The Resource Angle

[dakh]

Tesla has said that their stationary storage batteries are less energy dense than automotive. So that means more material weight and volume per kWh, but we don't know if that also means materials at a lower level of refinement, or if they are just sacrificing some energy density for durability. I suspect a bit of both.

Aha, thank you! Honestly I'm actually thinking about this as a way to diversify and at the same time use the knowledge of the upcoming trends. The way it looks to me is the market entry barrier to stationary storage is WAY lower than automotive. It boils down to batteries which I'll assume will become a low margin commodity market once production capacity gets built, and some electronics/software. So I'm going to speculate that there's a medium term opportunity before the market gets saturated, or disrupted by a battery technology break-through which will throw all this out the window (not that unlikely to happen). Electronics and software for grid support seems to actually be a somewhat safer investment. I so far haven't been successful in identifying any investment opportunities though.

 

[JRP3]

I don't see electronics and software having much room for significant improvement since you are really only working with small percentage points in those areas as far as I can tell. The bottom line for storage is cost, efficiency, and durability of the storage medium.

 

[dakh]

I don't see electronics and software having much room for significant improvement since you are really only working with small percentage points in those areas as far as I can tell. The bottom line for storage is cost, efficiency, and durability of the storage medium.

At least the way it looks like to me the opportunity for optimization is via things like demand prediction as distributed storage and solar become mainstream. Looking at this on a global scale, for good performance of the overall system there is a lot of cooperation and very involved automated decision-making is necessary between the layers all the way down to house level. I'm thinking supply chain management automation as a past example of a new area of investment.

As an example, there's going to be a piece of software somewhere that is going to use weather forecast, sunrise/sunset times, day of the week, and a hell of a lot of other factors in deciding when to charge and discharge the batteries.

 

[Robert.Boston]

Electronics and software for grid support seems to actually be a somewhat safer investment. I so far haven't been successful in identifying any investment opportunities though.

I recently participated in a private placement with a company (which I won't name) that has both an interesting storage technology but, more importantly, a very sophisticated software layer that sits between the storage and the grid. My investment thesis was that the software alone is worth more than the implied market valuation of the company. It's easy in hindsight to see how storage fills in the gaps of renewables or smooths consumption. Good predictive models are much harder. As we've learned with TSLA, it's very hard to know whether a sudden increase means it's a spike or a longer-term step-up.

 

[JRP3]

This is interesting and might influence the future of graphite use. Not directly Tesla related though it could be at some point.

http://www.grafoid.com/

 

[dakh]

I recently participated in a private placement with a company (which I won't name) that has both an interesting storage technology but, more importantly, a very sophisticated software layer that sits between the storage and the grid. My investment thesis was that the software alone is worth more than the implied market valuation of the company. It's easy in hindsight to see how storage fills in the gaps of renewables or smooths consumption. Good predictive models are much harder. As we've learned with TSLA, it's very hard to know whether a sudden increase means it's a spike or a longer-term step-up.

Looked at a few public companies that work in this space. Looks to me the waters get very muddied up by regulatory influence on the market. Few players seem to just focus on checking the boxes to sell software to regulated utilities and I want to have nothing to do with this type of 'business'.

Ended up taking a small position in EnerNOC. The growth opportunity is there but again they're at the mercy of regulations.

 

[JRP3]

Tesla buying some local lithium: http://fortune.com/2015/09/16/tesla-lithium-gigafactory-nevada/

 

[JRP3]

Analysis of Tesla's recent lithium moves: http://seekingalpha.com/article/3533986-tesla-vs-the-lithium-oligopoly

Lithium juniors Bacanora/Rare Earth Minerals and Pure Energy announced off-take agreements with Tesla.

Investors should wonder why TSLA won't deal with the producing lithium companies.
We see the makings of a war between the existing lithium producers and Tesla, which plans on becoming one of the world's major lithium consumers.

 

[JRP3]

More lithium in Nevada:

And the newest entrant on this scene—Dajin Resources Corp - has two projects in Nevada, only a short distance from Albemarle’s Rockwood producing mine and in close proximity to Pure Energy Mineral’s lithium development project, which just signed a preliminary supply agreement with Tesla.

http://finance.yahoo.com/news/lithium-market-set-explode-eyes-220800839.html

 

[neroden]

I wish there were some news on cobalt, but I haven't seen *any*. By value, nickel and cobalt are probably the largest part of the cells. Musk did say "North American sourcing", which in the case of cobalt means Canada...

 

[JRP3]

Potential US based Cobalt operation: http://www.formationmetals.com/s/Operations.asp

 

[JRP3]

Dajin Resources article: http://finance.yahoo.com/news/dajin-resources-early-entrance-nevadas-134000813.html

 

[RobStark]

 

[ecarfan]

Quote from that graphic: "The underbody of the S is made from...titanium".
Almost completely wrong. There is a small piece of titanium used to shield the forward edge of the battery compartment. The chassis is not made of titanium.

 

[JRP3]

Copper suppliers looking to Tesla and EV's to counter falling copper demand from China:
Copper miners pin hopes on electric cars as China falters - FT.com

The world’s copper miners and traders are pinning their hopes on increased demand for the metal from the makers of electric cars, after Tesla Motors revealed more than $10bn of pre-orders for its mass-market vehicle, the Model 3.

Robert Friedland, billionaire founder of Ivanhoe Mines, showed a picture of a Tesla vehicle at the annual copper conference in Santiago this week, saying it will consume 65 kg of copper per car. Friedland’s HPX exploration company is working “very closely” with Tesla, he said.

“Copper is the king of metals,” he said. “Just based on world ecological and environmental problems every single solution drives you to copper — solar power, wind power, electric cars, you name it.”

While copper use could increase in electric cars and in renewable energy, other analysts say it is unlikely to make up for weakness in demand from China’s construction and infrastructure industries, which are slowing.

 

[TheTalkingMule]

From what I gather, China is about to flood the market with copper stockpiles they've been sitting on for a while. Guess where all that reservation money is going!

What a great time to be a cutting edge EV manufacturer, things could not be better.

 

[JRP3]

One possible issue would be that flooding the market with copper means mines will cut back production, which would lead to a cutback in Cobalt production, most of which is recovered as a byproduct of copper and nickel mining.
Cobalt Market Overview • MMTA I don't know how quickly or to what degree dedicated Cobalt mines could compensate, so Cobalt prices could go up quite a bit. This is the premise of a recent Petersen article, so I don't give it a lot of credibility, but it's something to watch for.

 

[JRP3]

More articles on lithium plays:
http://seekingalpha.com/article/3960907-goldman-calls-lithium-new-gasoline-get-late-stay
http://seekingalpha.com/article/396...ithium-spot-prices-rise-lithium-companies-buy
This guy has a number of articles on lithium, scroll down for them:
Epstein Research

 

[RobStark]

New lithium and cobalt project in Canada with a potential of 82M pounds of Cobalt.

Can Tesla shock N.W.T. mining to life?

 

[AudubonB]

There have been a small number of posts today regarding the recent market price moves regarding Western Lithium.

First, the company has changed its name to America's Lithium, and its shares, which are Canadian, no longer trade in the US as WLCDF but as LACDF.

Second, at the end of March it announced a link-up with Soquimich (50/50 jv) to develop a salar in northwestern Argentina.

Third - and I didn't find this until last night - the company also announced a new board chairman - someone who was a pretty close friend of mine back in the late Oligocene. That's not going to provide me with any source of inside information, as the last time we were in touch some Macedonian named Alexander was puzzling over a knot. But it was fun to learn!