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

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Forward Observing

Quite frankly, Larryly is out of town, Toyota has too few colors; all ugly, for their trucks, GMC makes only two tanks, and Ford has two F150’s ~ gas and electric. For a publisher to say Tesla is not up to par, is flawed analytical thinking; flawed ~ period.

A few years back I found the perfect dark chocolate hard shell with creamy white mint ball and bought hundreds of them. But the manufacturer decided, I was the only customer and terminated dark chocolate but kept the milk chocolate Mints. Bottom line we do not buy candy of any kind from them period now.

Anyone that has been conscious for the last fifty years, you would be aware that auto dealers have been declining color options from several pages to red, white, blue, light gray, gun metal gray and black or something like that with a slight variation. GMC makers the same-o-same makes and models as they did when I was a kid. For the most part Ford. Buick has become a footnote ~ used to be the middle class executive car of choice, when I was in high school. In the late 1980’s the station wagon began transforming into the SUV revival of baseball moms into soccer moms. I have been sadly aware of this decline since junior high school ~ you know, when JFK suddenly terminated his presidency.

As anyone worth their salt knows here, Tesla (TSLA) is not just a car manufacturer, for the simpleton the semi’s are about to range free.

I have always leaned forward in the foxhole, always. Tesla/Elon is coming in a wedge formation right up the middle while legacy automakers and the “I am content with my naval” group will always, always tell you they are entitled. It is FUD. If they attack, it is because you have hit a nerve.

Most follow the mantra, “if it’s not broke, do not fix it.” “Everything is broken, so fix what can while you move forward,” that’s my guiding principle. I just have to hope I am right, or get better at horseshoes. Today, at a busy intersection I see usually three Tesla’s. While waiting to cross the traffic on foot, I see an electric Mustang. There are at least four Riven’s in our town/county. It was not this way in 2010, or 2017 when Xena was delivered, or, or, or.

The next time you read or hear FUD, put on your tinfoil hat, or borrow mine, and think thru why they are attacking ~ there you’ll discover the spilt milk. Look for the iWind, feel the breeze.

Cheers
 
August was one of the record months for Fremont in terms of production. The Fremont factory is now able to make around 12,000 cars per week and is aiming for 14,000 per week as its next goal, he said.

At the same meeting on Thursday, Montgomery told Gigafactory employees that they need to get to a steady output of 8,800 high voltage battery packs per week to support Fremont’s new production goals, and “maximize all-wheel-drive builds.” He said August 2022 was also the Gigafactory’s second-best month on record for production, second only to October 2021.

So in a week they'll build 14,000 cars using 8,800 battery packs... is the difference LFP packs that don't come from Nevada?

It was nice to have the numbers but what I don't have is a sense for what kind of improvements are possible or likely. Giga Nevada has always seemed to run more or less at a steady state; it seemed like a huge deal whenever Panasonic planned a 5% capacity improvement. Saying they haven't matched peak production since October 2021 contributes to that thinking. Yet, the articles makes it sound like management was changed because production needs to improve. Are they looking for ongoing incremental improvements? Major improvements? Is 8,800 packs per week up 2% or 20%?
 
A bunch of production rate information (some new, some possibly old) in that Kolodny piece.

Fremont Factory:



Berlin



Austin



Nevada Drivetrain



Nevada Car Battery Production



Nevada Megapack



Nevada Powerwall






This entire piece may have more useful information than all previous Kolodny articles combined! Please @The Accountant @Gigapress etc... tell me how much money Tesla is gonna print this Q3...

This part stuck out for me:
Sagar told employees on Thursday that they should think of the Fremont factory as their “customer,” noting that vehicle production there succeeds or is hampered depending on Gigafactory shipping volumes and quality.

Note that he doesn't say anything about Texas. Freemont is THE customer for Giga Nevada.

I think we can infer that 4680 production is going well and there are no plans for Nevada to supply batteries to Texas much longer.
 
I don’t know how many here are as tied into The Dark Side as I….well, as I have the wherewithal to see…but the reason I am supremely hopeful this news becomes reality is because of how it could with finality slay the nasty little worm of truth that hides inside a lie.

