.

[Dan Clemmensen + 1,011]

2 minutes ago, Rob Kramer said:

But car companies are a terrible business IMO. 

Agreed. To paraphrase the topic of this thread: "What synergies do ICE majors bring to EVs? Nothing!"  Manufacturing expertise? Apparently not. Tesla has re-invented car manufacturing. Factory buildout? Nope.   Dealerships? Nope, customers hate the dealership model. Supply chains? Nope. EVs have dramatically fewer parts than ICEs and therefore in-house manufacturing beats extensive supply chains.

Well they do have one thing: a lock on many state legislatures. But that will crumble eventually.

[Rob Kramer + 696]

1 hour ago, Dan Clemmensen said:

Possibly, but maybe not. Tesla appears to be supply-limited for the Model 3 and Model Y, so they can keep expanding until they meet the pent-up demand. If they finally saturate that market, they will move down-market and build a "Model 2" or whatever and do it again, using the lessons learned on the existing products. They have done this twice so far (roadster-->S and X, then S and X -->3 and Y). They have demonstrated the ability to very rapidly build factories and ramp up production, so they can increase supply until demand saturates at each price point. They hit their 400,000/yr mostly out of a single factory. They now have two factories up and two under construction, and the factories are getting bigger. That's how the doubling works. By any traditional measure, this is insane. Just like Amazon or Google. I have always been skeptical about Elon's grandiose schemes, and I still am. I have always been wrong. It's a good thing I don't play the market.

Unless competitors get their act together, Tesla will continue to double until it captures the entire vehicle market. The only ICE manufacturer that appears to really understand this is VW, and I think that's because of the basic internal reset following dieselgate. The other big ICE guys are in denial, and look on EVs as a mostly future adjunct to their main ICE business. Since an all-Tesla world is just plain crazy, the competitors will not be the ICE companies, but other mostly Chinese pure EV companies.

The only way they can keep doing this is through selling more shares .with all the investment needed to sell more cars profits are nowhere . Once tax credits stop,  competition increases ZEV credits displaced by internal EV sales by competitors... where does that leave tesla ? Another brand making low margins  and reinvesting it all . GM wants a stake in Nikola motors to pay itself ZEV credits. Others will get tired of fuelling the competition.  

So how many vehicles need to be replaced to offset 3M barrels of decline ? 3,000,000x260L = 780M L/D ÷6L /car= 130,000,000 cars.... get to it autos decline is steep!

[Rob Kramer + 696]

3 minutes ago, Dan Clemmensen said:

Agreed. To paraphrase the topic of this thread: "What synergies do ICE majors bring to EVs? Nothing!"  Manufacturing expertise? Apparently not. Tesla has re-invented car manufacturing. Factory buildout? Nope.   Dealerships? Nope, customers hate the dealership model. Supply chains? Nope. EVs have dramatically fewer parts than ICEs and therefore in-house manufacturing beats extensive supply chains.

Well they do have one thing: a lock on many state legislatures. But that will crumble eventually.

Not to mention most income at dealerships is from used cars and the parts department / mechanics . So the "less repairs+ fewer parts" may be their own curse.... tesla doesnt make tires do they?

[Rob Kramer + 696]

1 minute ago, Rob Kramer said:

Not to mention most income at dealerships is from used cars and the parts department / mechanics . So the "less repairs+ fewer parts" may be their own curse.... tesla doesnt make tires do they?

Most tech make 25$/hr and are peice work (in hours) 10hrs a day is the goal. So at 120$/hr at alot of shops the dealership makes 95$ x10hr per tech on labour alone. Parts are marked up 50-300%. 10c bulbs are 2$ 20$ pads are 80$ and so on parts usually did 130k/month at the dealership I worked at. So 8 techs ×950$ = 7600$×30 days=228k$ . So repairs made 360k$ vs new sales ar 30/month @2k$ 60k $ and 60 used vehicles 3k profit? 180k = 240k$ in vehicle sales. 

So if you had little to no repairs and no used sales youd be in trouble! 

[Gerry Maddoux + 3,627]

7 minutes ago, Rob Kramer said:

The only way they can keep doing this is through selling more shares

Gentlemen, the value of Tesla is in small part due to its cars. Some, granted, but more on this later. 

The value of Tesla is in lithium-ion battery expertise. In just a few short years Tesla went from having its batteries catching fire in various points of the world to building vast battery arrays for the storage of energy to be released upon demand as electricity. 

Back to the cars. Part of the Tesla Grid Concept is the ability--at some point--of having a peaker plant in the form of a million lithium-ion batteries mostly stored up from electricity bought on the cheap last night. Buy at a buck, sell at ten--but it won't happen often. 

