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

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OT:

There is no economic case for it. There just isn't. The fuel is more abundant but fuel rod fabrication costs are higher, which offsets it. The waste rods are more hazardous to handle and reprocess (due to the very thing that resists proliferation, U-232 - and its proliferation resistance can be bypassed, turning a proliferation hindrance into a proliferation benefit). You can run it as a breeder, and create less waste, but you can do the exact same thing (only more effectively) with U-238, and we generally don't do that either. Yes, every new thorium reactor design makes all sorts of "we're super economical and safe" argument, but so does every new uranium reactor, and in general, they're all BS in practice.

(These sorts of claims tend to cause nerdy but non-industry-savvy people to glob onto them as the Next Big Thing - you see the same thing as well with various types of "trendy" uranium reactors, like PBMRs)

The simple problem is the very nature of fission. Whatever method you use. Fission creates every isotope on the table lighter than your fissile material (and indirectly, some heavier ones). Most of these are exceedingly toxic, in vanishingly small quantities. But you're simultaneously creating new byproducts with every chemical property in existence in your fuel rods - solids, liquids, gases, things that readily convert between different states, things that corrode various other things (whatever you make your reactor out of, you're also generating its worst enemy), etc. On top of that you're simultaneously bombarding your reactor (solid structures and working fluids) with an intense neutron flux, which is first off changing what it's made out of, via neutron capture, and secondly altering its crystal structure, which not only can severely harm its material properties, but can also store energy inside of it which can be released suddenly (Wigner energy), depending on the material. And you can't just use whatever materials you want to make it, because you also have to take into account how they're going to affect fission inside the reactor.

The economics problem is far worse than the physics and engineering, however. The lead times on reactor construction and necessary operating lifespans are so long that if you get your demand or price forecasts at all wrong, you're totally screwed. Nuclear power has also undergone something extremely rare in industry: a negative learning curve. That is, the more you deploy the tech, the more expensive it gets. In the case of nuclear, it's due to the process of learning all of the things that you didn't forsee that start to affect your reactor with time, and new hazards or costs that you didn't expect previously. The way to overcome this is with new reactor generations, but then with each new generation, you reset your learning curve and have to start over from scratch. And then we come back to the lead-time problem - you've invested countless billions before you discover what you did wrong.

Nuclear power has always had far more support on K-Street than Wall Street. Many of the most expensive structures on Earth are nuclear reactors. The price is mind-boggling - even with government subsidies (like the US indemnifying reactor operators from catastrophic damage liability - no insurer would ever insure them without that). And it doesn't even pair well with renewable power - response times to increase or decrease generation are usually slow, and they have to run at high capacity factor to get even their already-poor economics, while renewables need to pair with generation sources that throttle up and down.

In general, the "you can't fight climate change without nuclear power" advocates' arguments are almost always "argument via incredulity". Aka, of the form "I can't imagine deploying that much renewables power!". Well, sorry, but that just means that your imagination sucks. ;) The simple fact is, you can build more renewable power capacity - paired with peaking, storage, and HVDC for reliability - for much cheaper and faster than you can with nuclear. One's incredulity doesn't change economic reality.

... and that's all I have to say on the topic.
I love the explanation of the negative learning curve. In a nutshell, the more we learn, the more we realize how much more costly it is than we previously imagined. To understand how a learning curve can go negative more generally, it may be helpful to consider the Dunning-Kruger effect.

dunning-kruger-0011.jpg


The global growth of nuclear power generation occurred in the mid-1980s. I would submit that the peak of Mt Stupid was reached around 1980. It was this excess of confidence that emboldened so much growth at the time. But as more was learned, confidence plummeted. And as a consequence the need to build in a lot more safety, redundancy and durability increases the cost faster than what an ordinary learning curve could offset. So the net effect is a negative learning curve as the state of art transitions from the peak of Mt Stupid through the Valley of Despair.

The troublesome thing for combating climate change with nuclear is that the Slope of Enlightenment may be too slow to allow nuclear to compete economically with renewables plus storage which concurrently running their own course down a learning curve. Moreover, there is no certainty that even at the Plateau of Sustainability any nuclear power would be cost competitive. So even if our nuclear engineers were past the Valley of Despair and making steady progress along the Slope of Enlightenment the learning gains may well be too little, too late to have any really impact on climate change. We simply do not have another 70 years to wait for several generations of nuclear engineers to achieve enlightenment.
 
