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

[MP3Mike]

We know Maxwell tech is supposed to be 16x production density increase.

That 16x only applies to the electrode portion of cell production. Not to any of the rest of the steps, of which there are many.

 

[Curt Renz]

Woah! I was expecting they would bump it up to $8,000 or something!

They now say that their 'Expected Value' is $7,000...
.

ARK's previous bull case for TSLA was $6,000. Their bull case is now $15,000.

 

[killianss]

ARK's previous bull case for TSLA was $6,000. Their bull case is now $15,000.

I am happy with $6,000 and definitely happier with $15,000
If the latter hit, I would quit my day job and open a coffee shop.

 

[mickle]

General note:
Their $7k target assumes no self driving revenue. The model places the odds of FSD happening at only 30%.

The ARK PT doesn't even mention energy or solar revenue. Surely, these will be much larger in 4 years. Wondering why they don't include it?

 

[Cosmacelf]

With all these traditional OEMs struggling to get enough batteries, there is always this nagging question in my head: how did Tesla, in such a crowded and competitive market, get their hands on production capacity at LG and CATL for at least 150,000 Chinese Model 3s per year (and more when the Model Y plant comes online)? How are they snatching those batteries away in front of VW, Mercedes, KIA/Hyundai, who are all extremely battery constraint, and not pay their weight in gold? Does anybody have an explanation?

In general, the boldest buyer wins. If you have VW saying I want 20,000 units next year, while Tesla walks in and says I want 150,000 units this year, guess who gets the contract? And Tesla has the balls and ability to sign a take or pay contract. ie. they will take delivery of the contracted amount, or if they don't take delivery, will pay the cell supplier anyways. A Porsche or VM or Jaguar CANNOT sign such a contract because they really don't know what their sales number are going to be. And so far, their sales numbers are anemic.

Tesla is also asking for a different form factor than all the auto majors. They are asking for cells in the same or similar form factor that the cell manufacturer makes for many other high volume consumer uses. It is likely that LG or CATL has excess capacity in cylindrical cell format.

This must be sweet irony for Tesla. In the third row podcast, Elon was lamenting how when they were first producing the Model S, they would get the "D" team from a supplier, which is why they ended up vertically integrating so many parts. No one wanted to talk to them. Well, now the auto majors are sucking on that same tailpipe with cells. No cell supplier wants to talk to them, they only want to talk to Tesla. Suck it long and hard fellas.

Update: I just thought of another thing. One of the things that was bothering me is why the Chinese Tesla Model 3 isn't a lot cheaper than it is. Labor and shipping charges are so much lower. Just now I realized that the Chinese battery cells might actually be costing Tesla more than what the cells cost from Nevada. Tesla might be able to afford to pay a premium price for Chinese cells since their other costs for MIC Model 3 are lower. Just a thought. No idea if it's true, but I kinda thought Elon hinted at this in the Third row podcast, or maybe I'm hallucinating again.

 

[Spksmp]

20 Million cars .... 35 GWh x 2 X 20 = 2,800

A but some portion would be smaller cars with smaller batteries...

When we need to add in Tesla energy ... my guess around 500 GWh per year...

2 TWh is a good initial target for Tesla...

You're right, 2TWh will likely be enough for Tesla's needs in 2030. But the world will need far more capacity. It needs more now. And if Tesla can help supply that...

I just can't think of what else would blow even Elon's mind, that fits in with the information we already know, other than an obscene amount of capacity now.

 

[Cosmacelf]

The ARK PT doesn't even mention energy or solar revenue. Surely, these will be much larger in 4 years. Wondering why they don't include it?

Because Automotive is at least 10x bigger and will remain so for the foreseeable future. While energy is growing, so is automotive.

 

[JRP3]

Bear Case

$1,500

We believe that there is a 25% probability that Tesla could be worth $1,500 per share or less in 2024.

So TSLA still a zero!

 

[Cosmacelf]

Posting this for the graphite ad in the beginning

Yes, that ad is great. Well worth watching. Very funny. Here's a direct link to the ad:

The point of the ad, BTW, isn't really to pique Elon's interest (that would normally be handled via a phone call - Tesla would take that call). It is to shoot up the stock price, so that they can do a secondary offering, so that they can then finally develop their mine. This company doesn't have anything other than mineral rights. They either need a 10 year supply commitment (which is normally the way these things are financed), or raise a bunch more money via another equity offering.

While the ad promises battery grade graphite, that's just a promise. It isn't as if they've built that plant either. And their graphite is still in the ground. So, a bunch of promises.

 

[Cosmacelf]

I was surprised when he said that. Seems as if it will be more difficult to make a sealed pack if the top cover is the vehicle floor, and, more importantly, I'd want the extra layer of protection and the small air gap between the pack top and floor bottom. A hard landing on an object could mean the top of the cells contact the vehicle floor, seems like a bad idea.

Good points. The battery pack engineers might very well be shaking their heads at Elon's comments. OR they could be thinking, hmmm, how can we do this? Probably the latter...

