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

[KarenRei]

In a video by Curious Elephant, he claimed Tesla would not stop partnering with big battery producers because of the patents and how expensive it would be to license them.

Does anyone have any opinions, on whether this holds water?

Tesla's acquisition strategy is purely about making batteries themselves. It makes no sense if they were planning to stick with big manufacturers. They're acquiring their own IP in the process.

Tesla obsesses over vertical integration in the way that nobody else does. I've been saying for years that, as soon as Tesla feels that it's financially plausible to do so, they'll ditch Panasonic for future lines. Cell manufacturing is just too large a piece of the overall picture for them to leave it to a third party. It looks like it's finally happening.

 

[jerry33]

Toyota says new Camry has liftetime transmission fluid but I will add two changes because mechanics say so. Of course mechanics will advise more maintenance.

Because the requirement for fluid changes really depends on the condition of the fluids and the condition of the fluids depend on the environment the equipment is run in, the correct way is to have the fluids tested for contaminants (about $25 the last time I had it done a few years ago). This is how fleets do it. I don't doubt that in pristine conditions a lifetime transmission fluid is possible (depending upon how you define lifetime, of course), but in dusty, salty, or extreme temperature environments, I doubt it's really lifetime.

 

[printf42]

Interview with Franz von Holzhausen is up:

Ride the Lightning: Tesla Motors Unofficial Podcast

I’m going to drop everything else and listen to this.
Side note, every time I saw a new Mazda in red, I speak to myself that Tesla should hire the one who started this new design language, then I remember who designed the Furai.

 

[DrKenneth]

Also, to spell it out why Tesla must get into mining: 90%+ of the required battery grade nickel sulphide extraction and refinery capacity simply does not exist today.

Let me ask you this: why is cloud computing becoming so popular among SaaS companies? I ask because the the premise is similar and the answer demonstrates why you are wrong.

It not to save money. Its because:

• It allows exchanging CAPEX for OPEX
• Flexibility. Less demand? No problem. More demand? No problem. Change in tech? No problem.
• You can concentrate on value adding work

These are the same reasons why Tesla should not go into the mining business.

Mining is a bad business. It is very cyclical. It has low margins and it very capitally intensive.

Imagine if there are battery chemistery changes or suddenly there is a massive influx of capacity. Now your stuck with a mine you don't need and because of dropped commodity prices nobody else wants either. Imagine instead if there is a recession. Tesla still has massive demand for its cars but due to recession the commodity prices dropped so much that Teslas actually pays more than market price for it's nickel. Entrily possible. Tesla has no competitive advantages in mining and it's capital cost is very high. I think I'd rather see Telsa investing in service, manufacturing or R&D than some mine.

I also think paying of debt would save more money than mining your own nickel and it has no risks.

 

[Fact Checking]

Minor corr: I think it's almost certain that Tesla would pursue HPAL-processed limonitic laterites rather than nickel sulfide as a source of nickel sulphate, despite the latter dominating today. Good nickel sulfide deposits are just too uncommon and geographically isolated. Nickel laterites** are abundant and widely distributed. I don't see sulfide deposits scaling to the multi-terawatt-hour scale.

Had to look up HPAL ore processing:

Autoclave pressures are up to ~4,500 kPa or 45 bar - significant pressure levels for such high capacity autoclaves.

On the HPAL capex intensity I found this figure: about $50k of capex per tons of Nickel output based on historical projects. So with 1 million tons that's ~$50b of capex with current technologies. Certainly not a single step expansion, and probably requires some out of box thinking to reduce both the capex levels and the lead time.

 

[kbM3]

Interview with Franz von Holzhausen is up:

Ride the Lightning: Tesla Motors Unofficial Podcast

Wow! I feel even better about Tesla after listening.

Thanks, Karen!

 

[KarenRei]

Mining is a bad business. It is very cyclical.

Exactly what part of Tesla's demand do you expect to be "very cyclical"?

Let me ask you this: why is cloud computing becoming so popular among SaaS companies?

Who exactly is the "Amazon of millions-of-tonnes-per-year-of-battery-grade-nickel-sulphate" here?

Tesla isn't talking about doing it because they think, "Gee whiz, wouldn't this be fun?" They're doing it because they can't count on others to invest at the sort of pace necessary to sustain their business.

 

[Fact Checking]

Let me ask you this: why is cloud computing becoming so popular among SaaS companies?

