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

[Chocochip]

A couple of possible scenarios for the cash raise I think.

1. Since the call they became worried about cash flow because of the virus etc.
2. Since the call the SP went up so much it looked stupid not to shore up the balance sheet.
3. During the call Elon was quite clear that if they had somewhere that made sense to spend the money they would spend it...perhaps plans in the last few weeks have changed regarding new GFs and/or battery plants.

Side note, I have a feeling that my cheap insurance $285 put I bought back in December will expire worthless on 3/20. Don't ask me how I know.

It seemed clear (to me) during the call that a capital raise is something they've been considering, but also that Elon doesn't want to needlessly dilute the company. Mainly because he doesn't want his holding to get diluted -- notice how he always buys into any offering and never misses an opportunity to accumulate shares.

But as circumstances may have changed in terms of investment and / or development acceleration opportunities post-ER, combined with a ballooning market cap, they might have concluded it's time to do it. Hell, as far as we know, it might have been on their minds since then, but they were waiting for the right time to do it.

 

[ninpb]

My hunch is that Tesla is raising the money to build a skateboard factory and will announce a deal at battery investor day. I don't see how other automakers can compete by building their own skateboard. They will instead buy it and innovate on top of it. Currently no one cares about the skateboard of existing cars, they care about the brand, looks, and features. That will continue with EVs, with range and performance being new variables. If you can buy a skateboard and get close to Tesla's range and perf, why spend billions to develop one?

To me, the parallels to EVs and the computer industry are too close to ignore.

Why deprive precious battery supply from your own line when you think your own product is what people love to buy.

 

[Nocturnal]

My hunch is that Tesla is raising the money to build a skateboard factory and will announce a deal at battery investor day. I don't see how other automakers can compete by building their own skateboard. They will instead buy it and innovate on top of it. Currently no one cares about the skateboard of existing cars, they care about the brand, looks, and features. That will continue with EVs, with range and performance being new variables. If you can buy a skateboard and get close to Tesla's range and perf, why spend billions to develop one?

To me, the parallels to EVs and the computer industry are too close to ignore.

If they have a plan to make more batteries than they could use then that's possible. The battery plan has to come first.

 

[replicant]

If you can buy a skateboard and get close to Tesla's range and perf, why spend billions to develop one?

Is it up to Tesla or to its competitors to take this decision?

Tesla can either make the batteries, assemble a great cars on top of them and keep the full profit on all the part or all the miles driven in FSD.

Tesla's competitors will want Tesla's batteries, but Tesla have far better uses for them. Why let companies who refuse to invest renewable energy, supercharging, OTA updates, stationary storage (…) keep the reins of the future of energy and transportation?

These dinosaurs only want to not die in the hope of making profits on anything they can sell, even if their products will destroy our habitat. We can jut let them die and move on. Lots of new companies will happily take their places and build a better future.

 

[Artful Dodger]

I estimate from the numbers given in that article that they're talking about water that's something like 6ppm lithium. A typical lithium resource today (whether you're talking salars, spodumene or lithium clays) is usually several hundred to several thousand ppm Li. Of course, Li concentration isn't the only thing that matters - concentrations of other salts matter too, and they don't give any indication of those.

I'd love it, mind you, if MOFs ultimately could render such low-concentration lithium available at economically competitive prices to conventional lithium sources, for one reason having nothing to do with fracking: selectivity and low-concentration absorption are key to making seawater lithium extraction economically competitive, and that's a limitless, minimal-impact resource. But it seems we're far from that point. For the time being, low quality lithium resources = comparatively expensive lithium.

I wonder if Boring Company could turn the Qattara Depression into a gigantic fractional-crystallization seawater salt extractor... I estimate it'd yield about 10t of lithium per day on a metal basis, or 54 tonnes of carbonate, or about $540k/d at current prices, or ~$200M/yr. Plus tons of other minerals, and hydropower potential (conventional and pumped), and increasing middle eastern rainfall, and potential recreation / real estate possibilities.

