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

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I do appreciate the sentiment, but this hyperbole isn't reasonable on any level. Tesla's margins aren't on an S-curve to 100%. I don't see 80% (software company scale margins) if for no other reason that Tesla's business will always contain more hardware and more Cap Ex than software companies.

Market share isn't on an S-curve to 100%. I do agree with the premise that Tesla is likely to hold very high market share in the light duty vehicle market as EVs take over that market. But the comparison we have today is around 10% for big market share. I like Tesla at around 30% (1/3rd) which is already outrageously high. I might even be talked into 50%, but neither are S-curves to 100%. At most that's an S-curve to 50%.

My primary constraint on market share by any 1 company in the automotive market, regardless of the company, are the number of countries in the world for whom car manufacturing is a big component of their economy. Big enough that national governments will bail out failing companies.

Bit of a sidebar: this is a reason why I consider building a factory in China and Germany to be so important - there are important import and logistics values for doing so. There is also a built-local component that is crucial. At some point down the road, when the current German car manufacturers are in worse and worse economic shape, Tesla might be US owned but it'll employ a big chunk of people in Germany, building made-in-Germany cars. To some extent Tesla will be taking over the local car manufacturing activity, rather than replacing it and shipping the work overseas.



I am in complete agreement with this notion.

In particular I've seen the idea that at any given point in human history, you can define our technological state and quality of life in terms of 3 technology vectors: communications, transportation, and energy.

As a point of comparison, I view the Internet as the manifestation of an important vector around communications: approximately zero marginal cost communications. It's become so cheap today to communicate, that for most of us we pay some sort of monthly access fee to send and receive on the communication network, and any incremental communication after the access fee is free.

Free and at such volume that we have businesses today that weren't being dreamed about in the '90s (Netflix; competition!?!). And the downloads of high MB / multi-GB data volumes is STILL approximately zero margin cost (the next episode of Smallville I watch won't cost me anything, after I've paid for the network access).

Consider the economic activity and benefits associated with approximately zero marginal cost communications. Not only are they huge and deflationary (in a good way), I claim that we're still scratching the surface of just what approximately zero marginal cost communications can/will be.


Costs for renewable energy are falling to the point that we have line of sight, today, to approximately zero marginal cost energy. At the retail level I expect that within 1 or 2 decades our electricity bill won't work as it works today. Instead of metering out kWh of energy consumption we'll pay a network access fee, and consume as much electricity as we want / need. That network access fee will probably be priced relative to the size of our network connection. 100a vs 200a service for example.

And within a pretty big budget you'll just use what you use. This will drive natural gas furnaces, cooking stoves, ... out of the market.

And most interesting to me - it'll drive the creation of new businesses and business models that we can't imagine today. What will we do, when energy is approximately zero cost? We see what it's meant in the communications industry - it certainly hasn't meant that the companies building communications equipment can't find people to buy their stuff. Turns out that there is a LOT of money to be made providing approximately zero marginal cost communications.

The reason we'll see this approximately zero cost energy is also discussed in the Energy Report — RethinkX report. To achieve roughly 100% renewable energy grids, the wind and solar assets will need to be built to significantly higher than a good day's generation. I believe they came up with about 4x - I've seen a similar idea out of Australia where they build the grid in a particular area to 7x.

What businesses can be built that have some ability to turn their energy consumption off and on at the hourly or daily level of detail, where that energy is practically free? An easy way to expand the businesses is for those businesses to build their own battery packs (or subscribe to 'cloud battery' services :D), that accumulate charge when there is excess available, and then draw that charge down to bridge between times of surplus (most of the time) to times of deficit.

Approximately zero marginal cost energy is coming to a chunk of the worldwide economic activity that today is ~10% of GDP. The world is about to free up a big chunk of GDP for other uses, and the history of that happening is that the worldwide GDP expands a lot more than the savings would suggest.


Approximately zero marginal cost transportation comes closer with free energy, but its not here yet. Transporter technology though, with free and abundant energy ... that'd be the ticket.

While Tony has a great point about solar over production providing nearly free energy, intermittency makes it more difficult to utilize.

E.g. Some have speculated hydrolyzing to produce abundant hydrogen, but the costs of the hydrolyzers are then increased because they are not fully utilized.

