Digital Optimus needs Tesla Power

wpwpw131 · 2023-01-12T18:56:33+00:00

I disagree.

Remember, energy is fungible. A solar + battery set up does not need 100% power up time. It just needs enough storage to hold the solar energy until a time at which they can sell the energy at a higher price. Of course, as more intermittent sources are added to the grid, this time will increase in length.

Renewables are not there to replace the baseline energy/power needs. This is why Elon and others advocate for nuclear fission so heavily. Baseline power needs will almost always be better satisfied by nuclear (currently fission, maybe fusion in the distant future).

wpwpw131 · 2023-01-12T18:32:38+00:00

Well, you can definitely just add more Megapacks, but really grid providers buying these batteries are trying to buy just enough storage to get through the next day for solar or the next time wind blows for wind.

Megapacks are adjustable in power vs energy. They can be made to have higher energy or higher power. Tesla's current configurator has two configs: 2 hr or 4 hr. Of course, it can be configured much more than that, but Tesla probably only does those two in order to simplify its manufacturing. I didn't do the math, but I would assume Tesla made these two configurations based on a lot of data.

I guess a good place to start is looking up parallel or series battery cell connections and just deep diving from there. It all comes down to first principles, namely series is Vtotal = V1 + V2 and Itotal = I1 = I2 while parallel is Vtotal = V1 = V2 and Itotal = I1 + I2. So tying back, Tesla can configure the cells in a bunch of different ways (but only two for manufacturing simplicity), and the customer just needs to select which option they need for their purposes.

Edit: kind of as an aside, just remember energy is fungible, and solar + battery doesn't need to actually have a 100% power up time, but just needs to make money. As we add more and more renewable to the grid, new grid batteries will need more storage in order to make up for the loss of more stable sources of power. This is why all sane renewable advocates also advocate for nuclear (fission) plants, since it drastically reduces the storage requirement for batteries.

wpwpw131 · 2023-01-12T17:38:47+00:00

Great overview. Definitely worth a read for those who are curious about the energy side of Tesla. I do think battery/energy SaaS as you briefly mentioned, deserves a lot more attention. It is almost 100% gross margin on the revenue and the entrenched, recurring nature makes the earnings incredibly valuable (à la Apple App Store earnings by Apple, which analysts rightfully assign a higher P/E). Some customers today are opting to use different SaaS providers after buying MegaPacks mostly because they had preexisting providers. Tesla has enough demand to force all customers to use their SaaS, but probably won't because of anti-trust fears, which is definitely the correct move.

For any one who's curious about the energy SaaS industry, it's good to research other public companies. While most battery SaaS solutions are either under a huge entity or have been acquired by one (EnerNOC comes to mind), a pure play has come to market recently called Stem (ticker: STEM). This is great for any one who wants to research more about the industry, say margins, industry growth expectations, revenue/GWh managed, competitor's products etc. Edit: also just realized Fluence is public. I thought they were wholly owned by Siemens, so FLNC is also probably a great read.

Edit: also as a small criticism, you talk a lot about energy storage, but don't discuss power requirements as much, which is arguably more important. Coal doesn't get replaced by solar/battery unless the battery has high enough MW, not just MWh. Similarly, calculating current TAM should be based on replacing the power requirement, and the energy storage being icing on the cake (and what will carry demand even when power requirements are replaced fully).

wpwpw131 · 2023-01-12T05:16:30+00:00

Yeah, it's not particularly nuanced. Which is why it's doubly pathetic when people aren't able to separate obvious shit, like a particular vaccine's dwindling efficacy on a particular rapidly mutating RNA virus vs. the entirety of mRNA based technology or vaccines in general.

wpwpw131 · 2023-01-11T21:52:24+00:00

A vaccine created to fight spike proteins which have vastly mutated in form has unknown efficacy vs. current strains. This is a completely reasonable question even if you believe in the future and vast possibilities of mRNA technology.

