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TSLA showing cracks? TSLA showing cracks?

08-08-2017 , 01:15 PM
Pretty good interest rate for B- rating
TSLA showing cracks? Quote
08-08-2017 , 01:21 PM
Quote:
Originally Posted by heltok
This VW Dr. Herbert Diess guy is no joke:
Member of the Board of Management of Volkswagen AG
Chairman of the Board of Management of the Volkswagen Passenger Cars brand

So he publishes an internal interview for VW and says:
Asked who VW’s main competitors are, Diess told an internal company publication: “In the old world it is Toyota, Hyundai, and the French carmakers. In the new world it is Tesla."

"Tesla belongs among the competitors which has abilities that we currently do not have," Diess said in the interview with "Inside", a publication for VW employees.

Around half of Tesla's engineers are software experts, while at VW's core brand it is a much lower proportion, Diess said. Tesla has good electric motors, a fast charging network, autonomous driving technology, internet connectivity, and a new approach toward vehicle distribution.

"This shows that we need to significantly improve. We can do this. We measure ourselves against Tesla quite deliberately.

https://www.reuters.com/article/us-v...-idUSKBN1AK261

Somebody needs to tell Dr. Deiss that there is a obnoxious daytrader on twoplustwo who goes by TS who proclaimed Tesla entered terminal decline two years ago and has no chance at being a big player in EVs, ect. lol
TSLA showing cracks? Quote
08-08-2017 , 03:33 PM
VW is not Ford so your arguments are invalid.
TSLA showing cracks? Quote
08-08-2017 , 04:51 PM
https://electrek.co/2017/08/08/nissa...tery-business/
Quote:
Before Tesla bet on its Gigafactory strategy to secure battery supply for its electric cars, Nissan had a similar plan by launching Automotive Energy Supply Corporation (AESC) back in 2007.

But the division is having difficulties competing with other battery suppliers and Nissan is now selling it.
Comment on this:
Quote:
I get the impression that almost every other car manufacturer not called Tesla is counting on LG Chem to supply their EV batteries?

That's obviously nice for LG Chem, which must see their battery business booming over the next couple of years. But I wonder what that common dependency on ONE battery supplier means for all the legacy auto manufacturers?

Isn't it hard to negotiate good prices for your EV batteries when all your competitors are also vying for the same product from the same supplier?
TSLA showing cracks? Quote
08-08-2017 , 05:18 PM
Panasonic (the same people who make Tesla's batteries and built what Musk tries to pretend is Tesla's "Giga"factory" when it's Panasonic running the production lines) will be supplying car batteries to anyone who wants them. Last year they built a factory in China, and many more will be going up:

https://electrek.co/2017/04/27/panas...factory-china/

Also, Chinese companies are building out 3x the gigafactory's capacity over the next few years. And another one in Germany.

Tesla currently only has a small fraction of the global EV market. Where do you think they're currently getting all their batteries?

Last edited by ToothSayer; 08-08-2017 at 05:32 PM.
TSLA showing cracks? Quote
08-08-2017 , 05:40 PM
Quote:
Originally Posted by ToothSayer
Panasonic (the same people who make Tesla's batteries and built what Musk tries to pretend is Tesla's "Giga"factory" when it's Panasonic running the production lines) will be supplying car batteries to anyone who wants them. Last year they built a factory in China
In the link it says they plan on launching it in March 2018 and that it will support ~200k vehicles per year, whatever that means in GWh. My view on prismatic vs cylindrical is that for now cylindrical seems to be cheaper and "better".

http://www.relionbattery.com/blog/li...l-or-prismatic
Quote:
Cylindrical Advantages And Uses

Cylindrical lithium cells are easy to manufacture and mechanically stable, making them enduringly popular. They’re also very safe – if internal pressure grows too great, most cells are designed to rupture, mitigating safety hazards – and benefit from longevity, an attractive price point and comparatively low watt-per-hour cost, making them an economical choice.

The cylindrical design, however, causes notable space between cells, making space efficiency more challenging. A well-designed cylindrical-type lithium battery takes advantage of the structure’s energy-dense nature, using free space to install thermal regulation solutions.

