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

[Artful Dodger]

Theoretically, if scrap was 50%, a 40% reduction in scrap results in a 40% yeild increase, but does anyone believe they would run millions of cells at those rates?

Indeed, we learned via a insider "leak" from Fremont Kato Rd last January (via Gali) that, even back then, 4680 yields were about 92%. There was a photo grab of a production computer display, and it circulated widely amongst Tesla followers.

 

[MC3OZ]

What do you mean "cherry picking" and "disclosure"?
@MP3Mike's point was that scrap was reduced by 40% versus yield increasing 40%. Which received a 'like' rating from the Original Poster. Yes, they could have asked if OP meant production was up 40% rather than yeild, but who has never focused on correcting an inaccuracy versustrying the discern intent?

You can increase production (total or good) without changing scrap or yeild rate. Production being up 40% doesn't say anything concrete about yeild or scrap ratios, unless you hold the number of cells they tried to make constant and term production as good cells.

Theoretically, if scrap was 50%, a 40% reduction in scrap results in a 40% yeild increase, but does anyone believe they would run millions of cells at those rates?
10 units, 5 scrap, 5 produced
40% higher yeild = 7 cells (1.4 * 5), 70%
40% lower scrap = 3 cells ((1-0.4) * 5), 30%

I regret being sloppy with the original post because the debate went off the rails.

Stating it another way, if the line speed is 7X and a 25 GWh annual run-rate then yield is terrible with more scrap than good cells.

(From Cleanerwatt YouTube video)
We can work out the actually run rate from the 20 Million cells produced,
10 Million cells in 0.95 GWh 117 days but rate increased 40% over the quarter, probably now at a run rate of around 4 GWh....
Running a single line at 1X would be 3.5 GWh per year,....
So one 4680 production line is already producing more per year than a conventional battery line.

My guess would be running in the range from 1X-2X with a yield slightly worse than a conventional battery line...

Still plenty of room for improvement..

I think the reason Tesla doesn't provide more information is it is easy for people to misinterpret it and panic.

I don't doubt that they will eventually get close to 7X,with a yield similar to the rest of the industry.

 

[Mike Ambler]

For anyone who does not understand 'exceptional'and 'superb' when discussing TSLA I suggest looking at the 10Q for 3rd quarter.
In the category labeled "Automotive Lease Revenue" page 11 look at credit losses then divide by "gross Lease Receivables. The results are astounding when compared with others.
Then go to page 14 to make similar assessment of "Warranty Reserves" and "Warranty Expense"
Apart from the virtually unprecedented Free Cash Flows being generated at @The Accountant and others often discuss,
the amazingly good credit quality and equally amazingly low warranty expense with very conservative reserves is yet another obvious but little noticed indication of how exceptional TSLA really is.

When facing FUD from all sides, friendly fire too, we also have constant carping of what Tesla should do better. Much of that is valuable, for continuous improvement is crucially important, in cost reduction, reliability improvements and feature development.

Still, this 10Q tells a vastly different story than the PR, including that of Elon, is presenting. This 10Q describes excellence in nearly all efficiency metrics, despite gigantic investments continuing with challenges in every area.

If the foregoing is not good enough take a glance at services and energy sales.
.
.
In the meantime I'm still HODL, and thrilled that TSLA is preserving such a stellar balance sheet, and not wasting reserves on share buybacks, dividends or inefficient promotional devices. Those practices have allowing Tesla to survive and thrive while others around have had bankruptcy, mergers and/or bailouts. Every quarter, poring over the 10Q new brilliance emerges!
Nerdish life is thrilled!

This is a few days old, but......Thanks @unk45 for the continuing education!
I would even like to see it in the Merit thread (for the first paragraph).

 

[Knightshade]

Yeah. The car buying public didn't want those larger sedans anymore which forced these agencies to buy SUVs which have higher running costs.

Apropos of nothing but this is an old niggle of mine-- The original, better, US-made full sized RWD cop car- the Chevy Caprice, was killed off after 1996, enabling Fords crown vic to take most of the pie by default... not because the Caprice wasn't wanted by customers-- sales were quite good for its class.

