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

[The Accountant]

Cory is making a point I have made before.

The large "gigapress" castings make old-style fabrications of stamped & welded assemblies uneconomic (as well as technically unattractive) provided that the auto-plants using them are making approximately 250-500,000/year of one vehicle.

If you look at a table of the output of US auto plants very few are more than 250k/year. (I've previously posted this table but cannot find it right now). However if you then look up those borderline plants at ~250k/yr it is noticeable that many of them make more than one vehicle and further inspection shows they are often on dissimilar product platforms. It is unattractive to keep switching tooling in a casting machine like this for all sorts of reasons, some technical, some economic. So most of the ~250k/yr factories could not easily adopt gigapress-style castings.

In fact very few auto-mfg-lines in US or worldwide are at the requisite volume to adopt this technology. Tesla's Fremont factory is (I think) now the #1 in USA and (from memory) there are only a couple of others of similar scale in USA. The distribution is similar worldwide. There are very few car plants in the world that seem to break the 500k/yr barrier, and even fewer do so of just one product or platform.

That is one reason why legacy-auto-mfg never found this sort of technology attractive. But it is of course attractive to Tesla who regard a 500k/yr factory as their current minimum building block (imho). I think one can go further and talk about vehicle platform being the relevant scale-setting item, but I am unsure to what extent the various 3 castings and the Y castings can be formed out of one common tool.

If legacy auto do not make the switch to adopt this (and other, e.g. cell manufacturing which is also a volume game) technologies, and suitably focus their manufacturing onto fewer sites, and reduce product (model) proliferation, they will go bust in this new manufacturing paradigm. Yet if legacy auto do go down this pathway the political wails regarding the lost jobs will destroy any minimal goodwill they still have left.

This also has huge strategic implications for which countries will be able to retain vehicle manufacturing. And that in turn has still more implications for other related clusters, skillsets, and national economies, and minimum strategic asset sets.

(Once a site as-a-whole is at-scale, then it becomes easier to run some sub-scale casting production. That is what we see at Fremont with the S and X now using castings, but first the 3 and the Y are needed to get the Fremont site to a scale where it is economically viable to run those castings in the mix.)

Agree. BMW's CEO states he is not interested in "mega castings" (he won't use the word Giga). He gives a host of reasons but I imagine that the economics don't work (as you point out) because the scale is not there on a single model at a single plant.
Article here: BMW CEO won't use mega casting

 

[elasalle]

https://twitter.com/x/status/1548593556121583618

 

[mongo]

Cory is making a point I have made before.

The large "gigapress" castings make old-style fabrications of stamped & welded assemblies uneconomic (as well as technically unattractive) provided that the auto-plants using them are making approximately 250-500,000/year of one vehicle.

If you look at a table of the output of US auto plants very few are more than 250k/year. (I've previously posted this table but cannot find it right now). However if you then look up those borderline plants at ~250k/yr it is noticeable that many of them make more than one vehicle and further inspection shows they are often on dissimilar product platforms. It is unattractive to keep switching tooling in a casting machine like this for all sorts of reasons, some technical, some economic. So most of the ~250k/yr factories could not easily adopt gigapress-style castings.

In fact very few auto-mfg-lines in US or worldwide are at the requisite volume to adopt this technology. Tesla's Fremont factory is (I think) now the #1 in USA and (from memory) there are only a couple of others of similar scale in USA. The distribution is similar worldwide. There are very few car plants in the world that seem to break the 500k/yr barrier, and even fewer do so of just one product or platform.

That is one reason why legacy-auto-mfg never found this sort of technology attractive. But it is of course attractive to Tesla who regard a 500k/yr factory as their current minimum building block (imho). I think one can go further and talk about vehicle platform being the relevant scale-setting item, but I am unsure to what extent the various 3 castings and the Y castings can be formed out of one common tool.

If legacy auto do not make the switch to adopt this (and other, e.g. cell manufacturing which is also a volume game) technologies, and suitably focus their manufacturing onto fewer sites, and reduce product (model) proliferation, they will go bust in this new manufacturing paradigm. Yet if legacy auto do go down this pathway the political wails regarding the lost jobs will destroy any minimal goodwill they still have left.