A new video with Sandy Munro has just been released, with new details about the Model 3:


Caption:

"Auto manufacturing expert Sandy Munro, the man behind the Tesla Model 3 teardown, had revealed a new shocking revelation about the profit margins for Tesla Model 3 made in China. Let's talk about it as I take your questions and comments during the LIVE stream!"​

Could anyone who has time to watch the 40 minutes transcribe a few short comments about major new points made?
 
Why would a company sell lower profit models unless they have some capacity left after selling the higher trim?

A liar always assumes folks are telling lies. A politician is always looking for the spin and the populist vote. A banker is always trying to extract the maximum profit. A thief is thinking everyone only wants to steal. A do-gooder thinks that deep down all people are good and want to do right.

So what does it tell about you, if you think that Tesla is following your script rather than the plan the clearly, openly, repeatedly and transparently outlined: Their mission is to advance sustainable transport. Which means bringing as cheap and as great as possible cars to market.

Why is it so hard to take Tesla and their announcements at face-value? Tesla said they will produce the 35k version as early as they can afford it. They didn't say they will only offer the 35k version once they are done selling the higher trims.

Of course Tesla is not stupid and they need the cash. There are ways to steer folks to the higher trims (e.g. by initially limiting the $35k volume, making the higher trims more compelling etc.). We all project way too much. (And we don't know if e.g. a SR+PUP etc. wouldn't be just fine in terms of margin in a cell-constraint scenario etc. etc. etc.)
 
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As we approach whatever Elon is going to announce later today, I can’t stop thinking about Tesla as the first flag bearer of what may be the 21st Century Industrial Revolution in America (and globally).

To many of us out there, we’ve been taught that economic success revolves around oil and gas and that we can’t have a strong economy without it. But now this point of view may not be focused on the root cause. What the principle first mindset might say is it’s not oil and gas, but *energy* that creates a strong economy.

Energy is what is exactly what Tesla does as its business. How to harness it and how to use it for useful purposes, products, and services.

In transitioning to a more effective way of harnessing and using energy — from gas/oil to solar, etc — Tesla is not just bringing new products and services, but at the beginning of a complete economic transition to follow-on products and services that could change global commerce and geopolitics in a significant way.

Much of our life is electronic right now already, we use electrons to run most of significant daily products... and this increase in electricity use will only rise as the globe continues this move in this direction. Thus, transitioning to a way to more efficiently produce those electrons is a necessity. We have essentially reached our capacity to efficiently convert gas/oil to electrons. Something else is required to meet these needs. Solar and energy storage?

It is already proven that energy storage is able to function more efficiently than gas peaker plants. It is already proven that solar cells/panels are becoming cheaper (as well as rises in efficiency) on a seemingly exponential scale over the last decade. Energy storage is also seemingly taking the same trajectory, thanks to gigafactory and Tesla.

Distributed engery increases individual and independent energy producers which not only distributes power production within the communities that will use it, it also provides economic security against rolling brown/black outs, but also national security by decentralizing from a centralized system that could be strategically attacked by hostile actors.

Electric transport, electric heating, electric energy production, personal, commercial, and industrial energy storage... all are just the beginning of the various entrepreneurial opportunities that expand and develop a booming employment environment. As the cost to produce a KWh drops, so to does the cost of good and services, thus a more efficient economy, with much much broader wealth creation across the country.

Thus, the real challenge ahead in such a future, may not be the physical transformation, but a secure software one. And this means from AI, as well as bad actors with the intent of using software for illegal gain and violation of individual human beings rights and liberties.

I find that Elon et al are deeply focused on this issue and I hope they continue to make great efforts here since the architecture of facing such challenges should be dealt with right now. As such, Elon and crew could take the bull by the horns and present a “model” for legislators to work from for the broader “digital security and rights” of each American citizen and hopefully inspire a global move in this direction.

This was exactly charlie munger's rational when investing in BYD. I agree with this whole heartedly but I am dumbfounded on how the hell he picked BYD.
 
