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

[Singuy]

I am not really going to respond to the above Message. I just wanted to steal it to back-up what I am going to say about the whole Battery day "thing."
before I get to that though.... How can I not mention that I felt like Battery Day was postponed over and over again for two different reasons... First was that the discoveries they found were being integrated into a pilot scenario fairly well so those in charge felt that they could discuss an almost working line, and when it wasn't being resolved on their time schedule they rescheduled Battery Day. My "proof" is in the fact that the people that did go had to sit in cars, So the whole "this needs to be live and seen" excuse never materialized. The second less bearish reason I feel Battery Day was delayed several times was that progress on the engineering front was occurring on several fronts (see message I've quoted above.).
Now to the other slightly negative thoughts I have about battery day....
Go look at all the Shitgar they showed us in what, an hour? It felt like I was truly getting overwhelmed by an infomercial about some microwave, stove-top, convection oven, dishwasher.
If a third of what they had was revealed I would have been pretty damn amazed. As it is I started wondering WTF are they thinking. And then they glossed over huge technology gains to hurry on to the next thing... Whenever any promoter does that scenario we ALL become critical... but not with Elon? It is so hard not to...
Especially when so much of what they told was dealing with chemistry that is so good, but we don't have anything really working yet....

So, Tons of "GREAT STUFF".... coming. I was surprised the floor didn't drop out from under us... i really woke up Wednesday believing it was going to be a $100/share loss kind of day. I even expected the rest of the $100 down movement to continue today...
But then MAX pain is tomorrow...we are all ants in an ant farm owned by our MaxPain Child.

Tesla went from schematics and acquiring companies to a factory producing tens of thousands of cells in 1.5 years. Show me another company that can do this? Battery tech took 20 years to 2x its capabilities and plateaued, Tesla took the plateau and 2x it in less than 2 years. So GTFO if you are not impressed.

 

[jhm]

Let's define "current tech" as the new Panasonic bty line going in at Giga Nevada right now.

Pansonic says it's a $100M investment and will add 3.5 GWh/yr capacity. That's roughly $28M per GWh annual capacity.

Is your estimate might be based on 2016 costs for GF1? But clearly there's some extrapolation errors when estimating $2T for 20 TWh.

Using that level of precision, you can only estimate to within roughly +/- $25B per GWh so it's insufficient precision for estimates at this scale.

Notheless, there's other infrastructure costs for new construction which Panasonic's $100M estimate does not include, but I'm not including them based on willingness of local Government's to fund basic infrastructure (this is the exact deal Tesla got in Shanghai: they get the building basically free, and they pay for all the factory tooling and equipment).

Additional economies of scale and impact of technology on the construction industry will make the 180th Bty Line much cheaper to build in 2042 than the 1st production line in 2021.

So initially, I think $240 annual Tesla's $240M CapEx will build:

• 1 pilot line @ 10GWh/ur in 2020/21 (12 mths ending 2021Q3)
  
• 1st Production line buildout starts 2021Q3; modular design completed
  
• 1st Production Facility adds ~1 module/mth; 9 lines complete by 2022Q4

That's about as far as $240 / yr Capex takes you. But once the production techniques are proven, it's time to ramp up CapEx as Tesla Grohmann begins building MTBTMs (machine that builds the machine) in 2023.

Cheers!

The $2T estimate for 20TWh capacity is from Tesla's Battery Day presentation. They are estimating the total cost to the advanced lithium ion battery industry. I assume that it is consistent with their claim that they can reduce capex per GWh by 69%.

 

[jhm]

Watching the super cut I caught the $1.20/kWh anode cost they cite. When I watched it the first time I wasn't thinking, but that is a raw dollar figure whose improvement is given as 5% cost reduction at the pack level. They list some alternative methods, the cheapest of which costs $6.60/kWh, and say that their current batteries are better than that, but not as good as the $1.20/kWh.

So: $6.60/kWh > current cost > $1.20/kWh
And: current cost - $1.20/kWh = 5% of current battery pack cost

This implies that their current pack-level cost is less than $108/kWh. How much less? That really depends on what their current cost for anodes are. However, GM's bragging about achieving <$100/kWh pack-level cost doesn't seem competitive with Tesla's current production. (And that is assuming that GM will achieve those costs. As far as I know they don't have a production facility yet to measure how well the practice matches the theory.)

