Tesla, TSLA & the Investment World: the Perpetual Investors' Roundtable

[kbM3]

The best person to decide on whether to buy a better workstation isn't someone in a management chain according to annual budgets that must be spent, can't be increased etc.

Just let the people (engineers) with the skills do what they know to be right. Trust them. Let them be the best that they can be.

Tesla's return/progress on research and engineering spending is fantastic.

if I compare it to my experiences, getting something bought that is needed wastes 5 people's time and takes forever. The final decision is made by a manager with no understanding and has to be spent in a certain period.

It's the same in a supplier as an OEM. The hierarchy model cannot compete with Elon's model.

Give authority to the right person - the expert.

The speed of decision and the right person making that decision are key.

You must not have met many Engineers if you think letting them choose their own workstation is a good idea. I never met one, who wouldn’t pick the absolute top of the line every time.

 

[Favguy]

Might be interesting to see how VW is looking at the future:

https://www.volkswagenag.com/presen...ber/20200915_VW_Presentation_Bagschik_UBS.pdf

My highlights:

I'm 52, married, with no children. Trying to work out what VW think I am, I don't seem to fit into any of their silly boxes. I built my own EV 12 years ago when I was 40, then invested all my life savings in TSLA at 44. So, maybe I'm a pre early adopter, tinkerer? Oh dear, no box for that. I'm retiring from any work I no longer wish to do, financially independent as of early 2021. So maybe now I'm a "Sophisticated Best Ager"? Nope, still not old enough, and I'm not sophisticated at all! What a dilemma! I do own a classic 1954 VW, maybe that counts for some box to tick?? Nope, still can't see a suitable box. Better not buy a VW ID model then..

To you VW!

Edit: "Established dealer and service base" is not a selling point for VW, or anyone else for that matter!! What this actually translates to is "You have to bring us your car annually for an expensive service, (just like a crappy ICE) even though their is next to nothing to actually do to an EV except software updates. (which we can't do over the air, like Tesla can). And if you don't commit to our service cost extortion, you'll not get the needed software updates and you can kiss goodbye to your warranty."

Sooner or later, the majority of people will catch on to this difference...

 

[Rb48888]

OK so it's post battery day and the new car pricing and specs did not change. (I was wrong, I expected a change)

So I've been on the fence bout buying a Tesla since 2018 (with much desire to join the club since the early S60 days back in 2012) a big chunk of what I've been waiting on that I didn't think would take this long to happen is for this void to be filled

View attachment 592031

There isn't a service center or store within 200 miles of me unless I have an aircraft to fly there and back. As the crow flies Atlanta, Nashville, and even Charlotte are all under 200 miles from my house. But in terms of driving over mountains or plateaus it becomes more challenging to just hop in a car and drive there (distance, time, and charging). Heaven forbid they try to give me a gas car loaner or uber credits. I just don't have faith that in the life of a new car warranty I won't need to get my car to the service center. And I don't want to have to stay in a hotel for the time of the repairs/upgrades or to have to make two long range trips to swap cars.

How big of a company does TSLA have to be before they put something in the center of this gap?

a lesser issue but still high on my hesitate to buy it reasons list is the lack of a heated steering wheel. I can grab a used 2012 Leaf for under $5k that has a heated steering wheel but I can't get a Model 3 at any price with one.


Anyway if I put an order in TSLA wants me to drive to Nashville to pick it up. Two people that worked in the same office building with me have already made that trip but they live closer to Nashville than I do.

So what's the catalyst that will push TSLA into opening more service centers. Do I have to wait for the TX factory to open before they expand stores/service centers again in the US? Or do you think TSLA will leave this gap for the foreseeable future?

Just yesterday, I pointed to our old Hummer/now Mazda dealer, and said to my wife, “I wish we’d make that one a Tesla Service Center like the new one in Naperville.”

We have been waiting too long.