There is a lithium extraction pilot project starting in Sherwood Park, Alberta (at 'Refinery Row', near Edmonton):

MGX Minerals brings rapid lithium extraction to Alberta’s oil patch

Lucrative lithium potential looms in Alberta

Smith: Alberta oil industry may be key to solving lithium shortage

I bring this up mostly to make sure Elon is aware of this resource (and since I know he subscribes to your feed on the Twitters...)

Cheers!

 

[TheTalkingMule]

How is it more effective to sell fewer cybertrucks? If the production rate is low it won't satisfy demand allowing other makers to sell lesser vehicles. While it could have an impact on market price point for Ford, which of the following forces Ford's hand more with regards to pricing?

1,000 cybertrucks per year at $50k

100,000 cybertrucks per year at $50k

In other words, supply and demand pricing -- if Tesla doesn't scale production of the cyber truck then it would keep supply low and have the opposite effect of what you state.

The Plan isn't to build every truck for the US market, it's to force universal change. There are a million and one other more important things Tesla will need to be doing in 2022/23.

Who wants to deal with traditional F150 owners flopping around complaining? Just set the benchmark and let the market fill the void(while struggling to not go bankrupt). Scaling the pickup segment will be a LOT more annoying than sedans or crossovers.

 

[KarenRei]

Alex on Twitter

Found a better version of this pic:

Tesla: Ökonomen uneins über Umweltauflagen für Tesla-Projekt

Source is cited as "DPA", whoever that is.

Still would love some drone videos, though! A single picture from the start of the day isn't much.

 

[vikings123]

Update on Tesla Model 3 Inventory levels in US.

Around 600 M3 appeared in the Existing Inventory on Tesla Website on 2/14/2020. It appears Tesla has started to shift production for US market. For more info please follow the link for aggregate Tesla Inventory lists:

https://ev-cpo.com/hunter/

This is interesting. I thought there was a 4-5 week waiting period for new orders.

 

[Silentk]

I’ll just crouch down in the weeds over here and wait for my opportunity to pounce

 

[heltok]

The question was if Tesla should raise money to pay off debt. Elon thought it was a dumb idea. That was aspie language for that raising money for other reason than to pay off debt may or may not be a good idea.

 

[Chunky Jr.]

If they have a plan to make more batteries than they could use then that's possible. The battery plan has to come first.

That's why I think it would be part of battery investor day. They announce plans to greatly increase their battery production and sell high margin skateboards. This is just wild speculation on my part obviously.

 

[Cosmacelf]

yea but Moody’s thinks they’re grrrrreat!

Fire Away!
(It’s the batteries, Stupid!)

Ratings agencies seem to have a 6 month rear view mirror. Oh, the company’s on the verge of bankruptcy? Downgrade! Oh, the company is piling on cash and has a strong balance sheet which was obvious to everyone a year ago? Upgrade!

My biggest trade (in dollar terms) was buying Tesla’s old Solarcity bonds after Tesla acquired them, for about $0.76. They matured at par, of course. Needless to say, I didn’t pay attention to the credit rating, just like I didn’t on the other side when I was offered some AAA CDOs in 2007, which I didn’t buy of course.

There desperately needs to be credit rating reform, but since we didn’t get it after 2008, I don’t know if we’ll ever get it. Meanwhile smart investors can use the credit ratings to their advantage by seeing irrational ratings and using it to buy bonds at a discount.

 

[rsm287]

I see your Rob Maurer and raise you Dave Lee on Investing:

@DaveT goes into some detail on the timing (relative to SP) and motivation for the raise. An interesting analysis for sure, I found it quite educating!

Loved it

 

[Chocochip]

My hunch is that Tesla is raising the money to build a skateboard factory and will announce a deal at battery investor day. I don't see how other automakers can compete by building their own skateboard. They will instead buy it and innovate on top of it. Currently no one cares about the skateboard of existing cars, they care about the brand, looks, and features. That will continue with EVs, with range and performance being new variables. If you can buy a skateboard and get close to Tesla's range and perf, why spend billions to develop one?

