Tesla Gigafactory Investor Thread

[dhanson865]

"I don't get it, and I'm basically screwed as a company if and when Tesla succeeds with their Model E, so I'll just say something random about suppliers." - 19th-century transportation company executive

I wonder if you meant that as a dig to pre car transportation era or just didn't realize the century to xxxx translation?

1814 = 19th century
1914 = 20th century (when most cars were made)
2014 = 21st century

from wikipedia car epochs are

Veteran era (1888-1904)
Brass / Edwardian era (1905-1918)
Vintage era (1919-1929)
Pre WWII (1930-1945)
Post WWII (1946 - 25 years ago)
Modern (25 years ago - now)

 

[FluxCap]

I wonder if you meant that as a dig to pre car transportation era or just didn't realize the century to xxxx translation?

1814 = 19th century
1914 = 20th century (when most cars were made)
2014 = 21st century

It was a goof, I meant 20th-century.

 

[The Blue Owl]

It was a goof, I meant 20th-century.

I liked it better with the goof .

 

[tigerade]

It sounds like Panasonic is still pretty gun shy about the Gigafactory. I can't say I blame them, I would scrutinize every detail before deciding to invest >$1 billion into a major project that's never been done before.

Tesla Gigafactory Faces Skepticism From Panasonic, Analysts - Yahoo Finance Canada

Panasonic: large risk
But even Tesla's lithium-ion cell supplier Panasonic--which owns a small share of the company--hasn't yet committed to participating in the gigafactory plan.
Bloomberg noted last week that the Japanese electronics giant's president, Kazuhiro Tsuga, told reporters the project would pose an "investment risk [that] is definitely larger" than the company prefers.
Panasonic prefers to "make investments step by step," he said, adding that he "would like to cooperate" with Musk's plans. He also noted that Panasonic's battery production "depends" on Tesla sales, which it monitors closely.
Tsuga's comments may reflect the slow pace of building consensus for such a major investment on Panasonic's part.

 

[uselesslogin]

It sounds like Panasonic is still pretty gun shy about the Gigafactory. I can't say I blame them, I would scrutinize every detail before deciding to invest >$1 billion into a major project that's never been done before.

It looks like more details as to what Kazuhiro Tsuga actually told reporters last week. It actually sounds a little more positive than what I saw quoted last week.

 

[hummingbird]

It's not in Panasonic's interest to jointly do the Gigafactory with Tesla.

Why should Panasonic share their battery IP and know-how with Tesla?

Panasonic would rather sell their batteries to many gadget makers, not just Tesla.

Further, two years from now what if Samsung/Chinese come up with better batteries and Tesla needs to switch vendor/technology?

Assuming $3/cell, last year Tesla paid Panasonic approx. $450 million for their batteries ($3 x 6700 x 22,500). This year it might be $900 million

In the world of big business these are not huge numbers. Why don't Panasonic make more batteries? I suspect it's because they don't want to. By keeping supply scarce, pricing can remain firm.

The 4-year deal for 1.8 billion cells the two companies recently signed is good for approx. 268,000 cars (1.8b / 6700).

That's not enough cells for the demand we see for the Model S & X in the next four years.

Why is Panasonic not cooperating? Perhaps it's because they are very careful and like to take little steps at a time. By going slow they can keep battery prices higher, for longer. I am sure there are other reasons we are not privy to.

Another very important issue we are not privy to is this: Tesla has been in business ten years now. 18650 form factor is supposed to be a commodity. Why haven't they second sourced this most important component? I am sure there are good reasons, but we just don't know.

On the positive side, Elon has a track record of make if he can not buy. I suspect he will get this done one way or another.

 

[MikeC]

It's not in Panasonic's interest to jointly do the Gigafactory with Tesla.

Why should Panasonic share their battery IP and know-how with Tesla?

Panasonic would rather sell their batteries to many gadget makers, not just Tesla.

Further, two years from now what if Samsung/Chinese come up with better batteries and Tesla needs to switch vendor/technology?

Assuming $2/cell, last year Tesla paid Panasonic approx. $300 million for their batteries ($2 x 7000 x 22,500). This year it might be $500 million.

In the world of big business these are not huge numbers. Why don't they make more batteries? I suspect it's because they don't want to.

The 4-year deal for 1.8 billion cells the two companies recently signed is good for approx. 268,000 cars (1.8b / 6700).

That's not enough cells for the demand we see for the Model S & X in the next four years.

Why is Panasonic not cooperating? Perhaps it's because they are very careful and like to take little steps at a time. I am sure there are other reasons we are not privy to.

On the positive side, Elon has a track record of make if he can not buy. I suspect he will get this done one way or another.

Why? Because (from the article): "He also noted that Panasonic's battery production 'depends' on Tesla sales, which it monitors closely."

