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

[hacer]

... Right now a US company is already at a disadvantage when trying to sell their cars in Europe(10% tax) vs a European company selling their cars here (2.5% tax). The playing field should be even and fair. If Trump could actually pressure Europe into a fair 2.5% tax(even a 5% tax would be better) by threatening tariffs, ....

Nearly 2/3 of the U.S.new vehicle market is trucks and large SUVs. These vehicles, when imported to the U.S. are subject to 25% tariff and have been for decades. Only about 1/3 of our new vehicle market is subject to the low 2.5% tariff. Europe charges 10% regardless, but their car market is a much larger fraction of their total vehicle market. If Europe were to levy a 25% tariff on cars, and charge 2.5% on trucks and large SUVs that would be something like parity with the U.S.

Be careful what you ask for.

 

[Thekiwi]

One thing to remember is that the MR+PUP at $41,900 price point is only $2k-$3k above what you would expect to pay for a SR+PUP ($39k-$40k).

If the PUP upgrade is considered a $5K option - then the MR is effectively at $36,900 already, if it was available without PUP. (Im aware that it might not be profitable yet at that price)

Its not outside the bounds of reality that the MR may infact become the $35k Model 3

 

[Artful Dodger]

Let's return to the meat of the subject (ahem!) of Tesla's dry electrode technology acquisition, what it might do for Tesla products/production, and when it might do it.

First, let's examine potential performance improvements with this cell as a product:

• gravimetric energy density improves 50%
  • spec increases from 265 wh/kg to 400 wh/kg (400/265=1.50)
  • 2nd gen. path to > 500wh/kg implies => 100% improvement
• 1st generation of packs in this family could be up to:
  • 50% lighter/cheaper with the same range (Model 3SR?)
    
  • 50% higher range/performance at the same weight/price (MS VLR?)
  • gains fully realized after re-engineering the pack to match the cell
• reduced portion of strategic minerals (ie: cobalt) further reduces costs
• 2x cycle life increase implies half the heat (c.f. Coulombic eff.) allowing:
  • simpler/cheaper cooling systems in vehicles
    
  • faster supercharging allowable w/o shortening lifespan
• doublling cycle life further widens the potential product mix for these packs:
  • enables the $25K Car (smaller pack in high-duty service, ie: half-size bty but full speed charging+full life-time)
    
  • for high-end products, the million-mile Model 3 LR and Semi becomes a reality, potentially including refreshed Model S/X (AC mtrs replaced with SRPM mtrs)

Next, let's examine potential manufacturing improvements with the new cell:

• gains are implemented primarily as a production process enhancement:
  • minimal interuption of production during upgrades:
    • modular - only 1 of 7 steps is affected
      
    • incremental - one production line at a time can be upgraded
  • reclaims significant production space/increase production density
  • significantly decrease energy costs (drying ovens eliminated)
  • significantly reduce costs of environmental protection (solvent recycling)
  • faster production due to shortening time-consuming step
• lower use of raw materials increases supply chain efficiency at all levels
  
• lower unit weight reduces unit shipping costs/allows increased volume to Fremont

Finally let's speculate about possible timelines** for these benefits to come online: (then add a quarter or two to see the effects on FCF/GM/Profits/TSLA SP)

• 2019Q2 - Telsa completes aquisition of Maxwell Technologies
• 2019Q3 - pilot bty cell production line goes online at GF1/Sparks
  
• 2019Q4 - pilot production begins for Tesla Semi at GF1/Sparks
• 2020H1 - beta/field testing of Tesla Semi/Megacharger
• 2020Q3 - conversion of existing cell production lines begins at GF1
• 2020Q4 - Semi production begins at GF1 with new cells
• 2021H1 - Existing products using 2170 format convert to new cells

Personally, I consider this timeline conservative. It may be possible to combine steps, or perform steps concurrently. The technical + production benefits seem obvious, though the above list may not be exhaustive. Your thoughts?

Cheers to the Longs!

** possible timeline above is my pure speculation. I have zero insider knowledge of Telsa products and/or production plans, just an interested shareholder.

 

[gringotuanis]

Sooooo, standard range removed from the website. Announcement coming?

https://electrek.co/2019/02/18/tesla-standard-model-3-battery-website-fans-panic/

I am wondering this as well. Any thoughts ppl?

 

[RobStark]

I’m sure he meant “easy” as “comparatively speaking”. Why do you think so many investors invest in MANY different companies. They assume most will fail and only need one or two hits.