 

[Cosmacelf]

Honestly, I'm not sure I want to tell at this point It's market cap is 3 1/2 orders of magnitude smaller than Tesla's, averages one trade every day or so, and you guys could ruin my cost basis while I'm still acquiring.

Well, tell us after you've acquired your position then...

 

[Spksmp]

That 16x only applies to the electrode portion of cell production. Not to any of the rest of the steps, of which there are many.

Ahh my bad, I see that now. Well, there goes that 10x capacity theory out the window. I still think the mind blowing part has to be a big increase in capacity though. Just not that big. lol

 

[rsm287]

You're right, 2TWh will likely be enough for Tesla's needs in 2030. But the world will need far more capacity. It needs more now. And if Tesla can help supply that...

I just can't think of what else would blow even Elon's mind, that fits in with the information we already know, other than an obscene amount of capacity now.

Maybe what blows Elon's mind is that the cost of cell production will be so much lower than their current costs?!

 

[kbM3]

The part that really sticks out to me is the "I don't know ..... or something"

So casual, like "you know, just a couple thousand GWh a year, no biggy."

We know in the past he has said he wants 2TWh/year by 2030. Now he says that battery day will not just blow people's minds, but it already blows his mind too. Announcing a path to 2TWh capacity by 2030 wouldn't blow my mind. I'm expecting this. And it certainly wouldn't be blowing Elon's mind. So what is? I think it's clear:

We know Maxwell tech is supposed to be 16x production density increase. Let's be conservative and go with 10x. So in the same space GF1 does ~35GWh now, they could do ~350GWh. Now add in similar sized production at the Cell Factories in GF3/4, and we could have ~1TWh/year. As soon as GF4 is up and running. Not by 2030, by next year. This would blow my mind. The only limiting factor would be raw material supply.

Do they need this many cells now? Sure they do. Semi will require a huge amount if they want to produce it at any sort of volume. Also, assuming these cells are 20% cheaper, Powerwalls and Megapacks would sell like hot cakes. Fossil fuel peaker plants would be replaced everywhere. Any extra, they would sell to other automakers, they sure need them, and this aligns with Elon's eventual goal.

By 2030, the world will need dozen's if not hundreds of TWh's of capacity. A couple TWh's is nothing. I believe battery day will basically change the course of history. A shot through the heart of ICE and FF. With this level of production capacity, the change to a sustainable future will be immediate.

Or, am I dreaming too big? What else would "blow people's minds"?

Whatever it is, I'm expecting the market to react big in April.

Do you have a source for the 2030 target date for 2 TWhs?

I only remember Elon saying 1-2 TWh / year target, but not attached to a date.

 

[AudubonB]

Ark posted its updated projection.

Tesla Price Target: Tesla's Potential Trajectory During the Next Five Years

2024 "expected value" - $7k. Bear case: $1,500. Bull case: $15,000.

Satisfied to see ARK appears to be in the ballpark. I'd showed my hand here one or two days ago - $16,000 (no, that wasn't a joke even though I placed it in some amusing throwaway reference). That's my 5-8 year expectation; for me the bear case is that events cause that to be delayed for 2-5 years further.

 

[MC3OZ]

Maybe what blows Elon's mind is that the cost of cell production will be so much lower than their current costs?!

I can't even guess what blows Elon's mind... but I know it will be good.

I was already excited about Battery and Drive-train Investor Day and the Plaid Model S, now it feels like I'm a 3 year old waiting for Christmas

 

[Dare]

Interestingly today, my old bookmarks resurrected this prescient post from @DaveT six years ago on January 6, 2014 which he titled
2019: The long horizon approach to TSLA investing

In it, among other things he makes this 2019 prediction:
“So conservatively if Tesla can sell 700k cars in 2019 then the stock price will likely be at least $630/share.”

Articles/megaposts by DaveT

Great job Dave!
Now...what’re your 2025 predictions??

Amazing work! Congratulations Dave. Love your channel.

 

[JustMe]

Yes, I can see that now, thanks. Still don't get the purpose of this column though, as in - what is it supposed to tell us?

The cumulative probability column shows the likelihood that the stock will/will not reach a certain price target. For example, according to their model, there’s a 57% chance that the stock price will go above $2,500 and a corresponding 43% chance that it will be at or below $2,500

 

[Artful Dodger]

The old software still has a lot of value in all of the AP and EAP software released in customer cars today, and I expect Tesla will still have teams working on incremental improvements to this software path (plus for those with FSD computers, simply scaling up the neural net size using the existing code base to increase accuracy).

My old Stats Professor said something that I've never forgotten:

"There millions of ways to do a particular thing wrong, and in my time I have sampled a fair number."​

Word for the weekend.

Cheers!

 

[AudubonB]

Oil stocks should be the most shorted, and they're not. What does that tell us?

It tells us that high-yield stocks are super-treacherous for shorters. CVX's dividend right now yields 4.6%; XOM a whopping 5.4%. If you're short, you have to pay not only the borrow rate but you also are required to cough up those dividends.
I long since have viewed dividends as nicely analogous to the pork chop necklace that a dog has to wear for other dogs to play with it. If you like, you can consider it the bribe they pay to keep short sellers away.