Musk endeavours

[odysseus2000]

I'm not seeing too much evidence that there is an unmet demand for 2m Teslas per year in Europe at the moment.

John

We are in the realm of Steve Jobs who said: "Believing is seeing!" rather than the more usual "Seeing is believing."

If Tesla is to take the European market then they have to have desirable and affordable products to offer consumers when the consumer wants to place an order so that he/she can get the car quickly and the only way they can do that is to make a product they believe will satisfy these two criteria.

There are risks to it, one of the biggest being that most punters have no idea that Tesla are a car maker and are wedded to existing makers that they have liked before. Some (many board posters here) who do know about Tesla, fear the quality control. There is another group who know all about Tesla and lust after one, but that group currently does not seem able to move the amount of cars needed.

How do Tesla deal with these issues?

As things are now I get the impression that they are not going to go down the advertising spend route, but are instead going along the pile it high and sell it cheap model as used by Henry Ford. For this to work they have to be able to produce a lot of cars and sell them at prices below what their competitors can while at the same time offering better specifications. If this works they will hurt legacy motors who are still fixated on selling ICE and are only beginning to dip in to BEV, producing models that are inferior to Tesla in most ways.

If this does not work I expect Tesla to start some advertising.

As things are now I am not certain Tesla can do this as European sales are stagnant due to c19, with estimates that there will be about 1.7 million new UK car registrations:

https://www.theguardian.com/business/20 ... de-quickly

However, if we find as a species find we can live with c19, as I expect is very likely, then before long usage and purchasing patterns will return. If Tesla has product ready and keenly priced, there is a huge opportunity here for Tesla.

If this does happen then 2 million cars per year would be circa the UK yearly registrations and if one includes other major European nations one can easily see that Tesla can flog 2 million cars a year.

Tesla have to believe to see this as a reality and it seems they do.

Regards,

[dspp]

I'm not seeing too much evidence that there is an unmet demand for 2m Teslas per year in Europe at the moment.

John

We are in the realm of Steve Jobs who said: "Believing is seeing!" rather than the more usual "Seeing is believing."...........................If this does happen then 2 million cars per year would be circa the UK yearly registrations and if one includes other major European nations one can easily see that Tesla can flog 2 million cars a year.

Tesla have to believe to see this as a reality and it seems they do.

Regards,

Sigh. I am afraid neither of you is answering the question I tried to ask. That means I probably haven't explained myself well enough. So can I try again please.

I am not (in this instance) interested in your views on the ability of Tesla to sell 2m cars per year in Europe.

What I am interested is whether the internet speculation that suggests :
i) a fully built-out Berlin factory is (designed to be) capable of 2m cars/year is correct ?
ii) and furthermore whether the quarter of that facility (i.e. the chunk currently under construction) has a design capacity of 500k cars/year is correct ?

regards, dspp

[odysseus2000]

Sigh. I am afraid neither of you is answering the question I tried to ask. That means I probably haven't explained myself well enough. So can I try again please.

I am not (in this instance) interested in your views on the ability of Tesla to sell 2m cars per year in Europe.

What I am interested is whether the internet speculation that suggests :
i) a fully built-out Berlin factory is (designed to be) capable of 2m cars/year is correct ?
ii) and furthermore whether the quarter of that facility (i.e. the chunk currently under construction) has a design capacity of 500k cars/year is correct ?

regards, dspp

According to wiki

https://en.wikipedia.org/wiki/Giga_Berlin

(reference 10) the Berlin site is:

Facility for the Making and Assembly of Electric Vehicles with a Yearly Capacity of 100.000 Units or More at Location 15537 Grünheide (Mark)] (PDF) (in German). Potsdam: Landesamtes für Umwelt. 2020-01-03. p. 3. Retrieved 2020-01-05.

Until Tesla announce what the design goal is or it leaks out from one of the contractors, it will be difficult to know what the factory is designed to produce other than 100,000 or More.

There may be questions/answers on this during the report tonight.

Regards,

[odysseus2000]

Wow!

First read of Tesla earnings is that they are very good:

Commentary:

https://www.cnbc.com/2020/07/22/tesla-t ... -2020.html

Results:

https://ir.tesla.com/static-files/f41f4 ... 23b00475a6

Looking at vehicle deliveries (year over year) Tesla are up over 10%, all other majors are down.

