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

[Jovian]

There surely is some merit in that claim: Aircraft 0xa835af - OpenSky Network

Any speculation on why he might be over there? Trying to work out some further deal with Panasonic? Anyone know if this is the international airport he'd fly into if he was going to meet with Panasonic executives?

 

[Thekiwi]

@×


I continue to expect a buyout of Panasonic's part of Giga 1 before Battery Investor day

Just curious - what purpose would this serve? I thought the common wisdom is that a lot of the current cell manufacturing process will be obsoleted by the new Maxwell battery technology? why would Tesla want to take ownership of all the current lines? is it to pocket/save with the small margin Panasonic earns on it for itself?

 

[HG Wells]

I’ll need one on each of my 7 private islands. So, yeah.

With solar and powerwalls would be nice to buy a small island in a lake or river.
Places that have no access to power might be somewhat affordable.

 

[Artful Dodger]

Translated/quoted article: "[The supply chain] is ready, but has recently started to receive notifications, and the schedule is advanced to the fourth quarter of this year."

Does this mean that there were two accelerations of the Model Y supply-chain ramp-up schedule ,,, then by another 6 months, "recently" from Q2'2020 to Q4'2019?

Do we know if this Supplier's particular Fiscal Year aligns with Tesla's? For example, I believe Panasonic / Japan is currently working in their Q3 (their current fiscal year ends on March 31, 2020).

This is a frequent source of confusion for people discussing Panasonic's supply relationship with Tesla. If also the case for these unidentified Suppliers, that could resolve the conflict between reports. IE: Panasonic's FY Q4 ends on 2020/03/31, which is the start of Tesla's Q2 and a very likely current target to begin Model Y production in Fremont.

 

[bpjod]

With solar and powerwalls would be nice to buy a small island in a lake or river.
Places that have no access to power might be somewhat affordable.

Don't forget the Starlink subscription so you can keep entertaining us here on TMC!

 

[SpeedGoat]

The US minivan market is about half million a year, a relatively small market. CyberTruck can address some of the need.

At this point I hope Tesla will focus on FSD, batteries, and work on existing products: S3XY CARS.

Model S is the best large sedan.
Model X is the best large SUV.
Model 3 is the best mid-sized sedan.
Model Y will be the best mid-sized SUV/CUV.
Cybertruck will be the best truck.
ATV is not a big deal, though many people will want it.
Roadster will be the best car ever.
Semi will be the best semi.
Solar roof has no competitor.
Megapack, Powerpack and Powerwall are the most compelling products in energy storage.
Gigafactories 1~4

That's quite an achievement. They will be super busy in the next 2 years. Getting into more categories won't help.

Minivans are all about ease of access. The big sliding doors make it easy to load kids in car seats, etc. I think very very few minivan buyers will consider the Cybertruck. It is far too high and just sits in a completely different part of the market. The Model X is far closer to the mark for minivan buyers.

 

[Oil4AsphaultOnly]

I think the TCO (total cost of ownership) advantages are so absurdly in favor of the Cybertruck that a great many traditional pickup buyers will learn to like the design. Who wants to leave many thousands of dollars on the table?

A Prius, on the other hand, does have TCO advantages over typical gasoline sedans, but this is peanuts compared to the advantages offered by the CT.

Today, my biggest worry as a TSLA investor is that the CT is "too good" a value. Besides being a great truck, it seems to be a better SUV than the Model Y or the Model X. One sign that Tesla is a true disruptor is that it's willing to disrupt its own products. I'm not saying that X/Y demand will drop to zero, far from it, but many potential X/Y buyers will certainly buy the CT instead. My hope is that margins on the CT, even the 2WD $40k variant, will be strong. If this proves to be the case, thanks to battery cost improvements and manufacturing innovation, then we could see the share price rocket even without major breakthroughs in FSD (full self driving).

Don't worry about CT taking model X/Y sales. I asked my wife about converting the 7-seat order to a CT, and she said, "heck NO, the CT's TOO BIG".

So there will always be those who want the economics of driving electric, but don't want to drive bro-dozers.