Small cylindrical cells are generally used in portable technologies such as laptops and medical devices. Large cylindrical cells are popular for electric vehicles, a growing market largely driven by manufacturer Tesla.

Prismatic Advantages And Uses

The prismatic lithium cell’s key advantages lie in its thin profile, lightness and effective use of space; the prismatic cell’s thin, rectangular shape facilitates better layering and gives product designers increased flexibility. Unsurprisingly, prismatic cells are typically found in mobile phones, tablets and other lightweight electronic devices.

While space efficiency makes prismatic cells highly attractive, several disadvantages exist. Prismatic cells are expensive to design and manufacture, in turn making them more expensive for consumers. They die quicker, as thermal management is less effective, and are relatively sensitive to deformation in high-pressure situations. Other drawbacks include a limited number of standardized sizes and an average higher watt-per-hour price.
https://www.quora.com/Why-does-Tesla...the-Chevy-Bolt
Quote:
Karl Young, M.E., Li-ion batteries, supercapacitors, cell-balancing, nano-materials
Answered Feb 28, 2016
Before Tesla appeared on the scene, many electric bicycles and scooters have power packs built-up using Li-ion 18650 cells. Laptops have been using 18650 power packs for a long time, as well. So, there was already a good size market for 18650 cells; which meant production equipment have been optimized for years already. That helps to minimize production cost significantly.

Compared to the pouch or prismatic cells, cylindrical cells like the 18650 can be produced more quickly; so more kWh of cell produced per hour due to its configuration - another reason for lower $/kWh.

Another advantage of cylindrical cells over the flat cells (e.g. pouch, prismatic) is that its electrodes are wound evenly and tightly and encased in a metal casing. This minimizes electrode material from breaking up from the mechanical vibrations, thermal cycling from charging and discharging, and mechanical expansion of the current conductors inside the cell from thermal cycling.

So, with over 7,000 18650 cells in Tesla's small power pack, you'd think the chances of a bad connection in one of the 14,000+ interfaces is pretty high. Not if you weld the cell terminals to each other with connector tabs.

Many cells are connected in series to build up the voltage; then these series lines are connected to each other in a parallel fashion to increase amperage. So, if one cell goes bad, its impact on the entire pack is low. However, when a large prismatic cells goes South, it could mean a significant % of the power pack is in trouble.

Panasonic is one of the top Li-ion cell producers in the world (Sony, Sanyo, Samsung and LG are the other four - Sanyo merged with Panasonic a few years ago, however). Panasonic supplied Tesla with 18650 cells from the beginning, and is now a large investor in the MegaFactory in NV.

By the way, quality control (QC) for round cells seems to show a higher % of good cells than pouch cells. Since prismatic cells are also wound, and then stuffed into a rectangular case, its production is also smooth as compared to pouch cells.

The prismatic cells are more used for electric buses, trucks, solar/wind storage and UPSs. So, it makes sense to use small cells to accommodate Tesla's thin (low-CG) chassis design. Other EV OEMs build modules of 18650s, so it would be easy to assemble the full power pack or replace them later on.

I've designed electric bus and truck power packs using prismatic cells, and I was able to integrate a phase-change-material (PCM) within each module power pack to ensure the cells will not get too hot and always above 50F to not lose capacity in the cold. Li-ion will be down to 50% of its capacity if you let the cells go down to 32F.

In summary, 18650 cells can be less expensive in $/Wh; has higher specific-energy (Wh/kg) than prismatic cells and pouch cells if pouch cells supports are not wisely designed; less negative impact on the whole power pack if a few individual cells are slacking off; more power pack design flexibility; can take some of the structural loads when all the cells are tightly packed into the chassis. If you don't design the structural supports right for the pouch cells, you may experience degraded performance from the cells, because they all expand during charging and discharging.
In conclusion, 200k cars(I assume they are not assuming 100kWh/car)/year of prismatic batteries is not something I would rely on if was an auto manufacturer.
TSLA showing cracks? Quote
08-08-2017 , 05:54 PM
Global EV sales are hitting a millions cars this year. Tesla have 10% of that. They're filling all those batteries somehow, and factories are popping up like mushrooms - that was just one example (there are many others, including in Germany and China). There's no shortage or potential shortage. Nor is there one supplier. It's all nonsense.

