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

[Curt Renz]

Solving the Money Problem - yesterday:

 

[GOVA]

My wife, who has a reservation for a cybertruck, seems to be...preoccupied...with the cybertruck. Her Christmas gingerbread baking seems to have also been influenced.

Note. She is a retired soldier..not a baker...so any less than positive compliments may result in her hunting you down and kickin your ass .

Just sayin.

Hey, I'd drive that.

 

[HG Wells]

Possibly important.
No its VERY important !

There have been virtually NO model 3 inventory in the US for the past few months.
Tesla has just listed 87 units as being available.
Only 2 have less than 100 miles on them.
They are selling off the DEMO's !

 

[Beltsbear]

Possibly important.
No its VERY important !

There have been virtually NO model 3 inventory in the US for the past few months.
Tesla has just listed 87 units as being available.
Only 2 have less than 100 miles on them.
They are selling off the DEMO's !

Yup. If you want a new Tesla this year, you pretty much need to be in Cali or buy an S/X.

 

[RobStark]

VW's network, which is open to GM, Ford and FCA products is a start but is not enough and is expensive for users.

Electrify America isn't the only CCS Network in the USA.

 

[BioSehnsucht]

Electrify America isn't the only CCS Network in the USA.

Is there another CCS network in the US that plans (or at least claims) to install chargers in locations useful for long distance travel (versus being located to only be useful for local drivers)?

 

[Carl Raymond]

Solving the Money Problem - yesterday:

Enjoyed that reference to "the scientifically literate Chinese government".

Could be suggesting that one or two nations with less enthusiasm for EVs are lacking in the science department. Maybe.

 

[tinm]

Reuters - late this afternoon: GM doubles down on big SUVs to pay for tomorrow's electric cars

An auto industry reporter at a major newspaper once told me he thought this and Mary Barra’s insistence on a bet-the-company revenue strategy around pickup trucks, was going to be GM’s doom. He figured GM goes bankrupt around 2022-2023.

Clock is ticking.

 

[Singer3000]

In my opinion Lithium Carbonate/Hydroxide and Nickel Sulphate supply are by far the largest potential bottleneck to the EV transition. The price isn't really an issue (likely $500 lithium hydroxide and $900 Nickel sulphate per SR+ pack currently), but in the future actual availability could be. Not this year, but during the period 4-10 years from now when EV penetration really does takeover. Lithium and Nickel sulphate are the slowest moving part of the EV production capex chain (Tesla can build a car factory in 1 year, likely it can build & ramp its own cell and pack factory in 1-3 years, but new Lithium plants take 5+ years to ramp). Elon has said Tesla should get into Nickel and Lithium processing. He is right and I really hope they will.

None of the leading Lithium and Nickel companies believe in an EV transition anywhere near as aggressive as Tesla, so they are not investing in the 2025-2030 capacity required to meet Tesla's goals. For example ALB is expecting demand from EVs of 700kt LCE (lithium carbonate equivalent) in 2025 (which is equivalent to a 4x increase in Lithium market size from 2018 levels). This is enough for 13 million EVs at a 56kwh average pack size (size of the SR+ pack) and market average 0.93kg LCE /kwh (I think Tesla's is closer to 0.7kg/kwh as it has more advanced chemistry). This is what the industry is building towards, but it is not enough. Tesla alone will need around 10x the current Lithium market to supply its 2TWh cell production target, or c.2x more than the entire global lithium capacity targeted by the industry by 2025.

There is no lack of actual resources in the ground, but there will be a lack of mines and processed high purity metals unless capex is quickly ramped.

I think average Lithium capex of around $700-1,400m per 1 million EV capacity will be required. Likely less than 20% of capex is used for buying the resources in the ground plus buying the equipment to dig it up (or pump it up for Lithium brines). Nearly all the capex is for highly complex processing - crushing equipment, processing, refining or electrochemical plants etc. For example, look at Nemaska Lithium's project (https://www.nemaskalithium.com/assets/documents/NMX_NI4301_20190809.pdf) Page 394 shows pure mine capex at just CAD$28.5m (total mine site CAD447m) vs total capex of CAD1.27bn including the electrochemical plant.

These are highly complicated value add processes and it takes 5-6 years to ramp up a new lithium plant. The purity and consistency of the metal (particularly lithium carbonate/hydroxide) is also critical to battery energy density, cycle life, power density and safety. So it is not easy to substitute new lithium producers into your cell supply.

There has been one main reason for Lithium Prices crashing the past 18 months.