Sorry, but that's a very broken analogy, there's significant differences between cloud computing and mining expansion:

• Cloud computing is a neutral platform - it can calculate anything, it's basically a flexible always-online supercomputer for hire. Companies add their own secret sauce and turn it into the cool service they are selling. Competitors cannot (easily) copy those services just by going to the same cloud computing provider. There's a distinct competitive differentiation available even if cloud computing is used, it doesn't erode the competitive advantage of software service companies. Cloud computing resources available are always several orders of magnitude larger than the largest clients of them. There's never any true danger of becoming dependent on a single cloud service provider.
  
• Mining platforms are fundamentally special-purpose and expansion is slow. Once you develop battery grade nickel mining it's available to all your competitors and your competitive advantage is gone. You also become dependent on the mining company as long as you require a significant percentage of total world production and have no realistic ability to switch suppliers. Also, for such expansion Tesla carries much of the risk of expansion anyway, because the mining operations will use Tesla purchase guarantees to secure bank loans. Those multi-year future purchase obligations are a liability on Tesla's balance sheet - why not use that as capex instead.

So the two scenarios couldn't be more different.

 

[KarenRei]

Had to look up HPAL ore processing:

View attachment 468129

View attachment 468134
View attachment 468136​

Autoclave pressures are up to ~4,500 kPa or 45 bar - significant pressure levels for such high capacity autoclaves.

On the HPAL capex intensity I found this figure: about $50k of capex per tons of Nickel output based on historical projects. So with 1 million tons that's ~$50b of capex with current technologies. Certainly not a single step expansion, and probably requires some out of box thinking to reduce both the capex levels and the lead time.

Yep, but capex (and opex) have been dropping quickly. Tsingshan has been the really big disrupter here. Their latest plant is targeting $700M for 50k tonnes per year, aka $14k capex per tonne of nickel sulphate per year.

And yeah, good HPAL systems are tough to develop! If I remember right (would have to double check), the purpose of the high pressures is to suppress the dissolution of iron in the acid (iron always vastly exceeds nickel in quantity in nickel ores... indeed, the very word "limonitic" ("pertaining to limonite", e.g. iron oxide-hydroxide) pretty much tells one all they need to know!

 

[SW2Fiddler]

I can think of a quite a few people (ReflexFunds, FactChecking, etc etc etc).

My dream weekly podcast?

Peter @Papafox, @Doggydogworld to balance, Earl of FrunkPuppy as the funny one... wait that’s a lot of canines...

...but non-negotiable is Curt The Cat @Curt Renz as host moderator anchor.

 

[GaryW]

Let me ask you this: why is cloud computing becoming so popular among SaaS companies? I ask because the the premise is similar and the answer demonstrates why you are wrong.

It not to save money. Its because:

• It allows exchanging CAPEX for OPEX
• Flexibility. Less demand? No problem. More demand? No problem. Change in tech? No problem.
• You can concentrate on value adding work

These are the same reasons why Tesla should not go into the mining business.

Mining is a bad business. It is very cyclical. It has low margins and it very capitally intensive.

Imagine if there are battery chemistery changes or suddenly there is a massive influx of capacity. Now your stuck with a mine you don't need and because of dropped commodity prices nobody else wants either. Imagine instead if there is a recession. Tesla still has massive demand for its cars but due to recession the commodity prices dropped so much that Teslas actually pays more than market price for it's nickel. Entrily possible. Tesla has no competitive advantages in mining and it's capital cost is very high. I think I'd rather see Telsa investing in service, manufacturing or R&D than some mine.

I also think paying of debt would save more money than mining your own nickel and it has no risks.

Reasons to use cloud computing may have a few more wrinkles than that?

Amazon sells cloud computing for servers they need only one month per year. I don’t see a parallel in Tesla’s nickel needs?

Customers have a variety of single use requirements for servers: large scale testing for new products or installations comes to mind. I don’t see any similarities with EV manufacturing?

Servers have very short shelf lives. A five year old server is typically worth ... nothing? The cost to manage, the cost of software licenses, the cost of network connectivity, all these things make server upgrades attractive. Again, this doesn’t seem too similar to car companies?

 

[jerry33]

I also think paying of debt would save more money than mining your own nickel and it has no risks.

Unless there isn't enough nickel being produced, or the nickel producers form a cartel the way the oil companies did, or the oil companies purchase the nickel and make it either unavailable or uneconomically high. I'd suggest there are more risks to not mine than to mine.

 

[KSilver2000]

Definitely did not like how he used his personal mpg, and then said he would generously raise it to a value that was still below the city mpg. He should have used the combined mpg rating.

That kind of bias made me stop reading.

Terrible analysis. Obviously biased.