It's Tesla that are taking the worst of it, since they're wedded to a very expensive factory making cells in a way that will be obsolete in the coming years. Vertical integration is for morons and narcissists; it doesn't work when profit and speed and adaptability matters, in a cutthroat industry where price matters.
TSLA showing cracks? Quote
08-09-2017 , 09:39 AM
I think it is common knowledge that if you want to create tech that outperforms competitors, you are vertically integrated. See intel for example. It is a pain to make quick adjustments if your supplier is somewhere in China.

https://electrek.co/2016/11/01/break...le-bottleneck/

And it seems that battery chemistry is different for Tesla as well.

I mean there is a reason panasonic partnered with Tesla? They are not exactly short on cash.

The entertaining thing about this is that we will see within a year who is right. Tesla should produce a sizable profit in 2018 as they plan to produce 500k cars. If they still burn money through most of 2018, Musk's promises have probably been false and Tesla shares will crater.

So it seems buying 2019 puts on Tesla would be a really good trade if you are pessimistic?
https://finance.yahoo.com/quote/TSLA...ate=1547769600

They don't really have a good excuse to not churn out at least a billion dollar profit if they hit their production targets. Amazon can make excuses, not Tesla.
TSLA showing cracks? Quote
08-09-2017 , 09:44 AM
The structure of the Panasonic involvement hasn't been disclosed either. Considering that Panasonic fronted a large portion of the investment and basically sells the batteries on credit to Tesla, it is likely extremely favorable to them in terms of share of net profit/loan terms.

It is quite interesting speculation since we'll never know. (kinda how we have nfi what happens at a supercharging station!)
TSLA showing cracks? Quote
08-09-2017 , 09:45 AM
dfgg,

Apple would like to lol at your suggestion.
TSLA showing cracks? Quote
08-09-2017 , 09:51 AM
"Apple Inc. is one of the best-known companies for perfecting the art of vertical integration.

Read more: Vertical Integration http://www.investopedia.com/terms/v/...#ixzz4pGY9LEUy
Follow us: Investopedia on Facebook"

?
TSLA showing cracks? Quote
08-09-2017 , 09:58 AM
They aren't involved in the assembly of the devices and large chunks are commodity. It is a pretty good parallel for Tesla tbh.

I didn't consider the distribution of devices as part of the integration btw. Def helped clarify my thinking on that end.
TSLA showing cracks? Quote
08-09-2017 , 10:11 AM
Quote:
Originally Posted by dfgg
I think it is common knowledge that if you want to create tech that outperforms competitors, you are vertically integrated.
As a general statement this is just false. It's true for certain things (chip fabs, for example), and not true for the large majority of complex assemblies.
Quote:
I mean there is a reason panasonic partnered with Tesla? They are not exactly short on cash.
Yes, it's free money, and Tesla are paying them billions without restricting them from selling to others. Why would they say no?
Quote:
The entertaining thing about this is that we will see within a year who is right. Tesla should produce a sizable profit in 2018 as they plan to produce 500k cars. If they still burn money through most of 2018, Musk's promises have probably been false and Tesla shares will crater.
I couldn't disagree more.

They do not plan to produce 500K cars in 2018. Musk himself has shown he lied about that and has no intention of doing it. His latest target a "10K per week run rate" in December 2018. That is not 500K in 2018, it's not even 400K. It's classic Musk lies and spin.

Secondly, profit is irrelevant. If they're managing to produce the volume and selling them without substantial losses, that's more than good enough.

Quote:
They don't really have a good excuse to not churn out at least a billion dollar profit if they hit their production targets. Amazon can make excuses, not Tesla.
Tesla needs to find $150 billion in capital to even reach any of the majors - more given their vertical integration. There are excellent reasons for no profit.

Last edited by ToothSayer; 08-09-2017 at 10:19 AM.
TSLA showing cracks? Quote
08-09-2017 , 11:00 AM
I think you are assuming that if Tesla plans to create 3m cars a year, they are still 80% vertically integrated.