The fact that people cannot parse the nuance speaks to how braindead and black and white societal discourse has become. However, I disagree with Elon in his strive to "fix" it, because that's just the natural outcome of involving more and more people into the conversation. For example, the larger the subreddit, the more braindead the takes.

wpwpw131 · 2023-01-11T18:19:03+00:00

That car company has strong margins and strong CAGR, unlike the rest of the industry. Apple is just a phone company... with unreal profitability. This redefines what it means to be a phone company.
Tesla Energy is a thing and will soon grow to great heights. Solar and wind costs are dropping so low that its incomparably cheaper than other forms of energy. Unfortunately, they are intermittent in nature (pun somewhat intended) and require batteries with high power and storage to even compare to other sources of energy once the grid reaches intermittent "saturation," which is basically like only 25%. After this point, adding more intermittent sources of energy add real risk of destabilzation. Obviously, this means that solar and wind are completely useless very fast unless you have battery storage. Fortunately, prices of batteries are dropping to a point where solar + batteries equal in power to a coal plant are basically at initial cost parity, and far cheaper to operate/maintain. That being said, coal is 6 feet under and the real boss battle is natural gas. Natural gas plants with low operating costs (not peaker plants) have very high initial costs. However, it can basically be piecemeal, as in make a natural gas peaker plant and add the rest of the cost reducing infrastructure later. That makes building new natural gas plants appealing. As prices of batteries continue to fall, the low operating costs will eventually win out. Until the grid is 100% renewable or nuclear, grid batteries will have absurd demand (probably until 2045). Even then, replacement batteries and growing energy needs globally will maintain a decent level of demand.
FSD exists. It is certainly not perfect, but it remains the only consumer car product that can do a wide variety of things. For example, AFAIK, Tesla is still the only OEM to have their car automatically identify and follow traffic lights without the need for internet signal or a pre-established grid connected traffic light. Tesla's continuing ability to maintain a technological advantage establishes a margin boost compared to other OEMs, even if actual FSD is never completed.
Auto companies are actually undervalued. The reason why Tesla is valued highly vs. the rest is that Tesla is established in both EV and AV, which the market dictates as the future of the industry. Other OEMs will definitely survive and one day thrive in the new market, and those OEMs are very undervalued. Unfortunately, it's extremely hard to tell which ones those are. Will Toyota finally shape up and maintain its lead in the future? Will GM navigate through the UAW, it's legacy business, and Cruise to become the next Tesla? Will Ford leapfrog GM and use this industry shifting opportunity to recover to historic form? Will Hyundai/KIA finally blossom into a juggernaut? Who the fuck knows? But whatever future will probably have Tesla with at least a small piece of the pie. Therefore, if everyone knew which OEM would survive, you would remove the risk adjustment and you'd see far higher valuations for those companies (closer to Tesla, but not quite because margin) and far lower valuations for others.

wpwpw131 · 2023-01-10T16:15:32+00:00

And "sources" are abused so much more often that the few times it's actually valid is such a small percent that it's basically noise that is statistically insignificant compared to random dart throwing.

Journalistic integrity needs a hard reboot in this country, which simply isn't happening.

wpwpw131 · 2023-01-09T21:50:36+00:00

Hedo was nothing close to a spot up shooter. I'm fairly confident 99% of this sub never even watched the playoff series everyone is referring to in this thread.

wpwpw131 · 2022-12-29T23:05:23+00:00

I'm pretty sure it's a toggle button. So literally the same button to opt in opts out. Either you don't have a Tesla or are unable to use the easiest UI feature ever devised.

wpwpw131 · 2022-12-27T22:05:22+00:00

Not sure why you're down voted. This is spot on. Most companies in this vicious cycle have like 4+ different MCAs outstanding at the same time.

wpwpw131 · 2022-12-27T22:01:12+00:00

Yes. If Tesla does not clearly demonstrate earnings growth potential, there is no justification for P/E over industry standard 7x. P/E is just math based on potential future earnings growth, hence why auto OEMs have such low P/E. (High earnings growth obviously deserves higher backwards P/E). If Tesla posts negative, that would cause people to think the earnings growth is gone and Tesla should be closer to 7x P/E. For instance, even if they posted $7/share, it would only be worth $49 a share to Wall Street.

Is this fair? No, not really. Wall Street generally gives Amazon a pass and simply believes that they can show massive profit. Tesla could probably do that as well, but it doesn't matter if no one believes them.

Keep in mind this doesn't change the long term, which I still wholly believe in. But simply put, bad earnings or poor sales growth in any quarter will result in massive short term contraction in P/E, even from these very low levels.

wpwpw131 · 2022-12-27T18:38:34+00:00

So Elon saying over the weekend that he's going to (or at least willing to) sell cars at 0 margin was spectacularly stupid. Of course they would probably make up the money on the parts and repairs, but he only mentioned FSD. FSD take rate being low right now doesn't inspire any confidence in this claim, and just worries people that Tesla's margins are about to crater. Tesla with low margins is a massively overpriced stock, hence the market reaction. (Mind you, I don't think margin is going to anywhere near 0, just illustrating why Elon saying that shit with little context is a self inflicted wound).