Since Elon has also said that adding a local service center is a primary driver of local demand, I console myself by thinking that the continued lack of one here is a confirmation of regional demand > supply.

IMHO, we’ll see service centers expand somewhere around the time that they finally have enough batteries to sell us.

 

[TheTalkingMule]

Most obviously it creates downsides in bigger capital demands, and issues of controlling scale and scope to set against the evident upsides.

Spending money to trim overall unit costs and eliminate bottlenecks is a positive, no?

However it also creates a problem that the supply chain that you wish to partner with today, is well aware that you will likely cannibalise them tomorrow. That in turn breeds a certain leeriness, and indeed I know companies that have turned down work with Tesla because they saw this exact risk several years ago (it is not just Tesla that looks forwards strategically) and chose not to put themselves at risk.

Panasonic just tried to renegotiate with a 1Q19 cell bottleneck. How did that work out? It's Tesla's world now, even if you're gonna get carved out eventually, it's clearly worth it.

Remember, once Tesla is done with Panasonic/LG/CATL, aaaaaallll the legacy manufacturers will come running. Or they can try and make white label products like Panasonic did with their fake Powerwall.

Either way, optimal path for an industry leader is still to work with Tesla. Because if you don't, then maybe you also risk losing that label.

 

[UkNorthampton]

You must not have met many Engineers if you think letting them choose their own workstation is a good idea. I never met one, who wouldn’t pick the absolute top of the line every time.

For valid reasons? Kit is cheap, software is fairly cheap, talent is precious.

I don't think you're correct anyway. If you think it's your only chance of a new workstation in the next few years, you might overspec it. If you know you can re-do the decision if you choose to, then you are more likely to make a reasonable choice.

The engineers' decisions are influenced by the management culture. Additionally, having a REAL MISSION changes people's perspective.

 

[thx1139]

Just yesterday, I pointed to our old Hummer/now Mazda dealer, and said to my wife, “I wish we’d make that one a Tesla Service Center like the new one in Naperville.”

We have been waiting too long.

View attachment 592133


Since Elon has also said that adding a local service center is a primary driver of local demand, I console myself by thinking that the continued lack of one here is a confirmation of regional demand > supply.

IMHO, we’ll see service centers expand somewhere around the time that they finally have enough batteries to sell us.

Naperville? Did you mean Knoxville?

 

[larmor]

I saw an email from upper management at a certain EV start up where they said " I want those cells....we need to get a hold of those cells somehow"

The future is bright.

They should be able to get them, apparently they are not worth anything according to the market

 

[TheTalkingMule]

Good morning all. This week is progressing quite well.

On Tuesday Tesla bulleted out precisely why and how they will continue to dominate transport and energy through the end of the decade.

Then China ended fossil fuels yesterday.

Not bad.

 

[Rb48888]

Naperville? Did you mean Knoxville?

No, but I could have been more clear.

Sorry for the OT: Knoxville has the same leftover Hummer stealership building as the one that is currently being converted for Tesla in Naperville. Ours has been occupied by several makes since Hummer ran out of gas, but there is poetic beauty in Tesla taking Hummer’s place, so it’s a nice daydream for me to envision the Naperville project duplicated in other markets.

That said, I’d be just as happy with a tiny service center tucked away somewhere in a low-rent business park. Like 865, my concern is more for easy access to local service (even accounting for what can be done with mobile techs).

 

[hobbes]

That depends on if you are really talking drying or sintering. Even drying will likely not get you to 100% removed solvent. I do not know if it would be 99.99 dry or more like 97% dry. If you are sintering as in moving solid matter through solid matter that usually requires very high temperatures, over 800C and cooking times in hours to days for 100% removal of something. So an expensive process, it might be 3 h in the ovens gets you to 95% and you need another 10h for every extra % point f. inst.
So not adding something is always better than adding and trying to remove after.

