It's fine to be wrong about Tesla and their stock a few times but at what point does it become a joke? Anyone can be wrong for a few years in a row and when a correction occurs at some point say 'See! I was right all along'. That takes no expertise at all. I don't care how nice of a guy he is in person, he treats people with an arrogance and disdain that is funny given how horribly uninformed and wrong he had been over and over again. It is this fact that has people piling up on him. If he had simply been wrong a few times that's one thing, it was his Tesla bashing and uninformed attacks against people who pointed out his mistakes that were key.
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Friend(s) of JP - Conversations with Nicu
- Thread starter Nicu.Mihalache
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First, I was only answering to MikeC about JP the person, not the blogger.
Second, since the beginning, I realized / believed JP does not get Tesla. That was a big reason for me to go and see him, to find out why, because I was starting a serious investing project around Tesla. He thought that it's virtually impossible to produce such a nice car with batteries (especially 18650), that they do not have the experience to avoid crushing delays (there were many delays that people tend to forget with time, but those were manageable). He thought that the car would not be safe, but doing a probability analysis with independent small cells, it is more probable that we will al die from a huge asteroid than a Model S to explode - all that if you really believe the cells are prevented from chain reaction. He thought that they will have bad recalls. We all know now about the quality and safety of the product.
He thought that they will run in huge problems with suppliers. That was half right until now, as the ramp-up was slowed down mostly for that reason and it's the main frustration of Elon's interventions in earnings calls for the last 5 quarters or so. But the jury is still open for the huge quantities of batteries needed for the Gen3. And one can ask why worry today about Gen3 when Model S and Model X seem on a very nice ramp-up path? First, it is because not only Gen3 is already priced into the share price, moreover, Gen3 is priced as a huge success. Should there be a period with large dark clouds about this future, TSLA will crash and burn by the time the sun comes back. Also, the environmental argument, if there is no (hugely successful) Gen3, Tesla will not have any kind of impact in the big picture.
I have always argued that Tesla will / could succeed as a premium car manufacturer and until now it did so quite spectacularly. But as a massive car manufacturer? I do not know, that's why I read both sides of the argument and use my (biased) filters. What I try to tell others, the stock is priced for perfection and by the time this perfection is confirmed (large quantities of Gen3 sold, 4-5 years in the future), the stock behavior will surpass even the wildest imagination. If you are not a battlefield hardened warrior, take at least some profits, cover your initial investment, your Model S and tax. Let the remainder run and see where it goes if you will.
If you check nasdaq.com, you will see insiders are having a blast selling their shares and that institutional interest went down by 10M shares in Q2, that is net of the public offering in May (so maybe 15M or so shares unloaded in 3 months). When those guys (investment funds, banks, hedge funds) will have made it big on those inflated shares, they will change direction, push negative stories and what not, and double their gains on the way down. All that is not some kind of prophecy, it may never happen, but if it does (I think it is at least 50% chance), all dreams will go up in smoke in less than 4.4s.
rolosrevenge
Dr. EVS
I'm actually kind of hoping it does crash down like you say, a small delay could send a panic and then I can nab lots of shares cheap.
What makes you think we should listen to his expert analysis when it comes to anything dealing with Tesla or batteries for that matter? He has the tendency to call people stupid even when they were simply pointing out errors in his arguments. Nothing about a nice guy comes across in his online interactions. Seems rather bitter actually. Guess I would be too if I told everyone very loudly that I was an expert in battery technology and to avoid a stock that is up 1000% and to pick a penny stock instead. Axion could jump 1000% tomorrow and still be under $10. He has zero credibility.
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Causalien
Prime 8 ball Oracle
I've decided to not invest in AXPW after remembering one of my principals on investing, which is vetting the management and JP's attitude is the cause.
Krugerrand
Meow
Ah, so he's a prime example from that huge experiment all of mankind is currently running where some people are way nastier hiding behind a keyboard and a monitor, then they'd normally be when standing face to face with them.
I don't really like to discuss persons. I think he just has had to develop a thick skin on SA and has not much patience with cocksure newbies (who repeat other's newbies same tired arguments hundreds of times).
I had no intention to "defend" JP, he definitely does not need that and cannot care less about what people on TMC think about him. Most people do not try to understand or bring counter-arguments, they simply try to fight the person and burry the message in noisy BS. Example: his last article. He went to some lengths to obtain costly reports from industry analysts, studied them and presented the industry situation about 18650 production capacity. Then also links that to Tesla's options in the future. What are the first comments to that?
1) "Pathetic.... Go short it... I dare you."