GM killed it because they wanted to retool the factory to make much-higher-margin trucks instead.

Sadly in killing the Caprice they also killed the even better Impala SS version civilians could buy- and the kinda retro-awesome Roadmaster Wagon also built on the same platform that was better than an SUV in virtually every way (could seat 9, massive cargo space, LT1 Chevy 350, 7k towing capacity, and still managed 25 mpg on the highway in the mid-90s on regular grade fuel).

 

[lascavarian]

Ford earnings coming out later today and expected to be up in the range of 50% for some metrics. UAW contract achieved. Maybe some turbulence etc if this surprises. YMMV

 

[unk45]

I don't understand what you disagreed with. Sounds like we both agree that Tesla's lower prices are based on market conditions rather than competition from other EVs.

In part I think Tesla lowers prices whenever they have reduced costs and whenever there is local supply imbalance. I do not think that pricing is monolithic for Tesla. The regular pricing adjustments country by country also reflect, in part, FX fluctuations. Remember Tesla does not choose to hedge FX risk, but makes direct pricing adjustments.

Thus I think materials cost changes, FX changes, shipping cost changes and factory capacity utilization all contribute to Tesla pricing, as well as other factors.

Competition with ICE pricing directly probably means little, but barriers to customer capacity to buy probably matter a lot. Beyond that since at least 2014 there we tactical price and/or feature inclusions to shift demand timing. That happened to me when I bought A P

Adjustable-rate mortgage demand hits highest level in nearly a year as interest rates continue to climb

Mortgage demand has essentially stalled at the slowest pace since 1995, as mortgage interest rates continue to rise.

www.cnbc.com

This is scary, I have no idea why credit cards are getting maxed and ARM's are getting pushed onto the consumer.

FWIW, in my own risk monitoring I use US credit card delinquency rates >30 days as a leading indicator. Actual loss rates are too slow to see what is coming. When fairly quick rises in rotating balances (i.e. not paying in full at first payment date) rise quickly that is nearly always followed by rise in >30 days past due, and that tends to relate quite closely to reduced gross consumer spending. Those metrics are less than perfect, though, because they are skewed strongly towards lower-middle deciles of income. In recent years higher income levels have been far less affected by economic stress, so things like Tesla sales, skewed strongly towards higher credit quality (mean 780's FICO) and higher income.

ARM's are a quite different animal. Those are frightening and IMHO are one fo the metrics Elon watches closely. These are the single most prevalent stress point for higher income younger middle-aged consumers. Why? Here it is:

Then there is this:

Federal Register :: Request Access

That change essentially switches from the global established standard of LIBOR (London Interbank Overnight Rate) to US-only rates. Perhaps unintended, this also probably increases the volatility somewhat for ARM's (that's controversial) because of their sensitivity to US bank regional liquidity stresses during the last couple of years.

If there is a single structural reason for Elon's relative caution versus the overall sanguine views this is it. ARM rate increase sap liquidity for prime Tesla buyers. That is very close to a factual statement, though built on inferences.

The second major reason is the fragility of the tech industry financial reserves, with Silicon Valley Bank standing as the prime illustration. Where are Tesla concentrations highest in USA? Woodside, Palo Alto, San Jose Silicon Valley. That fragility is enough to make any denizen of the area very nervous. Where have ARM's been most prevalent sine their inception. You'll not be surprised if the zip code is 940xx.

Before writing the Elon statement as unduly pessimistic we might look at underlying developments that are largely ignored in the overall data. If these are not enough look at the US deficit and the dramatic changes in, for example China and Saudi Arabia purchases. Elon does. Those are worrisome...

but perhaps most of all the US Congressional state of affairs is inducing more fear.

Thus far Tesla pretty much has defied gravity. Will it continue? I don't know but HODL seems to be the only prudent option because Tesla is better prepared than any global OEM and nearly all public companies. It is for this that Tesla has little debt, pays no dividends and eschews inducements to buy back shares. We'll thank them for their prudence, if we don't already do so.

