I dont know if the next vehicle I get will be electric, but for sure the one after that within the next 10yrs will be an EV. Im looking forward to ending those oil changes forever.
I look forward to not standing outside in the cold to fill my car with petroleum. I think they will "set a record" for quarterly deliveries but not by a lot. I'm expecting a number around and perhaps just over 100K. The October 14th production start date for GF3 should serve Q4 financials nicely. They should be cranking out 500 units per week by November 1 and 2.5K units per week by December one. We'll see. Again, I don't see how they can turn a profit this quarter, with similar sales to last quarter and additional GF3 fit-out charges they didn't have last quarter. Elon predicted Q3 profit on the Q2 call, so we will see if they can pull a rabbit out of a hat.
On another note, a buddy of mine just finished a new home in rural AZ. He is off grid. He purchased a pair of 10KWh batteries for $18K/batt. That is just for the storage, no inverters, install, etc. He could have picked up a pair of powerwalls for $17K that would have provided 35% more storage, plus inverters, transfer switches, etc. I asked if he considered Tesla and he said he preferred his brand. He literally paid over double for substantially less storage, no inverters, etc. plus he paid more for design and install since that stuff is all discrete components. It's pretty clear there is a large segment (I'm guessing almost exclusively GOP types) who are anti-Tesla. That's why I'm happy to see Tesla expand outside the US. That's where Tesla should focus their future effort.
To clarify a couple of articles which may be misleading or incorrect, Tesla is still shipping cars to China with no plans to stop. The only thing that changed yesterday is the base model 3 will be sourced exclusively from the Shanghai plant. This makes a lot of sense. The higher margin cars will incur the shipping and tax overhead while the lower end cars will take advantage of local production. This will free up capacity to deliver more cars in Europe. Tesla is already dominating sales charts in Europe and that should only increase as production is diverted to Europe. With GF3 production, Tesla is going to be in the same boat as other manufacturers. GF3 will be limited by LG's ability to produce cells. I don't know why people feel so confident about contracts. Tesla had a contract with Panasonic to produce 35GWh of batteries at GF1 in early 2019 but Panasonic was only producing about 60% of that number. Even now, it looks like they are barely above 30GWh. If you connect a contract to an electric motor, the motor will not spin, although the contract might. We have seen countless incidences of companies contracting battery supply followed by under fulfillment of those contracts. Now Tesla is exposed to that. I would like to think LG is in a position to deliver and they surely will want to impress the largest battery consumer in the world... Tesla. We will see.
Q3 numbers, just in Production = 96,155 Deliveries = 97,000 These numbers are OK but not great. They are both records but the goal was a bit higher.
I don't see anything good happening to the stock price for a while, but I am never that tuned in. It was a record quarter but 3% short of Musk's prediction so the anti-Tesla types will be beating their drums. Meanwhile, the Q3 financials will be good but a bit off, also. I expect a small loss this quarter. We will see. The next strong positive inflection in the stock price will probably be the next investor day in which they discuss their battery technology.
Some quick thoughts on battery life. Elon has said they have a path from 30~400K mile batteries to 1M mile batteries. That does not mean the next generation packs can do 2.5~3 times more cycles. To increase the longevity of a pack, they can simply increase the capacity. A battery that can travel 500 miles on a charge will need to be charged half as much as a battery that can travel 250 miles on a charge, therefore lasting twice as long. I expect the increased longevity to come more from a confluence of three factors: 1) cells which last 20~40% more cycles 2) higher energy density (some dispute here but discussions are usually 10~30% increase) 3) larger packs (at the same or lest cost since Tesla will be the manufacturer) Some quick calculations on the guess-o-meter indicates that, to get to 1M mile longevity, they will be coming out with a 200KWh model S/X and 150KWh model 3. Tesla will have 700 mile cars. That ought to catch the attention of the Tesla killers. [Edit: I have no expectation of Tesla doubling the capacity of their products, across the board, in the next battery update. I expect there will be a "Model 3 RT" version which will be the robotaxi that will last 1M miles.]
During the last few years, a network of Tesla fans has evolved. Without it, I would have never purchased Tesla. While alt-right media spammed articles of “Tesla is going out of business because ______”, we have known what’s going on. When articles about volumes being off were propagating various media outlets, we watched serial number registrations set records and semi haulers queued at staging lots. Now we see articles about questionable Chinese demand. Meanwhile, Shipping pier 80 is swamped with inventory heading to China. This, after Tesla announced it would ship no more base models to China starting on October 1. This glut could be the final cars of a production run of base 3s for China or they could all be upscale models. I suspect the former. All we know is that Tesla is shipping cars to China by the thousands. Poor demand? I think not. Lol!
I don’t talk about valuations much but I’ll share a perspective on Tesla. Software companies like facebook, Google, Microsoft, Oracle, etc. have ridiculous valuations because of how software scales. There is essentially zero cost of production so they can infinitely scale in extreme little time. Hardware companies like Ford, GM, et al. have a fixed ability to scale. They can sell 0 to factory capacity units. They need to sell closer to their capacity than to 0 in order to make a profit. If demand outstrips their supply, they have to decide if they will risk tremendous capital adding capacity. Right now, Tesla is a hardware company like Ford, GM, et al. but Tesla also writes software. In future, Tesla is going to turn into a software company that also builds hardware. The body of code Tesla is currently writing is going to turn transport into a service, at some point. At that point, nobody will care about the vehicles. Just get me or my package from point A to point B. Can you imagine service people who carry almost no inventory? They could show up to a job, order parts, and 30 minutes later install those parts. Now, someone comes to your house, figures out what he needs, and you don’t see him for two hours…. All the while the customer is paying. There is barely an industry that could not be revolutionized by transport as a service. Right now, Tesla is over-valued as a car company by a significant margin. As a growth company and as a software company, Tesla is heavily under-valued. Tesla has competition but it's not from the traditional car industry. Tesla needs to be more worried about Google and ignore the media which is only capable of understanding vehicles in their current form.