Since Tesla doesn't give dollar costs for the battery production any longer I thought this was an interesting nugget.

Sandy Munro estimates the Model Y pack has a cost of $108/kWh. So this is in line with your upper estimate.

 

[Chunky Jr.]

Sorry for being ignorant but surely that is not just pure profits as Tesla pays to a cell provider for all those subscriber lines...?

That’s a good point. So not all profit. Hopefully very high margins though.

And don’t call me Shirley.

 

[jhm]

"Tesla is Building the World’s Biggest Factories + California to Ban ICE Vehicles by 2035" | Tesla Daily (45 min ago)

Rob walks through the same calculations I've been doing on capex for battery prod capacity. We both get to $93B for 3 TWh or $31M per GWh annual capacity.

 

[ADP]

I am really getting the feeling that the post battery day event is going to mimic the post Cybertruck reveal event. At first there was a bit of disappointment because there was so much hype going into the event. When we do a post mortem and let everything sink in we will realize how awesome everything revealed was. The stock price will go back up in no time, just like after the Cybertruck event.

We also have our wonderful buddies on YouTube posting videos and promoting Tesla.

 

[Artful Dodger]

Rob walks through the same calculations I've been doing on capex for battery prod capacity. We both get to $93B for 3 TWh or $31M per GWh annual capacity.

Yeah, I just watched that. I think there's more to the story. GF1 is reported to have cost about $6B in CapEx to date, and is producing just 36GWh (let's say for ease of estimate).

That's $167M/GWh/yr of production capacity. Ugh. Even now Pana adds just 3.5GWh/yr for $100M of CapEx, or ~$28M/GWh/yr capacity. Tesla's bty day slide stated they expect a 69% reduction in CapEx. Panasonic's latest line is already at an 83% reduction over the intial CapEx, so Tesla's slide can clearly not be referring to that comparison.

Roadrunner is all about developing production equipment and tech to build cells from raw materials at the receiving dock to battery cells delivered out the gate. I doubt RR's cost reduction comparison is to the $2T estimate for world-wide battery capacity buildout.

But that's all in the past. I reinterate my statement that, going forward, Tesla will choose to build new G-cubes initially in jurisdictions with tax-friendly policies with available low-interest, non-recourse local loans such as the deal Tesla negotiated in China.

In China, Tesla has basically only needed to pay for the production tooling and equipment. Why would they accept a lesser deal in the future? Certainly, this looks to have influenced the recent announcement about Model 3 exports coming from China. It's all about lowest net cost of a vehicle delivered to the hands of a consumer.

But soon, as the number of G-cubes (an individual unit of a modular bty factory) grows, their growth will be become self-sustaining from FCF. I estimated here on TMC back in Jul 29, 2019 that a 2-yr payback period for CapEx allows Tesla to grow battery production geometrically:

Moderators' Choice: Posts of Particular Merit | G-Cube July 29, 2019​

• I predicted that by 2022 Tesla would have bty production capacity of 119 GWh/yr
• I predicted that each G-Cube must be able to produce 25GW/yr in finished bty cells
• G-Cubes must produce cash to pay for another G-Cube in 2 yrs (41% CAGR)
• I predicted the cost to build each G-cube would be $2B, based on $100/kWh product

So I should now revise sales estimates to $50/kWh @ 20 gWh per year for the product, allow for operating expenses (roughly half in raw materials/labor), specify a 2 yr payback for each G-cube, and calculate the max allowable CapEx. Once that's paid for, each G-cube produces roughly $500M in FCF per year. The 2 issues are how fast does it pay for itself, and how much FCF do you need to accumulate to pay the CapEx for the next G-cube (presumably lower CapEx with each iterations). Whew!

All the above assumes high levels of automation for all operational tasks inside the G-cube, with human operators acting mainly as safety, maintenance, and logistics operators. Dojo/AI whittles down that expense each year going forward.

Cheers!

 

[ggr]

semi-mod: Gah. Heated steering wheels. Moved 17 posts (including my own). We should all know better than this. --ggr.