To me, the parallels to EVs and the computer industry are too close to ignore.

Sorry to hit you with a dislike, but I just don't see that happening. Neither Tesla or the Traditionals want it. Tesla because they'd rather focus their resources (incl. engineering) into producing their own high-margin products, the Traditionals because it would be equivalent to admitting defeat. They'd rather die than admit a new-comer beat them at their own game*. And they will.

*It's not really their game. ICEVs and EVs may look the same, but the technology is completely different, and the traditional OEMs have expertise precisely and exclusively in what makes ICEVs different from EVs: the ICE.

 

[KarenRei]

El Salvador reduces import tariffs on EVs from 30% to 0%.

Secretaría de Prensa de la Presidencia on Twitter

 

[Chunky Jr.]

Sorry to hit you with a dislike, but I just don't see that happening

No worries, I appreciate the feedback. To me, the EV market seems a lot like the early days of the PC. At first everyone tried to build their own, but eventually they standardized on a common motherboard design, chipset, and OS. I think EVs are going the same way, but Tesla will be the one supplying the motherboard, chipset, and OS. Unless Tesla has 100% market share, the market for EVs >> the market for Teslas, so if Tesla can also get a piece of the rest of the pie, I think it makes sense to take it. And if you're another automaker, why spend billions to develop something you can buy for less?

I could be wildly wrong, and it wouldn't be the first time, but it is a fun thing for me to think about as I contemplate where things are going.

 

[Late2theGame]

Found a better version of this pic:

Tesla: Ökonomen uneins über Umweltauflagen für Tesla-Projekt

Source is cited as "DPA", whoever that is.

Still would love some drone videos, though! A single picture from the start of the day isn't much.

"DPA" : Deutsche Presse Agentur = German Press Agency - a major German news distribution service like Reuters etc.

Edit: The article itself is all about environmental concern, regulations, 2 expedited lawsuits got filled yesterday against Tesla, current measures Tesla took to protect ants, bats, and 'rare' reptiles are described, and a good number of citations from politicians and economic 'experts' are given.
I found it overall balanced, which should not surprise too much as it is published in a trade and industry newspaper and not in a political paper.

 

[ninpb]

Sorry to hit you with a dislike, but I just don't see that happening. Neither Tesla or the Traditionals want it. Tesla because they'd rather focus their resources (incl. engineering) into producing their own high-margin products, the Traditionals because it would be equivalent to admitting defeat. They'd rather die than admit a new-comer beat them at their own game*. And they will.

*It's not really their game. ICEVs and EVs may look the same, but the technology is completely different, and the traditional OEMs have expertise precisely and exclusively in what makes ICEVs different from EVs: the ICE.

The established would most likely fumble the integration and execution (half ass development of everything else on top) so bad that it will look bad on Tesla (because they will blame Tesla).

 

[davecolene0606]

El Salvador reduces import tariffs on EVs from 30% to 0%.

Secretaría de Prensa de la Presidencia on Twitter

El Salvador has quite a bit of installed wind capacity.

Fire Away!
(It’s the batteries, Stupid!)

 

[dl003]

I don't understand why Elon is always so irritated when asked about raising capital. Perhaps he sees it as a sign of weakness, or outsiders telling him how to run his company? Or he just wants to prove the shorts that his company is self sustainable?

Last time it was "we can't rely on free cash and need to save on expenditures". This time is "we are spending as fast as we can but still swimming in cash". I think he has earned the credibility that his business model works with such positive cash flow so there's really no one criticizing him for tapping into raising capital for even more growth.

He sees it as non essential and dry. If you haven't noticed, Elon lights up when you ask him nuanced technical questions. Everything else, especially coming from people who demonstrate a hostile attitude, he's easily irritated.