Venture Capitalist expect many companies they invest into to fail.

Investors who invest in S&P 500 companies don't expect many companies they invest into to fail. They bail way before then if they see trouble in the horizon.

Amazon is not a VC. Amazon is not investing into 20 EV startups hoping 2-3 are purchased by a legacy OEM and one really takes off to become an established OEM itself. Thereby garnering a handsome profit despite 16-17 failures.

 

[VValleyEV]

Just now:
Tesla: Overvalued After Q4 Earnings Announcement - Tesla, Inc. (NASDAQ:TSLA) | Seeking Alpha

1. Is there a basis for the claim here that the Q4 ER was “mostly negative”?
2. Is there a basis for the claim here that SP is currently at a $50 premium, overvalued by 17%?

 

[MarcusMaximus]

One thing to remember is that the MR+PUP at $41,900 price point is only $2k-$3k above what you would expect to pay for a SR+PUP ($39k-$40k).

If the PUP upgrade is considered a $5K option - then the MR is effectively at $36,900 already, if it was available without PUP. (Im aware that it might not be profitable yet at that price)

Its not outside the bounds of reality that the MR may infact become the $35k Model 3

Or they just charge $36,900 for it and call it good enough accounting for inflation.

 

[Foghat]

Let's return to the meat of the subject (ahem!) of Tesla's dry electrode technology acquisition, what it might do for Tesla products/production, and when it might do it.

First, let's examine potential performance improvements with this cell as a product:

• gravimetric energy density improves 50%
  • spec increases from 265 wh/kg to 400 wh/kg (400/265=1.50)
  • 2nd gen. path to > 500wh/kg implies => 100% improvement
• 1st generation of packs in this family could be up to:
  • 50% lighter/cheaper with the same range (Model 3SR?)
    
  • 50% higher range/performance at the same weight/price (MS VLR?)
  • gains fully realized after re-engineering the pack to match the cell
• reduced portion of strategic minerals (ie: cobalt) further reduces costs
• 2x cycle life increase implies half the heat (c.f. Coulombic eff.) allowing:
  • simpler/cheaper cooling systems in vehicles
    
  • faster supercharging allowable w/o shortening lifespan
• doublling cycle life further widens the potential product mix for these packs:
  • enables the $25K Car (smaller pack in high-duty service, ie: half-size bty but full speed charging+full life-time)
    
  • for high-end products, the million-mile Model 3 LR and Semi becomes a reality, potentially including refreshed Model S/X (AC mtrs replaced with SRPM mtrs)

Next, let's examine potential manufacturing improvements with the new cell:

• gains are implemented primarily as a production process enhancement:
  • minimal interuption of production during upgrades:
    • modular - only 1 of 7 steps is affected
      
    • incremental - one production line at a time can be upgraded
  • reclaims significant production space/increase production density
  • significantly decrease energy costs (drying ovens eliminated)
  • significantly reduce costs of environmental protection (solvent recycling)
  • faster production due to shortening time-consuming step
• lower use of raw materials increases supply chain efficiency at all levels
  
• lower unit weight reduces unit shipping costs/allows increased volume to Fremont

Finally let's speculate about possible timelines** for these benefits to come online: (then add a quarter or two to see the effects on FCF/GM/Profits/TSLA SP)

• 2019Q2 - Telsa completes aquisition of Maxwell Technologies
• 2019Q3 - pilot bty cell production line goes online at GF1/Sparks
  
• 2019Q4 - pilot production begins for Tesla Semi at GF1/Sparks
• 2020H1 - beta/field testing of Tesla Semi/Megacharger
• 2020Q3 - conversion of existing cell production lines begins at GF1
• 2020Q4 - Semi production begins at GF1 with new cells
• 2021H1 - Existing products using 2170 format convert to new cells

Personally, I consider this timeline conservative. It may be possible to combine steps, or perform steps concurrently. The technical + production benefits seem obvious, though the above list may not be exhaustive. Your thoughts?

Cheers to the Longs!

** possible timeline above is my pure speculation. I have zero insider knowledge of Telsa products and/or production plans, just an interested shareholder.

Again, just more evidence we are only just getting started down the path of EV transport tech. Imagine where we’ll be in 10 years... these are the boons of a culture of innovation.

 

[Fact Checking]

Its not outside the bounds of reality that the MR may infact become the $35k Model 3

Tesla is building a new "Grohmann machine" battery pack assembly line at the Nevada Gigafactory the size of a football field. This new, large assembly line is assumed to be making the lighter, cheaper, faster to assemble Standard Range battery pack.

