Musk endeavours

[odysseus2000]

For anyone interested, I have sold all my NIO shares at a loss into the spike up, because I wanted to reduce my taxable gains as much as possible but mostly because NIO have not executed well and have imho spent too much money on marketing and not enough on engineering and don't have imho a practical competitors for any Tesla vehicle.

Regards,

[redsturgeon]

Let's face it the top-end competitors are still struggling to put out a competitive 2020 vehicle that can face off against Tesla's 2012 offering of the S/X.

Regards, dspp

Do you think the 2019 Tesla S/X is the same as the 2012 S/X?

https://www.youtube.com/watch?v=7-XMnUrFp5U&t=512s

John

[BobbyD]

Turn to the dark side Obi 911...

Porsche Taycan Flanked By Stormtroopers At Asia Pacific Launch

Sometimes I wish I kept up with my alerts...

[odysseus2000]

For anyone interested in the technical picture, this Rob Smith video covers Tesla quite early on and gives the reasons for the recent declines and sets the stage as to whether this is likely to reverse or carry on down. The technical ideas are advanced and took me quite some time to begin to use effectively and I had a years subscription with Rob which was one of the best spends I have made in my life. The video is here:

https://www.facebook.com/T3Live/videos/ ... 780064980/

Regards,

[dspp]

Let's face it the top-end competitors are still struggling to put out a competitive 2020 vehicle that can face off against Tesla's 2012 offering of the S/X.

Regards, dspp

Do you think the 2019 Tesla S/X is the same as the 2012 S/X?

https://www.youtube.com/watch?v=7-XMnUrFp5U&t=512s

John

The 2012 Tesla unit has had minimal spend in the intervening period. The competitors on the other hand have had nothing else to spend their money on, except of course on digging bigger ditches for their dino-juice ICE coffins to die in ...

dspp

[Howard]

Perhaps more important than twitter musings was Tesla's formal comment to the market:

In their Q1 results update published in April 2019, Tesla said “if our Gigafactory Shanghai is able to reach volume production early in Q4 this year, we may be able to produce as many as 500,000 vehicles globally in 2019”.

So sadly their actual performance fell well below that recent forecast.

They may have made some cars in China, but so far have only delivered 15 of them to members of their staff as at today.

Who knows what their actual global sales will be in 2019? It's pretty certain they will be less than 80% of their April prediction.

As I've said before, it's a pity that their CEO makes such daft forecasts. Their actual performance is impressive but looks poor compared with Elon's hype. For this reason, when their 2019 results are published, the Bears won't believe them because of all the shenanigans which have happened this year.

But they certainly sold a lot of cars in the Netherlands. It will be interesting to see if their sales in the UK have grown in December.

regards

Howard

[odysseus2000]

According to this Tesla, China, is now producing 1000 cars per week & expecting to triple & by end of 2020 to use predominantly Chinese sourced parts:

https://seekingalpha.com/news/3528861-t ... email_link

Regards,

[Howard]

According to this Tesla, China, is now producing 1000 cars per week & expecting to triple & by end of 2020 to use predominantly Chinese sourced parts:

https://seekingalpha.com/news/3528861-t ... email_link

Regards,

Again these forecasts are just clickbait. Who knows how many cars they will sell in China in 2020? So far their sales performance there hasn't been that startling. Yes, the factory looks impressive but they have to ramp up sales to fill it. They are obviously trying hard and building what looks suspiciously like a chain of distributors across China. This may be a different sales model than the internet model in the USA.

Turnover is vanity, profits are sanity. We will have to wait and see what happens. The actual results for 2019 are what count in Tesla's development. Will they indicate that it's a growth company or that sales are stagnating in their home market in the USA?

regards

Howard

[odysseus2000]

Howard
Turnover is vanity, profits are sanity. We will have to wait and see what happens. The actual results for 2019 are what count in Tesla's development. Will they indicate that it's a growth company or that sales are stagnating in their home market in the USA?

... but cash flow is reality. Sure you can argue that Tesla's cash flow is all about loans, but they currently do not have any problems borrowing money.

Looking at what is happening over all for BEV consumption leads me to believe that when there are good prices, such as in Netherlands, the 3 sells very well.

