Articles/megaposts by DaveT

[mrdoubleb]

Actually the more I think about it, I lean toward Tesla doing an offering to raise money for the gigafactory. I don't think they need to do an offering soon as they still have a lot of cash in the bank. But if they want to build/ramp battery production at a giga-factory they'll probably need more money than they're bringing in currently. They'll probably need to start scaling battery production some time before GenIII to get ready for GenIII.
I'd prefer Tesla to build/operate the giga-factory on their own so they can control/own the battery design and manufacturing process. But Tesla appears to value their partnership with Panasonic so I wouldn't be surprised to see Panasonic have some role in the gigafactory.

I agree with that, althought I am not sure they would want to raise all that money for the factory on their own. There are other things - like Gen3 develeopment, global Supercharger and service center/showroom rollout - they need money for.

I would think they will start the design phase, maybe even working on permits for the battery factory at Fermont this year. Model X production should help the stock price (showing they are not a one trick poney) and if they can really pull of showing the Model E prototype next January in Detroit, that's going to send TSLA to record heights. At that point they could raise money for the battery factory.

 

[Lessmog]

I agree with that, althought I am not sure they would want to raise all that money for the factory on their own. There are other things - like Gen3 develeopment, global Supercharger and service center/showroom rollout - they need money for.

I would think they will start the design phase, maybe even working on permits for the battery factory at Fermont this year. Model X production should help the stock price (showing they are not a one trick poney) and if they can really pull of showing the Model E prototype next January in Detroit, that's going to send TSLA to record heights. At that point they could raise money for the battery factory.

Someone posted a link somewhere to a Fremont council planning document, with maps, for General Industrial use of the lot beside Tesla's factory, in the wedge between the two freeways to the south. So work is under way!

 

[justdoit]

Someone posted a link somewhere to a Fremont council planning document, with maps, for General Industrial use of the lot beside Tesla's factory, in the wedge between the two freeways to the south. So work is under way!

If you can find the link to this or point me in the right direction I'd really appreciate it.

 

[Lessmog]

If you can find the link to this or point me in the right direction I'd really appreciate it.

don't have time to search now, gotta run out to do shopping before the rain starts seriously.

It was a pdf of ca 10 pages with a proposal to allow grading work in the field used for alfalfa, and some considerations about water runoff and a 12 inch water main line. On the council website, I think. HTH

 

[Lessmog]

don't have time to search now, gotta run out to do shopping before the rain starts seriously.

It was a pdf of ca 10 pages with a proposal to allow grading work in the field used for alfalfa, and some considerations about water runoff and a 12 inch water main line. On the council website, I think. HTH

Found it! Oops, it's a year old: http://www.fremont.gov/DocumentCenter/View/19174

PLANNING COMMISSION STAFF REPORT

JANUARY 10, 2013
Project:
THERMO FISHER SCIENTIFIC

(PLN2012-00224/PLN2013-00081)

Proposal:

To consider an Environmental Impact Analysis and Preliminary Grading Plan for a new 275,000-square-foot industrial design and manufacturing facility on a vacant 22.3-acre parcel.

Recommendation:

Approve, based on findings and subject to conditions.

Location:

45600 Kato Road

in the SouthFremont Community Plan Area

 

[Cattledog]

Found it! Oops, it's a year old: http://www.fremont.gov/DocumentCenter/View/19174

Not sure how this is related other than being neighboring property - the things they do at TSLA don't seem to overlap the things they do at Fisher Thermo.

 

[Lessmog]

Not sure how this is related other than being neighboring property - the things they do at TSLA don't seem to overlap the things they do at Fisher Thermo.

No, you're probably right. It would have been a very convenient location, though. Just across the storm ditch.

 

[bonnie]

I'd be stunned to learn the gigafactory location was anywhere near Fremont. I'd expect it to be built in a more central location of the US, in an area with currently high unemployment, good transport options, etc. And I'd expect Gen III to be eventually produced both in Fremont and in a plant right next to the gigafactory. Nothing wrong with parallel production and removing a single point of failure from a company's risk profile.

 

[Lessmog]

I'd be stunned to learn the gigafactory location was anywhere near Fremont. I'd expect it to be built in a more central location of the US, in an area with currently high unemployment, good transport options, etc. And I'd expect Gen III to be eventually produced both in Fremont and in a plant right next to the gigafactory. Nothing wrong with parallel production and removing a single point of failure from a company's risk profile.

So what would you have in mind then? Tennessee? Louisiana? (Detroit?) Hmm.

 

[bonnie]

Really no idea. If it were me, I'd be shopping around for the best tax incentives, all that. No idea what deals different states might offer to get a plant of this magnitude.

Looking at the Fremont site, it doesn't seem like there is enough room for a gigafactory and GenIII production, fully ramped. So it has to be someplace else.

