September 23rd, 2020

Concerned by Elon's statements that batteries will take 2 years to see good ramp? Don't be.

If batteries were in final stages of optimization, then Tesla still wouldn't be able to drop them in to all the Gigafactories.

The original thought behind Gigafactory 1 Nevada was to make it enormous to produce more batteries than the world was currently. Somewhere along the line, they realized they could do this in 1/10th the footprint.

Halt GF expansion!

Whoa, if this can be done in 1/10th the footprint, then expanding Nevada's footprint so quickly may prove to be a big waste of space. So, let's not do that and focus on the 1/10th the footprint proof of concept.

Let's look at how every aspect can be optimized. Back to first principles to remove unnecessary processes. Rework the physics. Fix heat/fire/slow charge issues with one innovation. Increase power as a side effect. Remove cell size limitations as another side effect.

Optimize the entire design of the car and minimize number components.

Now start building more Gigafactories. And this is the real reason why you shouldn't be concerned by this taking 2 years. In 2 years, 4 Gigafactories will have expanded and be ramping battery production. In 2 years, their dry battery electrode process will be 3 iterations along.

If this tech was totally finalized, putting battery manufacturing processes in Gigafactories today is itself a ramping process.

If Tesla didn't go this far down the optimization path, this wouldn't be possible.

So what does "volume production" of cells in 2022 look like? If Tesla puts 1 line in each of their GFs, Berlin, Texas, Nevada, Shanghai, that will bring them to +80Gwh.

2019, they were at 35Gwh. They make about 10K cars/Gwh with the current vehicle/grid storage allocation. Which puts production of vehicles somewhere around +800K so over 1M.

Tesla has defined a clear path. In 2030, with 3Twh in production, that means they will have 150 cell production lines.

This means they need to install on average 10 production lines per year. More likely they will ramp exponentially every few years from 4/year (one at each gigafactory next year) to 16/year in 2030.

And so Tesla has time. They have some time while the gigafactory sites are prepped to have battery production facilities built. In that time, they can continue to revise their dry battery electrode.

Historically the stock flat lines for long stretches. I think battery day would normally be enough to kick of this flat line until 2022, or even go down. However, I think Tesla will make major headway with autonomy, Texas and Berlin and production beginning there + Shanghai progress. I don't really expect the stock to stay still like it has in the past.

Chicken Genius Singapore points out that in 2030, Tesla is expecting ~100X Gwh production. If this is true, take the stock you have now, add 2 more zeros and think about what you are going to do with all that money in 10 years. If you have good ideas on how to help the planet transition to sustainable energy or improve in other ways, and you could use a Sys Admin, let me know.

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I am TSLA Long. Model 3 Owner. Brother of a Model 3 owner. Son of a Model S owner. I have reservations for Slate Roof and Cybertruck. I am a Tesla speculator and fanboy. I am not a financial advisor. Investing in anything comes with inherent risk. Short NKLA (Aug 4 2020)