Some of the posters here have also pointed out that it is quality and depreciation that most troubles them about Tesla. This is clearly an issue for some buyers, but the lust for a BEV at an affordable price seems to trump such users in an ensemble of potential buyers.

If I am correct, the factor holding back BEV sales is price, if this can be got lower or the price of competing ICE made higher with taxes etc, there looks to be good market for the 3. This is, as I understand it, what Henry Ford observed and why he cut prices by improving production efficiency. I don't know if Tesla want to do this, or can do this, but I believe one needs to pay attention to what they say about batteries. If they have ways of making them for less and faster, prices of Tesla cars can come down without hurting margins. Musk is on record as saying the prices of Tesla cars are too high so I believe he is thinking like Ford.

The marketing of VW has also been about lower price but I don't believe affluent consumers will accept lower price if it comes with a compromise on other parameters such as safety, over the air updates, driver assist tech, range,...

Tesla has shown that BEV are a practical alternative to ICE both in terms of performance and cost. Having built this platform they now have to broaden the appeal of BEV to the great mass of consumers who still have no idea about BEV. For now the competition is mostly marketing and although that can work for a while the quality of engineering and price will be big factors governing punter buying.

Regards,

[dspp]

I checked my database and it would appear that the pacing constraints in 2019 were most likely battery supply. A second paint shop appears to be coming onstream in Fremont to support the Y, so that indicates that Fremont capacity is being ramped only as required to match Sparks capacity.

This in turn suggests that sales blends are being carefully managed to prime markets, build charger networks, and bias towards key models. In other words a thoughtful strategy. There certainly does not appear to be a sales constraint on the ramp.

Given that battery supply is a constraint it makes sense to be as vertically integrated as possible, i.e. wring the last $$ out of each battery.

Battery numbers are approximately as follows:
2019 = 31 GWh
2018 = 21 GWh
2017 = 8 GWh

Stationary storage is generally 3-6% of the above. There are indications storage may have reached 13% in the very early days as they were trying to find their way, but now it is at about 6%.

Turnover numbers are approximately as follows:
2019 = $ 26 bn
2018 = $ 21 bn
2017 = $ 12 bn

From this one can observe the trend in $ bn / GWh. I will let you do the numbers and consider the implications.

If we were to pencil in 40 GWh for 2020 this would imply a turnover of $33bn, and 475,000 vehicles, and be 30% annual growth which is Tesla's long term yoy avge growth rate. At 22% GM that would be approximately 6% NM. We then have to think whether that is a reasonable case. Since it is approximately 110,000 vehicles more than 2019, and since China is already able to do 1,000 per week and is heading towards 3,000 per week then I would say that is eminently doable on the back of China alone. The pacing China constraint would appear to be local battery supply (9GWg/yr would be needed), and I think that Tesla may be pleasantly surprised with what LG et al can do there. Then we know that the Y will start coming out of Fremont in mid-2020 which in turn indicates that Sparks will start get to 35 GWh/yr about then (and there are indications that the cell capacity may exceed 35 GWh/yr), plus they are still bringing in the S/X cells from Japan (about 2 GWh/yr), which suggests that Tesla has room to surprise to the upside in 2020. Those cell supply capacity estimates may be why they are prepared to start shipping the semi in 2020, even if only in small volumes and quite late in the year. It might be that Tesla could produce (i.e. make, use, sell) 45-50 GWh in 2020 in the extreme upside case.

At this stage all the other automotive players can only dream of battery supply capacity coming online in 10 GWh/yr increments ! They are all fundamentally hobbled by this, and falling behind each year in the dash to scale on a comparative basis.

It is worth paying attention to the numbers.

Regards, dspp

[dspp]

Doing some more modelling and a key determinant for Tesla in the next 5-years is what will constrain their battery growth rate and how will it constrain it.

If the constraint is approx 10 GWh/yr, whether because of cell machinery addition rates, or cell raw material rates, then Tesla would reach 2025 doing 1.1 mln vehicles per year, 91GWh/yr, and $79 bln turnover. That would be quite realistic from 3 factories.

If the constraint is 13 GWh/yr, which is the max yearly capacity add so far, then the 2025 numbers would become 1.3 mln vehicles, 109 GWh/yr, and $95 bln turnover. Again that could be done from 3 factories and is a annual addition that Tesla has done in the past.