Everything looks good with $8.6b in cash driver by free cash flow of $418m.

Regards,

[odysseus2000]

This bear compares Tesla of 2020 with Cisco of 1999:

https://seekingalpha.com/article/436000 ... ent=link-0

IMHO he is missing the lesson of 1999. Sure Cisco sold off, but it survived.

If he thinks Tesla is a bubble about to pop he should be finding all the business that were like the compatriots of Cisco that did not survive. These business made the best shorts and folk got fat shorting them in 2000.

I think it was Fischer the elder who amassed a short basket of all the "Cisco me-too" stocks in 2000 and made a fortune as many went bust.

If Tesla are doing as well as this report suggests, the place to look for shorts is among its competitors and the business that supply them.

Regards,

[odysseus2000]

Just finished the earnings call.

There were lots of things discussed with a few reinforcements of previous ideas, in no particular order:

Musk said they were very close to full self driving and that his own car can take him from home to work with minimal input. If full self driving happens they believe the value increase will be the largest ever seen in a business, something like a factor of x5. Car utilisation going from about 12 hours/week to 60 hours per week.

Tesla cars are too expensive, attempting to cut price while keeping margins intact via more efficient manufacturing. I.e. the Henry Ford playbook. As an example the approx 12 parts in the model y rear casting would soon drop to 1 part and that they will soon have the biggest (?) casting facility in the world.

Iron-phosphate range is now about 300 miles for Chinese model 3, so that the nickel cells cans go to the semi-lines. They expect semis to start rolling off the lines shortly, the first ones will be reserved for Tesla use to move parts etc, then to the long standing patient customers.

Musk noted energy would be about the same as automotive and then a little while said energy was bigger than automotive, so not quite sure what is going on there.

Insurance is aimed towards becoming a very big business. Currently only in California, but filing papers etc to be in many more states. Much of the call revolved around asking gifted people to apply for jobs and this included actuaries who wanted a near real time insurance risk market.

There are NO demand issues, there are some supply constraints.

Solar is now supplying the cheapest panels and roofs in the US, they see large growth for panels/tiles and power walls and for grid scale batteries.

No mention of car-to-grid, but possibly saved for battery day.

Musk said he had never been more excited about the prospects for Tesla.

Don't know if this call is enough to ignite Tesla equity. There was no stock split and nothing on what battery day is going to be about, but there was an awful lot of good news and positive future vibes.

Regards,

[redsturgeon]

Musk said he had never been more excited about the prospects for Tesla.


Regards,

It would be very surprising if he had not said that!

John

[odysseus2000]

Another excellent accounts analysis of the latest Tesla results results:

https://youtu.be/X3i_Z9cd7Fg

The author believes Tesla will be able to make 3-4 million vehicles per year when all 6 factories are running, implying an average, assuming NY isn't producing vehicles, of upto 4/5 million per factory. If this simple analysis is right Berlin likely something of order a few 100,000 per year, so the putative 500,000 vehicles from Berlin looks potentially credible.


Now, we need to see what European sales will be as we go forward in light of comments that demand is not a problem.

Regards,

[odysseus2000]

This is a summary of what Elon Musk said in his opening comments:

https://twitter.com/smartertrader/statu ... 07938?s=20

His comments re battery day and "will really surprise" are providing fuel for a lot of speculation.

There are a number of folk arguing that Tesla have a battery that will give a 3000 mile range per charge.

If this is true it would really surprise, but if not what else might be discussed at battery day.

It has already been stated that the 3 is now efficient enough to use iron-phosphate batteries and still have a near 300 mile range.

We should also note that battery day was originally scheduled to be earlier, so the chance of a leak via this pushed back time scale increases.

Regards,

[dspp]

If you look at the slidedeck in the Q2 presentation p7 one can see that Shanghai 3 line is at 200k/yr. That will debottleneck to 250k. The Y line will be 250k also. So 250k/line.

Then look at the Fremont factory and they are currently at 400k 3/Y debottlenecking to 500k, so again 250k/line.

Look again at the Shanghai photos and one can see potential to add at least one full line, maybe two (depends). So 3-4 lines in all, so 750k-1m/year. It really does look as if they are planning on a standardised factory size of 1m/yr based on 4 assy lines of 250k.