 

[InTheShadows]

Wow, could you imagine if Tesla set up shop in Detroit for their mass production. They would be the heroes of blue collar, bringing life back to that area of the country.

 

[AlMc]

Wow, could you imagine if Tesla set up shop in Detroit for their mass production. They would be the heroes of blue collar, bringing life back to that area of the country.

I was thinking that they could take over the GM plant that Fisker was to use in Delaware. Since I live 10 minutes away I would be able to give production reports whenever the group needed them:wink:

 

[DaveT]

I'd be stunned to learn the gigafactory location was anywhere near Fremont. I'd expect it to be built in a more central location of the US, in an area with currently high unemployment, good transport options, etc. And I'd expect Gen III to be eventually produced both in Fremont and in a plant right next to the gigafactory. Nothing wrong with parallel production and removing a single point of failure from a company's risk profile.

It's definitely a possibility for Tesla to create the gigafactory next to their eventual next U.S. factory location, ie., Texas or somewhere. But I also think that Tesla is realizing a lot of benefit by having their current factory so close to their Palo Alto headquarters. They also have their powertrain engineers at the factory as well.

I'd lean toward Tesla building the gigafactory fairly close to Fremont (maybe within 30 minutes). It would give them proximity so their team could travel easily to and from HQ (Palo Alto), Factory (Fremont) and the Battery Factory. Since the battery factory will be their first, I'd think there would be a need for a lot of iteration and hands on management and engineer involvement... another reason to build their first battery factory in the Bay Area or near it.

 

[mrdoubleb]

Remember, they already hinted they are thinking about a future factory in Europe and later even in Asia - I suppose around the time Gen3 scales to 400-700k per year. It makes sense too: supply the Americas from Fermont, EMEA (Europe, Middle East, Africa) from Europe, and Asia from another factory in that region. It's more than just new cars, think supplying spare parts too.

In that scenario, it does not make much sense to have another vehicle factory in the US.

As for the battery factory, I could even imagine that eventually each factory (continent) would be paired up with a battery factory. (I say eventually, as it looks like the costs of such a fab are astronomical).

 

[DaveT]

Remember, they already hinted they are thinking about a future factory in Europe and later even in Asia - I suppose around the time Gen3 scales to 400-700k per year. It makes sense too: supply the Americas from Fermont, EMEA (Europe, Middle East, Africa) from Europe, and Asia from another factory in that region. It's more than just new cars, think supplying spare parts too.

In that scenario, it does not make much sense to have another vehicle factory in the US.

As for the battery factory, I could even imagine that eventually each factory (continent) would be paired up with a battery factory. (I say eventually, as it looks like the costs of such a fab are astronomical).

I definitely agree about the next factories being in Asia and Europe. But eventually Tesla will need a new factory in the U.S. when they make their pickup truck. But that will likely come after they've ramped GenIII.

 

[JRP3]

I'll agree with having a critical vehicle component built near their Fremont factory would make the most sense. Why place it elsewhere then incur larger shipping costs and longer shipping times, plus more travel time for Elon and others?

 

[InTheShadows]

I think their only reasons would be to reduce the risk of a local catastrophic event and to centralize distribution (think Zappos). For us on the east coast it's 7 days shipping from CA, Europe is really bad, has to truck/train all the way across the US, then put on a boat.

 

[Lessmog]

I'll agree with having a critical vehicle component built near their Fremont factory would make the most sense. Why place it elsewhere then incur larger shipping costs and longer shipping times, plus more travel time for Elon and others?

May be a question of relative volume. If Fremont is mainly for the S&X and some early series E, and be supplied via present channels, the next fab could be more devoted to main E production and need the majority of battery supply, from a "local" battery plant.

Logistics become heavier by volume. So maybe Detroit isn't an altogether bad flash in the pan of ideas after all? It already has the infrastructure for a century of car manufacture, as well as idle capacity and trained labor, and cheap land, etc, etc. And that does not even begin to touch incentives and stimulation grants.

Tell me I was wrong, a year from now. By then I won't care, larfin' all the way to the bank. ;-)

Also, to get serious for just one second, geographical diversity is good, especially if your company core is located at a geo hot spot like central CAL. Don't put all your strategic assets in the same pod, or aircraft.
-----
I see Theshadows has already spoken to one of my points. Or two.

 

[DaveT]

TSLA’s breakout: 6900 cars delivered in Q4

Today Tesla announced that they delivered almost 6900 cars in Q4 of last year. Previously (in Q3 shareholder letter) they had guided for slightly under 6000 cars delivered.

This is huge news for Tesla because the stock has been shrouded in hesitancy the past few months from:
1. Production constraints, mainly battery supply from Panasonic.
2. Potential for new fires
3. Pending NHTSA investigation on previous fires

The press release from Tesla (Tesla Revenue Expected To Exceed Guidance By 20% In Fourth Quarter | Press Releases | Tesla Motors) contained an interesting callout to Panasonic:
“A higher than expected number of cars was manufactured as a result of an excellent effort by the Tesla production team and key suppliers, particularly Panasonic.”