The whole concept is so beautiful it almost brings an old oil and gas fan like me to tears: energy harvested from solar and wind feeds into an Energy Storage Site (ESS), which by the way has a second ESS to back it up. Imposed is synthetic grid inertia--to prevent the lights from dimming. From this grid emits flawless, uninterrupted electricity. 

There are, at the moment, three limitations: lithium, cobalt, cadmium. Tesla contracted with Livant for much of its lithium. It has initiated a mining operation to dovetail into that. While GM and all the others are scrambling to buy lithium on the spot market, Tesla is going to have access to low-cost lithium. And tires? My bet is on Goodyear.  

I am not a fan of change. I don't personally believe that the global climate change we are experiencing has much to do with fossil fuels. But I do see handwriting on the wall. And what I've written above is it. Read it or weep. 

[Dan Clemmensen + 1,011]

1 minute ago, Gerry Maddoux said:

There are, at the moment, three limitations: lithium, cobalt, cadmium. Tesla contracted with Livant for much of its lithium. It has initiated a mining operation to dovetail into that. While GM and all the others are scrambling to buy lithium on the spot market, Tesla is going to have access to low-cost lithium.

Right now, Tesla uses the same battery technology for fixed storage (utility and home) as for its cars. Developed for the cars, then quickly repackaged for utility scale and home fixed storage. However, the actual metrics are quite different. For cars, we care a lot about  kWh/Kg and kWh/liter, with kWh/$ coming in (sort of) third.   For fixed storage, we only care about kWh/$. It can be as big and heavy as needed, pretty much. The current batteries need lithium, cobalt, and cadmium, but heavier and less energy-dense batteries can be developed that do not need these and that are a lot cheaper. There are several chemistries that lose the cobalt and cadmium but keep the lithium, and some research is being done with using sodium instead of lithium. Not dense enough for cars, but great for fixed storage. You PowerWall is twice as thick but a third the cost.

Yes, there are other metrics so not all batteries with the same kWh/$ are equal, but it's a good place to start your analysis.

[Jay McKinsey + 1,489]

2 hours ago, Dan Clemmensen said:

Right now, Tesla uses the same battery technology for fixed storage (utility and home) as for its cars. Developed for the cars, then quickly repackaged for utility scale and home fixed storage. However, the actual metrics are quite different. For cars, we care a lot about  kWh/Kg and kWh/liter, with kWh/$ coming in (sort of) third.   For fixed storage, we only care about kWh/$. It can be as big and heavy as needed, pretty much. The current batteries need lithium, cobalt, and cadmium, but heavier and less energy-dense batteries can be developed that do not need these and that are a lot cheaper. There are several chemistries that lose the cobalt and cadmium but keep the lithium, and some research is being done with using sodium instead of lithium. Not dense enough for cars, but great for fixed storage. You PowerWall is twice as thick but a third the cost.

Yes, there are other metrics so not all batteries with the same kWh/$ are equal, but it's a good place to start your analysis.

According to Battery Day they are planning on using the LFP chemistry for grid storage, so no cobalt being used.

[Jay McKinsey + 1,489]

2 hours ago, Rob Kramer said:

The only way they can keep doing this is through selling more shares .with all the investment needed to sell more cars profits are nowhere . Once tax credits stop,  competition increases ZEV credits displaced by internal EV sales by competitors... where does that leave tesla ? Another brand making low margins  and reinvesting it all . GM wants a stake in Nikola motors to pay itself ZEV credits. Others will get tired of fuelling the competition.  

So how many vehicles need to be replaced to offset 3M barrels of decline ? 3,000,000x260L = 780M L/D ÷6L /car= 130,000,000 cars.... get to it autos decline is steep!

You really don't understand Tesla's business model. Car repairs are not a profit center for them and the credits are helpful but aren't critical. This article touches some of it:

https://www.forbes.com/sites/greatspeculations/2020/10/08/tesla-can-post-apple-like-margins-heres-how/#3e0d825b353d

more numbers https://dashboards.trefis.com/data/companies/TSLA/no-login-required/pNkbHhrb/A-Detailed-Look-At-How-Tesla-s-Battery-Costs-Impact-Its-Gross-Margins?fromforbesandarticle=trefis201008

[Dan Clemmensen + 1,011]

5 hours ago, Rob Kramer said:

The only way they can keep doing this is through selling more shares .with all the investment needed to sell more cars profits are nowhere . Once tax credits stop,  competition increases ZEV credits displaced by internal EV sales by competitors... where does that leave tesla ? Another brand making low margins  and reinvesting it all . GM wants a stake in Nikola motors to pay itself ZEV credits. Others will get tired of fuelling the competition.  