This also has huge strategic implications for which countries will be able to retain vehicle manufacturing. And that in turn has still more implications for other related clusters, skillsets, and national economies, and minimum strategic asset sets.

(Once a site as-a-whole is at-scale, then it becomes easier to run some sub-scale casting production. That is what we see at Fremont with the S and X now using castings, but first the 3 and the Y are needed to get the Fremont site to a scale where it is economically viable to run those castings in the mix.)

Hummm...
Tesla eliminated about 300 robots per each gigacasting, plus the dies and stamping needed.
In Sandy's interview with IDRA, they said volume needed for press cost parity was 20-50k. Of course, this varies based on part/ press.

Tesla developed a new alloy which eliminated post cast heat treating and machining, along with being the instigating client for creation of such a large press.

 

[henchman24]

The Volvo hopefully can use ccs enabled super chargers by then, otherwise they might have an issue. Depends on where though, check PlugShare.com and abetterrouteplanner.com for the specific route, there are more 150kW to 350kW (on paper) electrify America options available nowadays. Still a far cry from reliability, convenience and performance of super chargers but lots of change in the last 2 years, more expected if fossil fuel munchkin didn't shoot it down like bbb

Are you stating EA is growing a lot faster than they used to or EA outnumbers Superchargers? EA is growing a lot more than it was, but is still lagging behind Tesla by a pretty large amount. As of today, Tesla has 1606 locations in North America (over 1400 in US). EA has 758 in US and ~30 in Canada (around 3300 actual chargers). Tesla added about ~330 locations in 2021 and is on pace for about ~400 this year. EvGo is over 800 locations (less stations than EA IIRC). I'm sure someone has the actual station count for Tesla in North America, but couldn't find that... I think the average is somewhere around 8 per location... so ~12/13k chargers in NA sounds about right.

The third party networks are growing, but they still seem to be growing at a slower rate than Tesla.

This is all NA centric... From a 1000' view, Western Europe seems to have plenty of third party chargers.

 

[Electroman]

You’re right I think we arrived more at 25% on that supercharging location. The first one we arrived around 10%. Still shocked by the difference of rate of charging between my Model 3 SR and my Model Y on 300kw supercharging locations. The stops are not long enough I have to rush at the car to move it.

300 kw? I don't think they charge beyond 250 kw and the next gen is not here yet.

 

[Singuy]

Are you stating EA is growing a lot faster than they used to or EA outnumbers Superchargers? EA is growing a lot more than it was, but is still lagging behind Tesla by a pretty large amount. As of today, Tesla has 1606 locations in North America (over 1400 in US). EA has 758 in US and ~30 in Canada (around 3300 actual chargers). Tesla added about ~330 locations in 2021 and is on pace for about ~400 this year. EvGo is over 800 locations (less stations than EA IIRC). I'm sure someone has the actual station count for Tesla in North America, but couldn't find that... I think the average is somewhere around 8 per location... so ~12/13k chargers in NA sounds about right.

The third party networks are growing, but they still seem to be growing at a slower rate than Tesla.

This is all NA centric... From a 1000' view, Western Europe seems to have plenty of third party chargers.

I honestly have no clue how these 3rd party charging companies stay in business when

1. There are no enough Non-Tesla EVs on the road
2. Tesla will open up their super charging station

These charging stations have poor utilization now and will sit idle even more in the future until legacy scale up production or Tesla opens up CCS for their own cars. Was in So-Cal last week and I saw a bunch of 3rd party chargers sit empty. Even though I saw some Rivian/Mach E/Ionic 5/polestar sightings but 95% of EVs were Teslas.

 

[dm28997]

Synthes variable angle distal radius plating system. The cream of the crop. The Tesla of the wrist plates.

At least it isn't brain surgery

 

[henchman24]

I honestly have no clue how these 3rd party charging companies stay in business when

1. There are no enough Non-Tesla EVs on the road
2. Tesla will open up their super charging station

These charging stations have poor utilization now and will sit idle even more in the future until legacy scale up production or Tesla opens up CCS for their own cars. Was in So-Cal last week and I saw a bunch of 3rd party chargers sit empty. Even though I saw some Rivian/Mach E/Ionic 5/polestar sightings but 95% of EVs were Teslas.