If the constraint is set to increase at 25% each year, but again is set to be 12.4 GWh/yr adds in 2020 then the adds scale to 37 GWh of additional capacity in 2025 ! That would mean Tesla would be doing 2.1 mln vehicles, 170 GWh/yr, and $149 bln turnover. That would imply 6-8 factories at various stages of ramp at that point. That is a slower rate of growth than Tesla has historically delivered.

Go to constraints increasing at 50% each year and Tesla becomes a 4.2 mln vehicle manufacturer by 2025.

Let's not misunderstand this. The industry has to do much more than this rate of conversion to BEV, and much more than these rates of capacity adds, to deliver the changeover that is underway. The question is who is going to be delivering it ?

Will it be the legacy auto mfg making a gradual transition, or will it be the newcomers doing a Intel "replicate exactly" strategy. Remembering of course that the economies of scale and the network effects (chargers, internet selling, autonomy) are now working for Tesla more than they are for any newcomer or any legacy manufacturer.

What is very clear from this sort of analysis is that it is financially attractive for Tesla to scale fast, and to keep on scaling fast. At least until (say) 10 million vehicles per year ......... and it makes it very clear that there will be some roadkill in the industry.

Battery day is going to be very interesting. Where are the real constraints ?

(edit) : oh, and what a surprise, Panasonic have just announced this "Panasonic has had difficulties ramping up production of battery cells at Gigafactory 1 to support Tesla, but the company now says that it would be able to ramp up battery production to 54 GWh....... They were supposed to keep growing the factory, which Tesla said could eventually produce up to 105 GWh of battery cells and 150 GWh of battery packs in order to support Tesla’s growing business. .......
But Panasonic could be ready to grow again at the Tesla Gigafactory 1.." https://electrek.co/2019/12/30/tesla-gi ... roduction/

regards, dspp

[redsturgeon]

Great video of actual Tesla autopilot in operation.

https://www.youtube.com/watch?time_cont ... e=emb_logo

John

[dspp]

Great video of actual Tesla autopilot in operation.

https://www.youtube.com/watch?time_cont ... e=emb_logo

John

Nice one. Is there a post-mortem of what caused failure (apart from the rather obvious one of the human failure to monitor) ?

Thinking further about the Tesla scaling issue it brings to mind memories of the old ROE discussions that were one way of analysing the 1990s struggles of HP, Compaq, DEC, etc. The ability to target capital well, or not so well, will be a key determinant in legacy vs newcomer outcomes.

In this vein I was thinking what are the actual real-world newbuild costs for pureplay EV manufacturing. One clue is https://www.reuters.com/article/us-tesl ... SKBN1YU19F the $1.3bn loan for the Shanghai facility. Now that facility is supposed to reach 150,000 cars/year at phase 1, i.e. the existing buildings etc. But ultimately it is intended to reach 500,000 cars/year when fully built-out. So my question is does anyone know how much of that $1.3bn is for phase 1, and what the total cost is expected to be longer term ?

If I use the $1.3bn as being phase 1, then my fagpacket payback period is 6-7 years. Is that typical for an auto plant ? Does anyone here have any insight into that ?

Regards, dspp

[redsturgeon]

I really don't know any more if new companies are supposed to ever make a profit!

John

[dspp]

I really don't know any more if new companies are supposed to ever make a profit!

John

If you look at the numbers for Tesla they are likely to show full year profits for 2020 and thereafter.

If you take the very high upside case I discussed below where the constraint is the rate of battery growth, and that capacity add grows by 1.5x each year, so that Tesla reaches 4.2 mln cars/year in 2025, then Tesla would be showing a profit of about $50 bn/year on sales of about $297 bn/year.

If you assume that it takes $1bn of capex investment to build approximately 100,000 cars per year worth of factory - which seems to be the right order of magnitude - then Tesla's additional investment required to get to that point is about $37 bn. Amazingly the net profit released over those 5-years would be $71 bn. Basically Tesla appears to have cracked it, enough even to support a very high upside growth case. I will admit I put BS issues to one side for the last few years in reviewing Tesla, but now I have had a look at these sorts of numbers I realise the BS ought not to be a problem.