The Berlin factory is announced to lead on Y, then 3. Listening to the call I think it (or Shanghai) will then be the launch site for the 2 (the compact) which will have a 300mile/500km range as being the sweet spot. Then they will launch a people-carrier MPV (that was the not so well veiled hint in the call). So Berlin will end up with a 3, Y, 2, and MPV lines for 1m/yr.

The Austin factory will end up with Y, 3, CYT, and Semi lines for the equivalent of 1m/yr. They are just starting prelim site-works at Austin this weekend.

Fremont will get the Y/3, and the S/X and the Roadster2, for 600k/yr.

At the moment they are entering a period of building at the rate of 3 lines per year, on 3 sites, on the 3 continents. I expect that when Grohmann etc can start doing a 4th line etc they will stay with one workface per factory and announce their next factories.

So, would it be a second Chines factory ? Another one in Asia-Pacific ? One in LatAm ? the UK (less likely unless massively bribed given the workforce mobility comments from Musk). India (why, that can wait, the powergrid in India can't take it yet imho). My personal guess is the next 3-factories would be Brazil, Tulsa, and a second one in China and that they will get announced in the course of 2021.

The comment they made was that the global energy market is bigger than the global auto market, but that for Tesla they will be about the same in eventual size.

It will be interesting to see how big the insurance market becomes. If I think about it, say a car costs £40k and lasts 14yrs that is £2.8k/yr on straight line deprec'n. I have no idea what early-years insurance is but I hazard a guess it will be £1k/yr based on my bangers being £200-£400/yr, (I'm sure Howard will tell us). So insurance might over time grow to be 1/3 of the auto business, but would start off at a small fraction of that.

The semi is made possible by the ironphospate being good enough t ogive 300-miles in the 3/Y, allowing them to reserve sufficient nickel cells to enable Semi production to commence.

They are prioritising growth rate over profit. 1% profit is enough for them. The priority is growth of affordable vehicles. Demand is not a problem, production growth is the constraint.

regards, dspp

[odysseus2000]

Bill Maurer argues Tesla results are not great:

https://seekingalpha.com/article/436025 ... ent=link-0

He gives Tesla no credit for what they have achieved in a difficult pandemic year and makes no comparisons to what other auto makers have done.

It has been noted before on this board that Mr. Maurer takes Tesla personally and one can argue that he is not doing a good job of analysis here because of his personal negative emotions to the company.

Regards,

[Itsallaguess]

It has been noted before on this board that Mr. Maurer takes Tesla personally and one can argue that he is not doing a good job of analysis here because of his personal negative emotions to the company.

<SPLUTTER>

Does anyone know the best way to get coffee out of a keyboard?

Cheers,

Itsallaguess

[odysseus2000]

Good summary of latest Tesla earnings call:

https://youtu.be/ozXyyevCDAs

Regards,

[odysseus2000]

A new short enters the arena making the usual valuation arguments:

https://seekingalpha.com/article/436058 ... ent=link-0

Today the share gapped down to sub $1400, making anyone who sold on the 13th of July at near $1800 look like a genius and here is part of the weakness in Mr. Franke's case, as a good short opportunity has been and gone.

I have no idea if the share price goes up or down from here, but I still believe that there are far easier short opportunities and focusing on something that has lots of potential upside possibilities is a very dangerous game. No profitable professional trader who wants to keep their job will enter a short position if he/she can see catalysts that might cause the share price to jump up. The time to short Tesla was from about noon on the 13th of July, now there are big risks to shorts and imho less risk for longs who have a likely holding period of months to years.

Regards,

[odysseus2000]

This is a very general article on energy which has a fab graph (1st image) from the Economist showing how the price of solar has fallen to the level of wind power over recent years:

https://seekingalpha.com/article/436060 ... ent=link-0

There are some other interesting nuggets in there although it is a bit long winded in places.

The more I think about the Tesla energy v Tesla car balance the more I wonder if energy will be larger than cars as was what I originally understood from what Musk said although in the latest conference call he argued Tesla energy and Tesla auto would be similar in size.

Much depends on what is revealed at battery day. If Tesla battery tech is as advanced as some are arguing it may be far enough ahead to make their systems dominate especially if they are, as I expect, going for very low profits and rapid growth. Such a strategy was what lead to the huge growth in Henry Ford's auto business.

