Tesla and Panasonic freeze spending on $4.5B Gigafactory | Hacker News Reader

Tesla and Panasonic freeze spending on $4.5B Gigafactory

asia.nikkei.com

165 pointselemeno185 comments

An ironic aspect of financing (from personal loans to multi-billion dollar deals) is that you can get it as long as you don't need it.

Google or FB would have no problem at all spending a measly $4.5bn on a project that potentially has real impact on their primary business (search,ads), or even secondary one (android, etc.). Their only problem is finding a way to spend it.

This is because Google makes software, and software doesn't really require much capital. The only thing they could realistically spend that kind of money on is m&a.

So, because they don't need it, google has many times that sum sitting around and could probably raise many times that sum again.

Because the only thing they could spend it on is m&a. If they do, the money goes to pay founders/investors in the target company....and back to to the "available to invest" pile of money collectively accumulating in software giants' balance sheets, VC & PE funds and such.

What rarely happens is actual spending.

If Tesla or another manufacturing company gets ahold of $5bn, they will actually spend it on parts, machinery and such.

The current money market is so loopy. All it can do is move money around. It can't spend it. It's like a real estate market in dense places like NY, but worse. Lots of money flies around, but it goes between one pocket and another. Very little goes towards building buildings. An investment in the gigafactory would be more like investing in a new city. It actually results in buildings, but isn't going to be attractive to investors, because... because it isn't a zero sum game. Other people can build a building too. There's no reason for your building to be worth more than it cost you to build.

It just demonstrates that Google/FB/[SOFTWARE] is a wonderful business, and Tesla/Cars/[CAPITAL INTENSIVE] is a waste of money. The market realizes this pretty well, so most money goes into developing and funding new software companies.

Both have pros and cons. Capital intensive businesses, once running, have their own barriers to entry (moats) "literally" built in: all those capital requirements help keep new entrants away. Capital-light business (and I am not sure the infrastructure investments to run a cloud service platform are so small), need to build this moat either by having access to consumer (data, network effects) and/or by keeping ahead of competition with constant innovation.

In practice though, msft, Google & FB have much better moats, via network/platform effects.

There are oil refineries that are decades old and still generate plenty of cash for their owners (granted, they need maintenance investments, but the bulk of the investment is certainly at the beginning), the same goes for cargo ships etc... While FB and GOOG need to come up with a new product or service every 6 months to keep those customers (see SNAP and their allegedly better fit with younger users). And MSFT wasn't in a very healthy situation just a few years ago. I have of course generalised and things are never clear-cut: servicing the high debt used to finance initial capital is also quite risky.

> you can get it as long as you don't need it

There's another explanation for the statement above. The more you need the money, the grimmer the outlook is from the lender's perspective. So you're much more likely to secure capital/loan when you are already financially secure then when you are extended almost to the limit. And this is true regardless of the domain.

You give the money to make money so you're looking more at "sure wins" and less at risky bets.

Their pnl can tell you that. They certainly are wonderful businesses for investors. The only problem is that they don't need investors' money. All investor demand does is enrich previous investors. It doesn't enable/change anything that outside exists outside of bank accounts.

Investment in a manufacturing company like Tesla enables more cars to be built, technology to progress and probably lots of 2nd order effects via their supply chain.

And by investing in more and more new software companies. The likelihood of them succeeding goes down. Roughly until an investment in a software company is as valuable as a hardware company.

>An investment in the gigafactory would be more like investing in a new city.

Like a Chinese ghost city?

>An investment in the gigafactory would be more like investing in a new city. It actually results in buildings, but isn't going to be attractive to investors, because... because it isn't a zero sum game.

Sorry, but businesses raise money for capital projects all the time. Tesla, itself, has raised billions to get to where they are today.

Maybe the Money People are smarter than you think, and are looking at the state of Tesla's business and saying, "if we lend them money for a factory they might not even require, will we ever be paid back?"

Of course it's related to the business proposition of investing in those companies. I never suggested otherwise. I'm talking about the consequences of the dynamic.

Most of the money invested in tech (excl early VC money, which is a small portion) very little is "true" capital investment. It's like the difference between investing in swappable corn notes and investing in seed corn which is going to be planted. One results in more corn. The other might be more profitable, depending on the year.

> you can get it as long as you don't need it

read this in a poetry book about love. Many things in life are ultra hard to get when you're further away from it.. an hommage to the non linear multivariate nature of life maybe

Name of book?

No idea at all, it was at someone's parents house, I just read one page and that sentence stuck in my mind because it felt insanely unfair.

reminds me of John Giorno's poetry, which I highly recommend ... 'I don't need it, I don't want it, and you cheated me out of it!'

https://youtu.be/q2aE8UdMBzE

The one vinyl record I've owned that I actually miss[0] is a double-LP of John Giorno, William S. Burroughs and Laurie Anderson doing their thing(s). They each had one side and the fourth had three side-by-side tracks, one for each of them, and you got what you got when you put the needle down. It died in the hot trunk of my car one day.

EDIT: I lost it a long time ago. It appears to include the piece you were referring to!

[0]https://en.wikipedia.org/wiki/You%27re_the_Guy_I_Want_to_Sha...

There is a potential workaround if it makes you feel better.

Get the thing in loan twice: that way you don't need any particular of the two.

Somewhat unfortunately, that latter statement is just as troublesome and can translate as "I am using you, x, as a way to make y feel jealous."

Which works if you're not looking for a wife!

In the context of Tesla, if the gigafactory is not the endgame.

I was thinking about that last bit earlier. What if gigafactory has spawned enough competition to make further aggressive development less necessary? Or what if there are tax breaks to be found in other states for a new plant (possibly with less of a focus on batteries)?

There are a lot of possibilities here, since the demand drivers won't appear for another year or so.

Which book?

> All it can do is move money around.

Not to be pedantic, but this is exactly how the economy works. One person's spending is another person's income and vice versa. An alternative definition of an economy is "the way money moves around"

The difference is that historically there was some tangible and durable result from that transaction. A house was built, a ship was commissioned, a food was grown. In the last 50 years the intangible transaction has become prevalent so there is no obvious and lasting product of that movement of money from one pocket to another.

There is still a house and ship being built at the end of it. Money and markets are just an abstraction of the physical work. Just like when i write in python - at the end, there is physical work being done in memory and cpu hardware. Money and markets allocate capital and no economist suggests otherwise.

Derivatives, securities and other finacial "products" have no physical backing, they are purely abstract concepts. They don't even exist on paper now, just intangible bytes.

Derivatives are derived from something... they have a notional, underlying, or delivery.

Why is this bad now?

To be clear, the American economy has always had a "Big 5" of Real Estate, Finance and Insurance, State and Local Government, Health Care, and then Durable Goods manufacture. That hasn't really changed. (At most maybe Lawyering and IT combined could knock off Finance? I seriously doubt either Legal or Tech could knock off even Durable Goods on their own.)

Point is, we've been operating like this for at least a century and a half now. Why are the big intangible transfers in Finance and Insurance, or Health Care, or even sometimes Real Estate* all of a sudden a problem now?

* Finance, Insurance, Health Care, and Real Estate are the intangible transactions that still dominate the economy today. Transactions for legal services or computer/tech type services could not even approach any of the Big 5 in terms of scale. Again, maybe if you combined them? But even then, I doubt they would be number one. There's no way they challenge Real Estate.

If a lot of money is just flowing in circles between a small group of people, then that's effectively taking money out of circulation.