 

[Baumisch]

Might be interesting to see how VW is looking at the future:

https://www.volkswagenag.com/presen...ber/20200915_VW_Presentation_Bagschik_UBS.pdf

My highlights:

 

[Green Pete]

Forgive the conspiracy theorist in me, but does anyone else feel like Amazon's ring car connect is a play at collecting driving data from Tesla owners

 

[larmor]

Forgive the conspiracy theorist in me, but does anyone else feel like Amazon's ring car connect is a play at collecting driving data from Tesla owners

No, of course not, Amazon is here to make sure tesla drivers are safe and their cars are safe and with the amazon ring of approval, they will be now. It has nothing to do with data, please now look away...

 

[Tslynk67]

Sandy on good form:

 

[Quesder]

Rob walks through the same calculations I've been doing on capex for battery prod capacity. We both get to $93B for 3 TWh or $31M per GWh annual capacity.

Tesla could be 10X market cap in 2030, but apparently need to go through many more rounds of capital raise in my opinion. So, SP won’t be 10X.

 

[Stinger63]

Do you own / drive a Tesla, or have you at least test driven one?

My claim, if you're investing for the long term, is that a minimum of a test drive, and preferentially owning one as your daily driver is one of the best pieces of a long term investment, and for maintaining the conviction.

The competition you mention is, today, still hot air / talk. They might turn into serious competition, but in the hot air / talk we've been listening to since 2015ish, none of that has been realized. My own definition of 'competition' is a car model that is intended to be sold in whatever quantities are needed to satisfy customer demand. What I've seen so far (the id.4 might be an exception) is that outside of the Nissan Leaf, all other EVs that are buyable today are being built in compliance numbers, and there is no intent to make more of them than are needed for compliance purposes.

My last observation about competition from other companies - there is no actual competition, even if they're building in arbitrarily large numbers, until the car market is significantly more than 2% EVs. I don't know that level - 20%? 50%? At 20%, that is 10x todays units, most of which are Teslas. Until then, anybody selling EVs are competing with ICEV and taking sales from the ICEV market.


What Elon has said repeatedly about the major advances being worked on in research labs - bring us a working well and let's talk. Mostly there aren't any working cells brought to Tesla. If you're an independent and doing serious research into next gen batteries, and you have a breakthrough, is your first choice to talk to GM / VW / BMW / ..., or is it talking to Tesla? You know Tesla - the company that is consuming 20-50% of worldwide cell production and has now talked about plans to single handedly move the world from GWh of production to TWh?

I know -I- would rather try to improve on Tesla's technology and sell to them - way more volume, and therefore a much higher sales price available.


Not saying that my position is correct - only that these are alternative views into the same ideas.

Thank you for not dismissing my points outright with Tesla pompom fluff. I'm a committed Tesla trader and thus look at Tesla the company more so than Tesla the car manufacturer. In fact, I spend on fair amount of time on other chat sites to emphasize that Tesla is more battery manufacturer than car company, but that's a different subject. See linked European EV sales . It simply wrong to suggest Tesla is alone in the EV space because its cars are so far ahead of everyone else. That's not even true in the US where EV buy in is comparatively low.

Record EV Sales In Europe

Like Musk has said, Tesla is a group of start ups, each trying to better existing products/markets. Energy storage is likely Tesla's soon to be main source of revenue, not car manufacturing. Furthermore, Tesla's energy storage and management capabilities has leaped a few buildings ahead of anyone else, but we are still far from replacing oil, gas and coal as main sources of energy, which is Musk's overarching goal, not car manufacturing!

 

[FrankSG]

Might be interesting to see how VW is looking at the future:

https://www.volkswagenag.com/presen...ber/20200915_VW_Presentation_Bagschik_UBS.pdf

My highlights:

This reads as if the conclusions and plan were written first, and the data and reasoning was filled in afterwards to fit those conclusions and the plan.

 

[bkp_duke]

Forgive the conspiracy theorist in me, but does anyone else feel like Amazon's ring car connect is a play at collecting driving data from Tesla owners

Given the feud between Bezos and Musk (at least what we've seen publicly), this one really surprised me.

And I'm right there with you. Knowing what we do about Amazon's usage of Alexa data and recordings, there is no @#$%ing way I'm letting them have my car data. To date, I'm even skeptical about Tesla having that data, but so far they have shown to be good stewards of that.