If we consider that it could easily become government policy to require every public building and most private dwellings to have solar and storage the market in the UK is something like 20 million homes plus public space and for each system that uses Tesla tech, licensed to other makers, Tesla would acquire royalties that run for 20+ years. By contrast there are something like 2 million new cars registered in the UK per year (pre-covid) and Tesla are unlikely to get all of this and if robotic driving happens with the new 4D neural net technology, the number of new cars needed will fall likely very substantially. If we take the latest conference call of existing cars being used 12 hours a week, but robo-cars being used 60 hours, then the number of new cars needed could be down to 2/5 =400,000.

If any of this speculative stuff happens the business that will suffer are legacy oil and gas, legacy auto and legacy utilities. These imho look to be the areas that one should explore for potential shorts.

Regards,

[odysseus2000]

This is a review of the Polestar-2, a Chinese made car, which has the Volvo performance branding.

The review is more for car enthusiasts giving an idea of the great strides being made by competitors to Tesla.

The reviewer who leases a model 3 says that he slightly prefers the Polestar-2 to the 3 in most things.

https://youtu.be/_cwD50F_RWw

Regards,

[dspp]

This is a very general article on energy which has a fab graph (1st image) from the Economist showing how the price of solar has fallen to the level of wind power over recent years:

https://seekingalpha.com/article/436060 ... ent=link-0

There are some other interesting nuggets in there although it is a bit long winded in places.

The more I think about the Tesla energy v Tesla car balance the more I wonder if energy will be larger than cars as was what I originally understood from what Musk said although in the latest conference call he argued Tesla energy and Tesla auto would be similar in size.

Much depends on what is revealed at battery day. If Tesla battery tech is as advanced as some are arguing it may be far enough ahead to make their systems dominate especially if they are, as I expect, going for very low profits and rapid growth. Such a strategy was what lead to the huge growth in Henry Ford's auto business.

If we consider that it could easily become government policy to require every public building and most private dwellings to have solar and storage the market in the UK is something like 20 million homes plus public space and for each system that uses Tesla tech, licensed to other makers, Tesla would acquire royalties that run for 20+ years. By contrast there are something like 2 million new cars registered in the UK per year (pre-covid) and Tesla are unlikely to get all of this and if robotic driving happens with the new 4D neural net technology, the number of new cars needed will fall likely very substantially. If we take the latest conference call of existing cars being used 12 hours a week, but robo-cars being used 60 hours, then the number of new cars needed could be down to 2/5 =400,000.

If any of this speculative stuff happens the business that will suffer are legacy oil and gas, legacy auto and legacy utilities. These imho look to be the areas that one should explore for potential shorts.

Regards,

That SeekingAlpha article is rather likethe amazement of someone who has just discovered that chickens lay eggs. Gosh.

The Economist graph is actually the Lazards one, which I am pretty sure I have posted on the energy board. Anyway it is at

https://www.lazard.com/perspective/lcoe2019

For utility scale onshore wind and utility onshore solar we are pretty much flatlining, with local resource/permitting/contextual factors tipping things one way or another. The unknowns (imho) are the pace of rooftop (C&I, domestic) solar cost decreases, and the rate of storage cost decreases, and the rate of offshore wind decreases, as these three factors will drive topological outcomes in grid & storage and consequently industry structures.

The macro issue for us investors is what is the rate of transfer from legacy to renewables, and to what extent price shocks along the way may make it profitable to hold onto legacy dino-juice exposure. I do not know the answer to that.

regards,
dspp

[odysseus2000]

Tesla sues Rivian for theft of trade secrets:

https://arstechnica.com/cars/2020/07/te ... -heats-up/

Regards,

[odysseus2000]

Interesting, albeit a bit long, New York Times interview with Elon Musk, covering many things:

https://www.nytimes.com/2020/07/25/styl ... &smtyp=cur

Regards,

[odysseus2000]

This is a super interesting Tesla daily, including comments by a German politician that Tesla Berlin, will produce a smaller battery, with an increased energy density, but as Tesla have not currently applied to do this there are no details and we have to wait for battery day.

There is also a nice section on BMW, which BMW fans may find of interest.

https://youtu.be/8n565iGi5uI

Regards,