I'm not a fan of money going into a bunch of real estate, but given that our society is built around certain kinds of transactions (financing stuff via income/property/sales taxes, plus... y'know, paying people wages and having wages go up eventually) having a bunch of people use their stockpiles of money to just shift stuff between each other in m&a deals doesn't get us far.

It's almost as though we already live in the high tax society Paul Graham hates so vehemently, with all its supposed inefficiencies. The taxes are just paid to private, unelected elite instead.

and you hit the nail on the head

>The taxes are just paid to private, unelected elite instead.

of which tesla bears use as a point when writing about the company, tesla/boring/spacex/the defunct solarcity are all vehicles for elon to "burn tax money" on his own megalomaniacal ideas, of which the arguments are about his companies and whether or not they... change anything about their industries

> Why are the big intangible transfers in Finance and Insurance, or Health Care, or even sometimes Real Estate all of a sudden a problem now?

Because those transfers are becoming less and less attached to tangible transactions of value while increasingly allowing the middlemen to embed themselves into the economy through regulatory capture. That's not to say they weren't a slowly growing problem before, but there was enough productivity to be gained through low hanging fruit to justify many middlemen who could claim to efficiently allocate it while taking a cut. Lawyers who can navigate complex regulatory schemes, investors who can free up capital by stripping companies in a dying industry for capital to invest in a growing one, bankers who let companies hedge their bets and trade their extreme highs for less risk of a catastrophic low, insurance companies to do the hard work of data collection so that risk/reward can be accurately priced, and so on.

There is a lot of room for all of these industries to act as middlemen while providing value, but just like a bunch of farmers can grow so much of one vegetable that they all collapse economically (taking the food supply with them), so can these middlemen go too far and bring the entire system down with them.

Take health care for example: we spend more of our GDP on healthcare than the vast majority of developed nations with worse outcomes despite the fact that the majority of research and development for drugs/devices/therapeutics is financed and carried out in the US. How much of that money is going to health insurance middlemen who structure the system to obfuscate pricing from consumers through layers of bureaucracy? How much of that money went (and continues to go) to corrupting the nation's politicians to prevent proper reform of our healthcare system? How much longer can we go with out of control healthcare costs before there is a reckoning like Medicare for all that wipes out the medical insurance industry - essentially putting everyone in the terrible spot of trading the livelihood of millions for the livelihood of millions?

That has always been a problem and it's only getting bigger.

People have been saying that for centuries. Is it really more true now? Jesus was thrown out of the temple, Hamilton was kicked out of politics, etc.

indeed r >> g

and the velocity of money is much slower now than it was pre-GFC. And it if wasn't, Paulson would have made almost as much on his long gold trade as he did on his short housing market trade.

Agreed, it's impossible to comment on the subject (I'll admit it was off-hand and rantey) without either (a) being really long and boring or (b) offending pedantry.

If we're getting pedantic though... money doesn't just move around. It also comes in and out of existence.

To the larger point though, what I meant is money moving in and out of investment pools. If Tesla raises money to build a factory, the money they raised results in operating revenue upstream for parts makers, materials companies, builders, toolers.. If Google raises money to by a company, it just goes from one investment pool to another.

BTW.. in some economists conception of the market, banks and similar (not sure if a PE funds count) are not part of the economy. They're outside of it.

I like to view this as an interconnected series of pipes through which money flows. It always flows somewhere else although some percentage spend most of its time in large tanks. Or in the case of Google et al. flows out of the tank, into adjoining ones, and then back in again. When a recession hits there is less liquid in the system, the flow slows down and cut off from some sections of pipe.

Most nations are shifting or have shifted to a service based economy, which means that most of the exchange of money is for a service, not parts, materials, etc. Services are often meant to augment the lives of individuals and businesses in different ways.

A lot of folks complain that companies like Google have made so much money that they don't have anywhere to spend so they start to hoard it instead of 'helping the economy'. The reality is that for a company, it is better to wait instead of investing for the sake of investing without considering the returns. It is also worth noting that when a company makes so much money, they often shift a portion of their business into the 'Financial services' segment of the economy.

I find it difficult to sell the idea that banks, etc are not part of the market. For example, without a bank loan at X% interest, some industries wouldn't exist. Without insurance for X product, a lot of companies and technologies wouldn't exist since insurance impacts risk level, etc.

You're mixed up here and so are many other HN comments about finance. Banks and markets are the middle men. They move the money around. If money happens to flow into investment pools, the money doesn't go there to die. Those pools in turn invest into things such as car part manufacturers. We need these middle men to make the money flow easier and more efficient.

The place that wealth gets destroyed is at the investment level (in your definition is the economy). At my previous company, they spent billions on plants and they very often sit idle... like 95% idle. That is where the wealth dies.

Google moving the money around from one pool to another doesn't destroy value. Google laying optical fiber down then abandoning it does destroy value.

I think the point being made is not every dollar spent is equally as productive in the meat space.

> If they do, the money goes to pay founders/investors in the target company

And when Tesla spends it, the money goes to workers that perform the physical labour. These situations differ in amount of people getting rewarded and in how long these chains are, but in the end, you give money to people for exchange for something valuable they created.

They differ (at least that's what I was argueing) in terms of what happens with the money the moment after the investment happens.

If Google takes $5bn (imagine they don't have it) from a firm/fund to buy a software company, that money goes to founders and investors. In practice, the money went out of a an investment pool and into another one, staying in the macro-pool.

What happens when tesla takes $5bn is it comes out of the fund and goes to pay parts manufacturers, toolers, builders.. IE, it is spent in the "real" (in the sense that economists use th term) economy. One affects the ethereal world of bank balances and stock valuations. The other affects wages and production of goods and services.

> m&a

To clarify, this is an acronym for mergers and acquisitions. That wasn't immediately clear to me.

My 2 cents: the only categories of “real” value are human life (measured in time, i.e., wages) and non-renewable resources (land, minerals, etc.) Building buildings takes a lot of both, so it is a “real” expenditure. Software is more-or-less a service good that only transfers money from one party to another. An implication of the US divesting it’s manufacturing capacity to China is that there’s a lot more “just” moving money around and a lot less building “real” value.

I don't see the irony. The lender wishes to purchases a future stream of payments, and is willing to accept a certain amount of risk proportionate to the interest rate they are willing to lend at. The borrower wishes to purchase cash now, in exchange for paying it back in the future plus some amount of interest.

The only question is whether or not a lender is willing to sell their cash now at an interest rate that the borrower finds agreeable. Sometimes, if you really have a bad track record, you can't get any financing, but in most cases financing is available, just not at an interest rate the borrower is willing to pay. The borrower also has the option of obtaining financing via selling equity.

Bottom line, financing is available at terms that have positive expected value for the person with the cash, not based on how much the borrower needs it or not, as with all other vendor - consumer relationships.

The article tells different story. Why you think it's wrong?

> An ironic aspect of financing (from personal loans to multi-billion dollar deals) is that you can get it as long as you don't need it.

It has nothing to do with need, just ability to pay back. It's mostly about leverage. When you have no money, leverage won't get you very far because 2 x 0 is 0. But if you have some money, you can leverage it, 2 x 1 = 2.

If you have a billion dollars, and try to over leverage by taking a 100 billion dollar loan, they won't let you do it, unless you are powerful enough to create a world financial crisis.

Maybe Google could spend that money figuring out how to stop making money on pirated content instead of saying the problem is too hard because it happens too much.

