Dec 21, 2015
tinm Ugh don't get me started with WLCDF. I'm only holding on until it gets back in the .40s, if ever, so I can dump this we-say-we're-lithium-but-we're-really-a-fracking-company stock.�
Dec 21, 2015
doctoxics A question to consider is what Tesla will do with the batteries made in the Gigafactory from when production starts in the second half of 2016 until the start of production of Model 3 in late 2017. Could we be getting a 100 kwh or 110 kwh battery for Models S and X by the end of 2016? More likely, early batteries will end up in storage modules.�
Dec 21, 2015
pmadflyer Stationary storage.�
Dec 22, 2015
chateauoaks Been a while since anyone's posted a photo update!�
Dec 23, 2015
pmadflyer The more recent (October) drone footage was removed from YouTube and the RGJ hasn't been taking close up pictures recently, something about an assault with an SUV, or rock depending on your view.:tongue:�
Dec 23, 2015
tftf The Fool has various independent authors (much like SA and many other sites), quality of submitted material therefore differs wildly. I linked to a single article that imho is worth reading.
Tesla wants to produce (this is direct quote from CEO Musk from Jan 2015) "millions of cars per year" by 2025, a mere decade from now.
Even just a production expansion to a battery capacity for about 1M cars/year requires $10bn in cap-ex - and that is of course on top of "normal" cap-ex needed for actual car production.
Vertical integration isn't a magic panacea, especially not in cap-ex intensive sector like cars and especially not when battery technology is still evolving rapidly - see the many solar panel makers going bankrupt over the last decade even as revenues in the solar (panel) sector exploded globally. That was the article's main point ( Could Falling Costs Be a Bad Omen for Tesla Motors' Gigafactory? -- The Motley Fool ).
There's a reason why pioneers in a new sector often die or are marginalized with arrows in the back, for example once "fast followers" with large financial means enter the new sector, technology matures and price wars start.
Tesla so far only invested a fraction of the $10bn (or $5bn if we assume 500k/cars per year) in its Gigafactory (it's Giga by name only for now), i.e. Tesla and Panasonic miss $9.7bn for battery investments alone (!) to arrive at a battery capacity of 1M cars per year.
PS: 1M cars/year of course roughly is about 1% global passenger car market share assuming modest growth in the sector until 2020 or 2025.�
Dec 23, 2015
doctoxics At least Tesla and Panasonic have begun to build battery capacity to manufacture a million BEVs. We don't see the same level of growth in their competitors. The catch-up time is widening and there doesn't appear to be any public information that indicates it will be closing for the foreseeable future. Also, the potential market is so large that early entrants that can compete with ICE vehicles are unlikely to be squeezed by each other.�
Dec 23, 2015
Krugerrand It's erroneous to think 500,000 cars per/yr Gigafactory costs $5B therefore 1M cars per/yr Gigafactory will cost $10B. Indeed, that's not how it works at all. I can't decide if that's purposeful obtuseness or real, honest to goodness ignorance.�
Dec 23, 2015
tftf
No, it is not because
a) the required battery capacity per car likely keeps increasing in the near future (so the economies of scale are evened out)
b) huge projects often have cost overruns until they are completed. $5bn was the initial estimate, I wouldn't be surprised at all if the final bill is higher in 2020.
The additional economies of scale per cell/pack are becoming also very small in the GWh scale.
In any case, even if a complete GF (or rather two of equal size) for 1M cars/year is "only" $8-9bn, the fact remains that Tesla and Panasonic so far only invested a fraction of the funds needed - and that the factory buildings/shells constructed so far are only a fraction (about 14%) of what's needed for the first "complete" GF (around 500k cars/years plus some capacity for local storage products = 100%).�
Dec 23, 2015
Chickenlittle cant believe I am bothering to respond to you but here goes
1. The required battery capacity is not increasing per car yet. There are larger options for batteries BUT the introduction of the 70 option and it popularity actually decreases the average capacity. The model 3 projected to be the vast majority of cars sold will very likely have smaller battery capacities with smaller size and price hence lower capacity
2. Huge projects have cost over runs. Not always true. Look at space X cost per rocket. I believe about 25% that of Boeing consortium. Clearly musk Is aware of limiting cost. Completion of giga factory will be done when cash positive and second factory would be a lot lower cost probably in Asia�
Dec 23, 2015
MitchJi The article makes a completely irrelevant point. The GF will allow Tesla to produce battery packs for less than $120 per kWh by the end of 2017. Meanwhile GM is bragging about cell costs of $145! And there are studies by utility's showing that replacing peakers with batteries is profitable at pack prices of $850 per kWh! The only problem with the GF is that it isn't big enough to meet the huge demand. It's going to be almost like having permission to print money. If you think that matches the history of the failed companies in the solar industry don't quit your day job in hopes of earning a living in the financial industry.
And good luck investing on the basis of trying to turn a goal that Elon's stated a negative! Just a couple of days ago Spacex achieved a goal of his that every expert in the industry has stated is impossible.�
Dec 23, 2015
doctoxics Right. One of the purposes in staging the Gigafactory is to generate cash flow (storage and Model 3 sales) to pay CAPEX for subsequent stages and Gigafactories. Once production begins, cash flow will catch up to CAPEX in an ever expanding market for battery packs. This scenario only works if you have superior products and cost competitiveness, both of which are the case.�
Dec 23, 2015
JRP3 Not even close to rational. kWh per car will only increase because energy density increases, which means more kWh PER UNIT. If your 18650 cell holds 12Wh and the new version holds 14Wh your cost per kWh just went DOWN. Come on tf, you're not even trying anymore.�
Dec 23, 2015
jesselivenomore Some solar panel makers went out of business when panels became commoditized because their margins got squeezed, since their core business is selling those panels. While Tesla will be selling batteries too, their core business is actually consuming those batteries in their cars. So even if batteries get commoditized to the point where there is no margin in selling batteries, that would mean the margins in their core business, cars, would be going through the roof with such cheap batteries. Its not even close to a comparison with solar panel makers.�
Dec 23, 2015
chickensevil To add to that, assuming they keep increasing their per cell capacity, this could be partly why they are projecting more GWh production in the factory than originally estimated? (aside from them making the plant itself bigger). They recently came out and stated that the cells coming out of the factory would be a new chemistry over anything used right now in their products.
Also as they continue to make improvements of 5-6% each year, that means that starting production at say 50GWh should mean they are producing over 80GWh in 10 years from the same plant. So how much more than this one factory do they *really* need to hit 1 million cars? That would all depend on what the new projections are for energy density and the weekly cell production rate...�
Dec 23, 2015
ecarfan Your statement that cars will need increasing battery capacity over time is erroneous. Tesla battery pack capacities have increased recently without increasing cost to the buyer because battery costs have come down (and that will continue) and battery chemistry has improved so the same number of batteries produce more kWh (and that will continue). With the growth of the Supercharger network, there is no need for Tesla to offer more costly battery packs in the future, though they are likely to offer larger packs as an option. The packs that Tesla has offered to date -- 60, 70, 85, 90 -- are sufficient for almost all use cases. Yes, larger packs will be offered in the future but they will not be more expensive to the buyer than the current top of the line packs because battery costs will continue to decline and chemistries improve.
And of course the Model 3, the real volume seller for Tesla, will use much smaller battery packs than the S or the X. So your assertion is completely unfounded.
Regarding the final cost of the Gigafactory: yes projects sometimes have cost overruns. Not exactly news. But your imagining that the factory cost will go from 5 billion to 8 or 9 billion is at this point exactly that: your imagining.
Really, you are grasping at straws in your ongoing attempt to convince the world that Tesla is doomed.�
Dec 23, 2015
Krugerrand Yes it is because...
a) Uh...no.
b) Also, no.
In any case, you just sit back and watch how the money shows up and the factory/s get built.�
Dec 23, 2015
tftf I used the $8-9bn as an optimistic assumption for a future battery capacity for 1M cars, not 500k cars - regardless of that, Tesla and Panasonic invested only a fraction of that so far.
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I doubt these 2017 numbers are public or verifiable (other than maybe vague goals, Tesla for example stated to reduce battery costs by "at least 30%" in the GF). Please provide links if you have any.
Most of the input and cell costs are on Panasonic's side anyway, that part of the equation is often forgotten. Tesla will not produce the cells.�
Dec 23, 2015
dakh tftf, let's go to the root of this. Let's say we get to the point that Model3's are being produced, and are using battery packs made in the "starter" version of the factory. Let's also assume it's utterly awesome, price is right and there's a half a million reservations on those. Do you have any doubt Tesla will have zero problems raising capital to finish this thing and maybe build a couple more while at it? There's a whole lot of money chasing very little real assets in this economy.�
Dec 23, 2015
Krugerrand So?
So?
You keep repeating these points. I believe you want us to arrive at the assumption that a) Tesla and Panasonic can't? won't? finish the Gigafactory due to running out of money - in your dreams!, and b) I'm not really sure what assumption I'm suppose to arrive at for that one. But we already have plenty of chatter coming out of Tesla that a) they have the lowest battery pack costs, and b) they are fully expecting to get pack costs down to a level that makes the whole battery equivalent in cost to a typical ICE engine. (That last should be a lightbulb moment for you.)
The game is over, tftf. You just don't know it yet.�
Dec 23, 2015
tftf I think even Tesla admits that it won't be cash-flow positive (even in the most optimistic scenario) before 2020 over more than one quarter.
I don't see how Tesla can finance a first and second GF with operational cash-flows.
