2017 Investor Roundtable:General Discussion

[Rarity]

This is a chart from the BNEF report titled: "Batteries two times too costly for California’s grid" published Jan 10, 2017.
View attachment 212730
As you can see from the chart, the all-in cost is dramatically different from the battery-pack cost. We have been largely focused on just the pack cost as we can find it on Tesla website. But utilities focus on all-in costs. Unless Tesla/Musk figures out some way to dramatically lower the gap, all bets are off.

Just to be clear, Tesla's website shows pack + inverter + control equipment + cabling and site support hardware. It seems to come out at $425/kWh for 50+ packs.

Like you, I wonder about the installation costs. But from past experience, Bloomberg has always come in higher on Tesla's costs than we assume here to be reality. Perhaps Bloomberg's pricing information is similarly high.

 

[Vitold]

Another


This is the downside to EM being involved with the Trump panels and his subsequent tweets that appear to be 'tepid'.

TM will never reveal how this changes cancellation numbers.

This is good. EM can show that it costs him to be on the panel so he will get something in return. Quid pro quo - seemingly a modus operandi of this administration.

 

[eloder]

I'm 20% cash and considering not increasing any investments at all. If more EOs start appearing and more protests, I might consider liquidating more. I don't like what is going on.

I recently reduced my TSLA investments by about 20%, too. (I had other reasons to do so, but I'm also increasingly worried about the chaos and instability of Trump--defiance of court orders, having nearly the entire senior State Department vacant, and Bannon's ever-increasing influence are very, very bad signs). If this continue, there will be more stock market pullback as well as material impacts on job indicators.

 

[-=buzz=-]

As you can see from the chart, the all-in cost is dramatically different from the battery-pack cost. We have been largely focused on just the pack cost as we can find it on Tesla website. But utilities focus on all-in costs. Unless Tesla/Musk figures out some way to dramatically lower the gap, all bets are off.

Let's list the components of such a system:
- Battery-pack
- Inverter
- Main Powerline Feed
- Flat concrete floor
- interconnection paths (integrated in the Floor?)
- control room
- installation cost (transport, bolt to floor, connect)
- Perimeter fence & surveillance

With the Floor plan apparently being a repetitive building-block (see Mira Loma pics), do you really think on a large scale of installations the other points will cost almost the same as battery&inverter*?

*~425$/kWh@1MW/6MWh or ~418$/[email protected]/15MWh configuration per tesla configurator

 

[jhm]

This is a chart from the BNEF report titled: "Batteries two times too costly for California’s grid" published Jan 10, 2017.

View attachment 212730

As you can see from the chart, the all-in cost is dramatically different from the battery-pack cost. We have been largely focused on just the pack cost as we can find it on Tesla website. But utilities focus on all-in costs. Unless Tesla/Musk figures out some way to dramatically lower the gap, all bets are off.

From what I understand, the first tier battery markets are Australia, Hawaii, Germany. Immediate next is California. If CA is this far away from gaining meaningful traction, we can pretty much ignore everything behind it. I don't know how big the potential market size is in first tier markets. Even if Tesla manages to make some sales, and some meaningful gross margins, I think it is highly unlikely they will make any meaningful (> $100mln) operating profits for years to come. Overall, I'm finding Jonas to be credible with his assumption of TE being 0 value for foreseeable future.

Benson, what you are missing here is that this cost curve does not represent what Tesla is currently offering. For $450/kWh, Tesla is offering the pack, plus inverter, controller, cabling and software. You attach this to any facility like a wind or solar farm that already has land and interconnection, then there is little cost left for installation. So what Tesla is now offering is where the big fat purple line will be around 2022. Moreover, if you integrate this now with a solar farm, you get a 30% ITC. And California has other incentives for storage as well.

So BNEF's fancy chart just does not represent where Tesla is or will be. It is looking abstractly at the general market for batteries and ignores incentives and attractive colocation opportunities. In short it is not taking an entrepreneurial view. It is not anticipating the most attractive packages that entrepreneurs can bring to market. If California were to tender bids for fully dispatchable solar+battery plants, it would immediately obtain PPAs much better than what the BNEF chart would suggest.

Edit...
It's also worth noting that Tesla is pricing 2 14-kWh Powerpacks with installation at about $450/kWh. So Tesla is not playing favorites with the utililities offering batteries at substantially lower cost. This levels the playing field between distributed batteries and utility batteries. It could in fact be cheaper for utilities to get storage capacity through programs that aggregate home solar+battery systems, than building stand alone utility storage systems. That is, it would take very little utility incentive to convince owners of distributed solar to add batteries. The amount of incentive pretty much comes down to how much control/influence the utility wants to retain over these resources.

