the hydrogen in the universe.

OT
Oh hi. I see others have already responded, but I want to point out that *all of the rest* -- i e non-hydrogen -- contents of humans is indeed "star dust", in that all of the heavier elements have their origin in stellar (or at least similar) nuclear reactions. Except for the artificial, really heavy elements above ~#100 or so.

And besides, if my molars had that much hydrogen in them they would probably be brittle and my speech would be even funnier.

 

[ls7corvete]

There was definitely a change in management strategy between mid17 & mid18, but I see no evidence that this involved a slowing in growth plans.

The change was much more focus on capital efficiency:

• Model Y capex is now expected at 25-50% of Model 3 per unit.
• Model Y is now expected to be built at GF1 rather than building a new US GF4 in the East.
  
• Model 3 stage 1 equipment for 5k/week in Fremont is now being pushed to 7k/week rather than buying stage 2 equipment to get to 10k. This capital is now being spent to get China to 3k/week instead, where there is a far higher return on investment due to the tariffs.
• After suppliers messed up with some of the Model 3/battery pack lines, Tesla is now building all production lines in house.
• Service centre expansion has shifted into the less capital intensive roll out of Service cars.
• Supercharger rollout is being slowed until the V3 launch, which Elon says will have both lower opex and capex.
• Taking difficult decisions on staff cuts to redeploy headcount to where it is most productive.

The motive for this new strategy was partly lessons and improvements learnt from Model 3. It was also due to the need to focus on cost because Model 3 cost more than initially planned and negative cash flow lasted longer than expected.

I think it was also driven by extreme exhaustion with the short seller/fossil fuel/ICE OEM relentless propaganda and defamation campaign, and the realisation this was deterring customers and slowing down the clean energy transition. Reaching continuous profitability and positive cash flow and removing exposure to the capital markets, takes away a powerful tool in the propaganda campaign and as result the TSLAQ ranks have already started collapsing.

Relative to my expectations 2 years ago, China GF3 seems about 1-2 years ahead of plan (and is now 100% owned rather than 50%), Model Y seems on track, and Pickup looks like it could also be 1-2 years ahead. For the European factory I had no idea then when it would be built, and I still don't now.

Excellent summary, only one thing I would add. The china/usa relations have changed in the past two years as well. We can hardly blame TSLA for not foreseeing that. I think a lot of the changes you mentioned can be attributed as a reaction to that, the correct one IMHO.

 

[Fact Checking]

There's virtually nobody who wouldn't put up with some extra weight (and a slightly thicker floor) in order to get nearly double the range and nearly half the 0-60 time and double the charge power and nearly double the pack lifespan.

Careful: doubling the battery pack will only double acceleration if the pack is significantly lower mass than the rest of the car.

But that's not the case most of the time, for example a P100D Model S already weighs around ~2 tons, with the battery pack weighing almost ~1 ton.

If the doubling of the battery pack increases mass from 2 tons to 3 tons and ~doubles power, then acceleration will only improve from 1/2 to 2/3, which is a +33% increase in acceleration - not resulting in "nearly half the 0-60 time", but improving it from around 2.4 seconds to 1.9 seconds, i.e. to 75% of the old 0-60 time.

 

[KarenRei]

Careful: doubling the battery pack will only double acceleration if the pack is significantly lower mass than the rest of the car.

Hence the word "nearly" used several times in my post

Model 3 LR P3D = 1847kg. Plus payload (driver, etc) ~= 1920kg. Battery pack = 478kg. Doubled = 956kg. But not really, because as Musk points out, overhead doesn't rise at the same rate as cell mass, it's significantly less. More like 800-850kg or so for a double-size pack. So 1920kg vs. <2242-2292kg. 17-19% more weight. Call it a flat 20% after adding more drive unit power (~80kg). And from that you get:

• Double the power, and nearly half the 0-60 (~60% as much)
• Double the max charge rate (kW), and nearly twice as many miles per minute spent charging (efficiency reduced by added weight, so in practice, 80+% more)
• Nearly half the number of cycles per unit distance (aka, nearly double the longevity) (due to the efficiency reduction, ~55% as many cycles per unit distance)
• Nearly double the range (due to the efficiency reduction, 80+% more).

Who would turn down that tradeoff?