Yeah.. 1 is the reason I think the business model is rather poor right now. In time it will come, but this is a large part of the reason we see these companies wanting gov't money or simply being the result of gov't fines. Tesla did it out of necessity early on, but built up enough of a network... and is producing at scale to where there are enough vehicles to start making a profit on the model. It just took a decade...

I even think Tesla has some utilization issues outside the California/East Coast hotspots. You can find some specific examples to say otherwise, but many of the chargers in my general 600 mi radius (Rocky Mountain area) are pretty low utilization outside Salt Lake and Denver. Opening up to CCS in these areas will not only capture the market from other networks, but help the utilization in Tesla's own network.

 

[The Accountant]

Random Weekend Insights - Inventory:

Raw Materials have increased from $1.8b to $3.8b in just 4 quarters (see yellow boxes). That's a huge increase. Berlin and Austin can't account for this entire increase. I suspect Tesla has increased it's safety stock at all locations to protect against logistics issues. We recently saw a Wu Wa video of Tesla's offsite materials warehouse in Shanghai. Castings would be included in raw materials as a sub-assembly. Castings move to Work in Progress once they move onto the production line. We could likely see raw materials rise again in Q2.

Work in Progress (WIP) has steadily increased since Q1 2021 (see gray boxes) and this is due to Berlin and Austin and possibly the abrupt manufacturing stoppage in Shanghai from the lockdown in late March. Also important to note: finished vehicles stay in WIP until they have passed quality control. Perhaps some completed vehicles at Berlin and Austin sat in WIP at Q1 2022 awaiting QC sign-off.

Finished Goods peaked in Q1 2019 ($2.2b) driven by Logistics Hell and then again in Q1 2020 ($2b) due to Covid lockdowns (see orange boxes). In Q1 2022 Tesla hit a recent low of $977m. The Q1 2022 number was remarkably low and was helped by the the delivery wave unwind. Finished Goods should increase in Q2 as production exceeded deliveries.

 

[mongo]

Raw Materials have increased from $1.8b to $3.8b in just 4 quarters (see yellow boxes). That's a huge increase. Berlin and Austin can't account for this entire increase. I suspect Tesla has increased it's safety stock at all locations to protect against logistics issues. We recently saw a Wu Wa video of Tesla's offsite materials warehouse in Shanghai. Castings would be included in raw materials as a sub-assembly. Castings move to Work in Progress once they move onto the production line. We could likely see raw materials rise again in Q2.

Some may be safety stock, but if production is part limited, buffering the available parts isn't very advantageous.

$1.0B of the $2.0B increase was just since Q4. Depending on supplier contracts, some of that will be flow through of their raw material costs, versus additional volume.

If they only maintained raw goods inventory proportional to production rate (fixed # of days buffer), then we would expect a 70% increase for that alone from Q1 21 to Q1 22 which would be $3.05B. So $3.8B is only ~25% over the two factory vehicle output rate. Of course, that is lagging production rate and future looking buffer would really be higher.

Shanghai upgrade was intended for Q1 which necessitated more raw goods to feed the increased line rate. As you mentioned, Austin and Berlin need parts, and with Shanghai feeding Berlin, that is additional work in transit (drive units and packs).

They may also have cell stockpiles from the factory throttling. Possibly 4680 feedstocks as well. On the non-vehicle side, Energy and Supercharger appear to be ramping. Along with Megacharger and Semi.

 

[Xd85]

At least it isn't brain surgery

OT At least you got the tesla of pain managements. Half of @OrthoSurg at my shop don’t want blocks

 

[SOULPEDL]

Finished Goods should increase in Q2 as production exceeded deliveries.

Awesome - Q2 deliveries, volume ramps, and margins grow even larger. Hopefully this becomes crystal clear in the update, referencing those strong June numbers onward. Throw in some solid contingency plans for adapting to Covid uncertainty by coming up with some self-contained safe production process, and how they can leverage this new global manufacturing flexibility to this advantage. One country could be down for a couple weeks while the others rock on, so fluctuations no longer matter in the bigger scheme. This also makes it easier to manage the factory upgrades, which seems to be happening a lot, not just adding new lines.

