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

[SPadival]

There are some things money can’t buy.

millennialgirlinamaterialworld on Twitter

 

[Singer3000]

And I say that while I consider train driving to be one of the most soul crushing jobs, a role that should be automated away. But the economic arguments in favor of automating train driving are not overwhelming.

DISAGREE
You have clearly never been beholden to a highly unionised and greedy workforce of train drivers. Total comp for a London tube driver has now surpassed £100k per year. They have achieved this by organising regular strikes every year that shut the city down for 2-3 days at a time, causing untold economic damage. This may not be the same thing as financial cost to the train operator.

 

[defc0n]

Elon is pissed

 

[ZeApelido]

Hai guyz, I don't know why but I have this feeling that Elon hates the WSJ. Just a hunch.

 

[ReflexFunds]

Oh-kay. So they aren't willing to say *which* materials they think there's a shortage of. Nickel's easy to get, there's lots of nickel. Lithium? Cobalt? Graphite?

It's not the actual raw material deposits that are in potential shortage, but the extremely high grade Nickel, Lithium and Cobalt needed for high quality batteries are highly processed through high capex plants which normally take 3-5 years to ramp to capacity. If Panasonic has contracted supply with certain suppliers and the supplier drop the ball on ramping their metals processing plant, Panasonic could very easily be left with a temporary shortage. All three of these processed materials also need to be combined in a cathode manufacturing plant which is another source of potential supply ramp bottlenecks.

No idea if any of these were actually a problem in Q1, but I wouldn't be surprised to see temporary issues due to raw materials every now and then.

In particular, Albermarle is likely Sumitomo/Panasonic/Tesla's key lithium supplier, and they had supply issues in Q1, in part due to heavy rainfall impacting their lithium brine evaporation ponds.

"CHARLOTTE, N.C., March 28, 2019 /PRNewswire/ -- Albemarle Corporation (NYSE: ALB), a leader in the global specialty chemicals industry, announced today that its Lithium segment expects a shift of approximately 3,000 – 3,500 metric tons on an LCE basis in volume from Q1 2019 to subsequent quarters in 2019. This volume shift will impact Q1 by approximately $40MM - $45MM in revenue and $15MM - $18MM in EBITDA. The company expects Q1 adjusted earnings per diluted share to be in the range of $1.20 - $1.25.

The volume shortfall in the quarter was primarily due to the timing of customer qualifications of lithium hydroxide from Xinyu II and lithium carbonate from toll manufacturers, as well as production issues at the company's La Negra, Chile, site due to the disruption in the supply of fresh water as a result of the rain event in Chile earlier in the year."

 

[SW2Fiddler]

OT
(Out of good Taste)

an occasional phantom breaking that comes out of nowhere.

I blame Fart Mode for what I imagine. And going forward, every time breaking is mentioned.

 

[DisruptionRe]

If you are a Tesla shareholder, I would appreciate your participation in the following poll, in light of recent headlines:

Disruption Research on Twitter

 

[neroden]

It only stands to reason that trains pulling 120 cars of goods are a lot more efficient than trucks weighing 35,000 kg or so including the weight of the truck. When I'm traveling, what I see are miles of railroad tracks that are seldom occupied and roads clogged with trucks. This seems to me to be a very inefficient way of delivering goods. Yes, trucks are needed at the end points, but a lot of shipping could be done by trains. This would not only reduce road congestion, but it would reduce road maintenance by a large amount.

Yeah, the main reason things are this way is that the government pays for roads out of tax money and provides them to truckers for free, whereas the government expects freight traffic to pay the full cost of railroad maintenance (like toll roads). If all our expressways were toll roads, the balance would shift back towards railroads by roughly the economically correct amount.

 

[Fact Checking]

Plausible. I'm not sure you're entirely right, though.

Yeah, it's a crude simplification of a complex topic. (Personally I'd love to see fixed track mass transportation converted to automated drivers - I really think driving trains is one of the worst jobs, and keeping those jobs is a crime against humanity.)