So Standard Range is not going be replaced by Medium Range, unless you think Tesla is throwing away all that capex.

I believe there are more benign explanations as well for the website changes:

Other explanations:

• They had SR "coming in 3-6 months" for the past 6 months, which was pretty stupid.
• That message was creating an unnecessary Osborne Effect against their own current offers: why remind customers who are thinking about ordering LR and MR, that a 20% less expensive configuration would be available "real soon"? It was an anti-selling force.
• Tesla has no obligation to announce their future plans. (And then get flak when they are missing their self-imposed deadlines or are changing their plans.)
• If European orders increase (and there's no tariff war) then meaningful quantities of SR might be delayed further: they should prioritize higher ASP configurations.

So I'm glad it's gone.

But it's not out of question that Standard Range will be announced soon, when Elon originally announced the Medium Range battery pack he mentioned February 2019 as the introduction date:

Elon Musk on Twitter

"It’s a long range battery with fewer cells. Non-cell portion of the pack is disproportionately high, but we can get it done now instead of ~February"​

And it's "~February" now.

OTOH as recently as January 30 Elon updated their "~February" timeline to "middle of 2019":

Emmanuel Rosner:

"First, I wanted to ask you about the short-range Model 3. What are your latest thoughts in terms of timing of introduction? I think at some point, you had in mind to do it in the - maybe the first half of this year. And just to clarify, when you're sort of talking about the outlook for 2019, the number of deliveries up 50% and then the margin target for Model 3 to get to 25%, does that assume that you're introducing a lower range, the short-range Model 3 at some point during the year?"

Elon Musk:

"Well, you could call it the standard range, but it's maybe short by Tesla's standards, but it's long range by other manufacturers' standards. So - but yes, we expect to introduce the standard range Model 3 sometime - probably the middle of this year is a rough, rough guess. And we're working hard to improve our costs of production, our overhead costs, our fixed costs, just costs in general. I think this past year, while extremely difficult, has driven us to a high level of financial discipline. I think we're way smarter about how we spend money, and we're getting better with each passing week. Yes."
​

Maybe those plans have changed again.

Some other possibilities:

• They might be introducing the new battery pack at a lower price point due to the lower assembly and cell costs, but with the same "Medium Range" rating.
• They could improve SR margins via bundling: for example unbundle Premium Interior but add AWD initially. This would allow a rough introductory price of $39,000, with the $35,000 version introduced later in the summer.

 

[Carl Raymond]

Let's return to the meat of the subject (ahem!) of Tesla's dry electrode technology acquisition, what it might do for Tesla products/production, and when it might do it.

First, let's examine potential performance improvements with this cell as a product:

• gravimetric energy density improves 50%
  • spec increases from 265 wh/kg to 400 wh/kg (400/265=1.50)
  • 2nd gen. path to > 500wh/kg implies => 100% improvement
• 1st generation of packs in this family could be up to:
  • 50% lighter/cheaper with the same range (Model 3SR?)
    
  • 50% higher range/performance at the same weight/price (MS VLR?)
  • gains fully realized after re-engineering the pack to match the cell
• reduced portion of strategic minerals (ie: cobalt) further reduces costs
• 2x cycle life increase implies half the heat (c.f. Coulombic eff.) allowing:
  • simpler/cheaper cooling systems in vehicles
    
  • faster supercharging allowable w/o shortening lifespan
• doublling cycle life further widens the potential product mix for these packs:
  • enables the $25K Car (smaller pack in high-duty service, ie: half-size bty but full speed charging+full life-time)
    
  • for high-end products, the million-mile Model 3 LR and Semi becomes a reality, potentially including refreshed Model S/X (AC mtrs replaced with SRPM mtrs)

Next, let's examine potential manufacturing improvements with the new cell:

• gains are implemented primarily as a production process enhancement:
  • minimal interuption of production during upgrades:
    • modular - only 1 of 7 steps is affected
      
    • incremental - one production line at a time can be upgraded
  • reclaims significant production space/increase production density
  • significantly decrease energy costs (drying ovens eliminated)
  • significantly reduce costs of environmental protection (solvent recycling)
  • faster production due to shortening time-consuming step
• lower use of raw materials increases supply chain efficiency at all levels
  
• lower unit weight reduces unit shipping costs/allows increased volume to Fremont

