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

[Fact Checking]

New It is rumored Apple cut all of their mechanical engineers.

First casualty of Tesla's Nürburgring (unofficial) record holder Tesla Plaid powertrain? Had Apple entered the market I'd have expected them to have a very expensive high end racing version with all sorts of records.

If Apple realized it recently that they are still years away from catching up with Tesla's powertrain technologies (assuming Tesla sits still during those years), it might have made sense to cut the 'drive train and car manufacturing' aspect of Project Titan.

 

[Antares Nebula]

Model 3 from Giga 3 seems almost ready!! Let's open the floodgate of Gigafactory Shanghai

Nice pun by the way. well explained.

T☰SLA Mania on Twitter
“开门见山” is a Chinese idiom, which literally means “open a door and see the mountain”, and figuratively means “straight to the topic, without any circumlocution”.

“开门见3” sounds similar to “开门见山”, which means “open the door (of Giga Shanghai) and see the Model 3” ️
​

Edit: add photo

Edit: It was reported by Cleantechnica that quality control is a major focus at Gigafactory Shanghai.
Now it seems shorts and detractors won't find any panel gaps to bitch about

View attachment 473645

And Reuters (and SA) just out with this story:

Tesla plans after-sales network expansion in China as Shanghai factory spins up

Tesla going all out in China - Tesla, Inc. (NASDAQ:TSLA) | Seeking Alpha

"Gearing up for the open of its $2B Shanghai plant, its first overseas factory, Tesla (NASDAQ:TSLA) is moving away from the approach CEO Elon Musk announced in March, when he said EV maker would cut costs and shut many of its retail stores worldwide.

According to documents seen by Reuters, the company plans to double its service centers to 63 from 29, boost fast charging stations by 39% to 362 and convert some of its showrooms into "Tesla Centers."

The country appears to be a different scheme, with Tesla China also offering racing events and parties despite Musk's open disdain for marketing."

 

[Mars ☰mperor]

And Reuters (and SA) just out with this story:

Tesla plans after-sales network expansion in China as Shanghai factory spins up

Tesla going all out in China - Tesla, Inc. (NASDAQ:TSLA) | Seeking Alpha

"Gearing up for the open of its $2B Shanghai plant, its first overseas factory, Tesla (NASDAQ:TSLA) is moving away from the approach CEO Elon Musk announced in March, when he said EV maker would cut costs and shut many of its retail stores worldwide.

According to documents seen by Reuters, the company plans to double its service centers to 63 from 29, boost fast charging stations by 39% to 362 and convert some of its showrooms into "Tesla Centers."

The country appears to be a different scheme, with Tesla China also offering racing events and parties despite Musk's open disdain for marketing."

Yes, also saw that service center and supercharger station expansion report.
But it seems to be an OLD document.

According to official Tesla data, there are 36 service centers and 310 supercharger stations in China mainland as of now (1009 destination charging stations and 50 experience center by the way).

 

[Antares Nebula]

If Apple realized it recently that they are still years away from catching up with Tesla's powertrain technologies (assuming Tesla sits still during those years), it might have made sense to cut the 'drive train and car manufacturing' aspect of Project Titan.

I don't know about this. Can't specifically speak to Apple's R&D efforts. But we are still in the early days of EV market penetration. Be it Apple, VW, F, GM, or a new company, I don't think its too late to enter the race to be a competitve EV/smartcar maker, provided one is committed and dedicated. If anything, one might argue that battery costs have yet to reach parity with ICE (though soon).

I agree that Tesla is far, far ahead of anybody else and will likely remain the market leader. Nonetheless, there is room for someone starting today to make competitive EVs in five to ten years and still capture a non-trivial portion of the market. After all, as bullish as we are, we certainly don't expect, in the future, Tesla to be the only viable EV/smartcar player with 100% of the market.

Edit: In fact, one might argue that there is plenty of room for competition, since many of the legacy OEMs do not (or did not) appear to take EVs seriously enough. So, for example, allowing Nio and other newcomers to easily enter the market. Had they otherwise been serious about EVs, it would be hard to start a new highly capital intensive business with multiple entrenched players (case in point: hardly any new major ICE players in the last fifty years). I mean, really, Tesla is currently the only major EV player, save for a few Chinese companies also.

 

[dww12]

The short answer here is some of those solar farms need batteries.

The reason they are turned off might be due to constraints around capacity of shared transmission lines, issues with "system strength" maintaining a stable frequency, or as a preemptive strike to stop prices going negative.

We sometimes get large negative price spikes and same solar and wind farms shut down, coal can't stop and start quickly, it's days an numbered for all sorts of reasons but in particular that reason.

Many solar farms do have contract "power purchasing agreements" set up to make financing easier, it could be the other party can opt out of supply when the PPA price is higher than the market price.

Overall it is very interesting, and while there are issues, it is not proving as difficult as the promoters of Fossil Fuels suggested it would be and it is lowering prices, which we always believed it would.

