Tesla's Investor Day - What's In Store For Investors?

Electric Car Maker Telsa Announces Nevada Site For New Battery Factory

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Tesla’s (NASDAQ:TSLA) “Investor Day” takes spot adjacent Wednesday, March 1st.

Elon Musk will coming portion 3 of his maestro scheme for nan company. This article is somewhat speculative, but based connected immoderate moves that Tesla, Inc. has made recently, and a fewer leaks to nan property I americium putting guardant a prediction of what I deliberation Elon Musk mightiness denote connected Investor Day.

The $25,000 car

First announced successful 2020, Tesla’s projected $25,000 car earned nan nickname “fluffy pillow” aft Elon Musk showed a image of an entity covered by a broad and resembling a ample pillow. However, according to nan Electrek website, nan improvement of nan car was connected clasp successful early 2022 erstwhile Musk claimed that Tesla had excessively overmuch connected its sheet and Tesla’s engineers had been diverted to activity connected a humanoid robot.

Tesla’s existing champion sellers, nan Model 3 and Model Y, are getting a spot agelong successful nan tooth, and successful that value range, location is not a batch of scope for further description . So, if Tesla is to execute important maturation (using units sold arsenic nan measurement), past it needs to revive nan much affordable car.

The $25,000 Tesla "fluffy pillow" (Google)

News of this car has already been leaked to nan media, and nan specifications and preliminary pricing will astir apt beryllium announced connected March 1st.

New mill (or factories)

Tesla’s existent mill capacity is listed arsenic 1.9 cardinal vehicles per twelvemonth versus an expected accumulation of 1.8 million. There is room for description astatine some nan Texas and German factories, and a Shanghai description was planned but has been put connected hold. However, continued description astatine nan 50% complaint that Tesla has targeted implies a accumulation complaint of 6 cardinal cars per twelvemonth by 2026. In astir locations (China excepted), a caller mill takes 3 years to design, construct, and ramp up. I don’t deliberation Musk is going to trim his 50% maturation forecast, truthful Investor Day will astir apt see immoderate news of projected caller factories.

Indonesia has been suggested arsenic a imaginable location, but that appears to beryllium only successful nan early stages of discussions pinch nan Indonesian authorities and could beryllium a agelong measurement from finalization.

There person besides been rumors about Mexico arsenic nan location of a caller car assembly factory. Mexico would person nan advantage of its free waste and acquisition statement pinch nan U.S. and Canada, and cars built successful Mexico would suffice for nan $7,500 taxation in installments successful nan USA.

However, nan smaller car, which is rumored to commencement astatine 180 miles range, is much suited to nan European and Chinese markets, truthful possibly we will spot nan first accumulation being allocated to caller lines astatine nan Shanghai aliases Berlin factories.

Irrespective of what is to beryllium built successful nan factory, we should expect an announcement of astatine slightest 1 caller assembly mill connected March 1st.

Nevada artillery factory

News has already leaked of a projected $3.6 billion Gigafactory to nutrient up to 100 Gwh of batteries successful Nevada, and eventually, a mill to combine nan Tesla semi astatine nan aforesaid location.

Musk has ne'er shied distant from taking subsidies, and a $45/KWh subsidy from nan U.S. payer (that’s $4.5 billion/year astatine nan projected accumulation rate) and much than $1 cardinal successful subsidies and concessions from nan authorities of Nevada make this a no-brainer. I expect an charismatic announcement connected Investor Day.

Lithium Hydroxide factory

Lithium hydroxide is utilized successful nan manufacture of cathodes for Li-ion batteries that besides incorporate nickel. Lithium hydroxide tin beryllium made from lithium brines but astir hydroxide is made from spodumene concentrate, a merchandise of difficult stone lithium mining.

Tesla is proposing to build a processing facility to make lithium hydroxide from spodumene ore successful Corpus Christie, Texas. It should beryllium seen arsenic a bully move, nan location is bully for shipping concentrates, it is adjacent to sources of sulfuric acerb from nan lipid industry, and it will beryllium nan first specified installation successful nan USA. It will thief Tesla fulfill nan earthy worldly sourcing requirements of nan IRA enactment to suffice its cars for nan $7,500 national taxation credit.

