That's the tricks Tesla always did. Is production started under a 1/8 of planned shell size the same with 1/4 or 1/3 planned shell size? How much money Tesla spent on GF construction out of 2.2B raised money? Probably no more than 25% at this point. Panasonic is still mainly on the sideline and no progress on other battery manufacture partners. Tesla has history to claim everything on track until it can't hide the truth anymore. The story already happened on model X and 2014/2015 delivery.
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Johan
Ex got M3 in the divorce, waiting for EU Model Y!
Google (or rather now Alphabet) gas collaboration deals with both Chrysler and Ford with regard to autonomous driving. That's irrelevant to any deal they could strike with Tesla. It's a strategy called hedging, or playing several horses at once. Very natural for Google to do this early in the game.
With Chrysler And Ford Deals, Google Continues To Think Big And Start Small On Driverless Cars
But the buyer of those shares can lend out 70% of them, which is another 49% of the original shares... and so on.
From the formula for a geometric series, the maximum is actually 1/(1-.7), which is 3.33x.
What? Where was it promised that there was a particular amount of shell building completion by 2017?
As for the use of proceeds of the $2.2 billion:
"We intend to use approximately $186.3 million of the net proceeds from this offering to pay the cost of the convertible note hedge transactions entered into in connection with this offering (after such cost is partially offset by the proceeds to us from the sale of the warrant transactions described in “Description of Convertible Note Hedge and Warrant Transactions”). We intend to use the remaining net proceeds to accelerate the growth of our business in the U.S. and internationally, for the development and production of the “Gen III” mass market vehicle, the development of the Tesla Gigafactory and other general corporate purposes."
That does not say that the $2.2 billion is exclusively for the Gigafactory. Matter of fact, it specifically says otherwise. The Gigafactory is only one of about 6 things listed there.
As for Panasonic, they could only really be involved directly on the ground in Nevada when the first phase shell was sufficiently done to install equipment. That occurred in late Q3, 2015. So for about the last 7 months, Panasonic's involvement as reported here:
http://www.diversifynevada.com/uploads/reports/Tesla_Gigafactory_Qtrly_Rpt_Q1_2016.pdf
was 52 employees on the ground and $128 million dollars invested. Obviously at this stage, they are installing equipment, so that's probably a lot of contractors and equipment costs right now. First phase shell is still undergoing final work as you can see in the latest Gigafactory pictures. Panasonic is certainly not mainly on the sidelines. Thus far Tesla has invested $380 million and the total investment to date is $508 million. Tesla has already spent almost all they need to spend for the pilot phase.
For perspective, note the entire LG plant in Michigan was about $300 million during its initial construction. The $508 million invested thus far is already more than cost of the first phase of the two phases at Panasonic's Suminoe plant in Osaka, Japan.
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Let's assume 2017-2020 was a 4 years plan to bring GF into full function. So common sense told me it's should be 1/4 up in 2017. It's similar to Tesla's annual guidance, if the Q1 or first half delivery is significantly lower than 1/4 or 1/2 annual guidance, then we'll likely see guidance miss. Right not, it's more urgent to push GF progress as it's supposed to be full function by 2018 per latest M3 plan. So that's one of the most critical paths investors should concern.
The GF price tag was 4-5B, Tesla claimed to take 40% cost, so it should be ranged to 1.6-2B, the highend is on par with 2.2B proceeds. The fund has been raised more than 2 years, but only 308M used for GF so far. So it's another proof of slow progress. To manufacture battery, Tesla and Panasonic are not enough. I doubt it'll be volume economical production in 2017 before we see other partners on board.
The GF price tag was 4-5B, Tesla claimed to take 40% cost, so it should be ranged to 1.6-2B, the highend is on par with 2.2B proceeds. The fund has been raised more than 2 years, but only 308M used for GF so far. So it's another proof of slow progress. To manufacture battery, Tesla and Panasonic are not enough. I doubt it'll be volume economical production in 2017 before we see other partners on board.
Johan
Ex got M3 in the divorce, waiting for EU Model Y!
No. Exponential growth, not linear, remember?
I bet you don't want to see same exponential growth as model X production
It's always risky to push everything backloaded from project execution point of view. The production and construction is not visionary thing, it needs solid step by step execution. Tesla doesn't have edge on this.
Construction is not lagging, its actually ahead of schedule. Since they have just moved up M3 plan due to excess demand, I guarantee you that GF is going to accelerate at a faster rate now with this new plan to satisfy M3 demand. Batteries are critical but should be the least of concerns.
as your quote above, Tesla controls it, and panasonic will do whatever it takes for their part. In other words, tesla have the option to have panasonic invest at or more than 40% in the GF, at the cost of giving panasonic more profit, if they come up short of cash.
Johan
Ex got M3 in the divorce, waiting for EU Model Y!
I bet you don't want to see same exponential growth as model X production
It's always risky to push everything backloaded from project execution point of view. The production and construction is not visionary thing, it needs solid step by step execution. Tesla doesn't have edge on this.