Google is one of the world’s largest makers of computers and network equipment and spent $26 billion on capital in 2018, more than ten times what Tesla invested in capital. Your entire analysis here is completely backwards.

Google is a far larger company than Tesla.

It makes me wonder how "real" our GDP and other paper money measures are. If the money can't be spent on actual stuff, does it actually exist?

Much of that money goes to pay software engineers. And they pay rent or purchase homes, like everybody else.

> An ironic aspect of financing (from personal loans to multi-billion dollar deals) is that you can get it as long as you don't need it.

Truer words have never been spoken. I remember when our startup had to fight to get a $5k credit card from Chase. Now our Amex LoC is like 750k @ 6% and it’s useless.

dalbasal, I feel like you're quietly sitting on a fascinating analysis of a facet of the modern economy. Mind sharing the sources of your knowledge so I can learn about it myself, either in the form of books, or articles?

They have already spent $4.5B which are creating all of the batteries for the model 3.

They are pausing spending of an additional $100-150M until Tesla needs the additional capacity. They don't yet need it.

What a terrible title...

You either misinterpreted the article or pulled numbers out of your ass as they are almost 10x off of what the article states.

"It was reportedly considering putting an additional 100 billion yen to 150 billion yen ($900 million to $1.35 billion) into the Gigafactory."

"reportedly"

That wasn't the actual investment up for consideration, and it's not needed yet because Model 3's production is satisfied, hence Tesla is offering longer range versions of the model 3 without the extra motor/AWD.

I'm not sure this is bad news for Tesla, I'd say it's mostly bad news for the rest of us.

Tesla has reached enough scale to be more or less sustainable (in the sense that they don't need to be posting losses anymore), and I'd imagine they can continue to grow, if more slowly, without the rapid expansion of battery production capacity that this story is about.

But the great aim behind the gigafactory (at least, how I read it) was to drive battery cost down very aggressively, that is, working on the supply-side economics. This would then make EVs (not just Teslas) accessible to more people sooner, without all the subsidies (which have been a demand-side hack that didn't even work very well). If this means a slower clean transition (and I think it does) that's a sad outcome.

Countries everywhere are taking down the subsidizing of electric cars ( In holland called, the Tesla-subsidie). This will hugely effect Tesla sales when they dont have an affordable car.

https://www.reuters.com/article/us-autos-electric-taxcredit-...

Tesla itself don't have to be the ones manufacturing the batteries. Given that manufacturing seems to be the part of the value chain that Tesla is the worst at, I don't think the gigafactory was ever going to be that valuable or effective anyway.

It was all the rage not for back that Tesla was a battery company, not a car company.

If they’re not scaling cars or batteries, then peak Tesla would be inevitable.

Their battery factory is Tesla's primary competitive advantage. They are far ahead of almost any other manufacturer in terms of battery chemistry (<3% cobalt [0], less lithium, etc) and battery pack manufacturing (first to do thermal management -> long battery life).

[0] https://www.teslarati.com/tesla-model-3-batteries-cobalt-vol...

Battery design is one of their primary competitive advantages, along with marketing and the supercharger network. Large scale manufacturing isn’t.

> This would then make EVs (not just Teslas) accessible to more people sooner

Volkswagen will be taking orders for their new electric hatchback in a month. It's Europe only at this stage though:

https://www.electrive.com/2019/03/13/vw-id-3-introduced-it-i...

The cheapest variant is supposed to be priced under 30,000 euros. But let's see what the price and availability is like in a month.

Its pretty bad news. I think the most important part of the electric car is the battery. Electric cars were more popular that the gas car car a 100 years ago. The crappy battery is why gas is more popular today.

What do the Tesla betters need to evolve into/achieve to not be deemed crappy anymore? What are the metrics we want to see that we don't have yet?

Cost, weight, power density.

I recently made a 1600 mile trip by car. In all of the places we stopped, I saw exactly one place that had EV charging set up.

Tesla, and non-hybrid EV in general, have a co-dependent relationship with charging stations to overcome "range anxiety". This is especially true for those od us who live in cold climates and must drive in conditions unfavorable to operating batteries, such as -20 to -40 degree weather.

I'm also very curious to see what the electric pickup trucks that all the manufacturers are not-so-secretly working on end up being capable of. A frequent consequence of rural life is needing to haul heavy things, such as wood for repairing out buildings or outdoor furnaces, or towing boats to go fishing.

>I recently made a 1600 mile trip by car. In all of the places we stopped, I saw exactly one place that had EV charging set up.

I made a 2800 Km (5 days) trip through Italy a few months ago, it was a breeze with SC and abetterrouteplanner.com, never had to wait at chargers. To give you an idea what kind of roads we travelled: http://666kb.com/i/dxjj2jkx7h0uvhmmg.jpg

Range anxiety: 0. Cost: only road tolls. I can imagine range anxiety and charging costs being an issue with other brands of EV (non-Tesla chargers in Italy are often horrendously expensive) and of course there's more planning involved than with an ICE, but for Tesla owners, this has been a non-issue for quite a while (at least in western/central/northern Europe and most likely the USA).

> most likely the USA

Only limited areas of the USA, as evidenced by my recent trip. That'll change over time, but as you also pointed out with the case of non-tesla chargers, one limitation of EV in general is the co-dependency on new infrastructure.

> Only limited areas of the USA, as evidenced by my recent trip.

For Tesla chargers, that might be the case, but there are a lot more multi-standard chargers supporting CHAdeMO, CCS1 & 2, etc., than Tesla chargers in the USA. Tesla has the biggest single-owner network, but that doesn't actually put them ahead in infrastructure supporting their cars, because they are the only ones relying on single-owner infrastructure.

I did a bit of research along the route I followed, and the worst stretch seemed to be around 120 miles of no charging stations. The rest of the trip typically had them between 15 and 20 minutes away from the freeway.

If I needed to spend an hour (driving off freeway + charging) for every 200 or 250 or even 300 miles, that would have made the drive far less pleasant.

You can get from virtually anywhere in the USA to anywhere else in the USA using the supercharger network. The problem is you're expecting to see them on every corner like gas stations, but most people with electric vehicles charge every night. They wake up with a full tank. So they don't need charging stations for day to day use. Just longer road trips. So not as many are needed. They're also often tucked away in a hotel parking lot somewhere that you don't notice unless you're actively trying to find it.

> and most likely the USA

The USA is huge. Imagine an EU with 50 represented countries, and a common-ish heritage, spread them out across twice the land mass, and you have the USA- lots of cities, lots of land. Just like the EU, different countries (states) have different adoption rates. In short, parts of the USA have much better support and adoption of EV's, and the adoption will likely radiate out from there.

Right, though the parent specifically called out Tesla, which is funding superchargers across the USA regardless of local culture.

It's more of an issue with non-Tesla EVs, in the US and EU alike, as stated.

As someone who also travels by ICE vehicle I don't look for EV chargers and they're not on my mind so I don't see them. That's probably not at all the case for someone with an EV especially a Tesla owner who has that information at their fingertips in the vehicle. I know around here they're at malls, movie theaters and a little more off the highway than gas stations. That said I don't know where you were driving so it's entirely possible there weren't many charging stations around.

Very significant portions of the trip were between large cities. If we had had to zig-zag back and forth between cities with movie theaters or shopping malls that had charges, it would have added a significant number of hours to the trip.

Even with an ICE, there was a (small) amount of range anxiety, in that some areas had 30-45 miles between exits with gas stations near by. Get caught up in a podcast or some good music, and if you're not paying attention, it's not impossible to run out of gas out there.