2) "What more could one expect, from a lawyer from South Bend, that is short Tesla. Don't ever give up, till you run out of money."
3) "Who lives and works in a castle in Barbereche, Switzerland with his attorney wife/partner Rachel Fefer and who was formerly board chairman and general counsel of Axion Power International, a company that's trying to introduce a hybrid lead-carbon battery. I would say he's just a tad biased. He's an attorney trying to defend his own [...]"
+ continued personal attacks with no link whatsoever to the article
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Those comments are pure red-neck testosterone induced unjustified attacks and they were not provoked in any way. In his place I would simply report that to SA and keep my comments stream clean. Here on TMC (if they were not "pro Tesla") would not even go to "snippiness", they would be deleted and accounts blocked.
The big picture of what I am arguing here is that even if you do not agree with JP's conclusions, it would be very hard to find out about the state of the Li-ion industry wrt to 18650 capacity production. Instead of learning about that, just because the article contains some arguments against TSLA, people are blinded and engage in behaviors that would make them very ashamed in the real life.
Most people here and those attacking JP are in love with Tesla or TSLA. Coincidentally I have seen a documentary yesterday which discussed the mechanisms put in place by the brain when we fall in love so that we do not see the shortcomings of the partner. Not only increased levels of stress, but also more dopamine and serotonin. They said it generally lasts 3-6 months, time by which normally offspring is guaranteed (an evolutionist argument, of course). I just hope that TSLA will stay around $150 or higher for at least 3-6 months so that some of those who are today blind to risks will realize profits and reevaluate the situation with a clear head.
Nicu, it's awfully conspicuous that you choose not to reply to folks like JRP3. If you're truly interested in a useful intellectual debate, perhaps you'd bridge the gap between JP and some of the folks on TMC that want to have such a debate. Rather than trot out "there's riff raff on the web and here are examples". Focus on the worthwhile discussions and address them directly rather than cherry-pick low-value comments as an excuse.
Brian, I have no intention to start a crusade in JP's name. I am not accusing anybody on the other side either. If 5% of the people who read this thread manage to look at the problem from a different point of view and gain some perspective, I am very happy. For that, I am even ready to take some snippiness from people like ppl (who do not even get it when they are trapped
btw).I gave those example to show what I meant with repeated personal attacks and "cocksure newbies" arguments. But even arguments from veteran well respected contributors on SA can be (almost) empty and here JP is even less forgiving because one has higher expectations from them.
Example: Nick Butcher was vehemently arguing that even the present Model S is more sustainable than conventional cars, using his assumptions of 300k miles over the life of the car and 23kg of Cobalt used in its batteries. I have simply checked independent data for oil and Cobalt world production to show him that he loses his "bet" by a factor of 38 (that is, he is 2.6% right and 97.4% wrong, if you accept this formulation). Of course, the usual defense "things will change" ensued, while we were talking about today's Model S. Well, in this case, JP does not even bother to consider Nick's arguments, because Nick knows about his archive of articles where the details of my computations are.
Here is the link to my comment (be aware that you may give a penny to the Devil if it's your first view of this article)
Tesla Motors Inc (TSLA): Tesla's Crushing Battery Supply Constraints - Seeking Alpha
So, JRP3, most of the "arguments" in those comments streams, are not what they seem and have already been explained / debunked.
SebastianR
Active Member
Brian, I have no intention to start a crusade in JP's name. I am not accusing anybody on the other side either. If 5% of the people who read this thread manage to look at the problem from a different point of view and gain some perspective, I am very happy. For that, I am even ready to take some snippiness from people like ppl (who do not even get it when they are trapped
I gave those example to show what I meant with repeated personal attacks and "cocksure newbies" arguments. But even arguments from veteran well respected contributors on SA can be (almost) empty and here JP is even less forgiving because one has higher expectations from them.
[...]
So, JRP3, most of the "arguments" in those comments streams, are not what they seem and have already been explained / debunked.
I guess if we were to "settle" this properly, we would need a Wiki that lists the different arguments and then starts a tree structure of argument and counter argument. What I really dislike on all sides is the "argument flip-flopping" e.g. starting off by claiming that Tesla should achieve X in the market and then arguing with market irrationalities if it does not come through etc.
But in general: I think all parties involved in this kerfuffle should from time to time take a deep breath, take a step back and stop taking themselves so damn serious. I love to laugh at JP and the way he expresses himself, the way he battles comments and the pirouettes he turns to explain away his cognitive dissonances, but I'm keenly aware that I'm just a clown poking a stick in the mud trying to find some gold
Sebastian, I see we have some similar feelings. I'm afraid a serious and emotionless discussion / wiki is not possible in practice with those rivers of hormones flowing around us. Even if you try to get on even ground, talking for example only what exists today, instead of what could be, arguments have a very hard time to stay focused on the ball and will fly in incontrollable directions. And the hardest thing is to consider the global problem instead of obsessing over details and fighting for each small issue in isolation.