So how many vehicles need to be replaced to offset 3M barrels of decline ? 3,000,000x260L = 780M L/D ÷6L /car= 130,000,000 cars.... get to it autos decline is steep!

First, you are correct: the insane business model is to sell shares based on the dream,  and lose massive amounts of money for a decade while creating an overwhelmingly dominant position using a new way of doing business. You then transition to profitability. It worked for PayPal, Amazon, and Google, and it's working for Tesla. Tesla also used the ZEV credits and other money they found lying around to augment all those shares. However, you are no longer correct about the need for additional massive amounts of money: they are making the transition as documented by Jay.

You estimate the need for 130 M cars. Yep, that's a bit less than 10% of the 1.4 Billion cars on the road today, and Tesla and its competitors are heading in that direction.  Do that 11 times and no more ICE. But that means there is a bug in our math somewhere, because that's only 33 M BoE/day. Where is the remaining 70 M BoE/day going?

[Jay McKinsey + 1,489]

24 minutes ago, Dan Clemmensen said:

First, you are correct: the insane business model is to sell shares based on the dream,  and lose massive amounts of money for a decade while creating an overwhelmingly dominant position using a new way of doing business. You then transition to profitability. It worked for PayPal, Amazon, and Google, and it's working for Tesla. Tesla also used the ZEV credits and other money they found lying around to augment all those shares. However, you are no longer correct about the need for additional massive amounts of money: they are making the transition as documented by Jay.

You estimate the need for 130 M cars. Yep, that's a bit less than 10% of the 1.4 Billion cars on the road today, and Tesla and its competitors are heading in that direction.  Do that 11 times and no more ICE. But that means there is a bug in our math somewhere, because that's only 33 M BoE/day. Where is the remaining 70 M BoE/day going?

I suspect Road segment is 33M for light vehicles and 17M for heavy vehicles:

https://www.statista.com/statistics/307194/top-oil-consuming-sectors-worldwide/

Edited October 10, 2020 by Jay McKinsey

[Jay McKinsey + 1,489]

8 hours ago, Rob Kramer said:

The only way they can keep doing this is through selling more shares .with all the investment needed to sell more cars profits are nowhere . Once tax credits stop,  competition increases ZEV credits displaced by internal EV sales by competitors... where does that leave tesla ? Another brand making low margins  and reinvesting it all . GM wants a stake in Nikola motors to pay itself ZEV credits. Others will get tired of fuelling the competition.  

So how many vehicles need to be replaced to offset 3M barrels of decline ? 3,000,000x260L = 780M L/D ÷6L /car= 130,000,000 cars.... get to it autos decline is steep!

Based on the IEA data I posted before and your analysis I think we will see 1M BoE/day demand destruction from EVs in 2024. 10M in 2030.

[Wombat + 1,028]

11 hours ago, Dan Clemmensen said:

Possibly, but maybe not. Tesla appears to be supply-limited for the Model 3 and Model Y, so they can keep expanding until they meet the pent-up demand. If they finally saturate that market, they will move down-market and build a "Model 2" or whatever and do it again, using the lessons learned on the existing products. They have done this twice so far (roadster-->S and X, then S and X -->3 and Y). They have demonstrated the ability to very rapidly build factories and ramp up production, so they can increase supply until demand saturates at each price point. They hit their 400,000/yr mostly out of a single factory. They now have two factories up and two under construction, and the factories are getting bigger. That's how the doubling works. By any traditional measure, this is insane. Just like Amazon or Google. I have always been skeptical about Elon's grandiose schemes, and I still am. I have always been wrong. It's a good thing I don't play the market.

Unless competitors get their act together, Tesla will continue to double until it captures the entire vehicle market. The only ICE manufacturer that appears to really understand this is VW, and I think that's because of the basic internal reset following dieselgate. The other big ICE guys are in denial, and look on EVs as a mostly future adjunct to their main ICE business. Since an all-Tesla world is just plain crazy, the competitors will not be the ICE companies, but other mostly Chinese pure EV companies.

And South Korean and Japanese H2 vehicles!

[BLA + 1,666]

Tesla is a technology company.  They have fine tuned the mfg process over the years. During the early years Tesla had many manufacturing problems.  These problems were very costly.  Will the auto mfg have the same problems.  I think not.  

Battery technology is key. It is also  the most expensive element of an EV. Tesla leads in EV battery technology.

I see the EV market developing similar to the "Intel model" . Intel produced the best processor at the time.  Most PC mfg used Intel processors.  Product differentiation was limited.  PCs became a commodity.  Prices dropped.  