I mean they had to create almost everything from scratch when they started, then when something isn't working, they need to very quickly adjust. You think that will work if they build it in China? You call the factory, they are slow to adjust. They tell you, sorry that stuff you ordered a month ago you now know has multiple flaws, we are sending you that now.

There is a reason they sell to employees first. Without vertical integration, lead times are much longer. You are basically the stereotypical armchair general. You really think Musk is such a dumbass that he does not know business 101, the risks of vertical integration? He had no choice, since he had to build a lot of stuff from the ground up.

Musk has said that he expects 250k (edit model 3 runrate end of 2017. Gross margins would be 25% at that number, according to him. So 400-450k cars runrate is not unlikely by Q3, and Tesla should already see a profit there with roughly $25 billion in revenue and $6.25 billion in gross profit. We should get a pretty good idea wether Musk is full of **** or not by Q3 next year. Hence the 2018 puts would be pretty attractive if you are so convinced he is a total fraud.

Quote:
Tesla needs to find $150 billion in capital to even reach any of the majors - more given their vertical integration. There are excellent reasons for no profit.
Yeah and most of that will be capex. Big difference with Amazon, is that a lot of Tesla's growth expenses will be amortized. Tesla's prime selling point as an investment will be that margins will be bigger than most other automakers as well. So let's say $30bn of profit should throw off $3bn of normalized operating profit. If there isn't at least $1bn of operating profit run rate by Q3 of 2018, it will be pretty obvious that scaling is going to be very difficult. Since most expansion costs are capex. And debt load is already pretty large.

Edit: by the way, 10k per week runrate is for model 3. So total is larger.

Last edited by dfgg; 08-09-2017 at 11:17 AM.
TSLA showing cracks? Quote
08-10-2017 , 04:34 AM
Quote:
Originally Posted by ToothSayer
Global EV sales are hitting a millions cars this year. Tesla have 10% of that. They're filling all those batteries somehow, and factories are popping up like mushrooms - that was just one example (there are many others, including in Germany and China). There's no shortage or potential shortage. Nor is there one supplier. It's all nonsense.

It's Tesla that are taking the worst of it, since they're wedded to a very expensive factory making cells in a way that will be obsolete in the coming years. Vertical integration is for morons and narcissists; it doesn't work when profit and speed and adaptability matters, in a cutthroat industry where price matters.
lol just trade bro, give us your opinion on some bull **** technical patterns or something that you might actually sound like you know what you are talking about.

You make statements about things you are completely clueless about because if you did have a clue, you wouldn't be able to spam these threads all day as you would be working with professionals studying the complex subjects that you arm chair expert on here all day long.

I actually feel sorry for a you a bit. You are a trader not an investor. You really want to be able to present fundamental company analysis (like an investor) but your stuck refreshing google news feed for updates/articles (like a trader) that either validate your bear thesis or confirms your view that anyone with a positive outlook on the company is a Musk drone. You invest ultra short term (supposedly)(like a trader), argue with people about the long term(like an investor), and can never be wrong, always knowing (irregardless of the topic).

Where do you find the energy to spin your wheels like this all day? Is this a part of your learning process? Seems so exhausting
TSLA showing cracks? Quote
08-10-2017 , 04:37 AM
Quote:
Originally Posted by dfgg
I think it is common knowledge that if you want to create tech that outperforms competitors, you are vertically integrated. See intel for example. It is a pain to make quick adjustments if your supplier is somewhere in China.

https://electrek.co/2016/11/01/break...le-bottleneck/

And it seems that battery chemistry is different for Tesla as well.

I mean there is a reason panasonic partnered with Tesla? They are not exactly short on cash.

The entertaining thing about this is that we will see within a year who is right. Tesla should produce a sizable profit in 2018 as they plan to produce 500k cars. If they still burn money through most of 2018, Musk's promises have probably been false and Tesla shares will crater.