And if the costs for a comparable GF in Asia are indeed much lower, then Korean/Chinese/Japanese battery competitors have huge cost advantages over time.
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I didn't write they will run out of money - but it's one possible scenario if credit markets shut down in a future recession / downturn. My main scenario is Tesla raising additional billions to be able to finish the first GF and the Model3, which adds more risk to the balance sheet and dilutes existing shareholders.
As for b) EVs winning (or at least gaining double-digit marketshare over the next 1-2 decades) and getting to cost parity with ICE soon. Once again this is is not the same as Tesla winning or being/remaining the cost leader. Large Asian battery suppliers (LG Chem, Samsung etc.) have lots of experience operating on tight margins and will compete on similar levels.
I heard the exact same arguments listed for Tesla from German solar companies (when companies like Q-Cells dominated global panel sales) a few years ago. Arguments such as "We have better technology/automation/supply chains etc. and will dominate the industry thanks to economies of scale". A few years later most of them were bankrupted by fast followers with deep pockets from Asia.�
Dec 23, 2015
mspohr I think the confusion here is that Tesla is not selling commodity batteries. They are buying batteries to use in their cars. If you are selling batteries, low prices reduce your profit. If you are buying batteries, low prices increase your profit.�
Dec 23, 2015
jesselivenomore He wants us to arrive at the conclusion that in order for Tesla to accomplish their goals, they will need a lot more future capital raises, which equates to diluting shareholders.
Never mind the fact that anyone with half a brain and paid even the slightest attention over the past few years realizes that every time Tesla has raised capital in the past, the stock has gone UP.
When Tesla did a secondary at $90 and Elon bought some himself, that set the stage for the massive short squeeze to $200.
When Tesla raised money for the Gigafactory the stock went vertical to 270.
Even the latest capital raise after Q2 earnings disappointment, where the stock had every excuse to go down on it, it went up instead, and the secondary was oversubscribed.
The capital markets jump over themselves to give money to Tesla. This is because Tesla is not raising the money for operating purposes. They are not raising money to pay salary or keep the lights on. They are raising money to invest in the future, which means great earnings potential in the coming years. It is not dilutive, it is accretive. The capital markets understand this, thats why the stock goes up every time they raise money. The people here understand this, that is why no one is concerned over it, even when Elon states openly that they will be spending vast amounts of capex.
Everyone understands this, besides some shorts like tftf who are hanging on to their last thread.
Yes, indeed the game is over.�
Dec 23, 2015
tftf The "game" (moving from current ICE cars to more EVs and autonomous/connected mobility) will last 1-2 decades, at least.
Let's assume everything goes according to plan for Tesla and it makes/sells around 500k batteries and cars by 2020.
Where will the other/remaining 99.5 million new cars be coming from? Tesla can't provide them. So even by 2020, the "game" will still be in the first inning.
Did Commodore win the home PC market back in 1980-1985?
Did Blackbery win in smartphones back in 2000-2005?
Did Q-Cells win the solar (panel) market back in 2005-2010?
Where are these former three market/technology leaders today? We know the answer. The same can happen to Tesla between 2016-2021.
You seem to call/know the winner before the first inning is played.�
Dec 23, 2015
jhm Wow, I step away from this thread for a month, and tftf is still going on about $5B as if we are supposed to be impressed by the bigness of the number. Ok, so let's shrink this down to size. A nominal investment of $5B in a plant and equipment with nominal capacity is $100 capex per annual capacity of 1 kWh. Suppose most of these assets are good for 15 years or more and we can finance at 6% or better over 15 years. Then capex is just $9.71/kWh. Given the ambition to push the total cost of production under $100/kWh, this level of capex cost does not seem like a huge impediment. Also note that all energy costs of manufacture is embedded in capex because of the reliance on onsite renewable energy. So if 10% of your cost includes plant, property, equipment and energy, that's not a bad deal.
But it gets better. If Tesla enhances the density of the battery or finds other ways to increase kWh throughput, then the capex cost per kWh drops. For example a 15% gain on density reduces the cost to $8.45/kWh.
So with capex as such a small portion of the total cost of production, it seems that Tesla should not struggle to find willing lenders and other financiers. For example, I know a certain solar installer that is willing to offer 6% lease financing. Perhaps it is cheaper for Tesla to issue its own debt at 4.5% instead. No matter. The question is not whether Tesla can get capital, but at what cost. Even if Tesla is trying to grow on a cash positive basis, leasing renewable power systems and other equipment is not a bad way to go.
I would also point out that SolarCity's ambition with their Riverbend plant and other manufacturing plants is not to own them, but to lease them. They want to reserve their debt ratio for project financing. This may well reflect Musk's thinking for Tesla to. Once the Gigafactory is in place they can sell power assets to a yield co and lease back. They can sell the plant and buildings to a REIT and lease back, and they can lease equipment as well. So long as PPE and energy are a small enough component of production costs, they can lease it and move capital into high value uses.�
Dec 23, 2015
Krugerrand You didn't have to write it. You've hung your hat on 'where is the money going to come from?' for a few years now. And yet here we are and the money just keeps showing up.
And once again it doesn't mean that Tesla doesn't win or remain the cost leader. That's why we place our bets.
Irrelevant.
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I won't argue what inning were in...but yes I'm calling the game over.
This question coming from one of the 'competition is coming to kill Tesla' guys?! Some consistency in your stance/argument would be appreciated, otherwise it gets really hard to follow the train of thought.
It's irrelevant what happened to Commodore, Blackberry etc... Has nothing to do with Tesla.�
Dec 24, 2015
mkjayakumar The three leaders TFTF mentioned did not innovate. They were simply standing still when they had a great market leadership. Every 5 years you have to completely reinvent yourselves. That is the difference between Tesla and other first-mover losers.
I will give you another example where this might happen - VMware. An undisputed leader still in virtualization, but is being swept away by cloud vendors and a new kid in the block -Docker containers. All because of their stifling and asinine licensing model.�
Dec 24, 2015
Johan Merry X-mas to both sceptics and belibers!
If you're feeling festive then go ahead and sing the rest of this post out loud!
Melody: Jingle Bells
Gushing through the snow
in a brand new Model 3
That was custom built
in the Fremont factory
With a pack that's fully charged
and a price that can't be beat
You see out there in Nevada
there is something really neat...
Battery cells, battery cells, battery cells galore,
once we've built a billion we will build a billion more!
Battery cells, battery cells, battery cells galore,
once we've built a billion we will build a billion more!
A gigantuous factory
with solar up on top
With such ubiquitous power
the price is set to drop
But some are unconvinced
Saying batteries are not yet
Ready for the prime time
But this they will regret...
Battery cells, battery cells, battery cells galore,
once we've built a billion we will build a billion more!
Battery cells, battery cells, battery cells galore,
once we've built a billion we will build a billion more!
With production ramping up
and the Japanese in place
It seems the competition
Are doomed to take up chase
We put anode, cathode in
Never mind mind the length or height
As we finish up the casing
we pour in electrolyte...
Battery cells, battery cells, battery cells galore,
once we've built a billion we will build a billion more!
Battery cells, battery cells, battery cells galore,
Elon is the genius we will all come to adore!�
Dec 24, 2015
Gerardf
TFTF also does not innovate. He keeps repeating the same old arguments, over several threads, no matter what feedback he gets from us and from official company reports like the GigaFactory actually being ahead of schedule and to be build out to even larger capacity than the initial plan.
He also fails to consider that not only does Tesla have a very clear strategy but also has much more data than TFTF has access to.
I put my cards on Tesla not repeatedly lying in official communications and having this all figured out a bit better than TFTF.
Edit : I enjoyed your great post Johan !�
Dec 24, 2015
Discoducky That is awesome! Thank you!�
Dec 24, 2015
Chickenlittle Not only do we know the winner but can certainly recognize the loser�
Dec 24, 2015
hiroshiy Wow this IS a nice Christmas song for (most of) all of us!�
Dec 24, 2015
jhm Yes, we can be absolutely clear about who the losers are. Let's fast forward to a time when there are lots of battery producers selling advanced battery packs into both electrical and automotive markets at prices below $100/kWh. The industry is supplying over 1 TWh of batteries per year, but economists recognize that the addressable market for batteries is still 5 times that level. We cannot predict what share of the market Tesla holds at this point, but it is definitely the business to be in.
The obvious losers are the fossil fuel related industries. 1.25 TWh is enough to put an extra 25 million electric vehicles on the road and knock out at least 1 mb/d (million barrels per day) of demand for oil. So at this stage, the oil industry is in massive decline. Each year the glut of fossil fuels get worse than the year before with no hope of recovery. Drilling will be limited to maintaining existing wells, and capital will flee oil and gas investments.
Investing in a gigafactory will be much more promising than developing an oil field. So whatever competive pressure Tesla may face from innovative battery makers, these pale in comparison to the obsolence risk that oil and gas face from those same innovators. Anyone who is shorting Tesla because they really believe other more innovative battery makers threaten Tesla should actually be shorting the oil and gas industry. Indeed, such shorts have already missed to opportunity to short Chesapeake, the largest US gas producer, whose stock has fallen 80% over this last year. This is just the beginning. There will be short ops like this all over the oil and gas sector for decades. Just looking at gas futures, the market still thinks that the price of natural gas will recover above $3/mmbtu by 2020, but this totally ignores the falling price of solar which presently caps gas at around $3 and will cap gas at $2 in less than 5 years. Massive overpricing in gas futures just fuels a sustained glut. The economy seriously needs shorts to bring discipline to the oil and gas sector. But hey, shorting Tesla is so much sexier. It's the glamour short.�
Dec 24, 2015
tftf I wrote that Tesla would need billions and billions of fresh funds to get the GF and the Model3 done - that was already back in in late 2013 and 2014 when some bullish people on this forum (and on SA) predicted that Tesla is somehow able to internally (operational Cash-flows) generate all the cash needed gong forward - which of course turned out to be false.