Finally let's speculate about possible timelines** for these benefits to come online: (then add a quarter or two to see the effects on FCF/GM/Profits/TSLA SP)

• 2019Q2 - Telsa completes aquisition of Maxwell Technologies
• 2019Q3 - pilot bty cell production line goes online at GF1/Sparks
  
• 2019Q4 - pilot production begins for Tesla Semi at GF1/Sparks
• 2020H1 - beta/field testing of Tesla Semi/Megacharger
• 2020Q3 - conversion of existing cell production lines begins at GF1
• 2020Q4 - Semi production begins at GF1 with new cells
• 2021H1 - Existing products using 2170 format convert to new cells

Personally, I consider this timeline conservative. It may be possible to combine steps, or perform steps concurrently. The technical + production benefits seem obvious, though the above list may not be exhaustive. Your thoughts?

Cheers to the Longs!

** possible timeline above is my pure speculation. I have zero insider knowledge of Telsa products and/or production plans, just an interested shareholder.

Incremental?

I can see how cell production could be incrementally switched over, line at a time. But what about products? You can’t have half the model 3 output on one cell and half on another. I’m assuming the car is tuned for a given mass of pack.

Or could mass be added some other way? Or could one model cope with both light and heavy packs? I mean, cars do cope with one to five occupants. Just thinking out loud here...

 

[Fact Checking]

Or they just charge $36,900 for it and call it good enough accounting for inflation.

BTW., median car prices are growing in the U.S. beyond the rate of inflation - but indeed, $35,000 dollars in 2016 are worth almost $37,000 in 2019:

$35,000 in 2016 → 2019 | Inflation Calculator

"$35,000 in 2016 → $36,706 in 2019"​

But Tesla should continue to drop prices, because that increases the addressable market. As long as they can maintain their 20%-25% gross margin target they should continue their march to lower prices - $30k base price might not be impossible, with EAP bundled into a $35k package.

 

[CaliBear1]

Simply cannot have enough Monty Python!

So the market is closed; I think I'll just stop by and give a quick look-see to what's going on in the TMC threa....

 

[Carl Raymond]

Tesla is building a new "Grohmann machine" battery pack assembly line at the Nevada Gigafactory the size of a football field. This new, large assembly line is assumed to be making the lighter, cheaper, faster to assemble Standard Range battery pack.

So Standard Range is not going be replaced by Medium Range, unless you think Tesla is throwing away all that capex.

I believe there are more benign explanations as well for the website changes:



But it's not out of question that Standard Range will be announced soon, when Elon originally announced the Medium Range battery pack he mentioned February 2019 as the introduction date:

Elon Musk on Twitter

"It’s a long range battery with fewer cells. Non-cell portion of the pack is disproportionately high, but we can get it done now instead of ~February"​

And it's "~February" now.

OTOH as recently as January 30 Elon updated their "~February" timeline to "middle of 2019":

Emmanuel Rosner:

"First, I wanted to ask you about the short-range Model 3. What are your latest thoughts in terms of timing of introduction? I think at some point, you had in mind to do it in the - maybe the first half of this year. And just to clarify, when you're sort of talking about the outlook for 2019, the number of deliveries up 50% and then the margin target for Model 3 to get to 25%, does that assume that you're introducing a lower range, the short-range Model 3 at some point during the year?"

Elon Musk:

"Well, you could call it the standard range, but it's maybe short by Tesla's standards, but it's long range by other manufacturers' standards. So - but yes, we expect to introduce the standard range Model 3 sometime - probably the middle of this year is a rough, rough guess. And we're working hard to improve our costs of production, our overhead costs, our fixed costs, just costs in general. I think this past year, while extremely difficult, has driven us to a high level of financial discipline. I think we're way smarter about how we spend money, and we're getting better with each passing week. Yes."
​

Maybe those plans have changed again.

Some other possibilities:

• They might be introducing the new battery pack at a lower price point due to the lower assembly and cell costs, but with the same "Medium Range" rating.
• They could improve SR margins via bundling: for example unbundle Premium Interior but add AWD initially. This would allow a rough introductory price of $39,000, with the $35,000 version introduced later in the summer.

Hmm. Will there be *any* people on that football field? My guess is, no.
$35K Tesla secured.

 

[Sweft]

Apparently the shorts have found a lot of M3 inventory in excess of 11,000:
Jake F on Twitter

Anyone able to dispel what they are saying? I don't know web-based coding that the guy is using

 

[mblakele]

Incremental?