I doubt solar ever goes below the ppa, free electricity is at night and I would think some wind farms might want to get out of the ultra cheap/free/negative power supply business, buy a battery and go into the ultra expensive peaker power supply business.

 

[MC3OZ]

VW assembles in Nigeria and is just about to open an assembly plant in Pakistan.

And Nigeria puts very high tariffs on cars coming in . Old and Used. So assembly facilities have a guaranteed market. Ditto Pakistan. And VW can export tariff free to local African countries.

Said countries are not going to demand higher emission standards than current EU standards. VW built the old bug in Brazil for something like 60 years. No major investments needed in ICE tech.

Nigeria, the most populous country in Africa and projected to surpass US population by 2050, is a major oil producer and plans the largest oil refinery in the world. They will play ball.
In Nigeria, Plans for the World’s Largest Refinery

Egypt is also opening a brand new massive oil refinery. Current population 93M. Estimated 2050 population 150M.
Egypt Qalaa's $3.7 Billion Oil Refinery to Start Up in September

Ditto Mexico.
Mexico’s Pemex to Build Major Oil Refinery

Brazilian Crude Oil Exports Hit Record in 2018 | brazilmonitor.com

Brazil to become major oil exporter, says director of state-run energy firm

I wish more countries were like Norway. Using oil wealth to fund the Sustainable Energy Revolution. Sadly, Norway is an outlier.

Herbert has done his research.

BTW In 1992 leaders of the US,Canada, and Mexico signed the NAFTA Treaty. Tariffs on used cars were supposed be eliminated by 2000 between the three countries. In 2019 tariffs were finally reduced to 1% for cars less than 10 years old and 10% for cars older than 10 years. Then Mexico instituted non-tariff barriers and quotas. To protect local assembly and manufacturing. And Mexico has free trade treaties with just about all of Latin America.

OK if they are assembling in those countries and have high import duties on imported used cars and their own oil, that is a very different I would say exceptional circumstance.

In this case politics and local circumstances override the global trend, no matter how strong that trend is...

Only ways I can see this changing is if those countries negotiate free trade arrangements that require them to drop their tariffs, or the Chinese open an EV factory in the country.

 

[MC3OZ]

I doubt solar ever goes below the ppa, free electricity is at night and I would think some wind farms might want to get out of the ultra cheap/free/negative power supply business, buy a battery and go into the ultra expensive peaker power supply business.

The price I'm talking about is the NEM (National Electricity Market) it is a very strange market with bizarre rules but prices like $-1,000 per MWh are not unknown, if you can't switch off, you need to pay someone to take your electrcity.

 

[Tslynk67]

Dag nabit.... Somebody managed to smuggle a couple of truck loads of Tesla Model 3s into Norway today.

And note that once again the mix is predominantly LR

 

[Tslynk67]

I’m guessing that the hepa filter/biohazard air cleaner is a popular upgrade over there. It makes a big difference for me driving by the chemical plants.

Completely removes all exhaust fumes as far as I can smell (and I have a very sensitive nose)

 

[LN1_Casey]

I took delivery of my P85 in March 2013 and cost was in neighborhood of 104K (not counting tax or tax incentives). P85+ had not yet been announced. So, if P85+ is going for $40k, it’s about 40% of value after 6 (okay, maybe 6.5) years. But if someone’s advertising a 2012 P85+, don’t buy from them!

I took it from OnlyUsedTesla to get a more accurate amount from a 2012 model (as I've only actively tracked 2018-2016). Good to know however!

 

[jerry33]

Interesting. I maintain that Apple is the number one threat for Tesla. Not VW, not Mercedes, not GM or F. If they have indeed dropped out, that is welcome news! But the above piece of news, while a valuable data point, is obviously not conclusive. I can't imagine Apple giving up that easily, unless they are indeed going to partner or acquire.

Though, like many here, I do not advocate it, I think there is a real possibility that Apple may be looking at Tesla in some capacity. They're not stupid; surely they must at least be considering it. At the least, it may cause the stock to shoot up if word got out, even if Musk and company are not interested. This is something I'm definitely watching (and maybe worth playing with some short term options).

I suspect if Apple makes a car, their current deals with other car makers are in jeopardy. They have, perhaps, figured out that their current operation is profitable while being a car manufacturer may not be. (Cook doesn't appear to think of anything but current profits). Or perhaps they've figured out that the political situation in the U.S. makes the outlook poor for electric cars (not taking into consideration how people will actually vote with the dollars).

Should Apple make a bid for Tesla, I'd recommend holding out for four figures/share. Personally, I don't think they will do that.

 

[jerry33]

I can understand switching off solar if the price went negative, but doesn't "low prices" indicate the electricity was worth something? Also, assuming the price went to zero and yet almost 50% of the electricity was still being produced by burning fossil fuels, doesn't that imply they were getting zero as well? Or perhaps they have contracts that require minimum payment for all production up to a specified amount 24/7? If so, it would seem more batteries would be economically advantageous.