This will astir apt beryllium included successful Investor Day

Lithium sourcing

Tesla signed a three-year proviso woody pinch nan Chinese lithium processor Ganfeng successful 2021. That woody is for nan proviso of lithium hydroxide, which would beryllium utilized straight to make artillery cathode, it will not beryllium nan provender for nan projected hydroxide plant. By nan clip nan hydroxide works comes online, Tesla needs to person lined up suppliers for spodumene concentrate.

In mid-2022 Tesla announced proviso deals pinch an Australian mining institution to fastener successful supplies of spodumene concentrate. Liontown resources will supply Tesla pinch 100,000 tonnes of ore starting successful 2024, expanding to 150,000 tonnes per twelvemonth successful 2025. A 2nd woody pinch Australian miner, Core lithium has fallen through, but Tesla has an statement pinch Piedmont Lithium to proviso 125,000 tonnes per twelvemonth of ore connected a three-year statement starting this year. Piedmont does not person an operating excavation and is improbable to beryllium capable to proviso lithium from its ain root wrong nan word of nan three-year contract, but it does person an statement pinch Sayona Mining, to acquisition spodumene ore from its Quebec excavation which is expected to resume accumulation successful 2023.

The 2 proviso deals, if each goes to plan, will supply Tesla pinch astir 275,000 tonnes per twelvemonth of spodumene ore per twelvemonth aft 2024, capable to make astir 42,000 tonnes of lithium hydroxide monohydrate (equivalent to 12,180 tonnes of lithium metal). Enough to nutrient astir 76 GWh of batteries.

Those deals are astatine marketplace prices, Tesla would reap nan profits from processing nan spodumene ore into hydroxide, but nan bulk of nan profit from nan worldly proviso accrues to nan mining company. Tesla has hinted antecedently of plans to participate nan lithium mining business.

However, I don't expect Tesla to make immoderate further mention of mining their ain lithium successful Nevada. I was incapable to verify nan connection made connected Battery Day that Tesla had a 10,000-acre declare successful Nevada (no specified claims had been registered astatine nan time), and I don’t deliberation Elon Musk has nan patience to spell done nan 10-year-plus process of processing a excavation of his ain successful nan U.S. I deliberation if Tesla intends to bring their full Lithium proviso concatenation in-house, it will bargain into a shaper aliases a excavation that is nearing production. That is why I deliberation location whitethorn beryllium immoderate truth down nan caller Bloomberg article claiming that Tesla will make a bid to bargain Sigma Lithium (SGML).

Sigma’s marketplace headdress is $3.6 billion, but it whitethorn return a higher bid to finalize a woody ($54.20 a stock perhaps?). I would not bet connected Sigma shares astatine this time, nan news is already built into nan stock value and location are different imaginable targets, truthful nan woody is by nary intends certain.

Unless nan woody is adjacent to fruition, I don’t expect Tesla to denote a takeover of Sigma aliases immoderate different mining institution astatine Investor Day, but I do deliberation they could denote their intent to move into nan lithium mining business. Musk has ever favored doing things in-house alternatively than relying connected suppliers.

Third maestro plan

Master scheme portion two, which was issued soon earlier nan acquisition of Solar City contained nan pursuing targets:

• Create stunning star roofs pinch seamlessly integrated artillery storage.
• Expand nan electrical conveyance merchandise statement to reside each awesome segments.
• Develop a self-driving capacity that is 10X safer than manual via monolithic fleet learning.
• Enable your car to make money for you erstwhile you aren't utilizing it.

None of those targets has been achieved. The star tile seems to person been abandoned, nan electrical conveyance merchandise statement is woefully thin, and nan self-driving car and Robotaxi look to beryllium arsenic acold distant arsenic they person ever been.

However, maestro scheme portion 3 must see self-driving, arsenic Tesla has excessively overmuch invested successful nan technology. Whether they ever get it to activity satisfactorily aliases not is questionable, but Musk will support pushing nan conception on pinch his visions of artificial intelligence and robotics.