The auto mfg are trying to develop battery technology in-house (like Tesla) and also investing in many startups.  Odds are there will be a period where multiple standalone battery companies flourish.  It depends on their technology, cost and the patents that protects it.  

It wouldn't surprise me if the electric motors could also become an OEM offering.  

This will all bring the cost of an EV down.  It will be interesting to see if the EV companies develop some kind of product differentiation. 

I see auto mfg buying the best technology available based on the criteria above.  This will lead to intense competition and a culling of the field.  Some of today's auto mfg will go out of business.  

Today Tesla is both "First in Class" and "Best in Class".  They will be one of the winners , but not the only one  Tesla is working on becoming the #1 battery manufacturer.  But as of today they still need to rely on Panasonic for most of their batteries.

Who knows what the leading battery technology will be 10 years from now ? 

The startup that develops the best cost effective battery with the specs the EV mfg need will be the biggest winner (and the venture capital firm that funded them).  

Not sure what their business model will look like.  My guess is they license the technology and mfg patents to the established industrial battery manufacturers commanding a nice royalty.  This will allow faster mfg startup and EV competition. Less risk of being leap forged by  newer  technology.  

OTHER TOPIC: Next year you will be hearing a lot about Tesla competitor Rivian .  They are taking orders for their EV SUVs and pickup trucks for delivery 2021. 

Amazon is major investor and has put in an order for 100,000 Rivian EV delivery trucks.  

 

Edited October 10, 2020 by BLA

[BLA + 1,666]

On 10/10/2020 at 3:00 AM, Wombat said:

And South Korean and Japanese H2 vehicles!

A lot of safety issues around hydrogen autos. 

I could see hydrogen long haul trucks or buses before autos. 

Edited October 12, 2020 by BLA

[Dan Clemmensen + 1,011]

5 hours ago, BLA said:

Tesla is a technology company.  They have fine tuned the mfg process over the years. During the early years Tesla had many manufacturing problems.  These problems were very costly.  Will the auto mfg have the same problems.  I think not.

The auto companies will not have the same problems. They will have (and are having) different problems. Their business model has a tremendous amount of inertia, so shifting to a Tesla model is non-trivial. The most obvious difference is the dealership sales model. The manufacturers don't want to upset their dealers, and the dealers don't want to simply go away.

It took Tesla a decade to fully shift from a converted ICE design (roadster)  to a fully EV-only design (latest Model Y), and Tesla had very little vested interest in the old ICE design.  ICE manufacturers will basically need to fire their existing design departments and start over to avoid institutional inertia. Same with manufacturing plant design, where the ICE companies have a 112-year history of continuous improvement of the assembly line: that's a lot of inertia. Their model also depends heavily on the "model year" concept, which Tesla has trashed.

[Dan Clemmensen + 1,011]

10 hours ago, Wombat said:

[responding to a post about competition to Tesla]

And South Korean and Japanese H2 vehicles!

Are there any "pure play" H2 vehicle manufacturers? I thought those vehicles were being made by ICE companies. They will have some of the same problems as they will with EVs, plus the need to develop an H2 infrastructure.

[Ward Smith + 6,615]

4 hours ago, Dan Clemmensen said:

The auto companies will not have the same problems. They will have (and are having) different problems. Their business model has a tremendous amount of inertia, so shifting to a Tesla model is non-trivial. The most obvious difference is the dealership sales model. The manufacturers don't want to upset their dealers, and the dealers don't want to simply go away.

It took Tesla a decade to fully shift from a converted ICE design (roadster)  to a fully EV-only design (latest Model Y), and Tesla had very little vested interest in the old ICE design.  ICE manufacturers will basically need to fire their existing design departments and start over to avoid institutional inertia. Same with manufacturing plant design, where the ICE companies have a 112-year history of continuous improvement of the assembly line: that's a lot of inertia. Their model also depends heavily on the "model year" concept, which Tesla has trashed.

The fundamental problem with ICE companies isn't what you named, it's the unions. The price of a brand new car includes 1/3 of the car to pay for retired union worker pensions. Tesla isn't under that burden yet. 

[Dan Clemmensen + 1,011]

5 minutes ago, Ward Smith said:

The fundamental problem with ICE companies isn't what you named, it's the unions. The price of a brand new car includes 1/3 of the car to pay for retired union worker pensions. Tesla isn't under that burden yet. 

Tesla will probably never be under that burden.  A company-funded pension plan (union or otherwise) is a system in which a company promises to pay retirees in the future. If the company does not fund the plan as it goes, it is in effect borrowing money from the fund. Modern companies do not in general do this. Instead, they use 401(k) or other pay-as-you-go systems. That "burden" you mention means that earlier cars were not sold at a high enough price.