I can see how cell production could be incrementally switched over, line at a time. But what about products? You can’t have half the model 3 output on one cell and half on another. I’m assuming the car is tuned for a given mass of pack.

Or could mass be added some other way? Or could one model cope with both light and heavy packs? I mean, cars do cope with one to five occupants. Just thinking out loud here...

Yeah, sounds like the difference would be roughly 100-kg, equivalent to an adult passenger. However they might have to crash-test with the new pack.

 

[anthonyj]

If Elon said February, that means 80% chance of not happening in February, and that’s being incredibly generous. Not hating on Elon

Apparently the shorts have found a lot of M3 inventory in excess of 11,000:
Jake F on Twitter

Anyone able to dispel what they are saying? I don't know web-based coding that the guy is using

Basically bankrupt

 

[Artful Dodger]

Incremental?

I can see how cell production could be incrementally switched over, line at a time. But what about products? You can’t have half the model 3 output on one cell and half on another. I’m assuming the car is tuned for a given mass of pack.

Or could mass be added some other way? Or could one model cope with both light and heavy packs? I mean, cars do cope with one to five occupants. Just thinking out loud here...

There are 13 Panasonic bty cell lines currently at GF1/Sparks. 1 has recently been reassigned for Telsa Energy products (NMC chemistry). That's one increment.

Let's say that Tesla Semi pilot production starts in 2019Q4, and they convert one more line for the purpose. How many Semi's does that cell output support? Well, current lines (not the newer upgraded ones) produce about 200K cells/day. So 18wh * 1.5 *200K is about 5,400 kwh per day production of Gen 1 "Maxcells" .

That's enough battery cells for about 9 Semi's (300 mile range) per day, or 750 Semi's in the first quarter (P.S. check my math). So they're going to need more lines as they ramp Semi production, but that's just more increments. while doing QC and product testing in the mean time.

Then bring the Model Y online in 2020H2 since it'll be lower volume in rampup mode at the beginning. And since the 2170 form factor is retained, it'll be largely plug'n'play. Finally the Model 3, but it'll be a non-event by then. Just more incremental cell line conversions, old hat by then.

I also suspect GF3/Shanghai gets its own "Maxcell" lines by 2022 and Telsa stops needing cells from outside suppliers. Gross margins go up, $25K car enabled in 3 years.

Cheers!

 

[PhaseWhite]

Apparently the shorts have found a lot of M3 inventory in excess of 11,000:
Jake F on Twitter

Anyone able to dispel what they are saying? I don't know web-based coding that the guy is using

There's also a thread here where someone posted some data trying to be helpful. By my count there's 7250
Unsold Model 3 sitting in lot awaiting buyers?

Rather than some sort of conspiracy I think Tesla has just realized that having inventory on hand increases sales opportunities. There are people who will do a test drive and want to buy the car now vs a custom order.

In the software world we call this a buffer.

 

[anthonyj]

A completely logical explanation would be that there simply isn’t demand for 25,000 model 3s per month in the US. If they were to average 10k/month, that would be extremely impressive. A lot of the demand was pulled forward due to tax credit and people waiting for two years. That’s fine and totally normal.

 

[Carl Raymond]

There are 13 Panasonic bty cell lines currently at GF1/Sparks. 1 has recently been reassigned for Telsa Energy products (NMC chemistry). That's one increment.

Let's say that Tesla Semi pilot production starts in 2019Q4, and they convert one more line for the purpose. How many Semi's does that cell output support? Well, current lines (not the newer upgraded ones) produce about 200K cells/day. So 18wh * 1.5 *200K is about 5,400 kwh per day production of Gen 1 "Maxcells" .

That's enough battery cells for about 9 Semi's (300 mile range) per day, or 750 Semi's in the first quarter (P.S. check my math). So they're going to need more lines as they ramp Semi production, but that's just more increments. while doing QC and product testing in the mean time.

Then bring the Model Y online in 2020H2 since it'll be lower volume in rampup mode at the beginning. And since the 2170 form factor is retained, it'll be largely plug'n'play. Finally the Model 3, but it'll be a non-event by then. Just more incremental cell line conversions, old hat by then.

I also suspect GF3/Shanghai gets its own "Maxcell" lines by 2022 and Telsa stops needing cells from outside suppliers. Gross margins go up, $25K car enabled in 3 years.

Cheers!

Gave that top rating because it avoids the Osborne problem. The Y needs to be priced high enough to keep the 3 lines maxed.