 

[JonathanDandrea]

Minivans are all about ease of access. The big sliding doors make it easy to load kids in car seats, etc. I think very very few minivan buyers will consider the Cybertruck. It is far to high and just sits in a completely different part of the market. The Model X is far closer to the mark for minivan buyers.

Minivan owner here can’t wait to replace it with a cybertruck. The wife is apparently a closeted prepper and I think she is more excited for this thing than I am

 

[ReflexFunds]

Just curious - what purpose would this serve? I thought the common wisdom is that a lot of the current cell manufacturing process will be obsoleted by the new Maxwell battery technology? why would Tesla want to take ownership of all the current lines? is it to pocket/save with the small margin Panasonic earns on it for itself?

1: Maxwell tech covers <20% of the cell manufacturing production steps
2: I'm sure Tesla has internal solutions developed for the remaining steps, but I expect Panasonic has some steps that Tesla can't yet match for efficiency - so for these steps it would be better to buy Panasonic's tech.
3: There is a very high chance of Panasonic challenging Tesla for IP theft when Tesla starts its own cell manufacturing and the relationship deteriorates. It is safest for Tesla to have bought Panasonic's IP or at least not be in a position to be held hostage by a 35GWh cell supplier when it happens.
4: There are no employees in the US with experience of cell mass manufacturing aside from the Panasonic employees in GF1. These are the best people for Tesla to acquire to ramp its own cell programs and teach new employees the trade.
5: Buying Panasonic GF1 should increase Model 3 cash flow per car.
6: Buying Panasonic GF1 will make it much easier to retrofit the existing cell lines with Maxwell electrodes and make space for capacity expansion within the current footprint.
7: Acquiring Panasonic's GF1 supplier contracts and relationships will be very helpful for scaling up supply for Tesla's future cell capacity.

The value of Panasonic's GF1 business is worth far more to Tesla than it is to Panasonic standalone. Panasonic knows Tesla plans to make cells for future expansion in-house - so it knows it is never going to get scale much beyond 35GWh to make its GF1 business significantly profitable - therefore discounted cash flow value of this IP is actually very low to Panasonic (also given the rest of the industry is going for Prismatic/Pouch cells). Tesla on the other-hand knows this business can be used as part of a platform to grow to 2TWh annual capacity. It will far simplify and likely accelerate its in-house manufacturing plan and has huge future value.

 

[PhaseWhite]

I think we’re close to 300k CT pre-orders and Thanksgiving will push us over.
Worldwide Cybertruck reservation tracker

In a related note /r/teslamotors is the fastest growing subreddit on thanksgiving
r/TeslaMotors is the top growing community on Reddit this Thanksgiving! : teslamotors

 

[PhaseWhite]

1: Maxwell tech covers <20% of the cell manufacturing production steps
2: I'm sure Tesla has internal solutions developed for the remaining steps, but I expect Panasonic has some steps that Tesla can't yet match for efficiency - so for these steps it would be better to buy Panasonic's tech.
3: There is a very high chance of Panasonic challenging Tesla for IP theft when Tesla starts its own cell manufacturing and the relationship deteriorates. It is safest for Tesla to have bought Panasonic's IP or at least not be in a position to be held hostage by a 35GWh cell supplier when it happens.
4: There are no employees in the US with experience of cell mass manufacturing aside from the Panasonic employees in GF1. These are the best people for Tesla to acquire to ramp its own cell programs and teach new employees the trade.
5: Buying Panasonic GF1 should increase Model 3 cash flow per car.
6: Buying Panasonic GF1 will make it much easier to retrofit the existing cell lines with Maxwell electrodes and make space for capacity expansion within the current footprint.
7: Acquiring Panasonic's GF1 supplier contracts and relationships will be very helpful for scaling up supply for Tesla's future cell capacity.

The value of Panasonic's GF1 business is worth far more to Tesla than it is to Panasonic standalone. Panasonic knows Tesla plans to make cells for future expansion in-house - so it knows it is never going to get scale much beyond 35GWh to make its GF1 business significantly profitable - therefore discounted cash flow value of this IP is actually very low to Panasonic (also given the rest of the industry is going for Prismatic/Pouch cells). Tesla on the other-hand knows this business can be used as part of a platform to grow to 2TWh annual capacity. It will far simplify and likely accelerate its in-house manufacturing plan and has huge future value.