 

[dhrivnak]

VW no longer seems to be as bullish on hydrogen (they used to be hardcore hydrogen bulls). Toyota and Honda keep dreaming of a hydrogen future, however.

The last thing VW did with hydrogen was a weird crossover where they made an EV charger powered by hydrogen :Þ

"Designed for supermarkets, sports venues and stadiums, CH2ARGE systems would be supplied with hydrogen by tankers, in much the same way petrol and diesel is distributed now. The tank contained within each unit could provide up to 140 charges before needing to be refilled."

This concept could be used by doctors as a reflex test for EV owners. "Good, you facepalmed - your reflexes are fine!"

Actually I think this could make sense. Produce hydrogen when you have excess solar and wind power and use the hydrogen to fill cars during peak times when the grid is strained.

 

[dc_h]

Thanks

(Nor would Elon read her feed and like some of her tweets if he thought she was a paid shill or dishonest reporter - though I'm sure he's not always pleased with what she writes.)

View attachment 377270​

But if you want Dana to hate Tesla, troll her all the time and give her grief even when she writes positive articles. It’s a tough gig. When she was at Mercury I thought she was more balanced. Bloomberg pushes all the authors for BIG stories and all good here today doesn’t sell anywhere.

 

[elasalle]

How do you evaluate Elon Musks statement on the 2017Q2 conf call that there is zero doubt they'll produce 10k/week Model 3 in 2018?

How about, we can get to 10K, but need capex, so better to stick to 7K.
Also, China deal progressed faster than expected ..

 

[Fact Checking]

No, because Tesla has options to buy those shares in the first place from option sellers which was its intent all along.

Only if you ignore absolutely every piece of evidence I cited:

• The SEC filing where Tesla registered 2.55 million new dilutive shares,
• the 10-Q wording where Tesla carefully only characterizes the notes as non-dilutive with an "if settled in cash" qualifier,
• Tesla's track record of settling previous convertible notes in new shares, not in shares repurchased from the float. How do you think Tesla diluted from 125 million common shares 6 years ago to the 171 million shares today?
• the Bloomberg report I cited, which reported that Tesla notified note holders to settle 50% of the notes in shares if possible.

You are also ignoring plain logic: what's the point of paying cash to hedge writers who buy stock from it (plus cash for the amount above $360), which stock is then given to note holders who, most of them being bond traders, will sell the shares for cash in about 10-20 milliseconds after receiving them? Why not settle in cash which they have the option to do, which avoids the transaction costs of physical delivery?

Settling in shares mainly makes sense if Tesla distributes the new, dilutive shares they registered with the SEC on the first page of their hundreds of pages long filing ...

Really, you are clearly out of your element here, yet you keep arguing against all the evidence, historic track record and logic. Why?

 

[Sean Wagner]

Actually I think this could make sense. Produce hydrogen when you have excess solar and wind power and use the hydrogen to fill cars during peak times when the grid is strained.

There's a concept in northern Germany set to do that by next year, albeit with a twist: the hydrogen will be pumped into a natural gas pipeline. It seems this is reasonable up to a certain percentage.

 

[elasalle]

Thanks

(Nor would Elon read her feed and like some of her tweets if he thought she was a paid shill or dishonest reporter - though I'm sure he's not always pleased with what she writes.)

View attachment 377270​

Rare Net Positive Week For Tesla Media Coverage, But ... (#Pravduh About #Tesla Report 23) | CleanTechnica

[/QUOTE]

 

[Drax7]

How do you evaluate Elon Musks statement on the 2017Q2 conf call that there is zero doubt they'll produce 10k/week Model 3 in 2018?

Comic books and video games .

 

[dc_h]

How do you evaluate Elon Musks statement on the 2017Q2 conf call that there is zero doubt they'll produce 10k/week Model 3 in 2018?

This was his over optimistic view of model 3 automation. It was later they built the tent and reduced automation to move forward. Now they seem to be on track to slowly add the original automation back online.
The delay in 3, which was delayed from the accelerated plan, created a lot of volatility in the stock and for Tesla. I think Elon is trying to avoid that going forward.
Solar city obviously plays a role in mission distraction and drawing in the shorts who lobbied to cut off capaital for Tesla. TBD, but this may have made Tesla much better moving forward. Capital discipline and nondilutive growth at 75%, I can wait for stock appreciation a long time when I see that.