 

[doctoxics]

I do not think that 150GWh was tied to 2020, but Bloomberg might be wrong about 15GWh of battery storage by 2020. Hopefully Jeff Evanson will respond to my e-mail, but I do not count on it as we are very close to the ER and Tesla will probably prefer to stay quiet until then.

In the Gigafactory1 opening video, Elon and JB make reference to 150 gwh by "about 2020", but do not break down the ratio of storage to cars.

Tesla Gigafactory Grand Opening

 

[SBenson]

Benson, what you are missing here is that this cost curve does not represent what Tesla is currently offering. For $450/kWh, Tesla is offering the pack, plus inverter, cabling and software. You attach this to any facility like a wind or solar farm that already has land and interconnection, then there is little cost left for installation. So what Tesla is now offering is where the big fat purple line will be around 2022. Moreover, if you integrate this now with a solar farm, you get a 30% ITC. And California has other incentives for storage as well.

So BNEF's fancy chart just does not represent where Tesla is or will be. It is looking abstractly at the general market for batteries and ignores incentives and attractive colocation opportunities. In short it is not taking an entrepreneurial view. It is not anticipating the most attractive packages that entrepreneurs can bring to market. If California were to tender bids for fully dispatchable solar+battery plants, it would immediately obtain PPAs much better than what the BNEF chart would suggest.

This is an insightful post. I will try to chase and find out what exactly went into that purple line. In any case, both Straubel and Jonas dismissing TE as a needle moving thing got me to accept BNEF's hypothesis.

 

[EinSV]

In the Gigafactory1 opening video, Elon and JB make reference to 150 gwh by "about 2020", but do not break down the ratio of storage to cars.

Tesla Gigafactory Grand Opening

If it really turned out to be 15GWh for storage, that would leave enough capacity for roughly 1.67M cars, assuming 80kWh/vehicle (135GWh/80kWh), reduced by whatever capacity is used for Tesla Semi/Minibus. And this does not include whatever production may be coming out of GF 2 by in 2020.

If 15GWh in 2020 is an accurate quote I believe it likely it falls in the very conservative category. I personally have no problem with conservative guidance on TE. Hopefully this gets cleared up on the earnings call, if not sooner.

 

[DragonWatch]

Go Elon/Tesla ~ Fossil Fuel is really getting soaked in yellow rain!

 

[Cosmacelf]

What is most unsettling is the impression that the new POTUS seems to have little or no comprehension of the concept of the separation of powers ("checks and balances") which is one of the foundations on which any democracy is built (and there are tons of other disturbing things, i will not go into for now). .... Escalation of such "interpretation" (taking over the justice, silencing the press etc.)

Not trying to attack, but educate. The US Justice Department isn't some independent body like the Supreme Court, it is a part of the administration. The Attorney General reports directly to the President. Trump fired the acting Attorney General, who was a hold over from the Obama administration (because the Democrats are dragging their feet approving Trump's AG), due to obvious insubordination. So Trump isn't "taking over" the Justice Department, he was already in charge of it by being President. Maybe you are confusing Justice with the Supreme Court, which is indeed independent?

And as you can tell from news reports, if Trump is silencing the press, he's doing a really bad job of it. Trump IS verbally (and twitteringly) pointing out stories that he feels aren't correct or fair, but the press is doing fine pushing back. He has made no moves to actually shut down any press. Instead he had expanded access to the White House press briefings to more media, not less, by adding bloggers and smaller news organizations to the mix.

 

[JRP3]

What's all this green on my screen?

 

[N5329K]

Not trying to attack, but educate. The US Justice Department isn't some independent body like the Supreme Court, it is a part of the administration. The Attorney General reports directly to the President. Trump fired the acting Attorney General, who was a hold over from the Obama administration (because the Democrats are dragging their feet approving Trump's AG), due to obvious insubordination. So Trump isn't "taking over" the Justice Department, he was already in charge of it by being President. Maybe you are confusing Justice with the Supreme Court, which is indeed independent?

And as you can tell from news reports, if Trump is silencing the press, he's doing a really bad job of it. Trump IS verbally (and twitteringly) pointing out stories that he feels aren't correct or fair, but the press is doing fine pushing back. He has made no moves to actually shut down any press. Instead he had expanded access to the White House press briefings to more media, not less, by adding bloggers and smaller news organizations to the mix.

Not exactly. "Expanded access" in this case means "I invite a lot of my own cheerleaders from the alt-press and dilute (or ignore) the fact-obsessed troublemakers all while making it appear like I'm expanding access." For the original model of this approach, go here:
’Tis the Season to Watch Vladimir Putin’s Annual News Conference
Important to not drink the koolaid, whether it comes from Fremont or Washington.
Robin

 

[Lesifass]

Not trying to attack, but educate. The US Justice Department isn't some independent body like the Supreme Court, it is a part of the administration.