Tesla has been cash-flow positive for quite a while now, and appears to be growing as fast as it can whilst scaling through the transition from loss to profit, which is a transition it now appears to have made.

https://ir.tesla.com/static-files/47313 ... 61bce15da4

So if it is profits you are after, at scale, then it is worth running the numbers on Tesla. But you will have to use PEG valuations rather than PE valuations as otherwise you would be wasting your time.

regards,
dspp

[PeterGray]

PEG valuations are fine if the growth estimates and forecasts turn out correctly. But, failure to hit targets or cuts in forecasts hits PEG, and SP.

So, yes, if your modelling turns out correct, and Tesla produces ongoing growth of the sort you suggest then investing a sensible PEG levels could prove a good move. But it's not one for me. Far too much uncertainty in my limited view on the likely medium and long term growth and competition. And to be honest the CEO makes Tesla uninvestible for me. He's clearly done a lot of things right, but he's such a loose cannon that I'd have no confidence that he wouldn't either prove to have been hopelessly oprimisitic in his forecasts, or finally have a run in that he and Tesla didn't come away from relatively unscathed.

[onthemove]

Great video of actual Tesla autopilot in operation.

https://www.youtube.com/watch?time_cont ... e=emb_logo

John

Yes, it looks like Tesla might need to re-think their AD strategy in regards to giving users 'AutoPilot' under the guise of it being a 'driver assistance' feature...

https://www.theguardian.com/technology/ ... two-deaths

An NHTSA statement said the agency has assigned its special crash investigation team to inspect the car and the crash scene. That team has inspected 13 crashes involving Tesla vehicles the agency believed were operating on the Autopilot system.
Results were published in two of those cases, one of which involved Autopilot. Results are pending in the other 10 cases, the agency said in a statement. ....
...
But several crashes – some fatal – have been blamed on driver inattention linked to overconfidence in such systems.

If Tesla doesn't back off a little in their deployment of autopilot to end users, they could end up with a significant reputational (and technical) problems from which they may find it hard to extricate themselves.

If the backlog of potential autopilot related crash investigations continues to grow, the authorities may be forced to act if Tesla don't pre-emptively act themselves. And that won't then be good for their reputation.

That may then hamper their efforts to gain licences for testing full AD cars without safety drivers, etc, or gaining regulatory approval for releasing full AD cars (or updates for existing cars) to the general public.

It may also have the effect of forcing the regulators hands regarding minimum requirements for AD.

For example, if Tesla (and their Autopilot) are being implicated in a growing number of crashes, then one potential factor that may come under the spot light is Musk's claim that AD doesn't need lidar.

If Tesla cars continue to be involved in crashes for which regulators might believe a lidar 'backup' safety layer might have been expected to avoid, then it is going to be inevitable that this aspect (the absence of, or need for, lidar) will be under the spotlight.

I mean, quite a few of these Tesla 'accidents' seem to be the case of the car just not seeing something - whether a fire truck, or safety barrier, etc. All of these should be easily detected by lidar. Wouldn't you want that additional 'redundant' safety backup for the car you or your family are driving in, or in the cars driving on the roads where your children cycle?

And if regulators decide that lidar should be mandatory for AD to be permitted for the general public, that could be quite a headache for Tesla who as I understand it, have promised full AD for model 3 owners, solely with a future software update.

Of course, if Tesla take pro-active action now, to back off a little from pushing ahead towards AD with free software updates, and perhaps even reign in or disable some of the AD features autopilot currently provides, that might help reinforce to users that autopilot is only driver assist and not AD and therefore get the accident rate back down...

... but then that could have quite a negative effect for all the hobbyists currently buying Teslas and raving about how great they are with all these updates taking them nearer and nearer to full AD in YouTube videos of which there seem to be so many.

Anyway, imv, if Tesla aren't careful, they could easily wrong-foot themselves.

The last thing Tesla need is a PR problem due to a growing backlog of accidents related to autopilot, coupled with regulators breathing down their necks as a result potentially putting a blocker on their releases and AD testing, just at the time their competitors, like Waymo, Ford, GM, etc are all about to release their own self driving car efforts, for which most indications are their technologies are likely to be better developed(*) and more reliable, due to a more safety oriented development mindset that seems to better understand the potential risks (both safety, technical and public relations).

---
(*) I will admit it's a little disappointing that Waymo seem to have switched to 'radio silence' regarding their AD technology since they split off into their own separate company. Before that, as Google's self driving car project, their presentations on their technology were really informative and interesting, and gave a good window into their mindset that really instilled confidence that they understood the inherent safety challenges of AD, and weren't just treating it as another tech fad, to be rushed out as fast as possible in order to gain 'first mover advantage', then fixed later.