So it seems buying 2019 puts on Tesla would be a really good trade if you are pessimistic?
https://finance.yahoo.com/quote/TSLA...ate=1547769600

They don't really have a good excuse to not churn out at least a billion dollar profit if they hit their production targets. Amazon can make excuses, not Tesla.
Tesla will not book profit for probably 2 decades, it will all be reinvested before it finds its way to the net income.
TSLA showing cracks? Quote
08-10-2017 , 05:18 AM
Quote:
Originally Posted by ChipRick
Quote:
View Post
Global EV sales are hitting a millions cars this year. Tesla have 10% of that. They're filling all those batteries somehow, and factories are popping up like mushrooms - that was just one example (there are many others, including in Germany and China). There's no shortage or potential shortage. Nor is there one supplier. It's all nonsense.

It's Tesla that are taking the worst of it, since they're wedded to a very expensive factory making cells in a way that will be obsolete in the coming years. Vertical integration is for morons and narcissists; it doesn't work when profit and speed and adaptability matters, in a cutthroat industry where price matters.
lol just trade bro, give us your opinion on some bull **** technical patterns or something that you might actually sound like you know what you are talking about.

You make statements about things you are completely clueless about because if you did have a clue, you wouldn't be able to spam these threads all day as you would be working with professionals studying the complex subjects that you arm chair expert on here all day long.

I actually feel sorry for a you a bit. You are a trader not an investor. You really want to be able to present fundamental company analysis (like an investor) but your stuck refreshing google news feed for updates/articles (like a trader) that either validate your bear thesis or confirms your view that anyone with a positive outlook on the company is a Musk drone. You invest ultra short term (supposedly)(like a trader), argue with people about the long term(like an investor), and can never be wrong, always knowing (irregardless of the topic).

Where do you find the energy to spin your wheels like this all day? Is this a part of your learning process? Seems so exhausting
Moron,
Instead of actually refuting what I said, which should be simple if it's so obviously wrong, you wrote out all of that stuff about my psychology. Is my psychology really that interesting to you, or anyone in this thread? No? Then why the **** did you just type that all out?

If what I say is wrong, refute it. Offer your own opinion on why Tesla is going to do well with vertical integration, when no car or plane maker does anything of the sort. The fact is that JIT outsourcing, as unintuitive as it is, as stupid as it seems - seems the only way to profitably make cars or other complex items in cutthroat-competition industries. If vertical integration is superior, why does no one do it? Is an entire globe of car makers, capitalized in the trillions, doing it the wrong way? Offer your view on why Musk is a genius who's going to crush them by vertically integrating. Then we all learn. That's the point of this discussion.

Last edited by ToothSayer; 08-10-2017 at 05:25 AM.
TSLA showing cracks? Quote
08-10-2017 , 05:41 AM
Quote:
Originally Posted by ChipRick
Tesla will not book profit for probably 2 decades, it will all be reinvested before it finds its way to the net income.
I think this is wrong. Even if we assume that they will heavily invest all their margins, there will be quarters with more or less capital expenditure or sold vehicles in transit. They made a profit Q3 2016 for example and given their heavy investments into Model 3 it would seem that somewhere close to full capacity at Freemont they will have much greater chance of making a profit then they had in 2016.

This said the profit might not be large or cover previous losses, but 2 decades seems like a very long time for 50-80% CAGR.
TSLA showing cracks? Quote
08-10-2017 , 05:51 AM
More importantly I don't think they need to book profit for the bull thesis to remain intact.

That said, with the accounting tricks and leeway around capex, it's easy to book a fake profit even on a badly failing enterprise that's guaranteed to go bankrupt, as long as revenue is increasing and you're selling your goods for more than the costs of parts + sales. You can shove a ton of what are essentially operating costs (in that you couldn't grow or run the business without them and they have limited value outside the specific product you're producing) into capex.
TSLA showing cracks? Quote
08-10-2017 , 08:34 AM
Positive FCF would be a fun guess on when it will be positive for 2 consecutive quarters
TSLA showing cracks? Quote
08-10-2017 , 09:25 AM
Quote:
Originally Posted by heltok
They made a profit Q3 2016 for example and given their heavy investments into Model 3 it would seem that somewhere close to full capacity at Freemont they will have much greater chance of making a profit then they had in 2016.
All of the Q3 2016 EBIT came from ZEV credits. If you remove ZEV/GHG/CAFE credits and use the same accounting methods as every other OEM with R&D as COGS instead of OPEX and growth SG&A added in you get Q2 2017 gross margins of just over 10%.