What a MACHINE!

 

[Singuy]

Yeah.. 1 is the reason I think the business model is rather poor right now. In time it will come, but this is a large part of the reason we see these companies wanting gov't money or simply being the result of gov't fines. Tesla did it out of necessity early on, but built up enough of a network... and is producing at scale to where there are enough vehicles to start making a profit on the model. It just took a decade...

I even think Tesla has some utilization issues outside the California/East Coast hotspots. You can find some specific examples to say otherwise, but many of the chargers in my general 600 mi radius (Rocky Mountain area) are pretty low utilization outside Salt Lake and Denver. Opening up to CCS in these areas will not only capture the market from other networks, but help the utilization in Tesla's own network.

Tesla may have a utilization issue however its not nearly as bad of an issue for the competition where theirs are always broken or people having sync/app issues. They need a robust tech support team and I feel like it cost them way more per vehicle charge than Tesla...like 10x more.

 

[Skryll]

Are you stating EA is growing a lot faster than they used to or EA outnumbers Superchargers?

EA has grown a lot in the last years. Lots of small locations.

Supercharger network obviously grew more and much larger locations, better maintained etc. we know who the leader is and will be.

My point is, the Volvo may not be as dead in the water as perceived when looking at current state of things and taking into consideration that superchargers may become accessible soon as well.

Sorry it my writing was unclear.

I don't at all see that as a negative for tesla, to the contrary it's their (and my) mission to accelerate the transition to renewable energy and transportation.

IMHO the biggest goal is redirecting Cashflow away from fossil fuel that pays politicians to inhibit the transition and towards renewable energy companies like tesla, daikin, rivian, solar companies, heatpump installers. That's why I janked out our gas furnace and replaced with Daikin heatpump based system.

EA is growing a lot more than it was, but is still lagging behind Tesla by a pretty large amount. As of today, Tesla has 1606 locations in North America (over 1400 in US). EA has 758 in US and ~30 in Canada (around 3300 actual chargers). Tesla added about ~330 locations in 2021 and is on pace for about ~400 this year. EvGo is over 800 locations (less stations than EA IIRC). I'm sure someone has the actual station count for Tesla in North America, but couldn't find that... I think the average is somewhere around 8 per location... so ~12/13k chargers in NA sounds about right.

The third party networks are growing, but they still seem to be growing at a slower rate than Tesla.

This is all NA centric... From a 1000' view, Western Europe seems to have plenty of third party chargers.

 

[dhanson865]

Speaking of Toyoda.. !

View attachment 829424

As I remember it she worked hard for weeks or months to win that contest. And she won the lawsuit. The Manager at Hooters had to buy her a new car (still the cheapest one he could, but it had to be a new Toyota to settle the issue).

edit: maybe not the cheapest one after all, and she sued the restaurant chain not the manager.

In 2002 the suit was settled for an undisclosed amount of money​

FORMER HOOTERS WAITRESS SETTLES TOY YODA SUIT​

PANAMA CITY, Fla. (AP) — A former waitress has settled her lawsuit against Hooters, the restaurant that gave her a toy Yoda doll instead of the Toyota she thought she had won.

David Noll, her attorney, said Wednesday that he could not disclose the settlement’s details, although he said Berry can now go to a local car dealership and “pick out whatever type of Toyota she wants.”

 

[bkp_duke]

Your Freudian slip is showing...

Touche!

 

[Ogre]

You mean like this?
The castings inventory at Fremont has been growing lately. At first I wondered it was to establish safety stock in case one of the Giga Presses were to go down for an extended repair. Now I am wondering if it could be backup inventory for Berlin in case a potential energy crisis in Germany surfaces later this year and shuts down Giga Presses there. Are the castings for Model Y in Fremont the same as the castings used in Berlin?

View attachment 829421

It would be ironic that the solution to a fossil fuel shortage would be burning even more fossil fuels to ship them 1000s of miles.

 

[henchman24]

EA has grown a lot in the last years. Lots of small locations.