My argument remains the same: If a significant or at least a growing portion of the remaining 99.5M people (the "remaining" new car buyers in 2020 which Tesla can't serve even at full capacity that year) want longer-range EVs more car companies will build them and more battery suppliers will build the latest battery plants for them.
It's not irrelevant what happened to other market leaders in nascent sectors: PCs, smartphones and solar panel revenue exploded while pioneers in these sectors went bankrupt or were marginalized. I think these examples are quite relevant for Tesla - note I don't say that outcome is certain, but some bulls seem to dismiss it while the shift to more EVs will take at least until 2025 or 2035 - as I wrote, we aren't even in the first inning imho. How can we predict "winners" already?
The car market moves much slower and requires more cap-ex than most other sectors. It's therefore even harder for a new entrant to "disrupt" (I think this borrowed tech sector word can't be used in the car market properly, changes take decades, not years) the sector.
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I still don't know which "game" you refer to. As I outlined in earlier comments
A) Tesla (with vertical integration of battery production) "winning"
or
B) EVs "winning"
are two very different outcomes in my opinion.
Most people in the car industry won't argue that EVs, or at least "electrified vehicles" (and more autonomous/connected cars) will play a very important role in the next 1-2 decades. The car sector is mature in many countries so each attainable percent of growth and each "conquest" car model for brand switchers (which is possible more easily with PHEVs and EVs) is looked at very carefully - upcoming emission regulations in key markets will do their part as well.
But that outcome A) doesn't have to result in B). I predict price wars and very tight margins in the Model3 space - especially on the battery production side.
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Yes, but that's much easier to say in hindsight (not to criticize your post). Back in their prime time in 1985, 2000 or 2005 few experts would have looked at the three example companies that way. They were all poised to dominate their sectors back then - often posting double- or tripled-digit growth.�
Dec 24, 2015
Discoducky And they are currently behind, but they will try and catch up. TM will be limited by their cash, but are dedicated to innovation so the bet is that they will retain a significant lead for the next 5 to 10 years.
Also, since you don't have a profile on TMC, but do on SA, it might be helpful for others to know where you are coming from: Tales From The Future | Seeking Alpha�
Dec 24, 2015
JRP3 I think we all know where he's coming from :wink:�
Dec 24, 2015
Krugerrand That's not what you said back 'then'. But I'm okay letting you think that's what you said because even then it's disingenuous and incorrect. Tesla most certainly could have funded the GF and Model 3 internally, they simply couldn't have expanded the SuperCharger Network, SCs, galleries, Tesla Energy, employee base, taken their time throwing the kitchen sink at Model X, expanding Tesla as a whole worldwide as well and as rapidly as they have. Sometimes things change. Indeed, with Tesla (and Solar City, and SpaceX) things change pretty much on a daily basis and when the opportunity to accelerate expansion plans came, Tesla leapt at the chance and grabbed the capital.
I wish. I really do because as I said earlier, your constant movement of the goal posts to fit your position is most frustrating from a logical standpoint and the ability to have a clear discussion of points.
.
First of all, you continually get stuck in the notion that everything has to happen to the fullest in the span of one steamboat. You continually think the GF has to be 100% complete before it can work and here you are again thinking that 100m cars must be built all at once.
Secondly, Tesla wants - it really, really wants - more companies on board building EVs. That's a clear win for Tesla. So bring it! Fair warning to the 'competition': you better come with your best stuff because competition has a way of upping Elon's game.
Yes, it is irrelevant. Tesla stands on its own, not as some copycat of previous businesses. Tesla is in control of its own destiny, not ruled by any that have come before. I baked a cake and it fell, therefore if you bake a cake it will fall too; that's the basis of what you're saying.
The car market 'used to' move much slower.
And yet Tesla has acquired the cap-ex and has turned the sector on it's putootie - again, some just don't know it yet.
Both. All.
Predict all you want. The fact remains Tesla leads and have set themselves up to continue to lead, and are daring others to catch up. If someone manages to catch up, we all win including Tesla.�
Dec 24, 2015
Discoducky I'm sure it is pure coincidence but JP went dark on SA when TFTF went active and are both in Switzerland
TalesFromTheFuture (@talesftf) | Twitter
John Petersen's Articles | Seeking Alpha�
Dec 24, 2015
chickensevil Thank you for this, I hadn't really considered the cost of CapEx amortized over the span of its assumed life. I mean it makes sense of course.
You know the other aspect of this, consider the most cut throat business rocket launching. There is an inconceivable amount of new cars produced every year (currently around 90M) and we are worried about Tesla getting boxed out of the market before they can hit .5% of the share? Consider instead Rocket Launches. There are only what? Like 100 some odd launches every year? And SpaceX did 6. Where is the outcry that SpaceX is *only* at 70M per launch. I mean, you better watch out because the competition is just going to come in there and wreck their world, right? Yet, somehow, somehow... the ancient dinosaurs of the industry Boeing and Lockheed with their launches exceeding 250M somehow still are able to get some amount of business. Why is that? Why would anyone willingly pay 3x the cost for what amounts to the same product? Because there is more market (demand) than there is people able to meet that demand (supply).
So here we have an EV company with a supply, but their supply amounts to a fraction of the potential demand. Why do people buy the BMW i8? Why do people buy the Porsche 918 Spider? Why do people buy any number of other inferior Plug-in type vehicles? Because there is more demand than supply (or people have some amount of brand loyalty and/or other draw toward that product causing a perceived added value... but mostly its a supply issue). So even if this magical competition comes out of nowhere and by 2020 there is enough supply for 12 equal companies to each produce 500k cars and all of them at a better price than Tesla, worst case, Tesla becomes like Boeing and Lockheed with their rocket launches still finding business at 3x cost because now instead of the EV market being at .5% of the total demand, the market is at 6.5% of the total annual demand. Tesla is still going to find business. It won't be until we start to see *maybe* 50% market supply of the underlying demand that we really start to look at having trouble which means some 45M new EVs produced each year.
It had been mentioned before that in order for Tesla to have an issue LG (or some other company - companies) would need to not just be building a gigafactory at 35GWh annual, but multiple factories at 350GWh annual (supply for approx 5M cars). I would counter that is still being generous and the number is likely closer to 3.15TWh before Tesla would have an issue finding market for their cars and margins would become "razor thin" and would have to cut costs further than they have.
This is all of course assuming that they also have no market for stationary storage. That means a drop of 50% of the worlds power plants could be converted to storage. According to EIA.gov there are 19,243 generators with a nameplate capacity of at least 1MW. In 2012 global installed capacity was 5,550,000,000 kWs. Yet the total annual generation was 21,532,000,000,000 kWhs. So lets look at the minimum average hourly generation to come to a true baseload demand if the curve was flat. That amounts to 2,457,990,868 kW per hour. So looking at the difference between the two is where they come to a reduction of 50% of the worlds power plants.
The question then becomes how much storage would one need? Well lets ignore the irregularities of renewables and assume the are all consistent generation sources such as hydro, coal, natural gas, or nuclear. So we need to support the potential for double the demand at certain time periods (5.5TW). Let's then also assume that storage only needs to match hourly at a 1-1 ratio of this peak power draw, so a removal of half the worlds power production would mean we need at a *minimum* 2.5TWh of storage. If the cost benefit of undercutting *all* forms of peak plants is at 850$/kWh it won't matter if Tesla is undercut on their current pack price of 250$/kWh advertised. Why? because the total addressable market is vastly larger than anyone can currently produce for. It would take 71 years of full gigafactory production to meet that demand (that's 2,500 GWh demand / 35GWh production per year). So even if, again, 2020 rolls around, and we have 350GWh of annual production combined by all this non-existent competition, it would *still* take 7 years of full production to meet this minimum supply requirement.
Realistically though, the 2.5TWh supply need is *vastly* under scoped, because you need account for multiple hours of over draw, and then multiple hours of under draw to replenish the store. Based on a 2012 curve (to try to remove renewables from the equation) this amounts to around a 15% +/- on either side, so lets assume for half the day you are running 15% too hot, and half the day running too low. You would then need to produce enough storage to hold out for at least 12 hours of running too hot for the day, before getting to the other side of the curve. Back to global numbers, the daily average is 58,991,780,821 kWh, if we are assuming that we only have 2,457,990,868 kW installed capacity, and dealing with just a 15% over/under, this amounts to 33,920,273,978 during the peak draw. Subtracting out the baseload generation of 29,495,890,416, amounts to 4,424,383,562 kWh of required storage to ensure enough draw during the 12 peak hours. This has now nearly doubled the required storage needs to 4.4TWh. And this is only with a *very* gentle 15% curve. As we go more into the extreme with Solar using 2020 projections, the over/under rises to around 36%, which increases the storage needs to 10,618,520,544 kWh or 10.6TWh.