I think the grid could be a lot greener with stronger time of use billing schedules. This would encourage water heaters with timers, EV charging during peak solar production and other adaptations which would reduce the baseload supplied by fossil fuels. But something tells me monied interests have their hands in the pie fouling up the way it should logically work.

Many types of fossil fuel plants can't be shut down or even have the output moved up or down easily. Because there isn't enough solar yet to shut them down completely (as I understand the article to say), they have to be kept running until they can be shut down (e.g. when there is actually enough solar).

 

[hacer]

How does everyone think Tesla will adjust to the new German EV incentive?

SR+ currently costs 44,390 euros in Germany.

new EV incentives:

Cars under €40,000: €6,000 incentive
Cars €40,000 - €60,000: €5,000 incentive
Cars over €60,000: no incentive

A $1,000 difference in incentive doesn’t really seem like enough for Tesla to worry about trying to introduce a model below €40k, Perhaps if SR+ drops in price next year then they might think about a software locked SR at €39,999

There is another factor here: in Germany, the manufacturer is responsible for half of the incentive funding. So if Tesla did lower the price to "get" the extra €1,000 that would cost them an extra €500 on top of the price break. Definitely not worth it.

 

[KarenRei]

Kelvin Yang says that news in China says that Made-in-Chia Model 3 will "launch" on 11 Nov.

Kelvin Yang on Twitter

He says that the news didn't offer a lot of details, but that he interpreted the report as the first (small batch) of deliveries.

 

[Prunesquallor]

I agree that Tesla is far, far ahead of anybody else and will likely remain the market leader. Nonetheless, there is room for someone starting today to make competitive EVs in five to ten years and still capture a non-trivial portion of the market. After all, as bullish as we are, we certainly don't expect, in the future, Tesla to be the only viable EV/smartcar player with 100% of the market.

If Tesla is still interested in encouraging other manufacturers to participate in the EV transition, it should, IMHO, avoid addressing the compact/subcompact market for several years and leave an opening for VW. It appears that VW is making a serious commitment.

Tesla is heading in a different direction anyway: Model Y and Cybertruck are addressing the US market, Semi the commercial trucking industry.

 

[KarenRei]

Well, this escalated quickly

 

[Prunesquallor]

Well, this escalated quickly

View attachment 473737

Either there is a change in strategy and deliveries are shifting much earlier, or...

you’re going to need to change the ordinate scale.

 

[HG Wells]

Another aspect is the lack of left over cars from Q2 to Q3 in Europe.
Could be fewer cars in Q2 were declined.
IE: Improved quality and fewer buyers having last minute second thoughts.

 

[Antares Nebula]

Why software companies (including Tesla) will dominate auto going forward; and why Google, Apple, Amazon, Tencent, etc. (and not legacy OEMs) are likely to be Tesla's biggest competitors:

Elon Musk on Twitter
Tesla is updating its internal OS, will focus on securing customer accounts next, says Musk - Electrek

“Connected, autonomous cars require great software. Advanced factories also require great software. The car industry is not very good at software.”

Software eating the world:
Why Software Is Eating the World - Andreessen Horowitz
Software is still eating the world – TechCrunch

 

[Antares Nebula]

I suspect if Apple makes a car, their current deals with other car makers are in jeopardy. They have, perhaps, figured out that their current operation is profitable while being a car manufacturer may not be. (Cook doesn't appear to think of anything but current profits). Or perhaps they've figured out that the political situation in the U.S. makes the outlook poor for electric cars (not taking into consideration how people will actually vote with the dollars).

Should Apple make a bid for Tesla, I'd recommend holding out for four figures/share. Personally, I don't think they will do that.

The reason Apple and Google are interested in EVs is not for the hardware side but the software side. Autonomous (FSD) software and carOS have hundreds of billions to trillions of dollars market opportunity. This dwarfs the profit from just car sales or the pure hardware. And software is their expertise.

Yes, they have to somehow get through or get past the manufacturing of cars, which is very capital intensive but not nearly as profitable as software. So they either partner (like Waymo/Google) or make their own (like Tesla).

Just look at Tesla. We all believe that Tesla will be worth on the order of hundreds of billion to even several trillion dollars. A majority of this eventual very large market cap can be ascribed to the software, specifically to FSD and carOS (games, apps, ads, etc.), and even to the software in the standalone powerpacks and megapacks. The actual car manufacturing component or battery manufacturing component is going to be significantly smaller in value, and even the majority of the value here will be in the software of the machine that builds the machine (the importance of which Musk re-iterated in yesterday's tweet -- see my prior comment above).

Yes, mechanical and electrical engineering is very important and Tesla and SpaceX excel at this. And the hardware engineering does make Teslas stand out. But it is the software engineering that is going to deliver the large market cap and a soaring stock price.