Besides the Camry mpg number:
1. Why not compare to the hybrid Camry that gets 50mpg and costs $27-$28K.
2. As everyone here likes to point out about ICE dealerships, people don’t buy ICE at the MSRP.
3. Oil changes for a Toyota at a Toyota dealership costs $29, not $50. Never seen an ad from a Toyota dealer in my area for more than that. Then he adds on about how his oil changes were bad experiences.
4. This one was ridiculous, when he stated gas in California is over $5. Where? I live in CA and have yet to see that. Even if there is, it is most likely for premium, which the Toyota does not need.
5. You don’t need to change the brake pads and rotors at every 37,500 miles (he calculated 3 changes). Seriously? Is the guy tracking his Camry?

6. Biggest miss: No mention about insurance premium difference. When we first swapped out an Accord with a Tesla, the difference was $800/yr cheapest quote among the bigger names.

 

[Pezpunk]

6. Biggest miss: No mention about insurance premium difference. When we first swapped out an Accord with a Tesla, the difference was $800/yr cheapest quote among the bigger names.

interesting. my insurance now is cheaper than it was for my Challenger SRT8, but i suppose both of these statements can be true.

 

[GaryW]

Terrible analysis. Obviously biased.

Besides the Camry mpg number:
1. Why not compare to the hybrid Camry that gets 50mpg and costs $27-$28K.
2. As everyone here likes to point out about ICE dealerships, people don’t buy ICE at the MSRP.
3. Oil changes for a Toyota at a Toyota dealership costs $29, not $50. Never seen an ad from a Toyota dealer in my area for more than that. Then he adds on about how his oil changes were bad experiences.
4. This one was ridiculous, when he stated gas in California is over $5. Where? I live in CA and have yet to see that. Even if there is, it is most likely for premium, which the Toyota does not need.
5. You don’t need to change the brake pads and rotors at every 37,500 miles (he calculated 3 changes). Seriously? Is the guy tracking his Camry?

6. Biggest miss: No mention about insurance premium difference. When we first swapped out an Accord with a Tesla, the difference was $800/yr cheapest quote among the bigger names.[/QUOTE

interesting. my insurance now is cheaper than it was for my Challenger SRT8, but i suppose both of these statements can be true.

My insurance dropped from my BMW Z4. A lot.

 

[KSilver2000]

My insurance dropped from my BMW Z4. A lot.

The analysis is comparing one of the cheaper family sedan, a Camry, to a Tesla. Not a luxury brand 2-seater. Little doubt your insurance might have gone down.

 

[EVNow]

The analysis is comparing one of the cheaper family sedan, a Camry, to a Tesla. Not a luxury brand 2-seater. Little doubt your insurance might have gone down.

Lower than what I paid for Leaf & Volt

BTW, one thing to note is - how old was the earlier car. A really old Camry will cost less in insurance compared to a new Camry.

 

[plug&play]

Terrible analysis. Obviously biased.

Besides the Camry mpg number:
1. Why not compare to the hybrid Camry that gets 50mpg and costs $27-$28K.
2. As everyone here likes to point out about ICE dealerships, people don’t buy ICE at the MSRP.
3. Oil changes for a Toyota at a Toyota dealership costs $29, not $50. Never seen an ad from a Toyota dealer in my area for more than that. Then he adds on about how his oil changes were bad experiences.
4. This one was ridiculous, when he stated gas in California is over $5. Where? I live in CA and have yet to see that. Even if there is, it is most likely for premium, which the Toyota does not need.
5. You don’t need to change the brake pads and rotors at every 37,500 miles (he calculated 3 changes). Seriously? Is the guy tracking his Camry?

6. Biggest miss: No mention about insurance premium difference. When we first swapped out an Accord with a Tesla, the difference was $800/yr cheapest quote among the bigger names.

If we are going to be comparing similarly specd cars, the author should have compared the model 3 sr+ to Camry XLE V6, which starts around $35k.

At that point the model 3 sr+ is definitely the better choice.

 

[KarenRei]

Lower than what I paid for Leaf & Volt

BTW, one thing to note is - how old was the earlier car. A really old Camry will cost less in insurance compared to a new Camry.

Beat me to it. Going from a used car to a new car should almost always be expected to increase your insurance costs, unless a big price difference / safety difference outweighs it.

The real question is how two new cars compare, insurance wise.

 

[Artful Dodger]

The Oct 18, 2019 video from GF3 Shanghai shows an new heavy girder structure on the left side of the building as viewed in the picture below. This heavy structure reminds me of the battery cell aging racks we seen previously in pictures from GF1 Sparks.

I think this is further evidence that the Phase 2 'bty workshop' at GF3 is in fact a bty cell production factory.

Cheers!