What’s your thoughts on how Tesla will pay for it? I wonder if Panasonic would do an equity deal. Otherwise Tesla would probably need to do an offering.

 

[Cherry Wine]

1: Maxwell tech covers <20% of the cell manufacturing production steps
2: I'm sure Tesla has internal solutions developed for the remaining steps, but I expect Panasonic has some steps that Tesla can't yet match for efficiency - so for these steps it would be better to buy Panasonic's tech.
3: There is a very high chance of Panasonic challenging Tesla for IP theft when Tesla starts its own cell manufacturing and the relationship deteriorates. It is safest for Tesla to have bought Panasonic's IP or at least not be in a position to be held hostage by a 35GWh cell supplier when it happens.
4: There are no employees in the US with experience of cell mass manufacturing aside from the Panasonic employees in GF1. These are the best people for Tesla to acquire to ramp its own cell programs and teach new employees the trade.
5: Buying Panasonic GF1 should increase Model 3 cash flow per car.
6: Buying Panasonic GF1 will make it much easier to retrofit the existing cell lines with Maxwell electrodes and make space for capacity expansion within the current footprint.
7: Acquiring Panasonic's GF1 supplier contracts and relationships will be very helpful for scaling up supply for Tesla's future cell capacity.

The value of Panasonic's GF1 business is worth far more to Tesla than it is to Panasonic standalone. Panasonic knows Tesla plans to make cells for future expansion in-house - so it knows it is never going to get scale much beyond 35GWh to make its GF1 business significantly profitable - therefore discounted cash flow value of this IP is actually very low to Panasonic (also given the rest of the industry is going for Prismatic/Pouch cells). Tesla on the other-hand knows this business can be used as part of a platform to grow to 2TWh annual capacity. It will far simplify and likely accelerate its in-house manufacturing plan and has huge future value.

How much would you expect such an acquisition to cost?

 

[defc0n]

What’s your thoughts on how Tesla will pay for it? I wonder if Panasonic would do an equity deal. Otherwise Tesla would probably need to do an offering.

Tesla may have close to 6 billion cash on hand at the end of the year I believe? Panasonic current total market cap is 22 billion. I wonder what their cell manufacturing division would go for. They could probably milk Tesla for a fairly high price I would imagine.

 

[ReflexFunds]

What’s your thoughts on how Tesla will pay for it? I wonder if Panasonic would do an equity deal. Otherwise Tesla would probably need to do an offering.

Very hard to know what price Tesla could get it for. Tesla are definitely in the far stronger negotiating position. Maybe $2-3bn and then Panasonic would at least recoup its investment for a business that's likely valued at a negative valuation currently by its P/E multiple investor base.

Maybe pay Panasonic half in new Tesla equity and pay the other half in cash. They have ample cash and undrawn credit lines for this without another capital raise.

Elon can go into negotiations saying if you turn this offer down, we will just build our own cells anyway and you will be left with a 35GWh cell business at close to profit neutral that in the long term may or may not recoup its cash investment.

I would be a lot more comfortable with Tesla's in-house cell manufacturing moving quickly and smoothly if they made this purchase though.

 

[defc0n]

I’d guess some mix between cash and equity but this is all very speculative.

 

[StarFoxisDown!]

Tesla may have close to 6 billion cash on hand at the end of the year I believe? Panasonic current total market cap is 22 billion. I wonder what their cell manufacturing division would go for. They could probably milk Tesla for a fairly high price I would imagine.

Not really. Pretty much come up with a fairly reasonable estimate for how much it would cost Tesla to build an equal size facility with the manufacturing equipment and that's how much Tesla will pay Panasonic. Maybe a slight premium to that. Couldn't see it being anything above 3 billion and even that's a stretch. Anything higher and Tesla will tell them they'll just build another factory themselves.

Tesla has all of the leverage here because they share IP rights and Tesla can build another factory to manufacture their shared IP battery cells themselves. Panasonic can NOT make the Tesla battery cells for any other customers

 

[1101011]

Yes, Tesla should definitely start building Ísland superchargers.