If there is no humor or even snippiness, we would not be able to focus on very long technical explanations (most of us already have hard technical things to worry about in the real life). As an example, for that reason I am glad Julian Cox (sorry if I misspelled the name) was banned from SA. Each argument got even longer, with longer twisted phrases, less meat and higher tone (not to mention the suffocating increasing frequency of those interventions). I'm not sure I ever got to read one of his interventions to the end (not enough value for the pain IMO).
If there is no humor or even snippiness, we would not be able to focus on very long technical explanations (most of us already have hard technical things to worry about in the real life). As an example, for that reason I am glad Julian Cox (sorry if I misspelled the name) was banned from SA. Each argument got even longer, with longer twisted phrases, less meat and higher tone (not to mention the suffocating increasing frequency of those interventions). I'm not sure I ever got to read one of his interventions to the end (not enough value for the pain IMO).
Ill start off with this JP argument
From the Norwegian LCA the Tesla battery has an extremely high eutrophication potential.
Rebuttal
The Norwegian LCA study was a bad study, then you compounded the errors in the study by averaging the two fictional EV batteries for Eutrophication and presenting it as a Tesla battery. The fact that one of the 2 batteries in the LCA was lithium iron phosphate completely skews the results. Eutrophication is a measure if "fertilizers", i.e. phosphates, so using a compound with phosphates in its name throws it off drastically.
Can make over 50 Prius batteries with the same manufacturing and raw materials at the Tesla Model S battery
Rebuttal
This statement was made in early 2012, at that point Toyota was using Nickel metal hydride batteries. If you do the mass balance, a Prius uses more nickel per battery than a Model S 85 kwhr battery. Secondly, making a large amount of battery packs also contributes to the energy and resource usage. Thirdly, even the lithium batteries toyota uses are inherently different than a Tesla battery. Toyota has no reason to use NCA, they would either use LMO or iron phosphate or NCM. For his statement to be true, lithium would have to be the bottleneck, and he conceeded in an earlier arguement that it is not.
Copper is the contraining material
Rebuttal
While true EVs use a tad more copper, even if all the cars became EVs overnight, it would only increase copper demand by about 20%. The largest consumer of copper is home construction. In the past when there was a copper shortage, aluminum was used in place of copper, in fact, it is currently making a resurgence since most of the safety issues have been indentified and solved. There is no copper shortage
From the Norwegian LCA the Tesla battery has an extremely high eutrophication potential.
Rebuttal
The Norwegian LCA study was a bad study, then you compounded the errors in the study by averaging the two fictional EV batteries for Eutrophication and presenting it as a Tesla battery. The fact that one of the 2 batteries in the LCA was lithium iron phosphate completely skews the results. Eutrophication is a measure if "fertilizers", i.e. phosphates, so using a compound with phosphates in its name throws it off drastically.
Can make over 50 Prius batteries with the same manufacturing and raw materials at the Tesla Model S battery
Rebuttal
This statement was made in early 2012, at that point Toyota was using Nickel metal hydride batteries. If you do the mass balance, a Prius uses more nickel per battery than a Model S 85 kwhr battery. Secondly, making a large amount of battery packs also contributes to the energy and resource usage. Thirdly, even the lithium batteries toyota uses are inherently different than a Tesla battery. Toyota has no reason to use NCA, they would either use LMO or iron phosphate or NCM. For his statement to be true, lithium would have to be the bottleneck, and he conceeded in an earlier arguement that it is not.
Copper is the contraining material
Rebuttal
While true EVs use a tad more copper, even if all the cars became EVs overnight, it would only increase copper demand by about 20%. The largest consumer of copper is home construction. In the past when there was a copper shortage, aluminum was used in place of copper, in fact, it is currently making a resurgence since most of the safety issues have been indentified and solved. There is no copper shortage
J.P. is very talented at inciting emotional replies.
His analysis are littered with dismissive terms to Tesla investors and derogatory terms towards the technology.
His description of the Tesla batteries as "floppy disks" is a great example of that.
Most people, hearing that term, think 'obsolete'. But if called to task, JP can simply say that isn't what he meant and blame the misunderstanding upon the reader.
Dan5, that's what I meant with "obsessing over details and fighting for each small issue in isolation".