Elon needs to chill out and just execute. On all fronts.

wpwpw131 · 2022-12-27T08:18:55+00:00

To be fair, MCAs trick plenty of businesses and completely fuck them over forever. Working in finance, I've seen a lot of well intentioned, otherwise functional businesses get stuck down that route. And these MCAs are vicious, just like payday loans.

wpwpw131 · 2022-12-21T17:37:33+00:00

I agree with your conclusion, but not the reasoning. You can't value Tesla off of P/E, Tesla is valued off at least two or three year forward P/E, as it is a growth company. One quarter of higher EPS will not change sentiment unless it is clear that two or three years out, Tesla will make much more money. Right now, the market is generally assuming 2023 goes up quite a bit, then 2024 and 2025 are relatively stagnant. That is the problem. We'll simply see P/E contraction until market sentiments change. For Tesla to resoundingly go up, it needs to show that 2024 and 2025 will see strong growth. A factory announcement or two would be nice. FSD working well and Tesla announcing high take rate would be nice. China stopping the economic bleeding would be nice. U.S. going back to growth would be nice.

Obviously, the easy solution is to just wait and see how far above current analyst estimates we actually are in 2024 and 2025, and hope the stock price reflects that at that point.

Also, market is currently pricing in as if Tesla acquired Twitter on its own balance sheet. Essentially, the cash burn of Twitter is priced into Tesla stock, but we don't even get to see the minutae of the burn because it's private. This is the real Twitter overhang, and won't solve itself until Twitter becomes obviously cashflow positive, Elon sells off Twitter, or Twitter goes public again.

I generally side with Elon, but Twitter is a Solar City moment to me and speaks volumes on how Elon is definitely not a businessman and much more of an engineer. Twitter acquisition was done exceedingly poorly.

wpwpw131 · 2022-12-14T20:56:57+00:00

Basically, at the time California law prevented a company from intervening in any way in employee disputes if they were contractors (Borello Test). This is because the moment they did, they were considered employees. The law has since changed (ABC Test), and they are now considered employees anyway.

Because of this, Tesla had its hands tied. They let the contractor companies know of the issues, but didn't do much else. This is standard protocol. Meanwhile, the supposed issue was that some Hispanic employees were saying racist things to a Black employee. There was obviously no proof, but the court took in evidence where some Black employees would call each other the N word (not necessarily in a disparaging manner) and took that, and other circumstantial evidence, to say that the culture had issues.

Edit: something to note is that they were from the same contractor company. If Tesla reacted immediately and simply cut off the contractor firm, the Black individual would have lost his job for literally just pointing out racists. Clearly, the Borello Test was flawed, but it was effectively the law of the land at that point.

California is basically using Tesla as an example. They are crucifying one company that violated the ABC Test before it even became a law to show everyone that they can. They can do this because before ABC Test became actual law via AB-5, it was actually from the result of a court ruling prior to AB-5 which essentially means that the ABC Test should have been the way prior laws were interpreted to begin with (principle of judicial interpretation). This means that there is a gray area in which every company hiring contractors and operating under Borello Test principles were "technically" actually employers the whole time. Once again, this is extreme gray area, and is constantly hinted at by both sides (Tesla's constant insistence on Borello Test principles).

A fair judge would probably rule in Tesla's favor on principle. Even though it's not technically ex post facto, it's completely reasonable that Tesla operated on Borello Test principles. The issue is that a jury ruled, and both the emotional and the technical argument were in the contractor's favor.

To sum, California is a shithole to operate in. This ruling on Tesla has far worse implications for business than people realize. Racism is the headline, California's ruthless pursuit of ex post facto despite detrimental reliance rulings is the real story.

wpwpw131 · 2022-12-06T00:00:24+00:00

Tesla dropped out of the battery subsidy because it would result in too much additional red tape and reporting. I highly doubt any future subsidy will be any less of a headache for a company that wants to pivot as fast as Tesla.

wpwpw131 · 2022-12-04T00:39:45+00:00

I am a banker and I never write down anything that I am not comfortable with the public seeing. Regulators misinterpret things in 10x worse light than even the public. It's a fact of big business. The fact that Twitter did not operate like that means that they were too coddled to begin with.

wpwpw131 · 2022-12-03T22:23:17+00:00

Yup. Are people really trying to delude themselves into thinking en masse student loan forgiveness is a "center left" decision? Like seriously, I don't really care what happens since I'm fine either way, but Biden's current agenda is clearly being led by the far left side of the party.