The point is, we are not trying to compete battery vs battery... that doesn't matter. Otherwise how in the world did LG land a contract costing them around 1,000$/kWh with an order of 1GWh if Tesla is already able to take orders for 250$/kWh? By TFTF's logic, LG should be going out of business today, and not be landing more contracts that cost 4x the "going rate". So what are we *actually* competing against? The cost of other power generations. Coal, Natural Gas, Nuclear... etc. And I have heard numbers ranging from 500$/kWh to 850$/kWh before you have basically undercut all those plants completely. The variance is likely trying to take into account that difference between the need for say, 10TWh of global storage needs vs something lower like 2 or 4TWh. What is clear, the market is vast, and the supply... the supply is *very* low... and will remain low for the foreseeable future.
Again, even with the assumption that all the "competition" comes out of nowhere to build an vast amount of factories about to produce 350GWh a year, it won't matter what price anyone sets, as long as they are lower than 500$/kWh, Tesla will easily sell anything they can make, because the demand will be there to support the higher price. If someone comes and sells then at 1$/kWh, it won't matter, because they just won't have the supply.�
Dec 24, 2015
Krugerrand Somebody else wrote that. Can't be the same person. Can't.
- - - Updated - - -
Definitely not the same person. I've read pretty much all their stuff and they have very different writing, discussion and argument styles.�
Dec 24, 2015
tftf Very similar things have been said about solar (panels) since about 2010. Global demand for solar is growing by leaps and bounds lately, prices kept and keep coming down - yet many of the largest panel makers went bankrupt in the past five years (and some others in Asia were saved by public funds or are being kep artificially alive...the actual number of casualties would be much higher in a free market).
I see lots of business and risks parallels between solar panels and batteries (other than maybe prices for panels coming down even faster / in shorter periods of time than for batteries) in terms of low margins, pork cycles (periods of under- and then over-investing) coupled with technology gaps (making it risky to invest a lot and achieve a decent ROI before the next generation comes along).
The parallels even go further: Many of the largest panel makers kept forward-integrating and were/are selling turnkey solar installations as well as vertically integrating the supply chain (polysilicon etc.).�
Dec 24, 2015
JRP3 Last I knew Petersen sold the castle and moved to Florida. Plus as Krugerrand says they have very different writing styles.�
Dec 24, 2015
chickensevil Were those panels at a price point that makes them cheaper than other power generations on the market? I am willing to bet the answer (without subsidy) is no. Because as far as I am aware, the price has only finally just recently fallen low enough even with subsidy to pull it under a good majority of power generation types, and it will still be until a projected 2020 when they can unsubsidize solar and have it being the cheapest energy source.
So no, the parallels aren't quite there. Solar was cost competing against Solar... essentially those who wanted to get Solar for environmental reasons and were just eating the surcharge on paying for the more expensive power generation. So your market is limited to just those willing to pay *more* for energy to do something "good", and not competing openly on a free-choice basis of just "what is the cheapest power". So not only did you have a limited market, but now someone comes out and undercuts you and you are unable to maintain your business of catering to this small crowd.
Contrast, at 250$/kWh, Stationary storage is already vastly cheaper than all other forms of power generation that would be used specifically for *peak power*. This, as it turns out, is a lot of power plants. As I pointed out above using real 2012 numbers of power plants and generation capacity, why would we have 5.5TW of power nameplate capacity, if we are only using on average 2.4TW per hour? So more than 50% of the plants are strictly there for *peak power* purposes.
Now, I don't have the data off hand, but maybe if I get chance I'll happily drudge it up on the costs per kW it is of a peak plant these days vs what you would expect to need of stationary storage... but it is a pretty large market. You have undercut half the current active power market, which is no small number. So 250$/kWh, 150$/kWh, or even 1$/kWh... doesn't matter, because you will have people chomping at the bit to not have pay the cost equivalency of 850$/kWh.
As a buyer I would go for any of the above choices as long as I could secure my place in line to get it tomorrow, because a cost savings of even *just* 340% is huge! I mean sure we would all rather have a magical cost savings of 850%, but if I can save money today, rather than getting at the end of a 7 year (or 70 year line... depending on my previous numbers given) line to save 850% vs saving 350% today, I am going to go with the more expensive, but available option. This is simple supply and demand economics. Until we see someone with a stationary capacity of something rediculous like 1TWh at a cost point lower than Tesla, the market is so vast that people will still choose Tesla over the option of having to wait 7 - 70 years.
As a buyer, I could save 350% of my costs year over year from now until 7 years, or keep paying the same price and wait until year 7 to get an 850% savings instead. Also, lets assume a 15 year life on these batteries. Lets say it costs me 1 million dollars per year on my peak power plant. At year one my annual cost is 285.7k. This spread out over 15 years costs me 4.3M$. Assuming I go with only the Tesla savings at 350%. Now I get in line at the end of 7 years, so starting year 8 I get that amazing 850% savings. But years 1 - 7 I was paying 1 million in annual costs because I wanted the cheaper product and had to wait. So now, I have just lost 7M$ in annual costs because I wanted the cheaper product. But hey, now the next 8 years will only cost me 940.1K!
So the end state is that even though I got the absolute best price which is totally not possible to happen any time soon of a magical 1$/kWh, it didn't matter because I would logically crunch the numbers and go with year 1 savings of 350% instead of year 8 savings of 850% because I would come out ahead. Then at the end of 15 years, sure, I could switch over to something cheaper at that point.
But amoratizing the cost of this annual peaker cost of 1M$ into batteries that last 15 years with next to no maintenance, it is clear, I will go with anyone that can provide substantial savings, I won't care if the savings is 100% - 300% - or 800%... once you get into triple digit percentages, your rates aren't really improving all that much, because at the end of the day, you can only get closer to 0 cost, but you can't hit 0 cost...�
Dec 24, 2015
jhm Chicken, you make an excellent point about the price of batteries being low enough to save serious money now. This does does give some laggards a little bit of running space. But it seems to me that a battery maker that does not have a cost path to compete with $250/kWh will find it very difficult to get the capital to expand. It think there are a lot of dabblers in the market that are simply cashing in on incentives. They won't grow much and will quickly become irrelevant. So I don't think we need to argue that laggards will be able to sell product. They may, but they won't be able to scale. The burden for TFTF is to give us a compelling reason why Tesla would allow itself to become one of the laggards. If he wants to argue merely at this is a remote possibility, fine. It cannot be logically excluded. However, he has provided us with no reason why Tesla is likely to become a laggard. So far it is arguably the most aggressive player in the industry. If it simply keeps pace with the industry it will hold onto significant market share. The addressable market is so vast there is room for dozens of battery majors. Just think of what is being replaced, the oil, gas and coal industries. There are lots of energy majors in that space with plenty of room for juniors as well. Personally, I'd be happy if Tesla retained just a 5% marketshare in a 10 TWh battery industry. But I do think they will do better than that.�
Dec 24, 2015
anticitizen13.7 To answer your question: you can't predict winners.
In the mid-90's Apple was close to dead. People predicted that high-end RISC processors like POWER and DEC Alpha would defeat Intel Architecture. Lexus looked like it would make BMW and MB irrelevant in luxury.
The best one can do is make a bet and wait for the result. If you aren't comfortable with the great uncertainty, then don't invest. No risk, no reward. Edit: Also wanted to add that entrepreneurs with the drive and ambition of Elon Musk are very rare. People said Musk would never be successful in rockets, and he proved them wrong. People (including myself 10 years ago) said he was crazy to build cars with LiIon batteries, and Musk proved them wrong. I bet on Elon Musk's venture because of his track record and willingness to put everything on the line even when the conventional wisdom says otherwise.�
Dec 24, 2015
30seconds Why you think Tesla is like German solar panel makers just baffles me. First you have already accepted that the auto industry is shifting to EV. This means that there is a need for large amounts of capital to flow to restructuring activities across the industry. It really doesn't matter much if you are GM, Ford, BMW, Audi, VW, etc., None of them are set up for scale manufacturing of EVs. They all need to re-design platforms (which, still, in 2016 there is a grand total of ZERO fully dedicated EV platforms from these companies) for EVs, not hybrids, or multi-engine platforms. They all need huge battery production (again, ZERO capital invested by these companies), charging networks (finally we have the announcement of a single effort), flexible and fully integrated software platforms for next gen vehicles (ZERO - not even announcements of vaporware) and gee, wouldn't it be nice if they had a sales channel aligned to sell such vehicles if they ever were able to make them.
So basically, if I am an investor (and I am) I would rather send my capital to a company that is way, way ahead the game vs. others who haven't even been able to get any real effort started.
I don't blame you for your myopia, it is very common to hear arguments of why a new technology company cannot compete with established, large footprint companies. Just go look at the history of Microsoft, Apple, Google, Facebook, Intel, Oracle, etc. and you would of course argue that they had zero chance against IBM (just wait for PS/2!), Yahoo, EDS, Fairchild.
Plus, you have yet to share any sort of sales/ cash flow estimates in 2016 - 2018. Or estimates when GM, F, BMW, VW will be able to sell 200,000 EV per year. Or why a company that is growing revenue at 50% per year will be unable to raise money.
Of course, just like the German solar industry.�
Dec 25, 2015
tftf I think Tesla's battery "part" offers some interesting analogies and risk lessons to/from Western solar panel makers (not the car part).
And yes, the car industry is moving to EVs (or at least electrified vehicles) imo. But that shift is very different...
Your examples are from tech sectors where disruptive shifts can occur within months and years.
Smartphones, tablets, PCs, flat-screen Tvs, digital cameras etc. - Replacement and development/production cycles are very different and double-digit marketshare shifts can indeed occur within a few years in these sectors.