I am not saying tesla specifically. I am saying the reason why gas car beat out the electric a 100 years ago was because of the battery.

Better build quality for one. The experience of actually driving a Tesla is undeniably sweet, but the panel gaps, the feeling of cheap half-assedness about details is not (especially at the Tesla price). More broadly price and range need to improve for those of us not willing to spend a premium just because it’s Tesla, and who don’t make only small commutes in a place full of superchargers. For me as well, OTA updates and the willingness of the CEO to go public blaming the driver for an accident is a no-go as well as all-touchscreen controls.

cost (max 15000€/$ for a low end EV) range (400-500km minimum) charging infrastructure (at home and on the highway) charging speed (not longer than 20min)

I agree with this as a dream list (at which point electric cars are better than ICE cars in every way), but we don't need all of them for batteries "to not be deemed crappy anymore"

For me personally, if I can get the first two, then I'll gladly give a bit on the third (even though I regularly do a one-day, 1400km drive and 1-hr charging times would slow me down dramatically).

Tesla right now has the range pretty alright, and the charging speed not bad (but not close to your 20 min full charge), but the cost is just too high. I'll keep driving my 7 year old Yaris.

The Tesla Supercharger v3 DOES achieve this. Can do >210 miles of charging in 20 minutes. 67% state of charge on a Model 3 LR in just 20 minutes, which works out to 210 miles of range on the EPA standard, and about 400km of range on the European standard. The Tesla Supercharger v3 DOES achieve this. Can do >210 miles of charging in 20 minutes. 67% state of charge on a Model 3 LR in just 20 minutes, which works out to 210 miles of range on the EPA standard, and about 400km of range on the European standard. https://electrek.co/2019/03/07/tesla-v3-supercharger-action-...

https://electrek.co/wp-content/uploads/sites/3/2019/03/D1CpC...

I think you've got a formatting issue doubling up your comment.

That graph shows it charging from ~10% to ~65% in 20 minutes - assuming that is a long range model, that works out to (523km*0.55=) 290km range in 20 minutes.

I know Supercharger v3 is great, and i'd be satisfied with that speed (as I stated). I was replying to someone who wants sub 20 minutes for (what I assume to be) a full charge.

Ah, you're correct about the starting at 10%. I had misread the graph.

Other than the cost one, Tesla has achieved this, as I pointed out below.

Reproduced here: The Tesla Supercharger v3 DOES achieve this. Can do >210 miles of charging in 20 minutes. 67% state of charge on a Model 3 LR in just 20 minutes, which works out to 210 miles of range on the EPA standard, and over 430km of range on the European standard. The Tesla Supercharger v3 DOES achieve this. Can do >210 miles of charging in 20 minutes. 67% state of charge on a Model 3 LR in just 20 minutes, which works out to 210 miles of range on the EPA standard, which works out to about 400km of range in 20 minutes charging on the European standard. https://electrek.co/2019/03/07/tesla-v3-supercharger-action-...

https://electrek.co/wp-content/uploads/sites/3/2019/03/D1CpC...

It will be extremely hard for Tesla to be break-even or better.

I think the Chinese operations are going to source batteries in China. Not sure if that means battery production in gigafactory 3 or not, but it should mean lithium ion production should continue to expand. Not to mention all the new entrants into the EV market. Lithium ion battery production should continue to increase and bring prices down. I'm hoping we see a $25,000 BEV with 200+ Mile range in the next 5 years.

> Tesla has reached enough scale to be more or less sustainable (in the sense that they don't need to be posting losses anymore)

I really wish that Tesla had reached that point as that would mean that it's almost possible to profitably produce electric cars, but they clearly haven't.

Panasonic's issue seems to be:

> Panasonic's Tesla EV battery business had operating losses exceeding 20 billion yen [~180m USD] in the financial year that ended in March, up from a year earlier. The losses were exacerbated by delays in the start of production of the Model 3.

It's not entirely clear to me from the article whether this loss stems from the operations itself, or from the reduction in demand for the model 3. Either way, it's bad news for Tesla.

> Either way, it's bad news for Tesla

As someone in the (US) industry, everyone's hurting right now, not just Tesla. The GM plant closures have had a large ripple effect on suppliers. And beyond that, in general it seems like there's been a lot of belt-tightening over the last year. Whether self-fulfilling prophecy from fears of a recession or something else, I don't know.

>As someone in the (US) industry, everyone's hurting right now, not just Tesla

Yes, that auto market is cyclical. That's why it's nice to be producing tons of cash flow and income, instead of burning billions of dollars.

Tesla isn't burning billions anymore, have you seen their last two quarters profits? Now, especially if they cut investment into new factories, they will have trouble bringing new products but they could still make 7k cars weekly and press pause on R and D.

What? They aren't burning any money let alone billions lol

The weird thing about GM closures was that GM seemed to be doing fine, and then they axed whole bunch of factories and discontinued most of the sedans and Chevy Volt.

To me, GM's closure was aimed at 'trimming the fat' to put more emphasis on areas where they are more profitable, a shift to the tech side of cars and in preparation for an economic downturn.

Cars are highly cyclical, which means future demand can be predicted very well. Cars are cyclical because they last for 5 to 15 years. When everyone is done buying new cars, there's a lull and car companies need to cut back supply.

"Everyone" is hurting because "everyone" is part of the same cycle in the industry. Ford, GM, etc. etc. have all closed plants in anticipation of the lower-demand over the next year or two.

Here's an older article that clarifies some of the issues:

Panasonic has lowered its forecast for the 2018/19 fiscal year, which ends in March, following a decline in profits over the winter. However, the Energy division, which also includes the battery business with Tesla, recorded its first operating profit in three quarters at 131 million euros.

The Japanese company cites the trade dispute between the USA and China as the reason for the lowered forecast, which caused demand for automotive components and factory equipment, among other things, to fall.

https://www.electrive.com/2019/02/05/tesla-saves-panasonics-...

From Electrek [1]: A Tesla spokesperson has reportedly commented on Nikkei’s report:

> “We will of course continue to make new investments in Gigafactory 1, as needed,”

Update: In a comment to Electrek, Tesla exapnded:

> “We will of course continue to make new investments in Gigafactory 1, as needed. However, we think there is far more output to be gained from improving existing production equipment than was previously estimated.”

[1] https://electrek.co/2019/04/11/tesla-panasonic-suspend-inves...

The most interesting part of this story is that Panasonic has chosen to broadcast this decision in a national newspaper in way calculated to cause maximum embarrassment to Tesla, which still depends on investor perceptions of huge upcoming growth to support its stock valuation.

An odd thing happened last year when Pana's reported margins dropped while Tesla's went way up during their "miracle Q3." A common theory among Tesla shorts was that Pana had helped them make the quarter with a discount on batteries, to be paid back at some point in the future. Given the big drop in Q1 deliveries and demand standstill in the U.S. after the Model 3 order backlog was depleted, maybe Panasonic is worried they're not going to get paid back?

A good Twitter thread on this subject here: https://twitter.com/BradMunchen/status/1112668005614252032

This makes sense with GF3 coming online so quickly. The original plans to keep expanding GF1 may not be needed if GF3 can do it better and more cheaply.

There is a lot of negative sentiment around Tesla lately. The Giga Factory was supposed to be Tesla's greatest asset, its largest advantage in the market, that enables exponential growth of production and sales. It looks like bears are coming for Tesla if they don't step up their game.

>There is a lot of negative sentiment around Tesla lately.