[Dan Clemmensen + 1,011]

21 hours ago, Jay McKinsey said:

According to Battery Day they are planning on using the LFP chemistry for grid storage, so no cobalt being used.

Take a look at the Sodium-ion battery (NIB, since the chemical symbol for sodium is Na). Its article on Wikipedia is one of the poorest I have seen, but you can still extract some useful information if you struggle:

https://en.wikipedia.org/wiki/Sodium-ion_battery

In addition to not using lithium, cobalt, or cadmium, the NIB can use aluminum instead of copper. Apparently, you cannot use aluminum with lithium because the two will react with each other.

[Ward Smith + 6,615]

1 hour ago, Dan Clemmensen said:

Tesla will probably never be under that burden.  A company-funded pension plan (union or otherwise) is a system in which a company promises to pay retirees in the future. If the company does not fund the plan as it goes, it is in effect borrowing money from the fund. Modern companies do not in general do this. Instead, they use 401(k) or other pay-as-you-go systems. That "burden" you mention means that earlier cars were not sold at a high enough price.

Nope. Here's how it really goes down. The UAW coerce management to sign a contract they can't afford, or effectively get driven out of business. Because the Big 3 got coerced by democrat government's over the years to make nice with the (Democrat aligned) unions, the UAW would always go after the weakest of the three, then once that company signed, they all were bound by its terms. A completely lunatic deal, which would have died with the auto bankruptcies in 2009, but Obama broke about 20 laws to keep the union deals afloat and illegally stick it to creditors. 

Your Kalifornistan governments do the exact same thing with pensions. They sign deals with municipal workers, police and fire they know they can't afford and leave it to subsequent administrations to clean up. They even lie and pretend they have budget surplus because their accounting doesn't acknowledge the liability of those promises. San Diego's liabilities alone can bankrupt the state. 

[Dan Clemmensen + 1,011]

13 minutes ago, Ward Smith said:

Nope. Here's how it really goes down. The UAW coerce management to sign a contract they can't afford, or effectively get driven out of business. Because the Big 3 got coerced by democrat government's over the years to make nice with the (Democrat aligned) unions, the UAW would always go after the weakest of the three, then once that company signed, they all were bound by its terms. A completely lunatic deal, which would have died with the auto bankruptcies in 2009, but Obama broke about 20 laws to keep the union deals afloat and illegally stick it to creditors. 

Your Kalifornistan governments do the exact same thing with pensions. They sign deals with municipal workers, police and fire they know they can't afford and leave it to subsequent administrations to clean up. They even lie and pretend they have budget surplus because their accounting doesn't acknowledge the liability of those promises. San Diego's liabilities alone can bankrupt the state. 

This may very well be true, but it is not relevant to Tesla. It explains how the US ICE companies got into their current difficulties. As to 2009, the administration, in conjunction with the legislature, dealt with the most severe financial crisis since the depression and did it decisively. This started with President Bush before the election. Just as during the depression, (or now with Covid) it's easy to retrospectively criticize the actions of the government during a financial crisis.

[Ward Smith + 6,615]

7 minutes ago, Dan Clemmensen said:

This may very well be true, but it is not relevant to Tesla. It explains how the US ICE companies got into their current difficulties. As to 2009, the administration, in conjunction with the legislature, dealt with the most severe financial crisis since the depression and did it decisively. This started with President Bush before the election. Just as during the depression, (or now with Covid) it's easy to retrospectively criticize the actions of the government during a financial crisis.

Here's the deal. Hundreds of major companies have cruised right through Chapter 11 bankruptcy proceedings, which is where they reorganize their debt and renegotiate their contracts. Obama illegally bypassed Chapter 11 specifically to keep the union contracts in force, stupid as they were. Don't worry about retroactively complaining, I was vociferous about the blatant stupidity in real time back then. Because I quoted law and pointed out hypocrisy at the time, naturally the Demoncrats labeled me racist, rather than, you know, addressing the issue.

[RichieRich216 + 454]

Be stupid like CA and go all in then complain when have rolling blackouts!

[Dan Clemmensen + 1,011]

10 minutes ago, RichieRich216 said:

Be stupid like CA and go all in then complain when have rolling blackouts!

I have no further posts for this thread. I has drifted too far off topic.

[Jay McKinsey + 1,489]

In regard to the OP:

Geothermal Energy Market Heats Up As Big Oil Moves In

https://oilprice.com/Energy/Energy-General/Geothermal-Energy-Market-Heats-Up-As-Big-Oil-Moves-In.html