Shifts beyond single-digit marketshare in the car sector however occur very slowly and can't be compared to shifts in most other sectors. By 2020 or even 2025, pure EVs will still have a very low market share in the global passenger car market - even using very optimistic scenarios.
Almost nobody is questioning a shift, the question is the timeframe and how to get there profitably.�
Dec 25, 2015
Krugerrand Tesla is a tech company. It's also an automotive company. And an energy company. Makes it rather unique, eh? And thusly going down a road no one else has before, making comparisons to others futile, fruitless and frivolous.�
Dec 25, 2015
tftf Pride comes before a fall.
I have been investing long enough to be extremely wary of "this time is different" stories/scenarios.�
Dec 25, 2015
Yggdrasill When was the last time there was anything substantially new in the automotive industry? *Maybe* you can count the hybrids, but I wouldn't, they're just slightly more efficient ICE cars. Maybe the electric starter, in ~1912? When there is no new technology, obviously you won't have any new technology startups, like in other sectors.
Compelling electric cars are a new technology, only made possible in recent years with advances in battery technology. Where there's new technology - expect to see successful startups. Certainly not all, but some. And of course, it's impossible to know the future ahead of time. But when you invest, you have to play the odds. And my money is on Tesla being able to capitalize on the electric car revolution. The car market is close to 100 million cars per year, and if Tesla manages to take 1% of that market, they will be a success.�
Dec 25, 2015
Chickenlittle Are you referring to the short position�
Dec 25, 2015
30seconds �
Dec 25, 2015
jesselivenomore Fits well with your short position. Better hang on to that bible.�
Dec 25, 2015
schonelucht Are you kidding? Just the fact that most people walk away from accidents that would be an insta-kill not even that long ago (look at the stats!) counts as major progress in my eyes. Reliability increasing by orders of magnitude. Navigation and entertainment systems. The efficiency gain both in consumption, performance and emission of nearly every single polluter too. The step between a 60-ies car and a modern car is larger by a multitude than the step between a modern car and a Tesla that -hypothetically- will only run on solar. Look, Tesla is a huge innovator but claiming there has been nothing substantially new in the automotive industry the last 50 years is absolute baseless.�
Dec 25, 2015
Yggdrasill You're talking about small incremental improvements over time. And none of the things you mention are essential to a car today, as you can buy a car without them (except safety-features now required by law.)
There's a big difference between incremental improvement and big technological leaps. With incremental improvement, no improvement is big enough for a startup to make a name for itself by offering that feature, and it's relatively easy for every car company to keep up with the competition. That changes with big technological leaps. Startups have every opportunity to succeed, and some competitors *will* fail to keep up.�
Dec 25, 2015
Krugerrand You can lead a horse to water, but you can't make it drink.
Tesla has shown every OEM how to make a compelling EV, shared their patents and a willingness to help and partner. Pride's got nothing to do with it, but I'd say that's about as different as it gets.�
Dec 25, 2015
jhm OPEC: 94% of all cars will burn gas in 2040
We may want to send that wisdom to our friends in OPEC. They seem to think gas cars will still comprise 94% of the global fleet in 2040.
I had to work out the math on that. Let's suppose about 2 billion vehicles now growing 2.5% annually to some 3.7B in 2040. So 222.5M EVs or more in 2040 would leave fewer than 94% gasmobiles on the planet. The cumulative number of EV in Jan 2015 was about 740,000. So OPEC thinks this fleet will grow no faster than 24.54% per year. So assuming geometric growth at this rate, new EV sales hit 544,000 in 2020 and cumulative sales 2.76M. Obviously OPEC is underestimating Tesla's stated growth ambition, since Tesla aims for 500,000 while other EVS will try to keep pace with Tesla. So we will know within 5 years if OPEC�S forecast holds any water. If new EVS in 2020 are closer to 2 million, then OPEC is in trouble.
So what if OPEC is just slightly off and electrics grow 30% pa? Well, in 2040 EVS dominate the new vehicle market selling about 157M and cumulative EVS are about 679M. So that is still just 18% of the global fleet. So OPEC is in good shape, right? Well, 25M gasmobiles a about 25 mpg is demand for about 1 mb/d of crude. So those 157M EVs to be sold in 2040 under this scenario wipe out in just one year over 6 mb/d in oil demand. That's about 6.7% of current global demand. There is no way OPEC can curtail production fast enough to support a healthy price for oil with that kind of fall off in demand. So 30% growth of EVs is a disaster scenario for OPEC..But let's step back to see when the pain happens under this scenario. Seven years earlier, 2033, new EV sales hit 25M, and the total EV fleet reaches a mere 108M. But this is enough sales volume to crush 1 mb/d in oil demand in a single year. I believe the current oil glut suggests that the oil industry cannot cope with a demand reduction at this scale. For example, OPEC was unable to reach an agreement internally to reduce oil production by this amount. The oil industry has no economically viable business past 2033 under this moderate 30% EV growth scenario.
Now, what if Musk is correct in thinking that EVs grow 50% through at least 2030 before slowing down? Then in 2030 new EV sale 162M and reach 486M cumulative sales. But 4.6 years earlier, it hits the 25M EV / 1 mb/d demand destruction threshold. Specifically, in 2025 new sales reach 21.33 M and 32 M in 2026. So under this Musk rate of growth for the entire industry, we are specifically assuming that several major automakers are growing at 50%, not just Tesla. If Tesla is able to move at this pace, then obviously other players will have to move just as fast or else traditional automakers will experience massive market share loss to Tesla. So I thoroughly expect other automakers will rise to the challenge. Moreover, if any competitor were to gain such a technological advantage as to slow Tesla down, that would only serve to make this scenario even more likely. So under the "Musk" 50% EV growth scenario, the oil industry is a basket case by 2026 if not earlier.
Obviously, OPEC and the oil industry wants to project confidence that oil will be economically relevant well past 2040. The even say that it will take decade before battery prices fall 30% to 50%. Obviously, no informed Tesla invest is likely to believe such nonsense as the Gigafactory is poised to deliver such a reduction in just a few years. Is OPEC really that dense, or is their slow EV uptake scenario just empty propaganda aimed at misinformed oil and gas investors, automakers and policymakers? Either way, pride comes before the fall. Personally, I believe some scenario between 30% and 50% EV growth will prove out. Moreover, solar and wind are already beating the crap out of demand for coal and gas, impacting oil demand largely outside of the transportation market. The oil industry enters structural decline within five years. It may have already.�
Dec 25, 2015
blakegallagher I think oil may get one more run up to what they think is acceptable levels. As more and more people start to realize how much oil demand is eaten up by one gigafactory and also realize most oil will be left in the ground for the foreseeable future the countries that have/depend on oil will continue to pump as much as they can keeping prices forever below 60 dollars a barrel (after one more run up)�
Jan 7, 2016
jesselivenomore Panasonic Will Bet Big on Gigafactory - WSJ�
Jan 7, 2016
austinEV Nice to see concrete numbers and plans reaffirmed.�
Jan 8, 2016
brandude87 I don't have a WSJ account, but here's basically the same article from MarketWatch: Panasonic ups ante in Tesla gigafactory investment. It's interesting that Mr. Tsuga said the GF will be built in 8 phases, given that all previously cited sources have indicated that it will be built in 7 phases.�
Jan 8, 2016
Rarity I noticed that too, but figure that it does not indicate a bigger factory, at least as far as footprint goes. Panasonic is probably just counting the "top" and "bottom" pieces as two instead of one.
As it stands, the factory seems to have a 50% increase in floor space that has not yet been announced.�
Jan 8, 2016
AudubonB Has anyone with longer memory or sharper search skills have a figure on what the initial or close-to-initial suggested $ numbers were for Panasonic's investment share? If you had grilled me for what the number was prior to this announcement, I would have said something that was close to $1.6bn, so isn't it the case that this release is confirming earlier expectations?�
Jan 8, 2016
austinEV Totally fuzzy memory at work, but I think they never said or it was like 200M, and we all figured we just weren't privvy to the real details. That is my poor memory, zero research answer.�
Jan 8, 2016
cgiGuy Something I learned from others on this forum is you can search for the title of a WSJ article on Google, and then click the WSJ link (from Google) and it will display the full article.�
Jan 8, 2016
hobbes
Found this: Panasonic, Tesla agree to partnership for US car battery plant- Nikkei Asian Review
�
Jan 8, 2016
AudubonB Well done - thanks.�
Jan 9, 2016
Jackl1956 Panasonic Bets Big on Tesla�
Jan 10, 2016
Cosmacelf I thought this quote was interesting from Panasonic President, �We are sort of waiting on the demand from Tesla,�. And we are waiting on Powerwall shipments from Tesla!�
Jan 11, 2016
brandude87 That works! Thanks for the tip!�
Mar 2, 2016
tftf Gigafactory myths, part 2.
A simple cap-ex comparison:
Cells are imported from Asia (Daimler is closing its cell production in Germany), this is purely for pack assembly - or rather an expansion thereof, Daimler is already doing pack assembly in a smaller plant at the same location.
An interesting comparison of this cap-ex number with Tesla-Panasonic: These two are investing less into a combined cell/pack facility until mid-2016 (the planned opening date of the pilot plant):
Source: http://bit.ly/1L0rxqd (PDF, PTD was until January 2016)
These are tiny cap-ex numbers compared to a full "planned" output of 35GWh in cells and 50GWh in packs in Nevada.