What the EV haters like to jump on is the “All those lithium batteries are made in China” falsehood. But the kernel of truth there is that, to an approximate value of 100%, the final processing of battery-grade lithium is occurring in China. That’s a low value-added refining process at which China excels.

Were such refining to occur in the US, poof, that argument vanishes. Now, as for me, I wouldn’t invest in such: the ROI is pitiful. But in geopolitically sensitive times, I’m happy to find others are coming up to the plate.
The Inflation Reduction Act makes this a lot more profitable. I'm continually amazed at the foresight in that law.
 
So the professional credit risk appraisers, who are supposed to be the best experts in the world at this one task, are worried that somehow something like this will happen?
  1. Tesla’s cash flow from operations will evaporate instead of growing 50-100% annually.
  2. Then Tesla will wastefully blow through all of its $20B of cash reserves trying to fix the problem, but Tesla’s attempts will fail completely and they still won’t have positive cash flow.
  3. While this is happening, Tesla’s market cap will collapse by 99% from $1T to $10B in the most spectacular stock meltdown of all history, precluding any reasonable possibility of salvation from equity financing.
  4. The TSLA stock crash and accompanying FUD frenzy from bloodthirsty short sellers will cause Tesla employees and customers to lose confidence and quit/cancel orders en masse, accelerating the aforementioned waste of $20B cash. The crash also sparks a market meltdown and causes Great Depression 2.0, killing demand for premium cars.
  5. Meanwhile, SpaceX competition will show up with rapidly reusable orbital rockets, making the Falcon 9 no longer a reliable cash cow, and Starship development will end in failure, and thus Elon’s $60B stake will collapse in value and he won’t be able to save Tesla from insolvency.
  6. Bankruptcy.
Edit: Moreover, if the risk appraisers are so concerned about Tesla having this kind of risk, then how do they justify having other companies rated higher than Tesla, including other automakers with lots of debt, declining revenue and earnings, lower market caps, lower gross margins and higher operating expenses?

This is the same rating organization that gave Lehman Brothers, Bear Sterns and AIG A2 investment grade ratings in 2008, in Lehman’s case just five days before filing for bankruptcy.

Rating Agencies are ripe for disruption; so much to fault with their subjective metrics. We need a start-up using AI to produce clear, transparent, dynamic credit ratings.
 
To expand on this, there are 2-3 different processes the charging system needs to handle:

1) VEHICLE COMMINICATION/CHARGING

Unlike the "house plug" example referred to earlier, which have "dumb" receptacles with power on them all the time (hence why you should not stick butter knives into electrical outlets), EV chargers are "smart". One reason for this is safety: the connectors are not live with power until successfully enabled by a vehicle connection. This way Little Timmy won't get fried by 500+ volts at several hundred amps when he sticks his tongue in a connector. The other reason is that a battery pack must be charged with a specific voltage/current profile, which is different for every vehicle, and dependent on SoC, temp, etc... Hence the power delivery is controlled by the car, which commands the charger what voltage and current to supply.

In order to do this, when you plug a car in to a charger, there's a communication that occurs first, based on the digital protocol standard for that charging system (CCS, Tesla, ChaDeMo, etc.). This is where I suspect the first problematic issue lies. Digital communications is not necessarily simple to implement, and takes some skilled programming talent. Then there's the fact that each implementation of the standard can vary a bit (hardware, software, firmware... both implementation details and/or revision levels, etc...) amongst manufacturers of both vehicles and chargers. Without a single entity responsible for verifying "correctness", there's gonna be problems. The charging folks stole from the computer industry playbook a few years back with a "plugfest" amongst different manufacturers to try and sort out issues, but I'm not aware of any such effort since then.


2) AUTHORIZATION

In between the above described digital communications handshake and the starting of charging, the system needs to authorize the charging session. The charger has to decide if the car is permitted to charge. Is it part of it's own network (e.g. EA, Chargepoint, etc...) or an affiliate network? This may require obtaining some info, such as a VIN/digital certificate from the car, and then communicating with a back-end authorization authority. That back end may then need to communicate with the affiliate. Once all this happens the charger then is authorized to start the session and may have parameters passed to it (charge session length, price, etc...).