Because the mainstream press is catching up to things that "the Shorts" have been seeing and saying for a long time.

It's a fact that Teslas are great cars. It's also a fact that the quality is just okay, that the market for $50k+ vehicles is limited, and that Tesla can't produce a $35k vehicle at a profit.

If people bought into the idea that you were getting a fully autonomous car that would drive itself around and make you money while you slept, for $35,000 before incentives...I'm not sure what to say. But it seems like many people did.

I find it hard to believe the most popular short around is actually good value to short much as I would with the most popular long.

It's just so often incorrect. Investing advice from mainstream sources isn't a good strategy.

That is a really good point and one that I haven't thought of much. I've always considered "most popular" company as a signal of overvaluation, though I've certainly never analyzed that rigorously.

But is there a similar correlation with "most popular short" and future success? Its definitely possible.

Fair point, I wouldn't say simply being contrarian is the solution. Shorts do great work and can profit immensely from finding the truth, as they should, but personally feel the financial media is a Dr. Frankenstein which creates it's own monsters. There's plenty of examples of "common knowledge" in the year before the Great Recession. All sorts of talking heads lined up to re-iterate the _truth_.

It is possible to short a viable company into bankruptcy and win from it, this is something that should be acknowledged.

Tesla never promised a $35k self-driving Model 3.

Since 2013 (when I started following Tesla stock), I have seen daily or weekly headlines about Tesla coming to an end.

And in the long term, one of them is bound to be right. Just like people, the vast majority of companies that ever lived are also dead now.

That doesn't mean we shouldn't celebrate and support and enjoy them while they're here. Tesla's stated goal is to advance the state of transportation, and they can do that whether they're in it for the long term, or just shake things up for a while and force everyone else to catch up. Sort of like Tucker or Studebaker, IMHO.

I'm too young to have owned a Tucker when they were new, but I'd be proud to have done so. Whatever happens to Tesla, I want to be able to say I was part of it.

> Whatever happens to Tesla, I want to be able to say I was part of it.

Good luck - and I sincerely mean this. I cancelled my Model 3 preorder just this morning after waiting for over 3 years. Still no ETA for them here in the UK. Meanwhile the rest of the global automotive market has caught up. I genuinely hope that my £1000 interest free loan was at least some use to the company in that time.

> Tesla's stated goal is to advance the state of transportation

There's no denying that they've achieved this and given the other manufacturers a much-needed kick up the ass in the process. Practical, desirable electric vehicles are here and they're here to stay, and pretty much entirely thanks to Tesla.

A friend has had a few Model S's since they were released and they're incredible cars, just unfortunately too expensive for me to justify at the moment. I'm still backing Tesla in spirit but there's no denying that they have a lot of issues and that their USP is rapidly disappearing as other manufacturers bring practical electric cars onto the market. Unfortunately mass producing vehicles is a hard problem that Tesla still seem to be working out.

> Still no ETA for them here in the UK.

I'm not sure what you mean by that. AFAIK, the schedule was always for the second half of the year, and they've been reaffirming June for first deliveries. They are clearly struggling with European deliveries, but the factory has been at a steady run rate of ~250k model 3s per year for the last 9 months or so. Add in the additional 50-100k run rate of S/X to that, and the plant is at least 350k per year.

For perspective, BMW's largest plant produces ~440k/year.

>Since 2013 (when I started following Tesla stock), I have seen daily or weekly headlines about Tesla coming to an end.

I don't understand this argument. Not saying Tesla is Theranos, but Theranos ran on hope and dreams for 10 years. These things take time to play out.

> I don't understand this argument. Not saying Tesla is Theranos, but Theranos ran on hope and dreams for 10 years.

Amazon ran on losses for many years and it played out in the end. By choosing what company you compare Tesla to, you already choose a particular narrative. It's worthless as an argument and if you have a reason for your belief, it's more useful to discuss that rather than arbitrary comparisons.

Amazon got lucky with AWS. What does Tesla have?

* Best in class battery technology (cost and power density),

* Highest efficiency motors in terms of cost, weight and HP (compared to BMW i3 and Chevy Bolt)

* A massive charging infrastructure

* 1 billion+ miles of driving data from its ADAS system to get it closer to FSD.

* A software platform that enables OTA updates that improves performance/features of the car that is unparalleled in the market right now.

Correct me if I'm wrong, but Amazon also didn't need the kind of large capital infusions that Tesla needs (in virtue of their industry and their pioneering efforts within it).

https://seekingalpha.com/article/4099612-amazons-massive-deb...

Amazon (NASDAQ:AMZN) issued $16B of bonds across seven tranches on Tuesday in the company's biggest bond deal on record. It was the fourth largest deal of 2017, and one of the 20 largest bond deals on record.

http://fortune.com/2012/12/18/just-how-risky-is-amazons-debt...

On the same day, Moody’s came out with its rating for Amazon’s debt: Nearly junk.

> Amazon ran on losses for many years

Amazon ran on losses but was cash flow positive. Telsa is not.

>Amazon ran on losses for many years and it played out in the end.

It's comments like this that demonstrate just how unprepared some people are going to be if Tesla fails. Brush up on your finance.

If you don't see the parallels between the companies, not sure what to tell you. But I'll mark this comment, because assuredly you'll say, "where were the signs!". Just like some other big name posters about Theranos.

That’s a silly analogy. Theranos clearly falsified their technology and were able to do it by hiding their product from their consumers. Tesla not only has been selling their product for years, but many of their consumers are very happy with the results. If things go south for Tesla, it’ll likely be the lack of political will, particularly from this president, to extend green energy credits and foster this nascent industry. That’s even discounting trade wars with China since China conditions were expected to deteriorate to some degree anyway. You can see what a difference political will makes when you read how Tesla is doing in Norway.

>Theranos clearly falsified their technology and were able to do it by hiding their product from their consumers

I guess that depends on which products you are talking about, right?

Full-Self Driving? Solar Shingles? Battery Swap? Starting insurance companies? Hyperloops? Tesla has made plenty of promises about technology that hasn't come into existence.

I see you've already developed your narative, however: Tesla will only fail because of politics. The atrocious financials, a CEO who is hard to work with, massive exodus of talent, employee abuse, poor product quality...none of that will be the reason.

>You can see what a difference political will makes when you read how Tesla is doing in Norway.

Earth shattering news: when you massively subsidize expensive consumer goods, people buy more. Can you tell me what the Norway data is saying now? (Hint: I know, and it's not good for Tesla).

There's so much FUD it's hard to know where to start. You start with a rebuttal on "clearly falsified their technologies" and then transition to examples of how Tesla talked about products that people can't buy yet. Completely Apples and Oranges. Where's "The Machine" from HP? What happened to Seagate's IP-driven Key-Value Drive? Both really cool products they worked on but didn't manage to get out there as everyday products. Full-Self Driving is one example. Tesla is working on it, but they are also describing different levels of Autopilot to the media and you are just focusing on one. The products of Tesla people talk about are the ones that provide the vast majority of their revenue and profit. The ones they are currently driving and reviewing.

I didn't say Tesla could only fail due to politics. I said that's a sizable component of their early stage effort not crossing the finish line. You dismiss the many reports of very happy product owners, which doesn't fit the narrative you have developed. Apple was frequently described as a place that had employee abuse, particularly the way Jobs treated some of his engineers, but they made great products. A company could very well be poor in some aspects but can still do well.