Obviously, the numbers have to make sense for them to join but that is simply a matter of negotiation. If they don't join they lose their biggest customer. If they do join they can increase sales by an order of magnitude.

 

[tigerade]

A FUD-ish article from WSJ:

Will Teslas $5 Billion Gigafactory Make a Battery No-One Else Wants? - Corporate Intelligence - WSJ

Can anyone address this?

 

[hockeythug]

A FUD-ish article from WSJ:

Will Teslas $5 Billion Gigafactory Make a Battery No-One Else Wants? - Corporate Intelligence - WSJ

Can anyone address this?

These high-power batteries are being built in various factories in the U.S., all of which received subsidies from the U.S. government, and all of which are operating well below full capacity.

What is that all about?

 

[The Blue Owl]

What is that all about?

They're implying those "various factories" were propped up by the government because there is not enough demand for the batteries they make ("all of which are operating well below full capacity.")

They are probably right on that one. It's irrelevant for Tesla, of course, who cannot get/make the batteries they need fast enough.

 

[JRP3]

A FUD-ish article from WSJ:

Will Teslas $5 Billion Gigafactory Make a Battery No-One Else Wants? - Corporate Intelligence - WSJ

Can anyone address this?

I did, in the comment section:

The battery plant need not be locked into a single format. The production line is made up of a number of machines, some of which are adjustable, and some of which operate completely independently of cell format. People who don’t understand cell manufacturing are making a bigger deal out of this than it really is.

To the comment below about running cars on sunshine, EV’s already make that possible.

 

[tigerade]

I did, in the comment section:

Your response to the troll is much nicer than mine would be. Thanks for the answer. I am not that familiar with battery manufacturing.

Do we know if Tesla has finalized a format for the Gen3 batteries, or is that still up in the air?

 

[JRP3]

I'm not aware of any formal statement, and there is plenty of time to decide on a format.

 

[kenliles]

"Will Teslas $5 Billion Gigafactory Make a Battery No-One Else Wants? - Corporate NO-Intelligence - WSJ"

Can anyone address this?

Sure it's possible. And about as likely as that ICE factory they invested in would make cars nobody wants.
Oh wait that's the same one that currently makes the batteries nobody (everybody) wants

 

[InTheShadows]

The solar industry is drooling over that battery. No I do not believe it is possible

 

[Cosmacelf]

That WSJ article is pretty dumb. Who said anything about Tesla continuing to use the same format cells? And it doesn't matter anyways, since the only customer for the battery factory is Tesla - Tesla doesn't need to make cells for other car companies.

I did like how they inadvertently showed up all the other car makers. They are STILL trying to get their large format cells down in cost to where Tesla's batteries are.

I wouldn't call the article FUD, just clueless. Happens all the time, actually.

 

[hummingbird]

A FUD-ish article from WSJ:

Will Teslas $5 Billion Gigafactory Make a Battery No-One Else Wants? - Corporate Intelligence - WSJ

Can anyone address this?

Some may label this article as promoting FUD, but the author asked perfectly reasonable questions. For sure, there is too much group think here on TMC. So much so, it's definitely unhealthy for evaluating this stock.

Most here are fans of Elon Musk and logical thinking. Pros on Wall Street who short stocks for a living are definitely some of the smartest people in the market. They definitely do their homework. For anyone who owns TSLA stock, it would be best to understand what they have to say.

For those who think only if everyone just posted positive comments here about Tesla then this stock will go up is delusional.

As to the form factor of 18650, I agree with the person who commented below that WSJ article:

David W wrote: "I think the guy who co-founded Paypal, made the simultaneously quickest and most efficient car (at the time) Roadster Sport, makes a car that will pulverize an alternator if it runs over it, sends satellites into space and makes a rocket that can take off and land vertically knows what he is doing when choosing a battery form factor."

 

[JRP3]

Since the entire premise of this article was based on the choice of the 18650 form factor, and since you agree that the form factor choice is not an issue, what exactly are the reasonable questions the author raised, and what "group think" do you feel we are engaging in?

 

[hummingbird]

I am relatively new here on TMC. My observation is that in the investment threads here there is whole lot of one-sided group think. Good reasoning from the short side are never debated here. If you don't see that then nothing I say will be able to convince you of my view.

 

[JRP3]

You seemed to be referring to group think in relation to that article. You acknowledged the flaw in that article, which was it's entire premise. Since the premise was flawed, the article was flawed. How was that group think?
I think most of us are open to valid criticism, it's not our fault that there seems to be very little of that to be had. The fact is we have been studying this company for much longer than most people, especially the critics, so it's easy for us to see the flaws in their arguments and quickly dismiss them, especially when they are based on incorrect data.