How can Tesla create the largest Li-Ion battery factory in the world with these modest numbers? It can't - Daimler's investment numbers for a mere pack assembly expansion are yet another proof.
Tesla is only building a pilot plant in Nevada so far (14% of the revised total size).
Since there is no activity on further outer shell / structural work in Nevada beyond the current size, an expansion is 2+ years away until more cells could roll off additional sections - even if Tesla started building additional Gigafactory "sections" tomorrow morning.
And out again.�
Mar 2, 2016
Johan Cool. Daimler is CapExing $554 million to expand from 20k square meters to 60k square meters. So roughly $14k per square meter of factory.
The GF is projected to be 10 million square feet which is 930k square meters. Someone else do the rest of the math please.
�
Mar 2, 2016
Oil4AsphaultOnly So in other words, if the ULA has to spend $300 million to build an Atlas rocket, and SpaceX claims to only spend a fraction of that, then it's not possible for SpaceX to do what they claim? Is that analogy about right?�
Mar 2, 2016
Krugerrand Yep, that's what he said.�
Mar 2, 2016
techmaven Let's see...
The original phase of the Panasonic Suminoe plant in Osaka, Japan, was expected to cost about 100 billion yen for two stages, in 2010 yen. That's $880 million, or $956 million in today's dollars. That's for about 8 GWh of production, or slightly bigger than the pilot phase of the Gigafactory. That's for cell production mind you and the plant is in Osaka, Japan, not known to be a cheap place.
Panasonic Scraps Battery Plant Expansion - WSJ
Panasonic has subsequently expanded Suminoe since Tesla signed a new cell supply agreement in late 2013. Using the Suminoe plant as a template, for which it actually really is a template in many ways, at $956 million per 8 GWh, that's $4.2 billion for 35 GWh. Even if we move to 7 GWh for $1 billion, we're still talking $5 billion, or right in line with estimates.
GM's Brownstown battery assembly plant is 160,000 square feet and costs $43 million ($48 million in 2016 dollars) to turn the warehouse into a final stage battery assembly plant:
Inside GMs New Battery Plant
So all you've really proven is that Daimler can get ripped off.
Again, at 14% of a the full Gigafactory + Suminoe plant output > 2x all of LG Chem's output in 2018 for all automobile manufacturers. It's also bigger than LG Chem + Samsung SDI + SK Innovation combined output in 2018.
The next phase, if started this year, would take until end of 2018 to come online. There is nothing that says they can only start one phase every year. They can start additional phases in a 9 month stretch and easily make a full Gigafactory by the end of 2020.�
Mar 2, 2016
Familial Rhino But you don't understand, you see, it takes years to design and build a reliable rocket, and Lockheed and Boeing have billions invested in existing production capacity and they spend billions on R&D. By the time Tesla, er, I mean SpaceX will launch their first rocket that doesn't explode, UAL will have even more advanced technology, since they'd be idiots to sit still.
And this reusable rocket fantasy is just Elon Musk selling fairy tales to unsophisticated investors like you and me, who don't understand that it takes years to build the technology base for space.
SpaceX will never put a dent in the launch business. Mainly because it takes years and billions of dollars to do. Rockets are not iPhones.
It takes years?.
I'm out for good.�
Mar 2, 2016
JRP3 Mod-deleted post�
Mar 2, 2016
mkjayakumar Rhino: rolling on the floor here -�
Mar 2, 2016
ggr Mod-deleted post�
Mar 2, 2016
AudubonB Mod note:? Stop making work for moderators, those of you with itchy keyboard fingers.�
Mar 4, 2016
electracity I'm really curious what is going on. A photo from Germany showed only 25 powerwall in boxes. Australia is not really shipping either, as it is referred to as a "trial" by the vendor.�
Mar 4, 2016
techmaven PowerWalls are a very small part of Tesla Energy. Each PowerPack is 14x larger. It also takes a while for the residential side to sort out, including the availability of the inverters. Even if the PowerWall was widely available, the residential inverters to support them are not yet widely available. By summer, this situation probably changes dramatically. In the meantime, PowerPack is really where the action lies.�
Apr 9, 2016
duke_of_ev With Model 3 pre-orders in, is Panasonic still "waiting for demand from Tesla"?�
Apr 10, 2016
Julian Cox Article on Seeking Alphaa out BMW i3 being dumped on a ride sharing service spun as though it was some kind of competitive leap forwards for BMW by someone presumably pretending to be Long TSLA.
Article gives some encouraging and credible statistical trends about younger people abandoning ICE manufacturers for mobility services where cost per mile comes down to lifetime average energy, amortisation and maintenance costs and relies heavily upon OTA connectivity to add value which ultimately precludes non EVs - and if the truth be known, precludes non OTA network connected EVs as time goes on.
Yesterday I was speaking at a conference for Cleantechnica and a fellow speaker presented his Tesla hailing and rental business and an app powered at the back end by a data feed licensed from Tesla for fleet status monitoring and dispatch. The author of the Seeking Alpha piece is simply confused if he or she imagines BMW has stolen a march on Tesla. Ther has been a 100+ vehicle OTA connected hailed and dispatched Tesla rental fleet in Las Vegas for two or more years now and the BMWs in 2016 are still relying on cell phones and a BMW fleet operator has no idea where his cars are without use of a tracking service (like LoJack or similar) and no idea of their status because BMWs can't be sold with an OTA network because car dealers won't allow it.
I think the problem with the article is that potential competitors like BMW - and the shorts that think their efforts to compete matter a damn, simply have no real grasp of how far ahead Tesla actually is. In investment parlance this is basically just a due dilligence failure at this point.
Lack of adequate due dilligence is one of the biggest possible and least considered investing risks one could fall foul of when deciding between going long or short a stock and to what extent from zero to margined and/or leveraged.�
Apr 10, 2016
bonaire The issue there is the PowerWall is only available in "high voltage" style. If they could configure the batteries for 48V then there are many inverters out there that can handle that as a buy/sell/standby/hybrid configuration. perhaps the Fronius model is cheaper and simpler but in the past 300-ish homes used in the earlier trial of the 10kWh box, they used Schneider's Conext XW model. The newer Conext XW+ is even more capable. There is a feature of High Voltage that is a benefit and I think it is smaller and less costly higher-voltage converters/inverters.�
Apr 10, 2016
pGo Here is what happened to 100 Teslas in Las Vegas.
Now defunct, what happened to downtown startup Shift�s 100 Teslas?�
Apr 10, 2016
Ampster I have a 48v inverter and it has no where the efficiency of high voltage inverters. 48v is a dinosaur of the lead acid age. It will take time for the features found in hybrid inverters like Outback and others to show up in high voltage versions.�
Apr 11, 2016
bonaire Offer both. That way, off-grid existing homes could replace aging LA batteries with an 48V Li-Ion option. Then for those who want to use other brands (non-Fronius) they may be able to install powerwalls using 48V setups like the Conext XW+. Then also offer the HV options for the Fronius as well. Unless the partnership is exclusive - wouldn't it be nice to see two options available? Some off grid homes use low-voltage electrical systems like 48V. But for homes which require 120V and 240V devices, including high-surge pumps (sump pump or water well pump) then high voltage solutions are definitely better. With the existence of so many 48V systems out there the ability to retrofit the battery bank alone is a viable market.�
Apr 16, 2016
eloder Any good information from VICE's Future of Energy episode with Elon and the Gigafactory? No HBO access for me�
Apr 16, 2016
MikeC Tesla was a relatively small part in the episode. Elon answered a few usual questions about climate change and a sustainable energy future, there was a quick test ride for the interviewer in a P85D, and not more than a few brief scenes of Powerwalls and stacks of modules inside the Gigafactory like the pictures already posted on Electrek. Nothing groundbreaking that I saw. The footage also seemed older, because at least during the test drive part, Elon said the 0-60 was 3.2 seconds (i.e., pre-Ludicrous).
FYI, HBO Now offers a free month preview if you don't mind taking the time to sign up.�
Apr 22, 2016
Rarity I have been tracking gigafactory employment for a few months. The past two months have shown a significant uptick in hiring -- a roughly 20% increase per month. Currently employing at least 104.
Panasonic has not increased its gigafactory headcount much at all. Currently, Panasonic has 25+ employees in the area (not all of whom work at the gigafactory).�
Apr 22, 2016
hobbes This blog on motortrend has some pics and info on GigaFactory (though it is mostly focused on Model 3 that they took there to take pictures - skip to update 5 for a trip to the roof of the GF:
http://www.motortrend.com/news/tesla-model-3-behind-the-scenes/?sm_id=social_aumomotortrendhub_MotorTrend_20160421_60790026&adbid=723167132293296133&adbpl=tw&adbpr=25383000�
May 3, 2016
electracity Panasonic's preference seems to be to provide batteries from Japan for now. This could be due to cost. Or it could be that the new gigafactory production will not be cylinders.
They did hide the machines during the tour. This could be simply to not confirm their battery production plans. But it could also be that experts would recognize a shift in battery type.
I don't expect a Tesla Battery Miracle. But I do expect Tesla to switch to the pouch format if that type pencils out to a lower cost.�
May 3, 2016
Rarity For sure, Tesla is not sentimental about cylinders, but is there any evidence that it is moving to pouches?�
May 3, 2016
austinEV Pouches: not a chance. Tesla likes the cylinders for thermal management and fault isolation.�
May 3, 2016
electracity Just thinking of a reason for the silence/slowness of gigafactory development. The most likely reason is simply that Panasonic's current preference is to manufacture cells in Japan.