The main forces I see that will speed up the use of AI drivers for road transportation:

• Costs. Trucking and taxi services are currently dominated by three big cost components: fuel costs, maintenance costs and labor costs. EV trucks with AIs will be irresistible.
• Medallion/license maximization: in markets where taxi drivers get a limited number of licenses and sharing is not allowed, the AI drivers who can utilize licenses 24/7 will be in a very big competitive advantage.
• Trust. People will trust AI drivers more than human drivers. (!) This is not something white males in their prime years can generally relate to, but there's many women, elderly and minorities that don't feel entirely safe with random human taxi drivers, who'd quickly embrace AI drivers. (This is why I think AIs will dominate health care, social services and mass education within a few decades - many humans suck in these roles.)
• Safety. I think AI drivers will be the safest in the world, by a large margin.

(In my view tunnels will be very useful in avoiding road congestion, and they'll further simplify FSD: only the "final mile" has to be driven on the surface, and that can be done super carefully.)

 

[KarenRei]

It's not the actual raw material deposits that are in potential shortage, but the extremely high grade Nickel, Lithium and Cobalt needed for high quality batteries are highly processed through high capex plants which normally take 3-5 years to ramp to capacity.

Spot prices of battery-grade nickel sulfate, lithium carbonate, etc are all down - some significantly. This cannot be the constraint. They can buy at low rates on the open market.

 

[ZsoZso]

That is Gumperson's Law, a corollary to Murphy's Law of Experimentation. "The desirability of an event is inversely proportional to its probability." To wit, if you drop a piece of toast it is likely to land butter-side down.

Indeed, combine that with a cat and you get a perpetuum mobile:

 

[jerry33]

Indeed, combine that with a cat and you get a perpetuum mobile:

Works except that you'll never get the bread and butter to stay on the cat for more than 0.03 seconds.

 

[RFernatt]

Anyone using navigate on autopilot knows highway driving is already now at L3. It still has the annoying nags but we are doing L3 on highways. There is a large gap in perception vs reality of where Tesla is with autonomous driving technology.

Latest version is the best I've experienced, but it doesn't handle some highway situations well. The lane changes were fixed from 5.15, which was horrible, so that was good, but anytime there is a truck lane beginning or ending it gets squirrelly in my driving (even some exit and on ramps). Today it would freak and ask me to take over especially at the start of some truck lanes. It's certainly improved, but I had to keep a close eye on it in the mountains. Then it disengaged due to rain. Maybe it just doesn't like curvy, mountainous interstates? Hey Tesla, if EAP can handle Hagerstown, MD to Fairmont WV on I70, 68, and 79 (and thread through Cumberland) without disengagement, it will have arrived!

 

[EVNow]

Generally very smooth. Anyone in my car would not know that I am not driving except for an occasional phantom breaking that comes out of nowhere.

False positives.

Have to wonder whether they tweaked something to prefer more false positives than false negatives.

 

[ReflexFunds]

Spot prices of battery-grade nickel sulfate, lithium carbonate, etc are all down - some significantly. This cannot be the constraint. They can buy at low rates on the open market.

I don't think these is a significant quantity to purchase at short notice on the open market for true EV battery grade (99.9%+ for LCE for EVs rather than 99.5% "battery grade") of any of these materials, the vast majority are sold on long term contracts. Sumitomo/Panasonic could perhaps buy a small amount of battery grade materials on the open market, but it would not be to Tesla's exact specification and I don't think it would be easy to simply substitute. Battery grade is a misleading term, it is an umbrella term for many different products and they can't all simply be used interchangeably across different cathodes.

That said, I think it unlikely that lithium hydroxide was the Q1 bottleneck.