Supercharger network obviously grew more and much larger locations, better maintained etc. we know who the leader is and will be.

My point is, the Volvo may not be as dead in the water as perceived when looking at current state of things and taking into consideration that superchargers may become accessible soon as well.

Sorry it my writing was unclear.

I don't at all see that as a negative for tesla, to the contrary it's their (and my) mission to accelerate the transition to renewable energy and transportation.

IMHO the biggest goal is redirecting Cashflow away from fossil fuel that pays politicians to inhibit the transition and towards renewable energy companies like tesla, daikin, rivian, solar companies, heatpump installers. That's why I janked out our gas furnace and replaced with Daikin heatpump based system.

Yeah I agree. I was just trying to get clarification.

EA is growing and doing the best job of any of the non-Tesla groups in the US. They are still not growing fast enough and their model doesn't seem to be all that viable at the moment. Where I think the third party model is really struggling, is the underserved areas... you can't have a CCS vehicle and get through Montana, Dakotas, Wyoming, Minnesota, and Nebraska with reliability and chargers over 120kW. You simply can't go out in the middle of nowhere in the western states and expect good charging. It seems to me, EA is really focusing on utilization in cities and overloading them so they can get revenue instead of a reliable rural network. Which it kinda has to given the business model. The everyday use case for most of the states west of the Mississippi and east of the Pacific Coast is much harder for CCS vehicles right now.

Tesla is far from perfect here, but you can tend to get through any state in the continental US and even hit the rural areas in many. Though I wish they'd target more rural areas in the West. My hope is them opening up the network funds this.

 

[scaesare]

Yeah.. 1 is the reason I think the business model is rather poor right now. In time it will come, but this is a large part of the reason we see these companies wanting gov't money or simply being the result of gov't fines. Tesla did it out of necessity early on, but built up enough of a network... and is producing at scale to where there are enough vehicles to start making a profit on the model. It just took a decade...

I even think Tesla has some utilization issues outside the California/East Coast hotspots. You can find some specific examples to say otherwise, but many of the chargers in my general 600 mi radius (Rocky Mountain area) are pretty low utilization outside Salt Lake and Denver. Opening up to CCS in these areas will not only capture the market from other networks, but help the utilization in Tesla's own network.

I think some are subsidized by legal mandate (EA), advertising (Volta), or are hoping to make a land grab with the idea it will eventually be profitable.

 

[unk45]

Agree. BMW's CEO states he is not interested in "mega castings" (he won't use the word Giga). He gives a host of reasons but I imagine that the economics don't work (as you point out) because the scale is not there on a single model at a single plant.
Article here: BMW CEO won't use mega casting

View attachment 829448

To put this in context BMW's largest plant is the US South Carolina one which has a capacity of 450,000 vehicles per annum. It produces BMW X Models 3,4,5,6,7 for worldwide consumption.

Eight Years in a Row: BMW Manufacturing is Largest Automotive Exporter in the United States.

www.bmwgroup-werke.com

A quick glance shows that although the reuse many components from one to another and from Performance, normal and hybrid models they share platforms between 3 and 4 but apparently not for 5, 6, 7. They do share engines, transmissions, switchgear, interior figments and many other parts between models and brands, as well as many parts shared with other OEM, the majority through supplier sharing.

They have made a number of small volume models that had unique features like Z1, i3 and i8 not to mention the M1, but all of those had major sharing too. The Z1 was unique, but was really a generic 325i chassis with a cool plastic shell (I owned one of those for a number of years).

Without belaboring BMW specifically it is clear that traditional OEM practices are to use outside suppliers for the tricky parts, reuse many parts in their entire line, but never overdo integration. Hence they do not know how to adapt to another motive source that depends on factory integration with a core operating system. Hence they'll never be able to adopt the new paint shop (NO OS, cannot run it)or Gigacastings because they too require highly automated and very disciplined processes.

It is a trifle odd that in one small statement BMW admits they are obsolete. That is very sad. The i3 was a major start but they ignored their own lessons, as they did with Z1 and a series of what really were technology demonstrators. They never one examined the basic manufacturing process despite world-class materials experimentation.