But Tesla didn't choose cylinders. Cylinders chose Tesla. I think that it is extremely unlikely that the germans will have a problem cooling pouches (or similar) on the large battery packs of 200 mile plus vehicles. I expect 800v high amp systems and large cell size without any cooling problems.
EV's have been done mostly "on the cheap": Nissan first foolishly sold EV to the desert southwest without cooling. Tesla pick the only lithium-ion format that they could afford. But those days are over. If Tesla has had great success at robotic assembly of cylinders and battery packs, then perhaps they will just use larger cylinders.
But something has changed with Tesla and batteries. I'm not concerned about cost/supply problems. I don't expect a formulation miracle. So I'm looking at format. "Bigger than AA cylinders" feels to me like the unambiguous result of years of research and planning by both companies.
A format switch for the M3 would look like the Gigafactory today being in no rush to produce cells.�
May 3, 2016
electracity Something has been going on. Perhaps just Panasonic's preference for manufacturing in Japan. Or perhaps Tesla limiting capital expenditures. Or perhaps a format switch for the M3.
A really doubt that Tesla believes that running $100K cars on a gazillion AA cells is state of the art. I really doubt that switching up a cell size is state of the art. I have no doubt that the germans will deliver 800v systems with high charge rates that have no thermal problems.
In the olden days little Tesla didn't choose cylinders. Cylinders chose Tesla.�
May 9, 2016
tftf Up to Q2 2016, Tesla and Panasonic combined have invested $ 508 million into the factory. That's of course only about 10% of the original $ 5 billion projection:
�In Q1 2016, Tesla reports an investment of $67 million, for a PTD investment of $380 million; PENA reports an investment of $64 million for a PTD investment of $128 million; or a combined PTD investment of $508 million through Q1 2016. That $131 million invested in Q1 2016 is 35% greater than the amount invested in Q4 2015.�
Panasonic doubled its investment in the Tesla Gigafactory during the last quarter [Q1 2016 Activity Report]
I don't see how these numbers add up with the new 500k cars (and some stationary battery) strategy plan by 2018 - assuming about 350-400k of those are Model3 cars and get the "local" batteries and cells from Nevada.
If it's so cheap to build the "largest battery plant in the world" then that's good news for all car makers and their battery suppliers looking into building more EVs. Car giants all have billions of $ available to invest each fiscal year.
I however doubt that's the case because Tesla and Panasonic still keep touting the original $ 4-5 billion for the "full" Gigafactory and the current footprint is much smaller (and yes, that's including the new internal floor design):
There also was a weekly average of 599 construction workers at the factory during the first quarter 2016 as Tesla is still expanding the plant, which is currently only 13.8% completed in term of footprint.
(same source as above).�
May 9, 2016
JRP3 So what's your point? They spent 10% of estimated total to build 13.8% of the project.* Sounds good to me. You also seem to ignore the fact that the footprint is capable of greater production than originally planned.
*Of course you always seem to forget the original estimate was a range between 4-5 billion.�
May 9, 2016
tftf So how does this small cap-ex of 10% of the total add up with the promised 30+% in battery/cell cost reduction plans AND the accelerated 2017-2020 Model3 ramp?
That was the point/question.
The press (invited to the Gigafactory recently) keeps talking about $5 billion, so there's still that $4.5 bn gap obviously. Orginally that gap was supposed to be closed by 2020 ("full" Gigafactory completed):
Elon Musk�s enormous, $5 billion factory is seriously ramping up production.
Inside the Gigafactory That Will Decide Tesla�s Fate
So which one is it? The promised $5 billion by 2020 or today's actual $500 million?
What about the new strategy for 2017-2018? Will the current floor space and investment be enough to support an output of 350-400k Model3 batteries by 2018 (and 100-200k by late 2017)?
And what about cost reductions? Is the current pilot plan enough or is the "full" GF needed?
PS: I'm ignoring stationary output here, just looking at car battery output.�
May 9, 2016
Cosmacelf It has been stated several times by Tesla that the GF will be producing cells, not pouches, and the cells will be slightly bigger than the current cells. There aren't many Panasonic employees currently working at GF because they aren't making cells there yet. First cells expected from GF is end of 2016. The GF is currently being used to make battery packs for the Tesla energy products and to assemble the Powerpacks and Powerwalls. It would be interesting if someone were to ask Panasonic if they have seen a spike in cell orders yet for the Tesla Energy products. They have been quite forthcoming with information in the past when people have asked them questions.�
May 9, 2016
tftf And only 6-9 months later they want to produce cells for 100-200k cars (H2 2017). How realistic is that? We will see...�
May 9, 2016
Johan We will see indeed. And your tales from the future will be replaced by facts from reality.�
May 9, 2016
mspohr Since Panasonic is already manufacturing cells in high volume, it shouldn't be hard to duplicate the equipment at the GF. They don't have to invent anything to get started. Hopefully it will go well.�
May 9, 2016
electracity Well, Now you have me looking at earnings reports before 2012.
Here's a gem from 2011 Q2:
Dan Galves - Deutsche Bank
I wanted to ask a little bit about the Model X. Thanks for the detail on start of production of that vehicle and volumes. In terms of the overall product development process for that vehicle versus the Model S, considering that you're leveraging the Model S platform, is the product development process much quicker on the X than the S as been?
Elon Musk
Yes, definitely. It's much a lower CapEx and a much quicker process, because we're really keeping the fundamental timeframe and the chassis, the electronic components, touch screen, instrument panel. And these things are all common between the cars. It's kind of usually the upper body that changes. But I really want to leave a little bit for the big unveil in December. So there are some pretty exciting things about the Model X that I think are going to be super-cool. But I don't want to say too much at this point.
_____________________________
Yet now we are told that Tesla is not only going to be the best manufacturer of cars, but of "things".�
May 9, 2016
electracity I agree that it is unlikely Tesla has a cell problem. They and Panasonic have a lot of practice manufacturing cells and assembling packs with apparently very few problems.�
May 9, 2016
Cosmacelf Um, well, I wouldn't put it past Elon to screw up cell development if he could. The Model X was supposed to be a slam dunk, based on the same Model S platform and instead we got "the hardest car to manufacture in the world" (Elon from 1Q16 conference call). With GF cell development, they are going to go big, meaning bigger process tanks (lots of high temperature wet chemistry) and the like. They probably haven't done that before. The only saving grace is that cell development will be run by Panasonic, and Japanese in general are not known for taking huge risks.�
May 9, 2016
electracity I expect that the Model X caused enough pain that Elon no longers gets the same thrill from "great design ideas".�
May 9, 2016
tftf Let's assume they make the late 2016 goal of producing first cells.
Then they only have 6-18 months left to make the 2017 and 2018 numbers.
The schedule is just impossible imho - and I�m not even starting to think about product quality on these first Model3 cars and cells/batteries (because Tesla will need to hire THOUSANDS of new workers at both facilities and train them first).
On the car side: Do you know how many suppliers (and sub-suppliers) a car company has? This is largely outside of Tesla�s control even if it insists on a magic " July 1, 2017" goal.
There are enough public stories out there that Tesla pays its suppliers very late compared to most competitors. Do they - and their sub-suppliers - really want to jump on the Model3 �opportunity� bandwagon?
Companies like Hoerbiger (Model X door supplier...) now have lawsuits pending. They probably wish they never signed that Tesla contract�
2016-01-25 - HOERBIGER denies TESLA claims - Compression Technology, Drive Technology, Hydraulics by HOERBIGER
Summary: I will only believe the revised output targets when I see the actual Model3 sales volume (and QA reports from early adopters).�
May 9, 2016
30seconds Cell production from the GF at significant quantities isn't needed until late 2017. Panasonic is set to supply 30% of the GF cell production from the Japanese plants.
Plus as you very much know, the July 1, 2017, is not a date Elon expects to make. but strawman production is your specialty�
May 9, 2016
Johan Your argument from personal incredulity is worthless. Don't take it personally, all arguments made from the sole position of personal incredulity are worthless. You have the right to an opinion (even though I'm not sure about the "humble" part) but it would be much more interesting if you based it on something tangible other than your "gut feel".
One may argue that Elon Musk and his team are also just throwing out fantasy numbers and projections, made from a position of overconfidence. However, can't you at least agree to the fact the Elon and his team have access to magnitudes of order more information than you and I, and everyone else on the internet, when it comes to the possibility of being able to start cell production this year, and the probability of making enough batteries in 2017 and 2018 respectively for whatever they have planned? I choose to believe they tell the truth. I haven't seen anything yet that suggests to me that they are lying on purpose or that the purpose of Tesla is to scam investors.
On the car side: Yes, I know how many suppliers (and sub-suppliers) a typical car company has. I also know that there is a laser focus as of now in order to get suppliers ramped up and ready for the deadline of July 1st 2017 ("the nonnegotiable deadline that nonetheless won't be met"). If you listened to the conference call you would have noticed how much time Elon spent on this subject to know he believes it to be of paramount importance to the success of Model 3. Also there's the fact that Tesla are saying they will be 100% prepared to take any component in house (vertically integrated) should the supplier fall through. I choose to believe they tell the truth. I haven't seen anything yet that suggests to me that they are lying on purpose or that the purpose of Tesla is to scam investors.
I'm sure Hoerbiger wish they didn't sign the contract. I'm sure all the people Elon have let go over the years weren't always happy having him as a boss. I'm sure there will be suppliers who say thanks, but no thanks, when Tesla approach them with regard to Model 3. And that's alright. They will find a way to make it happen.