China EV sales are far far below plans this year following the economic downturn and huge subsidy cuts. Battery metal capacity had been built for a supply ramp which didn't happen and this supply is now flooding the market. The price impact of this has been exacerbated by two factors:

• Lithium Supply had been built for low quality low range batteries with low tech cell chemistries. The Chinese subsidy change means there is very little demand for these low range subsidy driven cars anymore. The Lithium purity ordered for these cars is not good enough to build high quality high energy density cells, so this low grade product is finding no buyers any more. Hence the price of low grade lithium products finding no floor, while at the same time cell supply for high quality battery cells is still limited.
• Lithium Carbonate and Hydroxide cannot be stored and stockpiled for long. The product quickly spoils, so unlike most commodities, a producer cannot simply stockpile when the price is low - they have to sell quickly no matter the price. This means prices are always going to be volatile and will always be driven by very short term supply and demand dynamics rather than longer term considerations. To some extent this is more similar to the volatility you see in short shelf life agricultural commodities.

So Lithium Prices have crashed due to a short term subsidy adjustment in China, not due to a long term setback to the EV transition story. However, the lower prices have caused lots of lithium companies to fail to raise financing and cancel production plans that would have brought on new capacity after 5-6 years in the 2025+ timescale. So I think it is important for companies like Tesla that actually do still believe in the EV transition, and have the cash to finance it, to step in to fund the capacity required to match their battery cell production ambitions.

Its a very big mistake to take a short term lithium price correction the past 18 months to mean there is no need to bother helping to build future capacity.

Note my argument is utterly different to the false FUD narrative that there are not enough lithium, cobalt and nickel resources for the EV transition. There are plenty of resources. And it is relatively easy to build the new capacity to get to a 100% Clean Energy society. But this takes time and cash. I'm just saying Tesla needs to be masters of their own destiny and not rely on an array of half incompetent junior metals startups and conservative larger metals corporations who believe in a slow EV transition to deliver on a product so critical to Tesla's own extremely aggressive battery production targets.

Nickel Sulphate is a similar story, but I'll discuss that another time .

TMC at its best. Thank you.

Based upon everything you know, what do you feel is a realistic ramp in GWh per year between 2020 and 2025?

$700m - $1400m capex per million cars, just in upstream Li sounds like rather a lot to me if the plan is to vertically integrate. Even if you spin off a Tesla mining business into a series of project SPVs with 70/30 debt/equity, this will be a huge financial endeavour if you are also vertically integrating the Ni piece. And building cell and vehicle capacity on top (they won't all come with free funding like GF3).

People are going to shout at me but I'm expecting a substantial equity raise after Battery Investor Day, certainly if their vertical integration plan goes all the way upstream to mining and processing but possibly even if their near term ambition is limited to cells (Pana US?). If you are right with this extreme version of vertical integration and if we're to hit the 2TWh number, I'd have thought Tesla's cumulative capex by 2030 has to be in the region of $100bn, not including additions to the lease book.

 

[RobStark]

Is there another CCS network in the US that plans (or at least claims) to install chargers in locations useful for long distance travel (versus being located to only be useful for local drivers)?

Locations in Metro Areas are also useful.

Which is why Tesla is rolling out urban chargers in addition to Superchargers in metro areas.

More miles are traveled within 200 miles of home than outside it.

ChargePoint,EVgo, EverCharge, Electrify America, Volta, Sunspeed Enterprises, Smatrics, IES, Engenie all matter.

 

[UncaNed]

This whole time (2 yrs+) I've been hoping "the pop" would coincide with my 59.5 retirement age on...

No good can come from making your birthday public. Doesn't help security, not that it's hard to look up.

 

[Freder Reeve]

There have been virtually NO model 3 inventory in the US for the past few months.
They are selling off the DEMO's !

Noticed that for my local'ish 200 mile radius earlier tonight too, and they all have Full-Self-Driving option included here. There were exactly 3 new M3s listed all quarter from central to south florida (they lasted maybe an hour on the site) until tonight's demos were unleashed. Looking forward to seeing if any of these are still available in the morning.

 

[UncaNed]

I like the trajectory today. Time to start working on our 420 celebration pictures.

420 being only a 20% increase, it seems so reachable.

 

[shrspeedblade]

I have been encountering an increasing number of Cruise and Waymo self driving test cars in the Bay Area, so much so that I rarely don't see several any trip into San Francisco.

A concern I have is that while these companies may not have near as many miles driven as Teslas with Autopilot, there is something to be said for quality over quantity. In this case, I mean that using myself as an example, while I probably drive more autopilot miles than almost anybody on earth in a Model 3 most of that driving is over the same roads, that are already fairly well suited for it. Take driving in SF for instance, most of the time it would be borderline insane for me to use autopilot, and if I do it's in a fairly brief, limited fashion with close supervision. Obviously it's impossible to know the full capabilities of the competitors cars, but a phrase from a racing text comes to mind:

Practice doesn't make perfect, perfect practice makes perfect.