Basically it appears that Tesla is attributing their ability to have ramped production in Q4 due to Panasonic delivering a more-than-expected supply of batteries. This is great news because previously it was unclear when Tesla’s production/battery constraints would be lifted so they can produce more cars to meet demand.

Today’s announcement was one of the best things that could have happened to TSLA shareholders. It was much better than an announcement of an AWD Model S or a beta Model X reveal (which many people were expecting). Today’s announcement was about accelerating production resulting in accelerating revenue and growing momentum.

In a CNBC interview today, Elon Musk shared more interesting tidbits of news (CNBC interview of Elon Musk):
- confirms 3rd gen car to be called Model E
- says they are in final stages to pick which state gigafactory will be located in
- will talk more about gigafactory during Q4 ER call
- will reach at least 800 cars/week production as a minimum by end of year

Q4 Earnings Report will likely be around Feb 15-20 (based on past years) and by that time Elon Musk will have a better idea of battery supply from Panasonic and Tesla’s weekly run rate for production and orders. Since Tesla looks like they’ve exited 2013 at 600+ cars/week (based on entering Q4 at 550 cars and needing to exit at 600 cars/week to average 575 cars/week x 12 weeks = 6900 cars produced. This would be minimum needed to deliver 6900 cars, so it’s likely they exited 2013 at a slightly higher rate than 600 cars/week). I’m expecting Tesla to guide for at least 35,000 during Q4 ER. If they guide for 40,000 then that would be beyond my expectations.

Q4 ER should also be the time that Tesla announces that they’ve achieved 25% gross margin, which would be a great accomplishment for the entire Tesla team.

But today’s news was about Tesla’s production constraints starting to be lifted in a meaningful way. It looks like the clouds around TSLA from the past few months were lifted today in a big way.

ps., Here's a video from the presentation at the NAIAS auto show today (audio is pretty bad)

 

[TSLAopt]

Today Tesla announced that they delivered almost 6900 cars in Q4 of last year. Previously (in Q3 shareholder letter) they had guided for slightly under 6000 cars delivered.

This is huge news for Tesla because the stock has been shrouded in hesitancy the past few months from:
1. Production constraints, mainly battery supply from Panasonic.
2. Potential for new fires
3. Pending NHTSA investigation on previous fires

The press release from Tesla (Tesla Revenue Expected To Exceed Guidance By 20% In Fourth Quarter | Press Releases | Tesla Motors) contained an interesting callout to Panasonic:
“A higher than expected number of cars was manufactured as a result of an excellent effort by the Tesla production team and key suppliers, particularly Panasonic.”

Basically it appears that Tesla is attributing their ability to have ramped production in Q4 due to Panasonic delivering a more-than-expected supply of batteries. This is great news because previously it was unclear when Tesla’s production/battery constraints would be lifted so they can produce more cars to meet demand.

Today’s announcement was one of the best things that could have happened to TSLA shareholders. It was much better than an announcement of an AWD Model S or a beta Model X reveal (which many people were expecting). Today’s announcement was about accelerating production resulting in accelerating revenue and growing momentum.

In a CNBC interview today, Elon Musk shared more interesting tidbits of news (CNBC interview of Elon Musk):
- confirms 3rd gen car to be called Model E
- says they are in final stages to pick which state gigafactory will be located in
- will talk more about gigafactory during Q4 ER call
- will reach at least 800 cars/week production as a minimum by end of year

Q4 Earnings Report will likely be around Feb 15-20 (based on past years) and by that time Elon Musk will have a better idea of battery supply from Panasonic and Tesla’s weekly run rate for production and orders. Since Tesla looks like they’ve exited 2013 at 600+ cars/week (based on entering Q4 at 550 cars and needing to exit at 600 cars/week to average 575 cars/week x 12 weeks = 6900 cars produced. This would be minimum needed to deliver 6900 cars, so it’s likely they exited 2013 at a slightly higher rate than 600 cars/week). I’m expecting Tesla to guide for at least 35,000 during Q4 ER. If they guide for 40,000 then that would be beyond my expectations.

Q4 ER should also be the time that Tesla announces that they’ve achieved 25% gross margin, which would be a great accomplishment for the entire Tesla team.

But today’s news was about Tesla’s production constraints starting to be lifted in a meaningful way. It looks like the clouds around TSLA from the past few months were lifted today in a big way.

ps., Here's a video from the presentation at the NAIAS auto show today (audio is pretty bad)

great assessment Dave...do you think there's a significant chance this momentum leads to new ATH before the Q4 earnings call?

i would say yes only because of the immense short position that is likely being significantly covered from this leading indicator announced today...but I suspect if we go above 200 it could get very volatile again soon after with daily 10-20 point swings down, then up, etc. for a while with new battles between the TSLA bears and bulls.