 

[jeewee3000]

Hi all,

Just watched the Tesla Investor Day again, purposefully at speed 1x, and combined with what we heard of later (Q3 call, Isaacson biography, etc), I wanted to share some tidbits that stood out to me that didn't before.

1) production of the Gen 3 vehicle: in the investor day they (quickly) mention they will build Giga Mexico. Only later (during Q&A I believe) is 100% confirmed that Gen3 will be built in Giga Mexico, "but also in our other factories". I'm reading this as "in our (existing) factories". Since it is now known/expected that Giga Texas is building a Gen3 manufacturing line, I conclude that Gen3 will als be produced in Giga Texas, possibly also Berlin and/or Shanghai. Berlin (expansion) has the room for it at least. Shanghai I'm not so sure but I'm expecting expansion there also.

Of course after Giga Mexico there will be other new Gigafactories, but since the Gen 3 production line is stated to have a much smaller footprint than Y/3 platform and will be nearly fully automated (they'd like to turn off the lights and let the factory run), I think Tesla will add it to almost all Gigafactories. With the exception of Fremont since that location is jam packed already, and we need S/X from there.

2) in investory day when talking about Gen 3 they (I believe it was Drew) mention something along the lines of: "our next generation vehicle, and later on a robotaxi variant of that vehicle". So at investor day it was already assumed they'd build "Model 2" first, and Robotaxi after that (when/if FSD is ready).

3) when talking about efficiently building Gen3 with the new production process, they casually mention: "if you have a plant with say 10.000 workers, or 5.000 workers and 5.000 robots." At the time this seemed more like Kuka robots in my ears, but now I heard this as 5.000 Optimi. They're not sleeping on Optimus at all.

4) the demand question is talked about in the Q&A and Elon reiterates something along the lines of "I already said in the past, but it needs to be said again cause it's not well understood, that demand is not a question of desire, but of affordability. Desire to own a Tesla vehicle is indistinguishable from infinite, affordability is not." (cue the recession talk, but my point is that the price drops/margin decreases should not be seen as a sign of weakness. They're just trying to sell every car they produce without halting production)

5) To non-believers of the Tesla 20 million per year run rate, I advise to watch investor day again. Regarding every aspect of the business Tesla asks itself: "can we scale this to 20 million cars per year?" If they can't, they reinvent the current practices/methods.

Tesla has software that measures everything from how people use/enjoy their cars (example: they deleted the sunroof on model S after learning from data nobody ever used it, same for lumbar support on passenger side), to how fast their suppliers are ramping/producing and this allows Tesla to focus fast and easily on the things that need most attention to ramp production.

TL;DR: Tesla should not be underestimated. Short term is up in the air but this company is/will be unstoppable in the long run. I for one am glad they keep a lot of cash on hand to prevent from going under during uncertain times. Buybacks or the like will matter very little in the end.

 

[Nocturnal]

BP is now a customer of Tesla.

Today BP announced a deal in which BP pulse, bp's EV charging business, will acquire ultra-fast charging hardware units from Tesla for $100 million

 

[MP3Mike]

BP is now a customer of Tesla.

Today BP announced a deal in which BP pulse, bp's EV charging business, will acquire ultra-fast charging hardware units from Tesla for $100 million

Here is an article on that: Tesla gets $100 mln US ultra-fast charger order from BP EV charging unit

It appears this $100M contract is part of up to $1B BP is planning to spend.

"Selling our fast-charging hardware is a new step for us, and one we're looking to expand," Tesla's senior director for charging infrastructure Rebecca Tinucci said in a statement.

BP said the Tesla chargers will be rolled out as early as 2024 at BP brands including Travel Centers of America and Amoco, plus at third-party locations via partnerships with companies like rental car company Hertz (HTZ.O) - which has its own agreement to buy Teslas for its fleet.

But it looks like they will be re-branded:

The 250 kilowatt BP Pulse-branded chargers will be compatible with both Tesla's North American Charging Standard (NACS) and Combined Charging System (CCS) connectors enabling the charging of EV models from other carmakers.