A self driving car in San Francisco, even if interventions occur occasionally, is constantly "pushing the edge of the envelope" for self driving technology. I can assure you even though I know it very well and I am certainly a frequent user I am rarely pushing that edge. (only because Elon's check hasn't cleared yet, $TSLAQ) This is not to say that Tesla's Autopilot miles don't have value- they certainly do- but without a test fleet constantly pushing the edge of that envelope the ragged edge will expand only slowly as any responsible users will not be pushing hard against it.

Fire Away!
(Yes I'm playing devil's advocate here intentionally, and am looking forward to the responses.)

 

[Webeevdrivers]

An auto industry reporter at a major newspaper once told me he thought this and Mary Barra’s insistence on a bet-the-company revenue strategy around pickup trucks, was going to be GM’s doom. He figured GM goes bankrupt around 2022-2023.

Clock is ticking.

I would disagree that it’s a bet the company move. It’s GM. They’ll just go back to the American and Canadian Goverments, get new factories paid for and a whack of cash and then move on. It’s a no lose situation.

 

[UncaNed]

Possibly important.
No its VERY important !

There have been virtually NO model 3 inventory in the US for the past few months.
Tesla has just listed 87 units as being available.
Only 2 have less than 100 miles on them.
They are selling off the DEMO's !

Clearing old inventory for a newer version, perhaps?

 

[3Victoria]

I have been encountering an increasing number of Cruise and Waymo self driving test cars in the Bay Area, so much so that I rarely don't see several any trip into San Francisco.

A concern I have is that while these companies may not have near as many miles driven as Teslas with Autopilot, there is something to be said for quality over quantity. In this case, I mean that using myself as an example, while I probably drive more autopilot miles than almost anybody on earth in a Model 3 most of that driving is over the same roads, that are already fairly well suited for it. Take driving in SF for instance, most of the time it would be borderline insane for me to use autopilot, and if I do it's in a fairly brief, limited fashion with close supervision. Obviously it's impossible to know the full capabilities of the competitors cars, but a phrase from a racing text comes to mind:

Practice doesn't make perfect, perfect practice makes perfect.

A self driving car in San Francisco, even if interventions occur occasionally, is constantly "pushing the edge of the envelope" for self driving technology. I can assure you even though I know it very well and I am certainly a frequent user I am rarely pushing that edge. (only because Elon's check hasn't cleared yet, $TSLAQ) This is not to say that Tesla's Autopilot miles don't have value- they certainly do- but without a test fleet constantly pushing the edge of that envelope the ragged edge will expand only slowly as any responsible users will not be pushing hard against it.

Fire Away!
(Yes I'm playing devil's advocate here intentionally, and am looking forward to the responses.)

I think the main argument against the Waymo/Cruise approach is that it is very dependent on detailed mapping and Lidar.

The concern is that this approach does not scale well. I.e. it is hard to generalize the specific to whole. E.g., while you might learn extremely well around you bedroom without nary a collision with bed or chair, it may not prepare you for the wider house nor the wider world. Applying their approach to all communities requires fine mapping all of them.

Tesla is approaching the problem much like humans do, using vision and learning how the world works. A young driver has 16 years of observation before starting to drive, but picks it up rapidly. FSD is learning, too. It is a question of speed of that learning. I think we see just the tip of the iceberg, with green-only peering more deeply into the depths.

 

[MP3Mike]

Clearing old inventory for a newer version, perhaps?

I think it is less that and more about Elon saying that we need to deliver every car possible by the end of the year.

But it is always good to keep your demo cars in top shape to show people. And of course they are always making updates to the cars, so they will have new things the old ones didn't.

 

[kengchang]

I think it is less that and more about Elon saying that we need to deliver ever car possible by the end of the year.

But it is always good to keep your demo cars in top shape to show people. And of course they are always making updates to the cars, so they will have new things the old ones didn't.

People are probably okayish with demo car around 1K miles, doubt people would like to buy a new car with 5K miles already.without heavy discount

 

[Tim S]

Possibly important.
No its VERY important !

There have been virtually NO model 3 inventory in the US for the past few months.
Tesla has just listed 87 units as being available.
Only 2 have less than 100 miles on them.
They are selling off the DEMO's !

Agreed. I can see 9 Model 3s available within 200 miles (NY, NJ, PA, MA) and they all have hundreds of miles on them. Some over 1000 miles.