Maybe on the Ring Road?

 

[Doggydogworld]

In Panasonic's investor day last Friday they appear to suggest Q4 GF1 cell production is up around 20% vs Q3. Looks promising for Q4 Model 3 production!
Also, given Twitter reports Elon is in Japan, I think now would be a great time to buy Panasonic's GF1 business. It would far simplify rollout of Tesla's in-house cell manufacturing - less potential IP conflicts and a US workforce of experienced cell manufacturing staff.

View attachment 482578
Note that Panasonic's 2020 reporting year finishes in March 2020 so 2020 3QE is Tesla's Q419.
https://www.panasonic.com/global/corporate/ir/pdf/irday2019_am_e.pdf

Good find. +20% would be almost 96k in Q4. If we believe the story about shipping 7000 packs to China, that's 88-89k Model 3s for Fremont. I believe they'll continue to supply China through Q1 then seamlessly shift that battery pack production to Model Y in Fremont while switching GF3 over to LG/CATL.

Tesla may have close to 6 billion cash on hand at the end of the year I believe? Panasonic current total market cap is 22 billion. I wonder what their cell manufacturing division would go for. They could probably milk Tesla for a fairly high price I would imagine.

Tesla paid 566m of debt on 11/1 and will pay another ~170m in December. I don't think they'll liquidate much more inventory so we're probably looking at a bit under $5 billion at yearend.

Also note that due to their wave production/delivery system their cash balance dips dramatically the first 2+ months of the quarter before it comes roaring back in the last minute deliverypalooza. They could probably pay 2b in cash but definitely not 4b.

 

[MC3OZ]

Elon can go into negotiations saying if you turn this offer down, we will just build our own cells anyway and you will be left with a 35GWh cell business at close to profit neutral that in the long term may or may not recoup its cash investment.

I'm not expecting this level of aggressive negotiation, both Tesla and Panasonic need the current arrangement to continue, or for Tesla to buy them out.

Tesla can start making their own cells and remain a customer of Panasonic for the duration of existing contracts and perhaps even extend those contracts..

IMO a possible deal is Tesla supplies dry cathodes to Panasonic, as part of a wider deal on cell production.I don't think it is likely, but it is more likely than a hostile negotiation...

I think if they ramp to 35GWh and convert 18650 lines in Japan to produce 2170 cells for Tesla energy, this line of Panasonic business can be profitable;.... But any further expansion will only be in Japan...

 

[Prunesquallor]

1: Maxwell tech covers <20% of the cell manufacturing production steps
2: I'm sure Tesla has internal solutions developed for the remaining steps, but I expect Panasonic has some steps that Tesla can't yet match for efficiency - so for these steps it would be better to buy Panasonic's tech.
3: There is a very high chance of Panasonic challenging Tesla for IP theft when Tesla starts its own cell manufacturing and the relationship deteriorates. It is safest for Tesla to have bought Panasonic's IP or at least not be in a position to be held hostage by a 35GWh cell supplier when it happens.
4: There are no employees in the US with experience of cell mass manufacturing aside from the Panasonic employees in GF1. These are the best people for Tesla to acquire to ramp its own cell programs and teach new employees the trade.
5: Buying Panasonic GF1 should increase Model 3 cash flow per car.
6: Buying Panasonic GF1 will make it much easier to retrofit the existing cell lines with Maxwell electrodes and make space for capacity expansion within the current footprint.
7: Acquiring Panasonic's GF1 supplier contracts and relationships will be very helpful for scaling up supply for Tesla's future cell capacity.

The value of Panasonic's GF1 business is worth far more to Tesla than it is to Panasonic standalone. Panasonic knows Tesla plans to make cells for future expansion in-house - so it knows it is never going to get scale much beyond 35GWh to make its GF1 business significantly profitable - therefore discounted cash flow value of this IP is actually very low to Panasonic (also given the rest of the industry is going for Prismatic/Pouch cells). Tesla on the other-hand knows this business can be used as part of a platform to grow to 2TWh annual capacity. It will far simplify and likely accelerate its in-house manufacturing plan and has huge future value.

You make a very convincing case. Thanks for putting this together.