I would assume that they will have at least V4 posts...

 

[Christine69420]

BP is now a customer of Tesla.

Today BP announced a deal in which BP pulse, bp's EV charging business, will acquire ultra-fast charging hardware units from Tesla for $100 million

AFAIK this is the first time Tesla is selling charger hardware to others! Love it!

I know they have sold MegaPacks used to beef up other networks' chargers. Don't remember whose.

 

[Mardak]

I would assume that they will have at least V4 posts

There's a photo or mockup from bp's press release:

bp boosts EV charging network with $100 million order of Tesla ultra-fast chargers

The Tesla ultra-fast chargers, which have an output of 250 kW, will be branded, installed and operated by bp pulse. The chargers will be fitted with Tesla’s ‘Magic Dock’, which is compatible with both North American Charging Standard (NACS) and Combined Charging System (CCS) connectors. This enables EVs from other major vehicle manufacturers to use the Tesla chargers on the bp pulse’s network, regardless of whether they use CCS or NACS ports. To further improve user experience, the Tesla chargers will support use of the Plug and Charge protocol, which simplifies and automates payments. As is Tesla's current policy, third-party operated ultra-fast chargers meeting Tesla's reliability and functionality requirements are featured in Tesla's vehicle UI and apps, and bp pulse expects to uphold those requirements on its network.​

 

[MP3Mike]

As is Tesla's current policy, third-party operated ultra-fast chargers meeting Tesla's reliability and functionality requirements are featured in Tesla's vehicle UI and apps, and bp pulse expects to uphold those requirements on its network.

Interesting, last I heard that was just a pilot in a few countries. (Other than they listed the EVgo sites that had a built-in CHAdeMO adapter.)

I wonder if that means it is finally coming to North America.

 

[Cosmacelf]

There's a photo or mockup from bp's press release:

View attachment 985423

bp boosts EV charging network with $100 million order of Tesla ultra-fast chargers

The Tesla ultra-fast chargers, which have an output of 250 kW, will be branded, installed and operated by bp pulse. The chargers will be fitted with Tesla’s ‘Magic Dock’, which is compatible with both North American Charging Standard (NACS) and Combined Charging System (CCS) connectors. This enables EVs from other major vehicle manufacturers to use the Tesla chargers on the bp pulse’s network, regardless of whether they use CCS or NACS ports. To further improve user experience, the Tesla chargers will support use of the Plug and Charge protocol, which simplifies and automates payments. As is Tesla's current policy, third-party operated ultra-fast chargers meeting Tesla's reliability and functionality requirements are featured in Tesla's vehicle UI and apps, and bp pulse expects to uphold those requirements on its network.​

I think this is a big deal? We've all suspected that Tesla‘s DC chargers are significantly cheaper than other manufacturers. No wonder other companies like Chargepoint, who also make DC chargers, have tanking stock prices.

Edit: I expect to see many more announcements like this in the coming year. I suspect Tesla was holding off doing this until they started ramping V4.

 

[Cherry Wine]

Can what is going on with Tesla possibly be summed up as follows?

1. Elon's more recent foray into politics has had an asymmetrically negative impact on demand, turning off a significant portion of the subset of buyers that are more open to buying an EV as their next car, meaning that more of Tesla's volume must come from non-early adopter types.
2. These non-early adopter, mass-market consumers are more resistant to buying an EV for various reasons, to the point of price inelasticity. (See the recent surveys that have been published on this topic.)
3. Elon and Tesla are conflating the cause for this demand weakness with high interest rates. They attempt to address it by dropping prices, but the buyers they are trying to lure are more put off by their misperceptions with EVs than they are by price, making the price cuts relatively ineffective.
4. At the same time, Tesla is not undertaking the type of educational campaign that could actually make inroads with these mass market consumers.

This new data supports this theory:

“EV ownership is deeply tied to voting behavior in the U.S., according to a report by BloombegNEF.