And your Earth shattering news is my point. If the US did what Norway did, Tesla would be doing great and a number of our nascent electric car industries would definitely survive the early-stage. This also goes to political will on forcing more automated driving areas like what China is doing by building out.

Sure, there are plenty of other ways Tesla could crash and burn as a company, including being out-competed, but all of this is just side-stepping what was a completely ridiculous analogy between a fraudulent company that intentionally misrepresented their one main product, and a public company shipping product that is routinely reviewed and scrutinized. If you can't see this, you are so wrapped up in your narrative that you are blind.

The argument is that most of those negative stories are "if it bleeds it reads" style stories rather than substantive analysis.

That doesn't mean they are ultimately wrong, but it does mean that much of the negative sentiment is no more grounded in reality than the positive sentiment.

It is an unfortunate state of affairs.

The "Tesla Death Watch" started earlier than that. I think 2009.

The bears have been coming for them forever, as the bears repeatedly short the company and then write numerous negative articles with clickbait titles

"The" Giga Factory doesn't exist anymore. There are three now and Tesla is shifting focus away from the first one because in China the demand is higher.

The technology is clearly the key piece of Tesla... and while that scales well, the platform is another story.

Imagine if Toyota bought Tesla. That may be the best outcome possible as the platform would suddenly be at scale.

The technology could be added to all Toyota cars ICE included (with their level of fit and finish) and the ‘electric only’ line would be supported while it ramped up and lowered cost.

This would solve a lot of Tesla’s problems and make the outcome far more likely to be positive. As it stands, I want a Tesla, but I am not going to buy one because 1) cost vs quality 2) likelihood of implosion

Well Moody's thinks the Toyota x Panasonic is credit positive… not sure they would think they same of Tesla acquisition at $2xx/share… though maybe Toyota would be interested (among others) in swooping up assets pennies on the dollar from default in an auction…

Unfortunately for Tesla, at its current valuation, nobody is going to buy it.

The race now is between established players catching up to Tesla and its technology, and Tesla catching up to established players with their capacity to produce cars at scale.

> Unfortunately for Tesla, at its current valuation, nobody is going to buy it.

A stock-for-stock merger is also a possibility, it's been done before.

In this case, the interested potential acquirer would have to move heaven and earth to avoid an instant credit downgrade (assuming they have investment grade status now) at current valuations.

Toyota has a lot more debt and a significantly higher debt/equity ratio than Tesla has, a merger shouldn't have a material impact on credit ratings.

Also, I feel quite confident in stating that the short-term market cap of the two companies merged would be significantly higher than the two companies separate. Toyota has a P/E of 10 (!). A merger would make it "cool", giving it a better ratio. Not Tesla's ~50 (based on quadrupling the last quarter earnings; TTM earnings are negative), but something higher than 10. And since Toyota has significant earnings, increasing the multiple of a big number....

Long term I'm not so sure it's a good strategy but a superficially the synergy looks awesome: combine Tesla's innovation and hype with Toyota's ability to deliver high quality cars.

If you look at the Volvo Polestar it is easily a peer of Tesla and far exceeds it on the software front with the partnership with Google.

And the car companies are playing in mass market segments that Tesla isn't in e.g. Kia Soul, Renault Zoe, Ford Focus, VW e-Golf etc.

>Polestar

Comparing vaporware to current Tesla cars makes no sense at all.

And I still have a Volvo. The quality level is astoundingly bad. You don’t want a Volvo.

The Polestar is not shipping. I had a brand new S90 rental last year, and the software was.. not great.

Tesla's just starting in that mass market segment. The prices are very very close to the ones you cite.

What technology exactly do the established players are catching up to?

I'm under impression that the value of Tesla comes from the brand itself and Elon Musk's persona. The tech itself is nothing special, they are far behind in autonomous driving but the brand is very strong, they easily upsell "one day it will be autonomous" packages.

Their whole car is a computer that can receive OTA updates. ( please show me an instance where a major car company sent 5% performance increase over the internet )

Their battery tech is better than everyones. ( Why is the Audi E-tron and Jaguar I-pace Less range than even the cheapest Tesla? )

Their autonomous is better than everyones. ( Don't know why you think they're far behind, the only other player with a comparable product is Supercruise and that is on one version of Cadillac ).

The data they have on their cars/collection pipeline is better than everyones.

Because their car is software there are all sorts of quality of life perks that exist from the dashboard.

So tired of hearing these cars aren't any better when they're some of the highest rated cars of all time and consistently compete with cars much more expensive.

> Their battery tech is better than everyones. ( Why is the Audi E-tron and Jaguar I-pace Less range than even the cheapest Tesla? )

The Audi e-tron deliberately over-provisioned the battery to give it a longer life and to enable faster charging. Only 88% of the battery (about 83 kwh) is available for use, but the upside of that is the e-tron can maintain a 150 kilowatt charge rate up to 80% state of charge which no other current EV can do:

https://support.fastned.nl/hc/en-gb/articles/115015420127-17...

Not even the Tesla Model 3 on the new Tesla V3 chargers:

https://electrek.co/2019/03/07/tesla-v3-supercharger-action-...

The e-tron's main problem is that it's too heavy for the battery it has. It either needs a bigger battery or a lighter construction or both.

But the Hyundai Kona EV, the Kia Niro EV, and the new Kia Soul EV all have good range for a good price. The Kona narrowly beat the Model X in this 1000 km road trip comparison:

https://insideevs.com/hyundai-kona-electric-race-tesla-model...

Tesla doesn't seem very far ahead.

>Their whole car is a computer that can receive OTA updates

No, the car has a computer that controls the systems in the car like all the modern cars. Receiving software updates to a computer is not a huge tech challenge. And no, you don't receive performance over the internet, you receive a driving configuration that may better utilize the hardware. Can be easily done by any manufacturer.

>Their autonomous is better than everyone

Factually wrong, they are a category down from actual self-driving tech developers. But if you decide to skip the self-driving part and call it driving assistant or something, then yes it's a pretty good driving assistant that can follow lines etc. Some people think that calling the driving assistance software an autopilot is borderline false advertisement.

>Factually wrong, they are a category down from actual self-driving tech developers.

Well they're the only people offering anything this quality unless your one of the hundreds of people in Phoenix that can order a Waymo (that still has a person driving).

>some people think that calling the driving assistance software an autopilot is borderline false advertisement.

Well my 'driving assistance' drove me 95% of the way to work this morning hands free feet free, seems pretty appropriate to call it autonomous to me.

Tesla also happens to have a fanbase who would defend them with passion, making claims and arguing for hours that you can indeed download car performance from the internet, that driving assist is an autonomous driving even though Tesla says that it isn't and you should always stay alert and if you get slammed into a wall(like that poor Apple engineer) you should have known better.

It's really not about tech but about the brand. Since Stave Job is no longer with us, Musk happens to own the tech visionary title.

It can be annoying but I'm glad that Tesla exists an it's brand is pushing the big players into electric cars.

->making claims and arguing for hours that you can indeed download car performance from the internet,

I don't understand. People went to sleep, their car updated via internet, and they woke up with more performant cars. This really happened. Obviously the car didn't changed the hardware, it changed the software, and the car drove better.

> Receiving software updates to a computer is not a huge tech challenge.

And yet almost all car companies are—with rare exceptions—entirely averse to the modification of car software updates for anything more substantial than bugfixes, device compatibility and trivial tweaks.

It might not be a tech challenge, but it is a corporate one. It seems like no car companies want their cars to ever change in any way, lest a single word of their owner's manuals might need to be rewritten.