No, I've said it many times and stand by it: the early part of the MX ramp was a failure and that failure is responsible for the recent set backs in TSLA.
But on a bigger perspective the back loading strategy is great for exponential growth as long as you execute flawlessly. Also note that aspects of their business are front loaded from a financing perspective (pre paid supercharging comes to mind).
The best strategy is to build out capacity and do the actual investments at just the right time, not unnecessarily early. That's what Musk and Wheeler spoke about when they said "there's a new focus in the halls of Tesla to use cash in the absolutely most effective way".
We no longer know the modular breakdown nor the GWh potential for the Gigafactory since they have expanded the internal floor space and increased the total capacity. Therefore taking square footage of the building is no longer an accurate way of assessing manufacturing floor space.
Furthermore, the new 2018 production plan does not need the full original size of the Gigafactory. At that point, we are talking about 350,000 Model 3's or so and the Osaka plants still supply cells for the S + X. With a far lower average pack size than estimated before, they need about 21-22 GWh out of the Gigafactory at that time, or about 3 phases on line. The timetable I gave earlier was bringing those 3 phases online in time for mid 2018. Tesla only needs another $800 million or so through the beginning of 2018 to make that happen for the Gigafactory investment.
Therefore they are not behind at all for the original production plans and they still have time to get in a position to realize the new production plans in a reasonable fashion.
Exactly, And if you watched the video where Elon can't help himself make remark about an even more affordable generation 4, you already know this roller coaster is going to go around again.
I am astounded by the limited vision of many posters here. Given exponential growth is inherent in compounding financial positions, I would have expected the 'common sense' of more in this thread to be better developed. Way to many projections are based on linear thinking. Some may find Tony Seba 'clean disruption' video/book educational. Having a better grip on the direction and pace of the transition can only help take advantage of the short term swings made possible by so much ignorance.
If this 'obvious' scale out approach doesn't make sense, now would be a good time to learn the difference between 'scale up' and 'scale out' which is 'common knowledge in silicon valley. The insides of all of those cloud datacenters are not one huge Giga computer but many little ones working as a team. The same is true with the GF 1 modules as well as subsequent GF 2. Think fractal. The build out of GF 1 module two will learn from the 'mistakes' of the first module. As has been stated elsewhere, these independent modules also reduce risk since modules can be independently upgraded to newer technology as appropriate. In fact given the rate of change, it is also 'common sense' to expect that the last module of GF1 will not simply replicate the technology of its first module. So delaying module build out as long as possible is also just smart planning.
The one thing I have a hard time understanding is if those who keep bringing up the X ramp/quality issues as irrefutable proof Tesla will fail with the M3 or that the delivery and financial goals of 2016 will not be reached truly believe what they are saying or are just trolling us?
Seriously, has there been any challenge so far the Tesla wasn't able to resolve and even turn to a positive? Think about the fire scare in 2013 (?): these are the things that burry companies. Even established ones, let alone startups. By the book, Tesla should have crashed and burned together with those 3 cars. But what happened? They went back to the drawing board and came back with a sci-fi sounding inexpensive fix and came out stronger than ever before.
But if you look at initial Model S production issues, no one thought they would end up beating all the German luxury sedans in their segment in 2 years.
I do not think Musk & Co are invincible. Nope. But give them an engineering issue (SpaceX, Tesla...) and they will turn it around and come out stronger.
So yes, the X ramp sucked. But nothing was more telling of the status of those issues than Musk's tone and enthusiasm on the last CC. He personally wanted to understand and see through resolving the issues and thinks they have a breakthrough and will be on track from now on. Sorry naysayers, that's just good enough for me.
Bottom line: Model X should now start contributing to financials positively and turn into a high margin halo product in a very lucrative market segment. And as for Model 3, it may turn out that Model X was a big enough slap on the face that it became the turning point in Musk's thinking. Listen to him talk about how M3 is designed for easy manufacturing - that's his central thought about the car every time he talks about it. At the end of the day, we may be lucky, that the first 1-2k Model X changed their thinking so the first 100-200k Model 3 will not become a manufacturing/financial nightmare.
Seriously, has there been any challenge so far the Tesla wasn't able to resolve and even turn to a positive? Think about the fire scare in 2013 (?): these are the things that burry companies. Even established ones, let alone startups. By the book, Tesla should have crashed and burned together with those 3 cars. But what happened? They went back to the drawing board and came back with a sci-fi sounding inexpensive fix and came out stronger than ever before.
But if you look at initial Model S production issues, no one thought they would end up beating all the German luxury sedans in their segment in 2 years.
I do not think Musk & Co are invincible. Nope. But give them an engineering issue (SpaceX, Tesla...) and they will turn it around and come out stronger.
So yes, the X ramp sucked. But nothing was more telling of the status of those issues than Musk's tone and enthusiasm on the last CC. He personally wanted to understand and see through resolving the issues and thinks they have a breakthrough and will be on track from now on. Sorry naysayers, that's just good enough for me.