I guess LST was talking about border agents ignoring court orders. Isn't that alarming? Or maybe that's normal practice until the matter is finally settled at the supreme court? From my European perspective this disturbed me a lot. What if they just continue ignoring any court orders?

 

[jhm]

This is an insightful post. I will try to chase and find out what exactly went into that purple line. In any case, both Straubel and Jonas dismissing it as a needle moving thing got me to accept BNEF's hypothesis.

I get that. We certainly do not want to hype this up. I think Tesla wants to keep a low profile. I suspect they want to build out capacity ahead of generating the sort of hype that induces mass competition.

 

[MitchJi]

Stock up on canned goods.

Dead food.

I'm not sure exactly what JB said. The source of the quote also used 15 gwh, which is inaccurate.

Otoh I remember what Elon said, that the amount of TE sales and profits would be similar to cars, but with faster growth. Not only Elon said that TE would grow faster than cars, but that makes sense (cars are harder to produce than TE packs). So until we have a clarification of JB's statement I'm comfortable going with what Elon said because I trust him and because it makes sense.

 

[DragonWatch]

Not trying to attack, but educate. The US Justice Department isn't some independent body like the Supreme Court, it is a part of the administration. The Attorney General reports directly to the President. Trump fired the acting Attorney General, who was a hold over from the Obama administration (because the Democrats are dragging their feet approving Trump's AG), due to obvious insubordination. So Trump isn't "taking over" the Justice Department, he was already in charge of it by being President. Maybe you are confusing Justice with the Supreme Court, which is indeed independent?

And as you can tell from news reports, if Trump is silencing the press, he's doing a really bad job of it. Trump IS verbally (and twitteringly) pointing out stories that he feels aren't correct or fair, but the press is doing fine pushing back. He has made no moves to actually shut down any press. Instead he had expanded access to the White House press briefings to more media, not less, by adding bloggers and smaller news organizations to the mix.

Very good points. Keep your mind sharp because repeated lies will wear down your rational thinking which led to the defeat of Hillary. She was constantly assaulted by her opposition to the point the average person could not tell truth from fiction ~ 99% fiction. I learned this political stuff back in junior high in a public school provided by tax payers. I was anything but top in my class. Oh, and JFK was assassinated and I received my Eagle rank two weeks later, then graduated into high school that June. Tough year.

 

[3Victoria]

Not trying to attack, but educate. The US Justice Department isn't some independent body like the Supreme Court, it is a part of the administration. ....

If true I find this disturbing. In Canada, attorneys general are always independant. While serving and selected at the pleasure of the government, they act independantly.

I believe this is the case in the US, too. Their job is to uphold the laws and constitution. A EO is not automatically lawful nor constitutional. The one in question may not be operationally lawful. BTW Nixon got into trouble firing his AG.

 

[jhm]

Dead food.

I'm not sure exactly what JB said. The source of the quote also used 15 gwh, which is inaccurate.

Otoh I remember what Elon said, that the amount of TE sales and profits would be similar to cars, but with faster growth. Not only Elon said that TE would grow faster than cars, but that makes sense (cars are harder to produce than TE packs). So until we have a clarification of JB's statement I'm comfortable going with what Elon said because I trust him and because it makes sense.

To use a SpaceX metaphor, TE will take off like a rocket, but the launch date has not been set and weather could force some launches to be scrubbed. But in the meantime we're getting good building rockets and doing a lot of test flights.

 

[jesselivenomore]

Macro - I would caution against conflating political/social disruption with economic impact. Big picture, Nasdaq breaking above all time highs after 16 years is much more significant. The only other time in market history where we had a decline akin to Nasdaq in the 2000s was 1929, and when the market reclaimed those 1929 highs it set the stage for a rally that lasted another decade. The current political environment could very well result in a short term reversal in sentiment, causing a pullback that may have been overdue anyways. I'd be a buyer.

TSLA - My recent views are almost entirely based on the monthly chart, which makes today(the close of the month) very important. A close below 240 would have made me reconsider, so today's strength(so far) is welcomed. As long as we close out the month strong, I will be adding to my position, half at the close today and half on a pullback to 235 or a break above 270 if there is no pullback.

 

[MitchJi]

Very good points. Keep your mind sharp because repeated lies will wear down your rational thinking which led to the defeat of Hillary. She was constantly assaulted by her opposition to the point the average person could not tell truth from fiction ~ 99% fiction.

Obama's failures and the fact that Hilary refused to run on the issues (party platform) are the reasons she lost, in addition to the gullible and morally bankrupt electorate. Like it or not trump is part of Obumble's legacy.