BMW for example will provide software updates to their iDrive head units: either as a trivial patch for device compatibility, or as a more substantial update applied by the dealer. And the latter sounds great... EXCEPT that their system configuration is guided by the car's build date, and if a useful feature was released after your car was built, you probably won't get it.

By way of example, my May 2013 build date BMW F20 shipped with no screen overlay for volume changes. In order to get that overlay, I first had to get the software flashed by the dealer (there was an actual crashing bug which was another story) and then I had to "code" the car myself to make iDrive think its build date was a year later. Once I did that, I got a screen overlay for volume changes.

I agree completely, what's holding back the established manufacturers is their culture. Their understanding of car experience is getting dated quickly.

I think at one point they will have to shake up and change. If they are smart, their executives will drive Tesla's as their personal vehicles until they understand what's all about.

These are not hard tech problems but for example, with the iPhone, it took quite some time for Google and Samsung to grasp the new expectation but Nokia and Microsoft never cracked it.

>( please show me an instance where a major car company sent 5% performance increase over the internet )

That doesn't sound like anything special. Engines have been computer controlled for a long time now. Depending on the temperature, fuel mixture, etc you can have a single engine with completely different characteristics. This is something VW took advantage of in Dieselgate by improving the performance of the car outside of emissions tests. If your car was affected the only thing that was changed by the recall was the software. Of course OTA updates are more convenient than driving to your dealer but software updates themselves are not a competitive advantage of Tesla.

>That doesn't sound like anything special.

Then lets see an example? As I asked the first time?

>but software updates themselves are not a competitive advantage of Tesla.

That is crazy to me. It's an advantage specific to Tesla. Clearly it's not game changing for a lot of people, but it is an advantage.

Another thing, their motors are lighter, cheaper and produces more horse-power than their competitors (in this case, comparing the Chevy Bolt and BMW i3)

>Tesla comes from the brand itself and Elon Musk's persona. The tech itself is nothing special, they are far behind in autonomous driving but the brand is very strong

I swear that this applies to every industry, A "strong" personality in front of the company + avg product = Established brand

Or maybe Tesla’s valuation catching up with its capacity to produce and sell cars at scale.

You cannot just plug and play, Toyota's vehicles dont have the requisite chassis and space for the battery pack. They'd have to redesign their cars from the ground up, and they're too busy with hybrids and fuel cells to undertake a bev revolution.

Toyota and Panasonic announced a battery tech partnership in January. They also partnered with Mazda and licensed all their EV patents. If you follow them closely in JDM, they have lots of EV concept vehicles in play.

What exactly is Teslas technology advantage? Pure electric cars are fundamentally simpler cars than both ICE and of course hybrid models. And most other brands had hybrid models for a long time. I seriously doubt any established car manufacturer longs for Teslas technology.

They have some advantage in drivetrain technology. Their switched-reluctance permanent magnet technology is probably at least a couple of years ahead of the competition.

Compare the efficiency of their vehicles (especially the Model 3), to something like the I-Pace or e-tron.

But Tesla’s real advantage lies in it’s software, it’s autopilot, it’s economies of scale in battery production, and it’s supercharger network. Competitors will eventually catch up with all this stuff, but it won’t happen overnight.

The range/efficiency advantage really isn't much of a differentiator once you reach a certain number. Most people simply aren't doing long road trips.

Software isn't that special and some companies far eclipse it e.g. Volvo Polestar 2. Autopilot is a death trap so no advantage there. Supercharger network is definitely a big one but not for much longer.

This 1000km road trip comparison between the Hyundai Kona EV and Tesla Model X is interesting:

https://insideevs.com/hyundai-kona-electric-race-tesla-model...

The Kona narrowly beat the Model X.

> Software isn't that special and some companies far eclipse it e.g. Volvo Polestar 2.

I have actually not seen a working prototype of this software. All videos I have seen just show a dummy screen with nobody actually using it. Do you have a source you could post that explains how this software far eclipses the Tesla software?

> Autopilot is a death trap so no advantage there.

Could you explain this more? All data I have seen shows Autopilot is much safer than a human driver.

> Could you explain this more? All data I have seen shows Autopilot is much safer than a human driver.

This is why I get annoyed when somebody argues that Tesla doesn't do false marketing. Why would this guy think that autopilot is safer than a human driver, when they aren't even comparable. Why would you compare an assistance system to a human. Isn't that done to imply that autopilot is actually driverless?

Apparently it annoys you even if nobody says it.

Efficiency might be cheaper to improve than battery capacity or charging speed.

Efficiency is critical for the success of any electric car, and will continue to be for a long time. The reason being that batteries are only just beyond the cusp of being viable for cars in terms of cost, weight and volume.

Most established carmakers haven't yet realized (in terms of adapting their engineering) that this, combined with the very high conversion efficiency of electric motors, means that electric cars get much greater advantages from efficiency improvements than ICE cars do. Single-digit improvements to efficiency in motors, inverters/power electronics and aerodynamics/roll resistance translate almost directly to single-digit improvements in range. And hence also allow smaller batteries, cheaper construction, lighter construction, which again allows a smaller battery.

You can see this very clearly in Audi and Jaguar's models, that have significantly lower range than Tesla's cars for each kWh of battery capacity.

According to manufacturing analysts Munro & Associates, Tesla's electric motors are significantly ahead of the competition. A lot of detail and engineering has gone into squeezing efficiency and performance out of the Model 3. Just because electric motors are simpler than ICE doesn't mean there isn't room for improvement.

The other piece of technology Tesla has is the driving data from all those cars on the road already. This is an important asset for autonomous driving because machine learning benefits from greater volumes of data.

Neither one of these puts Tesla so far ahead of the game that the competition can't catch up. But they're real advantages that could keep Tesla in the game if they can sort out their manufacturing process.

”Imagine if Toyota bought Tesla. That may be the best outcome possible”

Culturally it may not be a good fit. Toyota, now days, is very conservative and risk-averse, and a Tesla under Toyota ownership may not have the freedom it needs to continue the kind of moon-shot innovation and investment that has got it where it is now.

From Toyota’s perspective, there’s nothing to stop them building high quality EVs in high volume and competing with Tesla. They don’t need to buy Tesla to do that.

Toyota is the tortoise and Tesla is the hare. Tesla’s lasting contribution will be shifting US consumer sentiment on electric vehicles. Previously, Americans were quick to mock electric vehicles and showed zero interest in the infrastructure investments required to make them work. Of course companies like Toyota have been burned many times by capricious foreign markets that are susceptible to jingoism and manipulation by oil concerns, etc. They took a wait-and-see approach. Once the market appetite is proven, they move with alacrity and eat this segment alive.

I’m posting this now so I can say “told you so” in three years.

Toyota will be shipping their first EVs for the 2020 market year (so I guess in the fall of this year if I understand such things correctly). It will be very interesting to see what happens. In Japan Nissan and Mitsubishi completely own the EV market (I see them frequently now and even own a Leaf myself). I've never seen any other make of EV (although I'm absolutely sure they exist and if I wasn't in the middle of the countryside would probably run into them occasionally).

My interest in this story is actually Panasonic because I'm curious about how aggressively they will pursue the Japanese EV market. Nissan just sold their battery making division and apparently had talks with Panasonic, but those apparently broke down. I have no idea who will build Toyota's batteries (and probably every other Japanese car maker as they all went in together into a consortium for building EVs). Mitsubishi apparently use GS Yuasa, which is a fairly new Japanese company (15 years old) that was created from a group of companies that used to make lead acid batteries.