Whatever the names of manufacturers or the exact composition of cells, cells are interchangeable in applications and many basic materials are common to families of cells that can be optimized for power, energy and / or safety. So instead of recognizing the universal truth that instead of selling one liter of lemonade for $3 is better to sell 5 200ml cups for $1 each, many Tesla fans bring minutiae details as roadblocks. Without being mean, this really recalls JP's relatively funny expression of bringing a swiss knife to a gun battle.
Whatever the names of manufacturers or the exact composition of cells, cells are interchangeable in applications and many basic materials are common to families of cells that can be optimized for power, energy and / or safety. So instead of recognizing the universal truth that instead of selling one liter of lemonade for $3 is better to sell 5 200ml cups for $1 each, many Tesla fans bring minutiae details as roadblocks. Without being mean, this really recalls JP's relatively funny expression of bringing a swiss knife to a gun battle.
[Moderator's request:
I think we've done more than enough analysis of John Peterson and his motives. This thread is to analyze/address his writings and not his character. I have moved some posts to snippiness, and any further ad hominem comments about Peterson or TMC members will be banished to there, too.
Nicu wrote, "If there is no humor or even snippiness, we would not be able to focus on very long technical explanations." Perhaps, but even then these elements need to be the leavening, not the whole loaf.
@Nicu also wrote "Here on TMC (if they were not "pro Tesla") would not even go to "snippiness", they would be deleted and accounts blocked." I'm disturbed that you believe that TMC moderators are anything but even-handed in our work. If you have concerns about biased or fanboy-ish moderation, you should communicate directly with doug. It is certainly not the my intention nor, I believe, the intention of any other moderator to selectively moderate based on the opinions expressed.]
I think we've done more than enough analysis of John Peterson and his motives. This thread is to analyze/address his writings and not his character. I have moved some posts to snippiness, and any further ad hominem comments about Peterson or TMC members will be banished to there, too.
Nicu wrote, "If there is no humor or even snippiness, we would not be able to focus on very long technical explanations." Perhaps, but even then these elements need to be the leavening, not the whole loaf.
@Nicu also wrote "Here on TMC (if they were not "pro Tesla") would not even go to "snippiness", they would be deleted and accounts blocked." I'm disturbed that you believe that TMC moderators are anything but even-handed in our work. If you have concerns about biased or fanboy-ish moderation, you should communicate directly with doug. It is certainly not the my intention nor, I believe, the intention of any other moderator to selectively moderate based on the opinions expressed.]
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Zythryn, I am not sure you understood the metaphor (I had a hard time in the beginning, too), it's about the 18650 format, not about Tesla's battery pack. And it's not so much (but maybe a bit, due to rigid manufacturing constraints) related to the technical capabilities of those cells, but about the industry's dynamic. There is indeed some spare capacity that will increase a bit in the short term (fewer thick laptops). But Tesla aside, there is not much demand or demand growth in this cell format. It is too risky for existing manufacturers to bet billions to build more capacity, they have already been hit hard once and cannot be dependent on Tesla. In this regard, the 18650 is a legacy product, innovations and production capacities will not concentrate around it anymore.
The real danger for Tesla from this story is that once they grow to absorb the unused production capacity which provides cheap cells (that profit from written off facilities), their growth will come to a halt. Either they change the structure of the battery pack (but then it's again Gen 1, not Gen 3 - they have many years of expertise with the current approach; no more technological moat etc.), or they have to pay the full price of cells from new expensive facilities (that include depreciation of assets) so the plans for a $35k 200 mile range EV would have to be delayed or changed.
This would imply that the valuation of TSLA which implies great success of the Gen3 is already in the bag, will take a hit at some point. If you are not convinced what the valuation implies, take a look at the table here, and think what else could motivate such enormity
Tesla Investors Are Crazier Than Elon Musk (TSLA)
One more thing. I am not trying to convince anyone and I do not intend to fight those who will try to "destroy" my explanations. This is an answer to Zythryn of what I understood from the last article of JP, take what you want from it.
The real danger for Tesla from this story is that once they grow to absorb the unused production capacity which provides cheap cells (that profit from written off facilities), their growth will come to a halt. Either they change the structure of the battery pack (but then it's again Gen 1, not Gen 3 - they have many years of expertise with the current approach; no more technological moat etc.), or they have to pay the full price of cells from new expensive facilities (that include depreciation of assets) so the plans for a $35k 200 mile range EV would have to be delayed or changed.
This would imply that the valuation of TSLA which implies great success of the Gen3 is already in the bag, will take a hit at some point. If you are not convinced what the valuation implies, take a look at the table here, and think what else could motivate such enormity
Tesla Investors Are Crazier Than Elon Musk (TSLA)
One more thing. I am not trying to convince anyone and I do not intend to fight those who will try to "destroy" my explanations. This is an answer to Zythryn of what I understood from the last article of JP, take what you want from it.