It looks like Tesla just developed a million-mile battery https://bigthink.com/technology-innovation/tesla-million-mile-battery
Workers have completed the first 25% of the roof structure on the new battery plant at GF3. From here, they will clean it up, paint it, and then start installing roof panels. I expect to see a few roofing panels by next week but the full roof will probably take 5~6 weeks. The building should be mostly in place and ready for fit-out by the end of the year. Meanwhile, Tesla have purchased a battery manufacturing company. Hibar systems out of Canada. There is talk of Pepsico deploying 15 Tesla semis in the near future. I don't see anything out of Tesla about this so I assume this is a rumor. All I can find is that Pepsi has 15 positions on the Semi wait list so they may be waiting for another year. It does make some sense for Tesla to roll out a dozen or two trucks, though. They can do a small run of their new pouch cells to try the new battery platform. Also, they will want the stability of a large company, such as Pepsico, to smooth over any PR issues that would rise from issues with the new beta test truck. After all, they would be pre-production units. There is a ton to say about batteries, all of it boring, but I will share this: Tesla already has batteries that will last 4000 cycles (as per the BigThink article). That's how they get the 10 year lifespan out of the PowerPack platform. The cells formulated for cars don't last as long but they can handle much higher current drain without electrode cracking. If Tesla can pull this off, it will be huge. Huge. On the self driving front, Elon promised it would be feature complete this year. This year is quickly coming to a close. It's hard to imagine they will achieve this goal with less than three months to go. To be fair, Elon didn't say it would be rolled out to customers this year. Demos of version 10 are beyond impressive. Autopilot is so good, it is almost getting creepy.
Quick note about Hibar. Hibar designs and manufactures battery manufacturing equipment. Specifically, their equipment appears to be exclusively designed to build spiral cells. On a few occasions, Elon has mentioned Panasonic has been the bottleneck in production. This acquisition is clearly intended to augment Panasonic production. Tesla had a 30 day termination clause in their 2009 Panasonic contract. I'm not sure about the current contract as I haven't read it. https://www.sec.gov/Archives/edgar/data/1318605/000119312510017054/dex1033.htm There are several years left on the Tesla Panasonic contract and Tesla seems to have no interest in having Panasonic develop pouch or prismatic cells, therefore, Tesla has committed to cylindrical cells for some years. It seems reasonable Hibar will develop the cylindrical cell production platform for Tesla to expand 3/Y production and perhaps eventually replace Panasonic as a supplier while Grohmann develops a pouch/prismatic production platform. My guess is the semi will have prismatic (or pouch) cells and so will the MegaPack. We will know fairly soon.
I don't understand why the price continues to hover around $246. Tesla is constrained by battery cell production. They have stopped investing in Panasonic because of it. They have obvious plans to build their own cells but that will take many months, best case. It will be a whole new production process to design and ramp, not to mention the new battery chemistries they are trying to bring to production. Right now, they can build more cars than they can put batteries in. This explains why nothing is happening on the Freemont expansion. I expect there is a hold on everything, as every project they have depends on battery supply. Maybe they can source some cells from LG but given how everyone in the industry is short on battery supply, that doesn't seem likely. The only hope short term traders have is that Panasonic will work on increasing their production efficiency for the lines they have at Gigafactory 1. Given how fickle the market is, I suspect this price is being buoyed by ignorance. Between now and six months from now when Tesla *starts* the ramp of their own cell production lines, the folks pricing this up will have made hundreds of trades. lol!
The roof of the battery plant is going up as quickly as the general assembly building. Some of it is already prepared and painted white, ready for cladding. The plant is said to become operational toward the end of Q1, 2020. I expect the building will appear externally complete by roughly the end of this year. I wonder if Tesla can bring in Hibar equipment and have a new cell production facility online by the end of Q1 or if they will use the facility to build packs with LG cells for a while. Further, I wonder if they will first build a prototype line or two at GF1, as that would make sense. The question is how will they produce the anode? Does anyone know if Hibar has an anode production solution? Perhaps Grohmann has something in the pipeline? I don't think they will be using dry anode technology on 20700 cells. As I understand, it is not compatible with spiral cells. If they can create 2070 cells with dry anodes that don't crack, I will be pouring a ton more money into Tesla. Back to GF3.... There is another unknown building going up on the south end of the lot, near the power station. No idea what it's for but it is progressing as quickly as the battery plant. Meanwhile, there are a lot more concrete pads, dormitories, and small structures. They continue to build this out at an astonishing pace. Chinese media have announced tomorrow as the first day of production. Model Y is expected in 1Q2020. I suspect the release date is a bit soft, as they don't need to rush it to market and they need to be careful to not release it before they can produce sufficient numbers and that will mean a lot more battery supply.