This is where I suspect the second issue is. Again, digital comms software ain't easy. And there several system negotiations that all have to work in succession for a session to be successful. And once more, there are several parties involved, each that may have varying level of reliability. And then there's the issue of network connection reliability at the charger site, which may be carrier-dependent.


3) PAYMENT

As part of #2 above, payment may be involved. While related to authorization, I call it out separately because I've heard of this being a problem in several locations. Hence I believe this is the 3rd major problem area.

This requires separate communication with a payment processor. This may be done by the back-end authorization mothership, or a separate transaction from the charger itself. This includes needing the appropriate card mag-stripe/chip-reader, keypad or touchscreen, etc... There also may be additional systems/comms (i.e. NFC comms devices) needed for phone payment support. Again lots of pieces, vendors, and transactions required.


4) HARDWARE MAINTENANCE

Here's a bonus 4th problem area separate from the actual charging process. Upkeep of the site needs to happen. Cable maintenance. Cleaning charger ventilation systems, Repairing vandalism. Updating firmware/software. Addressing HW failures. Sadly it seems a number of sites are problematic due to neglect.



SUAMMRY: Too many players with nobody driving compliance. And likely vastly different skillsets. And no real vested interest in making it seamless, but often driven by mandate. (EA anyone?). Lots of finger pointing no doubt....
Coincidentally timed announcement, given our discussion here: Electrify America to Streamline System
 
So in a week they'll build 14,000 cars using 8,800 battery packs... is the difference LFP packs that don't come from Nevada?

Models S/X packs are also built in Fremont, from 18650 cells sourced from Panasonic in Japan. That's max 100K/yr or about 2K/wk S/X. So perhaps 12K M3/Ys = 8.8K GF1 packs + 3.2K CATL LFP packs per week.
 
Rating Agencies are ripe for disruption; so much to fault with their subjective metrics. We need a start-up using AI to produce clear, transparent, dynamic credit ratings.
I totally agree that ratings agencies have outlived their usefulness. In the old days, these agencies had an information advantage. Combined with diligent work, the agency could produce a better rating than most entities and individuals could get on their own. With the free flow of information on the internet, their advantage is gone.

I don't know much about bonds, but aren't metrics like the Altman-Z score already more useful than a rating from Moody's?
 
Major leaked info with numbers.

And now this unicorn positive Kolodny article has been all but removed from the CNBC app. I guess it was deemed too informative for wide distribution!

10 times out of 10 a detailed Tesla article like this is the #1 viewed article on the CNBC app by the next morning. Citing actual production progress means it must be algo'd to the appendix and replaced with "Tesla is mining" news.
 
The L in LFP means Lithium. While LFP might be better for home storage than other things it isn't better than itself.
Indeed. The acronym stands for "Lithium Iron Phosphate". (the periodic table abbreviation for iron bing "Fe"[1])

What's a tad confusing for some, however, is that the abbreviations aren't always consistent... for instance another pack chemistry Tesla uses is NCA (Nickel Cobalt Aluminum), which is also Lithium Ion based cell, but it doesn't include "L" in the abbreviation.

(of course in the post you refer to, the chemistry referred to contained an "L", which should have given pause to making the statement that it wasn't a Lithium-based cell...)


[1] Coincidentally my cat's name is "Ferrous"
 
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And now this unicorn positive Kolodny article has been all but removed from the CNBC app. I guess it was deemed too informative for wide distribution!

10 times out of 10 a detailed Tesla article like this is the #1 viewed article on the CNBC app by the next morning. Citing actual production progress means it must be algo'd to the appendix and replaced with "Tesla is mining" news.
First, I wouldn’t give her the distinction of having ‘written’ a positive article. This appears to be practically a word for word transcript of an all hands on deck meeting. Normally, we’d get a couple of broad nuggets. This is something else entirely and perhaps Tesla contacted the media and asked to have this lidded a bit or - and this is the way I’m leaning - the WallStreet puppet masters aren’t positioned correctly for all this ‘good’ news to hit the stands yet.