As to your summary. Let's assume they do produce the first Model 3 cars in second half of 2017, and that they do exit 2018 on a 500k run-rate (S+X+3 combined). Then what? You'll probably still be incredulous to the projections they're putting out then, just like you didn't believe the S would come to market, would sell well, would ramp well etc. etc. etc.�
May 9, 2016
tftf Tesla talked about 100-200k cars by late 2017 in the latest CC.
Using your number 70% of those batteries and cells will come from Nevada.
That's 70k batteries within 3-5 months in 2017 using the lowest projections from Tesla. Is that realistic?
Why does Musk trow out such numbers in the first place given the history of delays at Tesla?
He can't even control 100% of the story.
He is dependent on Panasonic, their battery sub-suppliers and dozens if not hundreds of car suppliers and sub-suppliers.
Do you think the recent Hoerbiger experience (see link above) makes other suppliers jump on the Model3 bandwagon?�
May 9, 2016
tftf Here was my argument about the Model X launch back in November 2014:
"I suspect the X "launch" in Q3 2015 may be a photo op with only a few Signature deliveries, real volume deliveries of Model X may only happen in 2016."
Worthless?
Yes, in theory they can take take even more components in-house if suppliers bail.
That however a) adds to costs and b) makes the 2017-2018 timeline even less realistic (see last-minute switchover experience like the Model X doors and seats).
The Model X at least was/is low-volume. This time we are talking about 70-100k batteries and cars in late 2017 in a matter of months.
A major recall on rushed Model3 batteries or cars is the last thing Tesla needs in late 2017 or 2018.�
May 9, 2016
30seconds You really can't figure this out?
No, I did not say that Panasonic, which has existing cell factories producing batteries for Tesla, would only supply 30% of the 2017 supply. This makes zero sense to assume, unless of course you are arguing in a complete bad faith manner without regards to logic or common sense.�
May 9, 2016
aronth5 Not sure how much this factors into their ability to produced enough batteries but remember the battery size for the Model 3 will be the larger format requiring fewer cells for each car. That combined with the fact the battery packs will be smaller means a lot fewer batteries then if you were trying to ramp up for the Model S or X.�
May 9, 2016
MitchJi I have no doubt that they can do this. But you're incorrect:
Short-Term TSLA Price Movements - 2016�
May 9, 2016
tftf No, I wrote that using your numbers 30% for S/X would (still) come from Japan - at least for now - while 70% (the cells for the Model3) will be produced in Nevada, likely in a new form factor (the slighty larger cylindrical cells Tesla has been talking about).
Or do you think that Tesla will ever turn a profit on a $35k Model3 with cells imported from Panasonic's current factories in Japan?
If so, why build the GF in the first place? What about the touted 30-40% battery cost reductions?
And what are the margins if that Model3 is then exported to Europe or China? You have shipping, import duties and a strong USD versus local currencies in most important car markets recently.
There's a reason car giants have local plants in all important car markets (subsidies, natural FX hedging, hedging against disasters or labor unrest, lower shipping costs, rapid turnover, local design teams to better match local demand etc. etc.).
If Tesla ever adds large factories for cars and batteries in Europe/Asia we are again talking billions in cap-ex and years of preparation. That's why breaking up with Daimler/Toyota was so foolish imho, it will make the international Model3 ramp that much harder and cap-ex intensive.�
May 11, 2016
tftf Speaking of Daimler.
Using a simple market comparable with $DDAIF. As discussed before, Daimler is investing 500 million EUR into expanding its current battery plants in Germany:
https://www.daimler.com/documents/investors/nachrichten/kapitalmarktmeldungen/daimler-ir-release-en-20160301.pdf (PDF)
The 500 million EUR figure is interesting because Tesla and Panasonic combined only invested 508 million USD up to Q2 2106 into what's still described in PR as the "largest battery factory in the world" aka Gigafactory 1.
What's even more interesting (even assuming building costs and permits etc. are somewhat higher in Germany, but so is the EUR to USD at the moment with EURUSD @ 1.14, or around 575 million USD) is that Tesla's factory obviously includes the cap-ex intensive local cell production with clean rooms and more raw material handling etc. - while Daimler's plant "only" assembles imported battery cells from third parties into battery packs.
Assuming Daimler is not being taken for a ride (after all it's a public company not known for wasting money) the similar cap-ex numbers so far (500 million USD and EUR) show that Tesla's and Panasonic's current Gigafactory build-out is very far from being the "biggest battery factory" in the world in terms of output - there's still a gap of over USD 4 billion compared to the full GF cap-ex estimate.
Tesla and Panasonic will therefore need to invest a lot more until 2018 to somehow make close to 500k cars and batteries by 2018 - even if some of the cells continue to be imported from Japan.
Importing cells and ramping Model3 production of course opens other questions as I noted in an earlier comment:
Summary: Leaving the QC can of worms aside (Tesla is in for a vertically integrated Kamikaze mission until 2018 instead of a lean Kaizen-style ramp until 2020-2025 with a postponed Model3 in terms of QC and manufacturing processes imho...), I think Tesla will need to raise a lot more funds than "just" the USD 2 billion suggested by some analysts to complete the Gigafactory and finish/ramp the Model3.
- If Panasonic's current Japanese factories are (soon) as efficient and could also build the new cells (updated form factor and chemistry), why build the giant Gigafactory in the first place?
- What about the touted 30-40% battery cost reductions / economies of scale when the Gigafactory remains at about 14% of its total planned size until 2018?
�
May 11, 2016
techmaven Wouldn't the closest comp to the Gigafactory really be the Sanyo/Panasonic plants in Osaka, not whatever Daimler's subsidiary is doing?
The original investment in Suminoe was supposed to be 100 billion yen in 2010-2012 and is probably pretty comparable to a single phase of the Gigafactory. Building in Osaka, Japan is not cheap... no where nearly as cheap as Nevada. Matter of fact, they initially scrapped plans to build out to full nameplate and built a plant in China. However, they end up building it out because of Tesla's success. That 100 billion yen is now about $1 billion dollars. It's for about 6.5-7 GWh of production capacity, depending on the cell. Panasonic also has other production plants in Osaka for Tesla.
Why Daimler isn't more capital efficient, we don't know. We probably won't know. Note that the Daimler's expansion floor space is 40,000 square meters for 572 million dollars. That is spectacularly bad when compared to GM's Brownsville plant that assembles the Volt batteries. That cost GM $43 million to refurbish the building and add equipment to assemble packs with 160,000 square feet of space. That's 14,800 square meters. Scaling it, that's $116 million for the same square footage. Maybe the land and building acquisition costs are particularly high for Daimler's subsidiary?
Back on the Gigafactory. If Panasonic can build one of the plants that provides Tesla's cells today for about $1 billion dollars in an expensive part of the world, why would Tesla have to spend far more than $1 billion dollars to build version 2 of that plant in a far cheaper part of the world?
The hard cost estimates are:
Building: $1.1 billion
Equipment: $3.9 billion
Total: $5 billion
These are obviously round numbers in two big categories, as the site prep work has to be folded in and so forth. Do the solar panels count as equipment or building? Probably equipment. Tesla is not only the building, but also battery pack production from the cells. Plus, that includes taxes, of which they already secured tax credits. So the cost drops towards $4 billion, but it's a bit difficult to visualize through time since some of those taxes credit apply for much later in time.
Likely the cost breakdown goes along the lines of:
Site prep, initial building costs like grid connection: $125 million
Each phase: $330 million
Renewable energy: $225 million
So the costs for getting the first phase online for Tesla is likely $455 million of which Tesla has already spent $380 million. That's another $75 million to go this quarter. They spent $67 million last quarter.
So the first phase, going from the original plans is about 7+ GWh which is good for about 115,000 Model 3's. It is pretty much wrapped up from an investment perspective on Tesla's part. Panasonic has publicly committed $1.6 billion and communicated that to their shareholders.
It is clear that each phase is now bigger than originally projected. How much bigger, we don't know. But we do know from the Storey County exec that they added another floor, at least in parts of the building. The manufacturing floor space is definitely much higher than originally communicated.
The first phase + the next phase is enough to hit the updated 2017 production goals using the original plans. With 3 phases in 2018, that's almost enough to hit the 500,000 production run rate, with about 345,000 Model 3 packs, again from the original plans. The new plans are larger, so that's probably what makes up the additional difference with whatever the S + X is shipping in 2018. The next two phases would cost Tesla about $660 million, with about half this winter and the other half next year, about 6-9 months later. This is for the new updated production plans - they may choose to go faster, starting more phases.�
May 11, 2016
30seconds of course they are going to turn a profit with cells imported from Japan. otherwise why import them? if you missed out on all of Elon's reviews on battery capacity here is the short version - there isn't enough. GF has two functions 1. more batteries and 2. cheaper batteries.
there is another concept of a "ramping" that also seems to escape you. Lets say they need 25% of GF capacity in year 1, 45% in year 2, 70% in year 3 and 100% in year 4. Panasonic can supply 100% of year 1 needs, 66% of year 2 supply, 43% of year 3 and 30% of year 4.
because this seems to be advanced math that means that the GF itself needs to supply 0% of year 1, 33% of year 2, 57% in year 3 and 70% in year 4.
and, in case you have also missed Tesla's various other announcements that in the longer run factories will be needed in other major markets (Asia, Europe) because it doesn't make sense to continue to build only in the US.�
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