He will not backmost disconnected nan 50% maturation rate, truthful expanding nan merchandise statement is essential. However, I deliberation he will steer immoderate of that anticipation of maturation distant from nan automotive assemblage and towards power storage.

I deliberation it was Mark Spiegel of Stanphyl Capital who coined nan building “subsidy truffle hound” to picture Elon Musk and his uncanny expertise to unearth payer dollars for his projects and products. The timing is correct for an description of nan power retention business. At nan family level, nett metering is not a sustainable attack for rooftop star and we will spot much artillery packs installed for small-scale star applications. At nan inferior level, much batteries will beryllium needed for load balancing arsenic much renewables are added to powerfulness grids.

The $45/kWh artillery subsidy successful nan misnamed “Inflation Reduction Act” useful retired to $630 for a 14 kWh Tesla artillery pack, $2,700 for a 60 kWh car battery, and a whopping $72 cardinal for a elephantine 1.6 GWh inferior retention battery. Our “subsidy truffle hound” will want his stock of that loot.

However, worldly shortages, particularly lithium could easy de-rail nan power transition, it would beryllium seen arsenic a affirmative move for Tesla to fastener successful sources of proviso for artillery materials, particularly lithium. Master-plan portion 3 could see a move into nan upstream portion of nan artillery proviso chain, including nan lithium mining and processing opportunities that are outlined above, positive different imaginable moves, possibly immoderate deals successful nickel aliases graphite.

As usual, nan Tesla Investor Day will make a batch of interest. The arena will beryllium covered extensively successful nan financial media, and Tesla shares will very apt get a impermanent boost from nan attendant publicity.

A superior raise is possible

However, location is 1 imaginable that could dampen enthusiasm for Tesla shares, and that is nan imaginable of a superior raise that whitethorn beryllium announced astatine nan Investor Day aliases soon after.

Master-plan portion three, if it is thing for illustration nan scheme I person outlined above, will require investments of billions of dollars. Recent heavy cuts to Tesla’s car prices will astir apt consequence successful antagonistic free rate travel for Tesla for a fewer quarters, moreover without caller Capex. Construction is still ongoing astatine some nan Texas and German factories, and superior expenditures are eating into nan rate provided by car sales.

Tesla’s rate position, arsenic presented astatine nan extremity of each 4th is highly misleading. The balance sheet is simply a snapshot of nan company’s financial position astatine nan extremity of nan quarter, and Tesla manages its affairs to coming nan champion imaginable image astatine that time. The $22 cardinal successful rate that sits connected nan equilibrium expanse is offset by $15 cardinal successful waste and acquisition payables and different $7 cardinal successful accrued payables, overmuch of which is owed early successful nan caller quarter. Tesla’s rate position mid-quarter is overmuch little healthy.

I judge Tesla will request to spell to nan marketplace to raise rate to transportation retired portion 3 of nan projected Master Plan. That is nan existent intent of Investor Day.

I could person waited till aft Investor Day to constitute this article, but past I would person only been regurgitating what is bound to beryllium successful each different financial newspaper and Internet web page connected Thursday. Instead, I stuck my cervix retired and made a prediction. It whitethorn move retired to beryllium wrong, but to immoderate degree, it reflects what I would do if I were successful complaint of Tesla. Elon Musk whitethorn deliberation differently, but for now, I americium sitting connected nan sidelines and waiting to spot what he comes up pinch earlier investing successful Tesla, Inc. banal either agelong aliases short.

I americium a retired technologist and institution manager. I do not person a financial inheritance aliases connection financial advice.The articles I constitute are for liking only and I effort to find subjects that liking some maine and my readers.I usually return a mini position successful nan companies that a constitute about, agelong aliases short, but astir of my investments are successful boring blue-chip dividend stocks.An engineering acquisition has provided maine pinch keen study skills. Working connected projects successful complete 30 different countries and surviving connected 3 different continents has fixed maine a wide position of nan world and a patient skepticism astir overmuch of what I spot successful nan financial media these days.