Quote:
Originally Posted by syndr0me
Positive FCF would be a fun guess on when it will be positive for 2 consecutive quarters
I'd take the under on five years if things continue as they are but ROIC will probably remain at or below Tesla's cost of capital for the next decade.
TSLA showing cracks? Quote
08-10-2017 , 09:43 AM
Quote:
Originally Posted by ChipRick
Tesla will not book profit for probably 2 decades, it will all be reinvested before it finds its way to the net income.
There are two ways a company can invest. By hiring a **** ton of developers, spending on marketing and spending on content (which amazon is doing). This shows up mostly in operating expenses, shrinking margins. Note that Amazon spends relatively little in capex. They got $30 billion of PP&E on $150bn of sales.

Expenses show up right away in income statement, so it can be unclear what true earnings are if they were not investing so aggressively.

Then there are capex expenses. They are amortized. So a company can spend $5bn in capex, while depreciation is only $1 billion, but they will show a paper profit.

Then take BMW, which I think will be pretty comparable since Tesla is expected to have world class margins basically:
https://markets.ft.com/data/equities...ncomeStatement

$94 billion in revenue, and $55 billion in PP&E. To spend that kind of money on growth expenses, Tesla will need to show an operating profit. Their PP&E is only about $8 billion, which can currently carry about $25-30bn in revenue.

On top of that, Amazon is a low margin company, Tesla is expected to be a high margin company.

So not showing a profit will be close to impossible if they really expect to grow to 2-3 million cars per year. It will throw the company in insolvency. This is not a software company.

I picked amazon as a comparison as they are the quintessential company that don't show a profit, priced to perfection. With a rockstar CEO.
TSLA showing cracks? Quote
08-10-2017 , 11:03 AM
BTW I pick BMW as they sold about 2.3 million cars in 2016 with revenue of $94 billion. So ASP was about $41k. EBIT margins of 10%.

Tesla is expected to sell at a run rate of close to 500k model 3's by Q4 next year. They will probably sell about 150k of their higher priced cars about about 350-400k of their Model 3 by Q3 (runrate for quarter), not total for the year)

I think this is reasonable estimate, since they will probably sell about 125k Model S and X in 2017.

Model 3 ASP will probably be $50k, as they will not sell lower priced model 3's at first like mentioned here already.

So their ASP run rate will probably be close to $60k in 2018 Q3. If not more. This is basically a luxury car, and they should generate very generous margins.
See Ferrari with their 19% operating margins on just 3 billion euro's in revenue.

ASP will probably trail off in 2019 and 2020 as they start selling lower priced model 3's, and model 3 will become a bigger part of sales.

So there is literally zero excuse to not make a sizable profit by the end of 2018, unless they badly miss their target. If EBIT margins are not at least 5%, the stock should fall probably 30-50%. As the only thing they can spend money on that is not amortized is R&D.

But let's say they spend money on software as well, employing 500 engineers to work on their self driving software. If they cost $250k per person, that is about $125 million per year, which is a rounding error on their $6-7bn in run rate gross profit if they actually hit 25%+ gross margins.

Rest my case .
TSLA showing cracks? Quote
08-10-2017 , 12:18 PM
Quote:
Originally Posted by ChipRick
Where do you find the energy to spin your wheels like this all day? Is this a part of your learning process? Seems so exhausting
Quote:
Originally Posted by ToothSayer
Moron,
Instead of actually refuting what I said, which should be simple if it's so obviously wrong, you wrote out all of that stuff about my psychology. Is my psychology really that interesting to you, or anyone in this thread? No? Then why the **** did you just type that all out?
Actually more interested in this than your Tesla wall of texts to be honest

Quote:
Then we all learn. That's the point of this discussion.
LOLZ let me fix this

Quote:
Then you all learn. That's the point of this discussion.
Ok better
TSLA showing cracks? Quote
08-10-2017 , 09:45 PM
lol buying this trash debt at 5.25%

that's truly insane
TSLA showing cracks? Quote

      
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