If Panasonic thinks that Tesla isn't going to perform, they may need to hustle to stay relevant.

Yuasa were making rechargeable AA batteries many decades ago, I can remember them in the 1980's in the UK or whenever it was that the Sony Walkman was king as they were invariably in the charger. Maybe they didn't make it to the US. I don't believe my personal recollections are that reliable, but I am pretty sure that Yuasa have been going for decades and would be surprised to be considered 'fairly new'.

GS Yuasa is the product of a merger. The merged company is fairly new (2004), but you're right - GS and Yuasa were formed in 1904 and 1909 respectively, and have been manufacturing automotive batteries since a century ago.

> I have no idea who will build Toyota's batteries

Toyota and Panasonic recently announced a joint venture on EV battery production:

https://www.reuters.com/article/us-toyota-panasonic-idUSKCN1...

What’s also important is how extensive the EV charging network is in Japan. The dealers all seem to have chargers, as do malls like Aeon, and some gas stations and conbini. I assume all the michieki have them too.

I have a Suzuki Lapin (80mpg!!), so I don’t pay enough attention. What’s your experience with charging on the go?

What gets me about Japan is how practical electric cars would be there. I lived in Hokkaido, and, in my experience:

* It was quite unusual for anyone to drive further than 300km in a day,

* The cold weather rarely got too far below zero so the range reduction from cold weather would be much smaller,

* On-street parking isn't a thing so charging stations would be easier to put in.

They do great with small, fuel efficient cars (like your Lapin!), and the Leaf is good, but I'm left wondering why EVs haven't been as big as they could be

(edited for formatting)

> "I'm left wondering why EVs haven't been as big as they could be"

Fukushima.

I actually live in an apartment and we don't have access to an electrical outlet outside, so I have to charge at a charger every time. There is a Family Mart near my house that has a quick charger. They limit you to 9 Kwh for each 30 minute charging session. I don't know if that's just how big a pipe they have or if they are limiting it for some other reason. It's not usually very busy, so I often charge twice which will fill me up almost all the time. I live in Shizuoka and it's never very cold here, so the chargers at Nissan will usually get me to 90+% in 30 minutes no matter how low I am (never been lower than 22%, though). I've had to wait a few times, but surprisingly little. I always bring my laptop with me and work either for paid work or on my side project when I recharge. It's actually a really good place to code: comfortable and quiet. I've found that I really enjoy this time, which is weird to say.

We've done a few longer road trips -- the longest one being about 350 km. I think it's safe to say that you need to plan to double the amount of time it would normally take you to get there (at least with our 30 KWh Leaf). However, I'm in my 50s and we also take my mother in law who is in her 80s, so... bathroom breaks are necessary anyway :-)

We drove to Takayama and I think we needed to stop 3 times to charge up. One positive is that there are charging stations on all of the toll roads as far as I can tell -- at least where we live. We stopped for breakfast, then stopped for the toilet and some omiyage shopping and then stopped for lunch. It seemed pretty natural.

On the way back we decided to take the non-toll roads for fun. It's a bit stressful, to be honest. There are actually lots of charging stations, so it's not really a problem. However, they are in weird places and the Navigation unit sometimes has some pretty strange ideas of the best way to get to the charging station. I'm still slowly getting the hang of setting up way points in the navigation unit on the Leaf -- the UI is absolutely horrible. But it can be done and I think once I play with it some more it won't be so bad.

I think the best thing about the experience was stopping in tiny towns that we would never have seen. To be honest, as a kind of lazy tourist trip, the 30 minute charging time is too short. Pretty much every time we stopped we felt rushed and had to get back to the car. I suppose in reality out in the mountains nobody drives an EV so we probably didn't need to worry.

All of our road trips have actually been in the mountains because we wanted to get some experience with that. It's kind of shocking when you are going uphill to realise that you probably won't even be able to do 100 km before you have to stop. But then on the way down it's just coasting all the way. For example, we went up to a small town near mount Fuji and had to stop 3 times to get up the mountain. On the way back we went nearly 300 km without stopping :-)

Anyway, I hope that gives you some idea. My biggest advice for anyone getting an EV is to definitely get a navigation unit that allows you to navigate to the charging stations. I can't remember if it's an option on the Leaf, but for road trips or going places that you've never been before, it's practically necessary (there are mobile apps, but it's stressful enough trying to juggle it without having to worry about dealing with your mobile while driving!). The other thing is we have a subscription for recharging which costs 3000 yen per month. It's a no-brainer for us since we can't recharge at home, but if you want to do any travelling, it's pretty much essential. For us it means we pay only 3000 yen (about $30) a month for fuel, which is practically paying for the car (we bought it used). We also got in on a deal that for the first 2 years we get 3000 yen worth of JCB gift certificates (which are accepted practically everywhere), so we essentially get free fuel for those 2 years.

In the end, it really depends on lifestyle. My wife is the busy, busy, go, go type of person, but I'm hugely laid back. I recharge the car almost every time because I enjoy relaxing and programming for an hour every couple of days. When we travel, I don't want to get there as soon as possible -- I want to relax and enjoy the journey. It suits be very well and even my wife says that she's happy we got an EV. I asked her if she would do it again if she had the chance and she said yes, so I don't think we'll ever go back to an ICE. However, I don't think it would be for everyone -- at least not until the rush mentality of our culture calms down a bit. YMMV ;-)

So interesting. Thanks for the write up! It sounds very convenient, actually.

Toyota claims that there is no market for high volume non-hybdrid EV.

https://insideevs.com/toyota-no-ev-because-it-wont-sell/

I don't have a link, but at least in Japan, my understanding is that Toyota will release their first non-hybrid EV for 2020. I'll have to scrounge around to see if I can find something to verify that...

In the US at this point in time.

And they are probably right that at this point they are more for early adopters. But in the coming few years that will inevitably change.

Toyota has made the Prius for a decade+. It has a hybrid drive train which is more complicated than an electric drive train. They just need to increase the electric drive train and pull out ice one.

Even more importantly, they've made the Prius Plug-in Hybrid for 7 years - it already has a big enough electric motor to drive it alone (up to 135 km/h), and a plug-in charging system.

Toyota, along with most Japanese car manufacturers, are betting big on hydrogen cars. They still invest in electric cars, but their main focus is on hydrogen-fueled cars. So I doubt they'll be buying TSLA.

Here is a good article on the direction of the japanese car industry.

https://www.scientificamerican.com/article/japan-bets-on-a-h...

Could this have anything to do with the Tesla acquisition of Maxwell? Perhaps there is a different battery technology on the horizon that won't require the same infrastructure with Panasonic?

No, Panasonic is worried about demand and doesn't want to throw money out of the window.

Because I took away the wrong message from the headline, and others might too:

> Tesla and Panasonic are freezing plans to expand the capacity of their Gigafactory 1, the world's largest EV battery plant, as concerns mount on Wall Street about weakening demand at Elon Musk's car company.

Freezing expansion, not production.

"We are seeing significant gains from upgrading existing lines to increase output, which allows Tesla and Panasonic to achieve the same output with less spent on new equipment purchases."

I know Elon loves cars (and rockets), but what about selling batteries for other things? BMW sells its batteries for electric vessels (boats). It would be great (for the world at large) if Tesla did the same.

They are. They'd done a few deployments for grid power and are selling the Powerwall. (Or were I haven't followed it since I'm not looking to install solar anytime soon)

And here I was thinking that Caa1 partnering with A3 would change everything…

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