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Nicu
I was citing the cell raw material costs which he asserts is $1.50. Its not quibbling over small details if the premise is that there can not be any further decrease in battery costs.
Further calling the 18650 cells as floppy drives is a complete and utter failure to illicit a negative response.
The floppy drives failed because the market fell out. Had floppy drives offered 700 mb storage in the same packet, that could be accessed at the same speed as a CD, there would still be a market. Recently i tried to access a 3.5 floppy from years ago, boy was it slow to access a word doc. Had the same info on a USB, plugged in the USB, and read the same file faster.
Even if Tesla was the only one to use the 18650 batteries there would still be a rather substantial market for the cells.
For example, Tesla, to make 20,000 vehicles per year, requires 160 million cells.
Back to floppy discs, floppy discs became obsolete due to more portable, higher capacity storage devices. The market fell out because consumers were not purchasing them. The only way the 18650 market will fall out is if Tesla decides not to uses it.
Consumers when it comes to EVs dont really care if the cells are prismatic, 18650, or run powered by a AA batteries. As long as the car moves from point A to point B it really doesnt matter.
I was citing the cell raw material costs which he asserts is $1.50. Its not quibbling over small details if the premise is that there can not be any further decrease in battery costs.
Further calling the 18650 cells as floppy drives is a complete and utter failure to illicit a negative response.
The floppy drives failed because the market fell out. Had floppy drives offered 700 mb storage in the same packet, that could be accessed at the same speed as a CD, there would still be a market. Recently i tried to access a 3.5 floppy from years ago, boy was it slow to access a word doc. Had the same info on a USB, plugged in the USB, and read the same file faster.
Even if Tesla was the only one to use the 18650 batteries there would still be a rather substantial market for the cells.
For example, Tesla, to make 20,000 vehicles per year, requires 160 million cells.
Back to floppy discs, floppy discs became obsolete due to more portable, higher capacity storage devices. The market fell out because consumers were not purchasing them. The only way the 18650 market will fall out is if Tesla decides not to uses it.
Consumers when it comes to EVs dont really care if the cells are prismatic, 18650, or run powered by a AA batteries. As long as the car moves from point A to point B it really doesnt matter.
Dan5, I have tried to explain what I understood from the floppy disk metaphor in my previous comment. I do not think I have much of value to add to that.
As for the costs of raw materials, at the beginning of his article, JP mentions
"The detail in this article is courtesy of my friends at Avicenne Energy, a leading consultant to the lithium-ion battery industry and the sponsor of Batteries 2013, the second largest advanced battery conference in the world."
Have you considered the fact that they may know more than you do about batteries? And that a simple approach of opening up a cell and looking inside would not provide much insight about the costs, composition and manufacturing complexities?
EDIT: when in doubt about the actual number, have you considered politely asking JP if this is in the Avicenne report or not, if he can provide details or links etc.? Even if negative (I do not think so), the experience could prove to be very interesting.
As for the costs of raw materials, at the beginning of his article, JP mentions
"The detail in this article is courtesy of my friends at Avicenne Energy, a leading consultant to the lithium-ion battery industry and the sponsor of Batteries 2013, the second largest advanced battery conference in the world."
Have you considered the fact that they may know more than you do about batteries? And that a simple approach of opening up a cell and looking inside would not provide much insight about the costs, composition and manufacturing complexities?
EDIT: when in doubt about the actual number, have you considered politely asking JP if this is in the Avicenne report or not, if he can provide details or links etc.? Even if negative (I do not think so), the experience could prove to be very interesting.
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Tesla's battery pack design is not, fundamentally, dependent on a specific form factor for the cells. They'd have to redesign the internal layout of the pack, but it would be a pull-in pull-out swap.
Could happen. I expect Gen3 to be delayed.
The valuation of Tesla doesn't imply that; in fact it doesn't require the Gen3 to be manufactured at all.
If Tesla retains current gross profit margins, there is a level of Model S/Model X sales which justifies valuations somewhat higher than TSLA's current stock price. Suppose Tesla sets up a second production line for Model X and runs both production lines full blast on three shifts, and sells all the cars. Since Tesla has a lock on the worldwide market for electric cars at the Model S / Model X price level, I personally believe that Tesla can hit those levels of sales. Your estimate of the market for high-end electric cars may differ. I, however, believe that Tesla's current stock price can be justified even if Tesla never manufactures Gen3, based on Model S & X sales alone.
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