Yar, with the small addition that the solvent does have some undesirable effects on the electrode and longevity. Also, dry electrode can allow higher energy density.
How Tesla Could Improve Its Million Mile Battery With Maxwell's Dry Battery Electrode Technology

I am not questioning at all that the new cells will be better. My point was just that the main improvement from dry cathode tech is in manufacturability, not in less mass of the final product via removal of excess solvent (even if you might still have 1% of the solvent in current tech and remove that with dry cathode).

 

[AudubonB]

~~~~~It is way past time to end all discussion of specific Service Centers in this thread~~~~~

 

[Paul_SF]

Battery related:

The guy at min 16ish is the best part. And they still got it wrong, as they didn’t see the possibility of Tesla making a new technology, they were thinking they will just scale up the old tech.

petite bateau: you being here actually proves Tesla is building the monopoly and nobody, your colleague’s client or anyone, will really catch up or surpass them in the next decades. Tesla and Musk will never say they have a monopoly on anything. Read “Zero to One” , no mega corporation ever claims they have a monopoly on anything. They don’t have to, they just do it.

When they say that dead investors are the most profitable they are not lying, for most of the people is hard to wait and do nothing. But that’s all we have to do, as investors. Tesla is changing the world, obviously not overnight.

Happy Friday Y’all!

 

[Tslynk67]

I am not questioning at all that the new cells will be better. My point was just that the main improvement from dry cathode tech is in manufacturability, not in less mass of the final product via removal of excess solvent (even if you might still have 1% of the solvent in current tech and remove that with dry cathode).

I agree with you, the DBE compacts and speeds-up the manufacturing, reduces Capex setting up the Iines, less operational waste, etc., but doesn't add to the cell performance, or if it does, this wasn't stated.

It is needed to scale and as I understood it, it's the only part of the process which isn't scalable right now.

Could be the next iteration solves the issue and they can get producing sooner.

 

[TheTalkingMule]

Nice open with macro headwinds. Certainly appears we're headed for a purely coincidental close at max pain $405.

Let's get a stimulus vote on Tuesday and ride the macros to $500!

 

[phantasms]

Nice open with macro headwinds. Certainly appears we're headed for a purely coincidental close at max pain $405.

Let's get a stimulus vote on Tuesday and ride the macros to $500!

Agreed. Buying under $400 is free money for the day.

 

[Favguy]

Hmm... No morning bear attack yet, and on a Friday... Maybe we've gone so low since battery day that buying pressure is now just too much as we approach the numbers next week?

 

[ggies07]

Could someone on here cut just the video segments from the presentation and make it one vid? I know there is the supercut 16 minute video out there, but that is of them talking.....would love to be able to show others those video segments while I discuss the importance of what Tesla is doing.

 

[jhm]

Yeah, I just watched that. I think there's more to the story. GF1 is reported to have cost about $6B in CapEx to date, and is producing just 36GWh (let's say for ease of estimate).

That's $167M/GWh/yr of production capacity. Ugh. Even now Pana adds just 3.5GWh/yr for $100M of CapEx, or ~$28M/GWh/yr capacity. Tesla's bty day slide stated they expect a 69% reduction in CapEx. Panasonic's latest line is already at an 83% reduction over the intial CapEx, so Tesla's slide can clearly not be referring to that comparison.

Roadrunner is all about developing production equipment and tech to build cells from raw materials at the receiving dock to battery cells delivered out the gate. I doubt RR's cost reduction comparison is to the $2T estimate for world-wide battery capacity buildout.

But that's all in the past. I reinterate my statement that, going forward, Tesla will choose to build new G-cubes initially in jurisdictions with tax-friendly policies with available low-interest, non-recourse local loans such as the deal Tesla negotiated in China.

In China, Tesla has basically only needed to pay for the production tooling and equipment. Why would they accept a lesser deal in the future? Certainly, this looks to have influenced the recent announcement about Model 3 exports coming from China. It's all about lowest net cost of a vehicle delivered to the hands of a consumer.