It’s not that surplus energy won’t be great, it will just have fewer use cases than other energy. I believe Tony gave a couple of examples that wouldn’t work that well.
 
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These are some great points. A couple years ago I didn't think I'd be a millionaire until I was in my mid 60's, but I passed that point almost two decades earlier thanks to TSLA.

With all the technological advances happening today it's hard to imagine how this plays out over the next decade. I feel like we are about to see a tech revolution the likes of which the world hasn't seen before, and who knows how that will impact the world economy, let alone company valuations.

While $17,000/share for TSLA by 2031 sounds ludicrous by today's standards, it might seem fine by 2031 standards. 🤔

AAPL stock would be close to $30,000 per share today w/o splits ... it would have sounded insane 15 years ago​


AAPL is no TSLA ... Tesla is disrupting a lot more than apple ever will !
 
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E.g. Some have speculated hydrolyzing to produce abundant hydrogen, but the costs of the hydrolyzers are then increased because they are not fully utilized.

There are lots of alternatives:-
  • Hydrogen/ammonia production
  • Hydroponics and processing
  • Graphene production - energy intensive, and difficult, but even multilayer forms are very useful.
  • Desalination
  • Heat storage, pumped hydro etc..
  • Energy intensive refining - eg. rare earths...
  • Recycling lots of possibilities - especially with hard-working non-union robots .... cue UAW...

I'll be very interested to see if anyone cracks efficient high volume Graphene production anytime in the next 10-20 years, if there is a next Tesla, the masters of Graphene are likely candidates...

Another growing area is UHVDC electricity links between countries and states, that is another industry very dependent on learning rates for UHVDC technologies..
 
This is not new. Here's a "News" video from China Insights (Fri, Sep 24, 2021):

Why China is facing the worsening electricity shortage now? It severely impacts the economy

Can you see their Copyright Notice in the video description? This is part of a Paid PR Campaign, plain and simple, one which CNBC, and other media decided to pick up and run with after it'd been shopped around as fit for purpose*

Here's the same story from Bloomberg on July 23rd:
China's Power Crunches To Worsen Without More Nuclear

Here's another scary headline from July 1st (quoting CNN as a source)
China grappling with worst power shortage in a decade as ... https://energy.economictimes.indiatimes.com › ... › Coal

This story was pushed by Bloomberg Markets and Finance on Sep. 16, 2021

"As a global energy supply crunch fuels a surge in prices, China is staring down another winter of ..."​


These stories goes on and on and on... But folks don't pick it up on their radar until it hits their usual sources of FUD. And now, it's a Q-thing so SCARDT! :p

TL;dr China is running out of power like they're running out of noodles: Favored industries will get their ration, everybody else is going on a diet. NEVs are a favored industry. Especially NEVs for highly profitable export (Tesla).

*that purpose is FUD
I had the same reaction when I first heard of this "emergency". There's no way for me to track electricity demand or supply in China, but I do follow oil a bit. They're by no means the same thing, but pretty much the opposite is happening with oil demand in China right now.

The Saudis cut October pricing for crude delivery to Asia nearly in half a few weeks back, hoping to juice demand. The market response.....meh. Chinese refiners ordered not one barrel more than they were contractually obligated to receive in October. Even at half price!

I've been railing about this fake energy supply crunch for months in @jhm's oil thread. Traders and producers(and a willing press) colluding to jack up oil futures. LNG and adding gas peaker plant capacity is all part of that oil & gas equation too.

We're getting hosed for no market-based reason. Gonna be twice as expensive to heat with gas this winter, or more.
 
While Tony has a great point about solar over production providing nearly free energy, intermittency makes it more difficult to utilize.

E.g. Some have speculated hydrolyzing to produce abundant hydrogen, but the costs of the hydrolyzers are then increased because they are not fully utilized.

It’s not that surplus energy won’t be great, it will just have fewer use cases than other energy. I believe Tony gave a couple of examples that wouldn’t work that well.
First order approximation, overbuilding solar and wind is for the purpose of filling in some of those intermittency periods. I.e. today in Portland, OR it is an unsurprisingly gray day (we get those this time of the year). But it's not really bad, so today might be a 20 kwh day from our panel system rather than the 60 kwh we get on a good summer day. Assuming that satisfied our daily needs (60 kwh) then a 3x system would have us covered today.