With their current radio silence we just have to take it on trust that they are maintaining their safety-first mindset, all while continuing to further develop and refine the technologies they were show casing a few years ago.

There's no reason to presume they aren't - their safety stats still seem to put them ahead of the game - both in terms of limited number of accidents, and number of miles between disengagements. And they are the only company (afaik - unless I missed anyone else getting approval?) currently licenced to conduct self driving tests on public roads without the need for a safety driver to be in the vehicle.

Something that, having watched even more Tesla drivers' videos on youtube today, I think it's safe to say it'll be quite a while before Tesla is granted such permission (to test in public without a safety driver present)

[odysseus2000]

Before we get too hung up on Tesla related car accidents, let us note that on average 90 people are killed each day on US roads and there are 6 million accidents:

https://www.driverknowledge.com/car-acc ... tatistics/

If the media reported these accidents there would be no space left in newspapers and media shows for other subjects.

Each death/injury is a terrible thing and now for the first time since Henry Ford, there is a chance that this appalling waste of human life and human health might be reduced.

The regulators are far more aware of this than anyone else which is why they are doing their best to speed the development of robotic driving by allowing beta versions and such on the roads. Clearly some of the Tesla accidents have been due to the failures of robotic driving, but many have been due to human error.

Regards,

[odysseus2000]

PEG valuations are fine if the growth estimates and forecasts turn out correctly. But, failure to hit targets or cuts in forecasts hits PEG, and SP.

So, yes, if your modelling turns out correct, and Tesla produces ongoing growth of the sort you suggest then investing a sensible PEG levels could prove a good move. But it's not one for me. Far too much uncertainty in my limited view on the likely medium and long term growth and competition. And to be honest the CEO makes Tesla uninvestible for me. He's clearly done a lot of things right, but he's such a loose cannon that I'd have no confidence that he wouldn't either prove to have been hopelessly oprimisitic in his forecasts, or finally have a run in that he and Tesla didn't come away from relatively unscathed.

Yes, some of this is true but let us not forget that silicon valley has a long reputation of bringing loss making companies to the market and then turning them into great profit centres.

I recall when Amazon was a joke which many analysts said would never make a penny, and similarly for Google and yet in the by and by they both became hugely profitable business and made fortunes for their investors.

One should also not forget that the great entrepreneurs have often had a dark shadow. Ford was heavily into religion and upset many folk with his rants and during the depression surrounded his house with machine gun nests, Edison went about electrocuting people, animals and an elephant to show that Tesla's AC system was too dangerous to use and this lead to the US 120 volt system and the electric chair. Even Arkwright was accused of intellectual property theft giving him a dark shadow too. All of these historical entrepreneurs lived before the intense media interest of today, had things been then as they are now, one can easily believe that these folk would have been vilified too.

Regards,

[dspp]

Great video of actual Tesla autopilot in operation.

https://www.youtube.com/watch?time_cont ... e=emb_logo

John

Yes, it looks like Tesla might need to re-think their AD strategy in regards to giving users 'AutoPilot' under the guise of it being a 'driver assistance' feature...


Something that, having watched even more Tesla drivers' videos on youtube today, I think it's safe to say it'll be quite a while before Tesla is granted such permission (to test in public without a safety driver present)

Let's be clear. That video is of a Tesla being operated in the pitch dark on unlit roads on autopilot in a torrential downpour, aquaplaning, begging its owner to take control and to not run it at 75mph on undivided B-road style highway in a monsoon. All it really proves is that Darwin is alive and taking scalps. In this case they were fortunate and got off with a repairable car. And some stupidity points.

Meanwhile if you go and look at the more responsible users you will see HW3 emerging, validating the original camera etc decisions, and coming towards a crux moment where we understand whether unfenced L4 or similar performance can be delivered, that is at least an order of magnitude better than the average human (yeah, OK, all you punters are superhuman, but the average is well, average). Maybe Tesla will be there or maybe that will have to go back in the cupboard for several more years of thinking and perhaps HW4. We will see. I do not have any valuation ascribed to general FSD autonomy in my investment decisions.

regards, dspp