Bottom line: Model X should now start contributing to financials positively and turn into a high margin halo product in a very lucrative market segment. And as for Model 3, it may turn out that Model X was a big enough slap on the face that it became the turning point in Musk's thinking. Listen to him talk about how M3 is designed for easy manufacturing - that's his central thought about the car every time he talks about it. At the end of the day, we may be lucky, that the first 1-2k Model X changed their thinking so the first 100-200k Model 3 will not become a manufacturing/financial nightmare.
Each piece of your own post provides the insight we need
In production ALWAYS push everything back possible and make adjustments along that path- holding massive scaling as late as possible. (Roadster thru M3 in our current example, but applies to virtually every production scaling. It's in the 10 Commandments of production, manufacturing and design
My add in bold--
In production ALWAYS push everything back possible and make adjustments along that path- holding massive scaling as late as possible. (Roadster thru M3 in our current example, but applies to virtually every production scaling. It's in the 10 Commandments of production, manufacturing and design
And you provide the most apprapoe example in your post. Thank goodness ModX IS exponentially deployed. Imagine the rate-scale of problems being solved. Errors are produced at the same rate as production. And often created by scaling too fast. If you're producing errors, produce them at lowest rate possible until solved, then scale. In other words, produce the errors slow, the perfection fast- exponential.I bet you don't want to see same exponential growth as model X production
Exactly...
SW2Fiddler
We Are Cognitive Dissidents
GF1 has already had walls deleted, construction layout/construction sequence altered and resumed - lest we forget. Once that we know of.
Once, that we know of.
Meaning? The machines-that-make-the-machines-that-make-the-batteries have undergone a major iteration/improvement once at a minimum. More pertinently, so has the GigaFactory As A Process.
Phase I is a prototype of a "seed" and the smaller the seed, as long as it still results in a producing plant (in an acceptable time frame), the better.
Phase I's roof/walls that are pointed out as "irrefutable evidence of being behind schedule," heh heh, has actually needed only to be large enough to cover the MTMTMTMTBs. When these are moved on to work their magic in the next phase, more of the logic of GigaFactory As A Product will clarify in our minds. Some of which are gonna be BLOWN, sorry about the mess.
But I'm breaking my promise not to speak further on the GF/TE catalyst which is starting to be heard as purrs and murrrs but is tantalizingly still in the bag.
Was it one or two additional GF Sites that TM famously broke ground on, in the weeks before the NV Site announcement? Rail line from either of these to a decent AutoFactory site candidate? Anyone here watching these for signs of tilling/fertilization?
Ackkk! Please ignore me! It's probably only the Whataburger coffee talking...
Once, that we know of.
Meaning? The machines-that-make-the-machines-that-make-the-batteries have undergone a major iteration/improvement once at a minimum. More pertinently, so has the GigaFactory As A Process.
Phase I is a prototype of a "seed" and the smaller the seed, as long as it still results in a producing plant (in an acceptable time frame), the better.
Phase I's roof/walls that are pointed out as "irrefutable evidence of being behind schedule," heh heh, has actually needed only to be large enough to cover the MTMTMTMTBs. When these are moved on to work their magic in the next phase, more of the logic of GigaFactory As A Product will clarify in our minds. Some of which are gonna be BLOWN, sorry about the mess.
But I'm breaking my promise not to speak further on the GF/TE catalyst which is starting to be heard as purrs and murrrs but is tantalizingly still in the bag.
Was it one or two additional GF Sites that TM famously broke ground on, in the weeks before the NV Site announcement? Rail line from either of these to a decent AutoFactory site candidate? Anyone here watching these for signs of tilling/fertilization?
Ackkk! Please ignore me! It's probably only the Whataburger coffee talking...
Just drove down to the LA Airport yesterday from Santa Barbara. 160 miles round trip, my son counted over 40 Model S. It's hard not to be bullish when you see Model S everywhere you look!
SW2Fiddler
We Are Cognitive Dissidents
Gene, I hate that you're actually missing out on the giddy excitement that comes from seeing the untapped potential - (outside of CA) hearing daily, "That's a what now? Who makes it? It's a hybird[sic], right? Who makes it again?"
Ah ha ha ha ha ha ha!! Slippery slope and a gravity well, just ahead!
Yes, I miss those days of 2013 when people would gawk at my car. Here in California nobody gives it a second look
In the CC, Musk mentioned some big executive hires that would be revealed soon.
Depending on how 'big' these guys are, presumably they would have wanted to know about capital raise/timeline before agreeing to join.
Makes me think it will be soon.
Depending on how 'big' these guys are, presumably they would have wanted to know about capital raise/timeline before agreeing to join.
Makes me think it will be soon.
Krugerrand
Meow
Not sure why you insist on being so obtuse, but hey you aren't alone. The GF is NOT behind schedule, indeed Tesla has said many, many, MANY times that it is on track or ahead of schedule for what they need. Things change and are not static including the whole 'battery cell/pack' situation, so it's really okay for Tesla to change their minds about whatever and whenever. It even says that in the paperwork. And lastly, you'll eat your words along with everyone else who doubts the GF. It'll end up being bigger than the original plan as has already been announced by Tesla.
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