But soon, as the number of G-cubes (an individual unit of a modular bty factory) grows, their growth will be become self-sustaining from FCF. I estimated here on TMC back in Jul 29, 2019 that a 2-yr payback period for CapEx allows Tesla to grow battery production geometrically:

Moderators' Choice: Posts of Particular Merit | G-Cube July 29, 2019​

• I predicted that by 2022 Tesla would have bty production capacity of 119 GWh/yr
• I predicted that each G-Cube must be able to produce 25GW/yr in finished bty cells
• G-Cubes must produce cash to pay for another G-Cube in 2 yrs (41% CAGR)
• I predicted the cost to build each G-cube would be $2B, based on $100/kWh product

So I should now revise sales estimates to $50/kWh @ 20 gWh per year for the product, allow for operating expenses (roughly half in raw materials/labor), specify a 2 yr payback for each G-cube, and calculate the max allowable CapEx. Once that's paid for, each G-cube produces roughly $500M in FCF per year. The 2 issues are how fast does it pay for itself, and how much FCF do you need to accumulate to pay the CapEx for the next G-cube (presumably lower CapEx with each iterations). Whew!

All the above assumes high levels of automation for all operational tasks inside the G-cube, with human operators acting mainly as safety, maintenance, and logistics operators. Dojo/AI whittles down that expense each year going forward.

Cheers!

Thanks for digging into all this. It is hard to know for sure what all Tesla is including in the 20TWh cost estimate. I do believe that it is more than just the tooling that Panasonic is rolling out at $28M/GWh. Specifically, BDay presentation included processing of raw minerals and recycling. At the 20TWh scale quite a substantial portion of materials are recycled, but at the present scale mostly third party recyclers recycle the small portion used. Optimizing raw processing and recycling is one of Tesla's strategies for keeping battery material costs low. To be sure there is a tradeoff between capex (for raw and recycled mineral processing) and cogs (for the cost of processed minerals). Additionally the Panasonic tooling might not include the cost of land and and buildings. Originally this was around $20M/GWh, but as Tesla shrinks the footprint to one tenth, this cost too can come down 90% or so. (Naturally ther is some geographical variation in these costs.)

So my expectation is that Tesla is trying to do the most inclusive, all-in, estimate of the capex needed for a 20TWh battery supply. They are scouring the whole supply chain looking for opportunities to shave pennies off of $/kWh. To find all of these savings, one must be willing to put up all of the capital.

Tesla long-term growth rate from 200GWh in 2022 to 3TWh in 2030 is about 40% per year or doubling every 2 years. Roughly speaking,, Tesla needs to realize a 40% return on these assets to expand on a self-funding basis. That is battery factories need to pay for themselves in 2 years. Theoretically this implies an exponential roll out. The scheme you have proposed is close enough to exponential for self-funding to be feasible.

If we take this logic and apply to the whole 20TWh industry, we conclude that there is an opportunity to build out $620B in assets that return 40% annually. The primary competition here is the oil industry. At $50/kWh, oil absolutely cannot compete. So terafactiory asset owners can realize outsized returns so long as auto buyers are switching from ICE to EVs. So the 40% ROA could last the whole decade. Thus, terafactory investing in the 2020s is a much better investment than anything in the oil and gas industries. The financial markets have not yet figured this out.

Moreover, you can see why Tesla wants to be greedy about deep vertical integration. It want to carve out the most profitable chunk of the total $620B asset opportunity for itself. Competition is some segments could erode the 40% ROA opportunity. So Tesla wants access to all the best segments of the supply chain, so as to realize a 40% return.

 

[Tslynk67]

As you can see, without even looking at the options chart, Max Pain is $400...

 

[UkNorthampton]

Could someone on here cut just the video segments from the presentation and make it one vid? I know there is the supercut 16 minute video out there, but that is of them talking.....would love to be able to show others those video segments while I discuss the importance of what Tesla is doing.

Slide deck would be nice. Quick google and Tesla IR pages search didn't find it.