“End users buy a product which is qualified for quality and consistency through a rigorous process. Short term substitution is not possible so it is not a commodity." “The only way you can have some form of standardisation in lithium is if large buyers get all of it from one source, with one set of chemical attributes. Product specs vary between producers depending on the source,” Richard Seville, Managing Director, Orocobre

 

[bdy0627]

What would you think the stock price will be at, if this turns out to be true a year from today?

Which week/month? Volatility likely won't be going away.

 

[Fact Checking]

DISAGREE
You have clearly never been beholden to a highly unionised and greedy workforce of train drivers. Total comp for a London tube driver has now surpassed £100k per year. They have achieved this by organising regular strikes every year that shut the city down for 2-3 days at a time, causing untold economic damage. This may not be the same thing as financial cost to the train operator.

So:

• https://www.ianvisits.co.uk/blog/20...erground-tube-drivers-are-not-earning-100000/
  
• "The majority of London Underground train drivers, approximately 3,000 of them, made £70,000-£80,000 last year when overtime and benefits is included."
• So total compensation per year for ~4,000 drivers is around ~£300m.
• Annual budget is around £7,000m, most of it from fares, of which driver wages are ~4.2%.

With taxi companies more than half of the fare goes to the driver. With Uber/Lyft it's 70-80%. (From which the driver covers all costs as well, so it's not all wages.)

I don't disagree that London Tube drivers are probably blackmailing the city for better pay - but my point remains: train driver wages are still a low single digit percentage.

 

[KarenRei]

I don't think these is a significant quantity to purchase at short notice on the open market for true battery grade of any of these materials, the vast majority are sold on long term contracts. Sumitomo/Panasonic could perhaps buy a small amount of battery grade materials on the open market, but it would not be to Tesla's exact specification and I don't think it would be easy to simply substitute. Battery grade is a misleading term, it is an umbrella term for many different products and they can't all simply be used interchangeably across different cathodes.

That said, I think it unlikely that lithium hydroxide was the Q1 bottleneck.

Spot prices are low because the market is oversaturated. There's been heavy investment over the past several years in battery materials, based on high forecast market growth, that's been coming online now. If Tesla was desperate for raw materials, they'd be buying everything they could be getting their hands on, and prices would be spiking.

Doesn't look likely to change any time soon. I'm really excited about the progress for producing battery-grade sulfates from common nickel laterite resources at economic rates via new HPAL methods; China has been pushing the envelope on this.

 

[Bladerskb]

I.e. the true comparison even based on your 10 billion neurons full visual cortex estimate would be a computing capacity of about 100 TFLOPs - close to the computing capacity of a single Tesla chip. (and there's two of them)

Note that each of the individual chips are NOT 100 tops. Both chips (the board) is what provides up to 10x increase that Elon has previously mentioned. HW3 is an actual board. This 10x is over half of 2016 Nvidia's Drive PX 2 which is about 10 tops.

 

[ZsoZso]

Do you currently have to pay attention and monitor the environment and the system's performance?
If Yes its still SAE level 2, if No, then its SAE level 3.

Level 3 allows you to watch a movie, read a book, etc because you no longer have to pay attention.

Incorrect, at Level 3 the human is still responsible to take over if necessary:

Understanding SAE automated driving – levels 0 to 5 explained

Level 3: Environment detection

Able to detect the environment around them, level 3 vehicles contain the lowest-tier system that is classified as an automated driving system as opposed to a manual system. With this more advanced technology, level 3 vehicles can make informed decisions for themselves such as overtaking slower moving vehicles. However, unlike the higher rated autonomous vehicles, human override is required when the machine is unable to execute the task at hand or the system fails.

Automated Vehicles for Safety

Level 3
An Automated Driving System (ADS) on the vehicle can itself perform all aspects of the driving task under some circumstances. In those circumstances, the human driver must be ready to take back control at any time when the ADS requests the human driver to do so. In all other circumstances, the human driver performs the driving task.

It is level 4, when the human can "watch a movie, read a book, etc".