OT

Just FYI, if you are trying to make someone who is a vegetarian on moral grounds think twice about their choice, you might as well dress up as the Marlboro Man and exhale smoke into the face of a non-smoker.
Hey, I met the Marlboro Man! He had a ranch about 250km from the family homestead. Nice guy, bad cough though... :oops:
 
He’s back to Elon Musk on Twitter.
Maybe it was all
Took one for the team, clicked hesitantly on a CNBC linked interview with Toni sauganucci. Main points:
-Today’s announcement will be Tesla securing local financing with China.
-no demand
-will have to raise capital
-no way could be product announcement
I'd be very disapointed if the announcement was only 'funding secured' for local financing with China. I mean, we all *expected* local funding to be secured. And Tesla always guided towards local debt financing of the Chinese GF, not capital raise..
 
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A user on SA asked me why did Tesla legal and Musk correct the original 500k tweet if it was correct. I actually wondered the same thing, and I think Tesla legal is now also wondering the same thing. It's a very nuanced issue. I wonder if it was never corrected, whether there would have been any issue. There is clearly a wide range there implied by the CC, from 360-600k. But 10k said 360-400k. If I were Tesla legal, I would have phrased the correction something like this instead:

"While it is possible Tesla will produce anywhere from 360-600k total vehicles, as implied by Mr. Musk's 350-500k M3 production estimate in the CC, our conservative estimate still remains approx 360-400k as stated in the 10k, with the possibility of greater production depending on the timing of the Shanghai factory and other factors as stated previously in the CC."

Regardless, the SEC (and even Tesla) would be in error if either claimed that the 500k was inaccurate, as clearly the CC implies otherwise. The only way that that is not the case is if the CC is not considered material info, which is patently false.

Thoughts? @Fact Checking, anybody?


A lawyer for Mr Musk had confirmed that the first tweet was not pre-approved, as required by the court-approved settlement, the SEC said. It added that the second tweet was only sent after a lawyer noticed the first message and approached Mr Musk to correct it.
 
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A lawyer for Mr Musk had confirmed that the first tweet was not pre-approved, as required by the court-approved settlement, the SEC said. It added that the second tweet was only sent after a lawyer noticed the first message and approached Mr Musk to correct it.
First tweet didn't need approval, SEC case is bogus.

2 PM here in Michigan
 

It's almost like what we've all been saying all along about the "Big manufacturers will just come in and stomp Tesla!" FUD and how it is nonsense....

The Audi EV isn't a Tesla killer.... It's an ICE-powered Audi killer.
The VW EV isn't a Tesla killer.... It's and ICE-powered VW killer.
The Porsche EV isn't a Tesla killer.... It's and ICe-powered Porsche killer.

As long as Tesla makes the best EVs (which so far seems to be the case, as most of the announced 2020 "killers" are benchmarked against 2016 Teslas) , those who want the best EVs will pick Tesla. If someone wants an Audi or a Porsche, they will choose the EV version if it is better. Meanwhile, Audi and Porsche will have to support their vestigial ICE capacity all throughout the transition, making it harder to make the best EV.
 
The new VIN registrations are just bonkers. Almost 7k registered today. Over 300k total now, and almost 110k for Q1, with NA registrations approaching parity with international, at approx 55k each. I ask again, what is the deal with the Musk's internal memo last month, claiming demand issues and borderline Q1 profitability?

Even if they make 6k a week. x12 (minus one week for holidays/retrofit, etc.) gives 72,000. Are they going to average more than 6k a week this quarter. I'm totally confused on this matter. 7k x 13 = 91k. Is it possible that they're doing this already??? Maybe they've reached this higher rate super early and that's why they can now offer standard range M3, which would tie into the announcement today??

Model 3 VINs on Twitter
Model 3 VINs
 
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The phenomenon described in my post last week is occurring again today. Overall money flow per WSJ is -$36M. Block trade money flow, however, is at +$16M.

This is the second or third time this happened in the last week or so.

Some potentially interesting money flow activity on TSLA today that could be regarded as bullish -- caveat emptor.

TSLA is flagged on the WSJ's "Selling on Strength" indicator today, with a total money flow of -$18M. However, block trades alone have a money flow of +$15M. In other words, if I'm interpreting this data correctly, it appears that some large hedge funds or institutional investors may be putting money into the stock while small-to-mid size investors are unloading today.

Money Flows: Selling on Strength - Markets Data Center - WSJ.com

Take this for what it's worth, which is not much, and throw in a dash of salt for good measure. Just an observation I thought worth sharing with the thread.