So overbuilding provides enough power for the always-on uses over more hours and days of the year. Of course that hypothetical 3x system would be generating 2x of need over some of the summer days, and nowhere near enough over some of the winter days (really bad days can stay under 1 kwh from our system).


One of the uses that's being hypothesized for that surplus energy is the one you mention - hydrolyzers to make hydrogen. One purpose for that hydrogen is energy storage. I tend to think that hydrogen storage for energy shifting is a bad idea, though only because hydrogen is such a difficult thing to store. Bind on a carbon molecule and you can get methane (CH4) or a nitrogen molecule (NH3) for ammonia. I know that we know how to use methane to make electricity, and if the manufacture is strictly renewable energy based, then the carbon cycle is net-zero. I don't know if ammonia has energy storage properties - it clearly has industrial applications - but its another option for something that can be made from air and excess energy. (I also don't know the degree to which those chemical processes can be shut down and restarted - so very, very much that I don't know).

An idea from Australia that applies anywhere - bring the big renewable energy to new mining projects. These tend to be far away from the electrical grid, and are energy intensive. So they truck in diesel to run local generators. Replace that with a solar and wind farm with battery and diesel generator backup and the mine can cut its carbon intensity immensely.

Even better - build a LOT more energy and you can do the ore processing much more locally and ship raw iron (or whatever) instead of iron ore (rock with a relatively high fraction of iron). More local jobs, less transport, and less transport energy.

An idea that occurred to me - use the excess energy to run desalination plants. The obvious use is municipal water sources for cities close to coasts. But what about making enough to pipe water inland for ag irrigation? Or pipe it further inland to dump into rivers to keep them flowing year round; might need to chill it to make sure you've got the right water temp :). Even the idea of making fresh water, pumping it far inland, chilling it to the right mountain melt temp, and pouring it out to make or sustain a river - totally ridiculous. And yet maybe not so ridiculous for the US West.

So very, very much that can be done with surplus energy.


And I think this is really the core idea. Our whole energy system in the history of the human race is built around the idea of producing the energy you need, and not more. Excess energy is wasted energy, and there are raw materials that need to be mined or created in some fashion, so excess energy is an important wasted resource. With solar or wind energy though (or at least solar), the consequence of overproduction is that some portion of the planet is shaded that didn't need to be in that moment.

I think that this will be the hardest mental model for humanity to change - excess / overproduced energy is a good thing in the evolving energy system. The clever scientists, engineers, and business people that will figure out how to make use of it - they'll come along whether we can imagine it today or not.

Netflix wasn't imagined by anybody in the '90s. And now a household that can't get arbitrarily large amounts of streaming video delivered for a flat rate monthly access fee is at an important disadvantage to the rest of society.
 
Tesla related Elon comments:
-Elon on accidents and deaths due to self-driving: "The 10% that do die with autonomy are still going to sue you. The 90% that are still living aren't even going to know it's the reason they're alive."


Great, now tomorrow there'll be Q headlines "MUSK SAYS SELF DRIVING CARS WILL KILL 10% OF USERS"
 
Cathie sold 340k shares today. This is their biggest sell post-split.

That's Mama Cathie - and you didn't provide context for her sales:

She sold a stock that was one of the least hardest hit to buy stocks that were most hardest hit in her funds.

Mama Cathie is TSLA's biggest cheerleader and bull. Selling some shares does not change that at all.

What kind of bearish inference are you trying to convey here. SPIT IT OUT

1632883500539.png
 
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That's Mama Cathie - and you didn't provide context for her sales:

She sold a stock that was one of the least hardest hit to buy stocks that were most hardest hit in her funds.

Mama Cathie is TSLA's biggest cheerleader and bull. Selling some shares does not change that at all.

What kind of bearish inference are you trying to convey here. SPIT IT OUT

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She sold a stock during a big run up to buy junk.

This place can be very toxic. I’ll delete my account.
 
She sold a stock during a big run up to buy junk.

This place can be very toxic. I’ll delete my account.

Nothing toxic about it, we're just tired of it being pointed out when we all know why Ark sells TSLA stock :rolleyes:

If you want a fun exercise, go back over the past 2 years and plot out the points at which Ark has sold TSLA shares..........you're going to be pretty shocked at how much money ARK has left on the table over the past 2 years by selling TSLA stock at the absolute WORST times.