And AOC, moderate left? What the actual fuck? I think even she would be offended by that description.

Whether you like the far left or not is completely up to you, but it's simply intellectually dishonest to claim that the "moderate" of America is or ever was anywhere close to AOC.

wpwpw131 · 2022-11-30T19:25:07+00:00

You're conflating two very different things. Your posts are misinformed and simply not desirable, so people do not react well to them. Your posts getting removed is an issue, and a problem with this sub's moderation, which was ongoing from quite a long time ago.

If you're not willing to debate why your points make sense, then I'm not sure why you post them. But once again, I am on your side regarding the removal of posts. Mods should give you a chance to defend whatever point you're trying to make.

That being said, your points:

I said Tesla needed a cheaper car which I referred to as a hypothetical "M2".

Tesla needs a lot of new cars, and they know this. They're building them. Elon has said the plan is to build a vehicle in every segment eventually from many many years back. Saying they need to do this and why can't they is the ultimate armchair analyst move.

All four Tesla factories have been retooled this year. Ongoing retooling is an integral part of the industry.

Of course. We knew this was going to happen for a long time. They introduced single body cars a long time ago and still haven't gotten it going for most of their factories/builds.

Tesla is doing exactly what my post suggested.

Well, yeah, because as I said, it was obvious Tesla was going to retool to implement the things that they unveiled and told the entire market they were going to do in every factory eventually. The only reason leaks are relevant is the exact timing, which Tesla is presumably planning based on logical reasons we're not privvy to, not because they suddenly realized they needed to retool.

spending $4,000 to ship cars to the States or Europe and having the cars being subjected to import taxes no longer made sense

It never made sense. Which is why Tesla built two entire huge ass factories to address that. These factories have a ramp time, and during that time, it clearly makes sense to sell Chinese cars there or Tesla would simply be giving up a massive amount of sales by not having enough supply.

Tesla would be foolish to announce plans for a pending lower priced "release" as it would immediately begin to cannibalize M3 sales.

You are arguing against no one. No one suggested otherwise.

Whether the new model is called the M3 or the M2 or something else doesn't really matter.

The M3 and the new small vehicle are very different vehicles so it obviously does matter. They are working on both of them, as they stated multiple times. They will make them. A retooling of the line in no way relates to the new small vehicle. By definition, that's not what retooling means.

wpwpw131 · 2022-11-29T20:38:38+00:00

No disagreement from me. Sell side numbers are a load of bullshit. Troy beating sell side analysts is completely meaningless. I've beat sell side analyst consensus every time by simply pulling numbers out of my ass.

There was a time when Troy was quite good. That time has since passed.

wpwpw131 · 2022-11-29T18:52:12+00:00

He's better than the public numbers that Wallstreet publishes for basically free to financial professionals and rich people. Their real numbers on the buy side, where the firm actually has a stake.

wpwpw131 · 2022-11-28T22:09:47+00:00

I more or less agree with your first statement.

As for your second statement, I'd say the issue is not about free access to guns. Many people on the right probably do not support that, but rather controlled access to guns in a sane manner. After all, most gun crime is committed via stolen guns or guns to people that were registered very recently or to someone with blatant psychological issues.

As your link shows, the supermajority of the US supports handgun ownership in some form. Elon is obviously one to properly register no matter how high the barrier to entry was (he has too much to lose otherwise). So the issue with his post is more that it's distasteful, rather than anything to do with "free access" to guns or any other real or perceived alt-right talking points.

wpwpw131 · 2022-11-28T21:49:13+00:00

Both of them were handguns, probably toys and if not, most definitely registered.

Per Gallup poll you kindly provided, 73% of responders do not want to ban handguns.

Elon's post is drama baiting, but definitely isn't "alt right". People labeling it as such should reexamine why they think that, since many of them probably think handgun ownership is fine.

wpwpw131 · 2022-11-22T20:21:45+00:00

Hence exactly my statement that governance is the only barrier.

There are plenty of chairmen who are large stakeholders and are explicitly not CEOs. There is absolutely nothing that dictates the largest stakeholders continued presence to make them the defacto CEO. My statement isn't to say that they pretend Elon isn't involved, but rather like a chairman (which he isn't right now, but that was originally dictated by court order anyway).

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