 

[Tslynk67]

I am not really going to respond to the above Message. I just wanted to steal it to back-up what I am going to say about the whole Battery day "thing."
before I get to that though.... How can I not mention that I felt like Battery Day was postponed over and over again for two different reasons... First was that the discoveries they found were being integrated into a pilot scenario fairly well so those in charge felt that they could discuss an almost working line, and when it wasn't being resolved on their time schedule they rescheduled Battery Day. My "proof" is in the fact that the people that did go had to sit in cars, So the whole "this needs to be live and seen" excuse never materialized. The second less bearish reason I feel Battery Day was delayed several times was that progress on the engineering front was occurring on several fronts (see message I've quoted above.).
Now to the other slightly negative thoughts I have about battery day....
Go look at all the Shitgar they showed us in what, an hour? It felt like I was truly getting overwhelmed by an infomercial about some microwave, stove-top, convection oven, dishwasher.
If a third of what they had was revealed I would have been pretty damn amazed. As it is I started wondering WTF are they thinking. And then they glossed over huge technology gains to hurry on to the next thing... Whenever any promoter does that scenario we ALL become critical... but not with Elon? It is so hard not to...
Especially when so much of what they told was dealing with chemistry that is so good, but we don't have anything really working yet....

So, Tons of "GREAT STUFF".... coming. I was surprised the floor didn't drop out from under us... i really woke up Wednesday believing it was going to be a $100/share loss kind of day. I even expected the rest of the $100 down movement to continue today...
But then MAX pain is tomorrow...we are all ants in an ant farm owned by our MaxPain Child.

The biggest hit on the AH SP came when the Plaid got a one-year delay. It was always supposed to be available around now, the moment Elon said "end next year", it dropped like a stone. We saw the SP climb almost to 450 when taking about the battery tech, so some were paying attention - and this is totally amazing, beyond what was expected.

Long term, I don't care, but sure put a damper on my October calls - which I had intended to sell on the Tuesday, but Elon's tweet about time-lines killed that idea, so I decided to wait and see, hoping that the sell-the-news had already happened.

So yeah, could have managed the Plaid thing a little better IMO, I can only imagine they expected to have better yields by now, probably the DBE that's delaying that. Better to use the cells they have in getting some Semis out, IMO.

 

[JBRR]

OK so it's post battery day and the new car pricing and specs did not change. (I was wrong, I expected a change)

So I've been on the fence bout buying a Tesla since 2018 (with much desire to join the club since the early S60 days back in 2012) a big chunk of what I've been waiting on that I didn't think would take this long to happen is for this void to be filled

View attachment 592031

There isn't a service center or store within 200 miles of me unless I have an aircraft to fly there and back. As the crow flies Atlanta, Nashville, and even Charlotte are all under 200 miles from my house. But in terms of driving over mountains or plateaus it becomes more challenging to just hop in a car and drive there (distance, time, and charging). Heaven forbid they try to give me a gas car loaner or uber credits. I just don't have faith that in the life of a new car warranty I won't need to get my car to the service center. And I don't want to have to stay in a hotel for the time of the repairs/upgrades or to have to make two long range trips to swap cars.

How big of a company does TSLA have to be before they put something in the center of this gap?

a lesser issue but still high on my hesitate to buy it reasons list is the lack of a heated steering wheel. I can grab a used 2012 Leaf for under $5k that has a heated steering wheel but I can't get a Model 3 at any price with one.


Anyway if I put an order in TSLA wants me to drive to Nashville to pick it up. Two people that worked in the same office building with me have already made that trip but they live closer to Nashville than I do.

So what's the catalyst that will push TSLA into opening more service centers. Do I have to wait for the TX factory to open before they expand stores/service centers again in the US? Or do you think TSLA will leave this gap for the foreseeable future?

"Spend your money on the things money can buy. Save your energy for the things money can’t buy."

 

[aubreymcfato]

Given the feud between Bezos and Musk (at least what we've seen publicly), this one really surprised me.

And I'm right there with you. Knowing what we do about Amazon's usage of Alexa data and recordings, there is no @#$%ing way I'm letting them have my car data. To date, I'm even skeptical about Tesla having that data, but so far they have shown to be good stewards of that.

Agreed.
I just don't see Musk being blindsided by a move like this from Bezos... He knows who Bezos is.
I'm confident he knows what he's doing.

 

[JBRR]

Tesla Model Y Dual Motor AWD gets paid Acceleration Boost upgrade