For every 10 percentage-point increase in Joe Biden’s share of votes in the 2020 election, the concentration of EVs was roughly 50 percent higher. The partisan rift goes well beyond preferences linked to income, urban density or the current rate of truck ownership.“

 

[Cosmacelf]

This new data supports this theory:

View attachment 985436

“EV ownership is deeply tied to voting behavior in the U.S., according to a report by BloombegNEF.

For every 10 percentage-point increase in Joe Biden’s share of votes in the 2020 election, the concentration of EVs was roughly 50 percent higher. The partisan rift goes well beyond preferences linked to income, urban density or the current rate of truck ownership.“

I wonder how much that is skewed by the fact that California has always been an EV hot spot? And has that chart changed over time?

 

[MartinAustin]

This new data supports this theory:

View attachment 985436

“EV ownership is deeply tied to voting behavior in the U.S., according to a report by BloombegNEF.

For every 10 percentage-point increase in Joe Biden’s share of votes in the 2020 election, the concentration of EVs was roughly 50 percent higher. The partisan rift goes well beyond preferences linked to income, urban density or the current rate of truck ownership.“

I hope we can keep U.S. politics out of this thread. Including people trying to tie things to U.S. politics. 50% of voters U.S. identify as independent... but people devoted to maintaining the duopoly resolve everything as left vs. right, democrat vs. republican, ignoring that afar more voters are independent/issue-based and a lot of the matters discussed really have no connection with U.S. political parties/partisan behaviour.

 

[Usain]

I think this is a big deal? We've all suspected that Tesla‘s DC chargers are significantly cheaper than other manufacturers. No wonder other companies like Chargepoint, who also make DC chargers, have tanking stock prices.

Electrify America has purchased chargers from at least three companies that I know of. They all are super-expensive and have terrible reliability.

I think EA and EVGo will die soon. Charepoint will be OK for awhile because of their emphasis on L2.

 

[Krugerrand]

I think this is a big deal? We've all suspected that Tesla‘s DC chargers are significantly cheaper than other manufacturers. No wonder other companies like Chargepoint, who also make DC chargers, have tanking stock prices.

Yeah, it’s a big deal that the fact it’s coming from Tesla and will be known by nobody outside this tiny TMC thread world.

Just you watch what happens. Praise for other charging networks while either ignoring Tesla’s, Tesla, and the fact it’s Tesla’s invention, hardware, software and standard etc.

And no, I don’t think ‘monopoly’ was or should be a ‘worry’. I’m really, really, really annoyed that the people and company that worked their butts off, that had to take all the ridicule and doubt, are now being effectively ignored and vanished. This is exactly how history gets lost and rewritten.

Absolutely hate (and I rarely use that strong, dirty word) what’s happening.

ADDING!!! For all those people so pro-advertising you should be incensed. By rebranding the standard AND then rebranding the units, an incalculable amount of free advertising has been given away. Like billions of dollars worth.

The first person who comes onto TMC and posts BP (or whomever) has a charging network as good as Tesla’s; I’m going to invite them to The Mountain and then push them off the side.

 

[Krugerrand]

This new data supports this theory:

View attachment 985436

“EV ownership is deeply tied to voting behavior in the U.S., according to a report by BloombegNEF.

For every 10 percentage-point increase in Joe Biden’s share of votes in the 2020 election, the concentration of EVs was roughly 50 percent higher. The partisan rift goes well beyond preferences linked to income, urban density or the current rate of truck ownership.“

We believe that chart?

 

[Usain]

This new data supports this theory:

View attachment 985436

“EV ownership is deeply tied to voting behavior in the U.S., according to a report by BloombegNEF.

For every 10 percentage-point increase in Joe Biden’s share of votes in the 2020 election, the concentration of EVs was roughly 50 percent higher. The partisan rift goes well beyond preferences linked to income, urban density or the current rate of truck ownership.“

It will be interesting to see how much the Cybertruck might change this in the next few years. Cybertruck seems like a product that will be very desirable to those on the right.

I'm hoping that Tesla/Elon can bring us together when it comes to EVs. The politicians won't do that as their incentive is to divide us.