Tesla Secret - Lathrop California Surprise

megawatts. maybe maybe it's 37 to 75 um yeah, the people at the San Joaquin Valley Tesla Owners Club saw it and there's a big solar project going on where all the bets have been made, they put them on shelves and all that, um, the owners of the San Joaquin Valley. Club has been very generous in helping me get the Drone stuff and helping me learn how to land lay and Lathrop and he has like a 2014 or 15 Model S, yeah, uh, Joe, just in a sjv Tesla on Twitter, yeah, yeah. I met him at the Plaid event. Do you have any important conclusions from all this?

Is that what motivated you about this? We are obviously excited about producing mega packs. I think you know the point is that we know there are 129,000 employees at Tesla, yes, around the world, and they're not all working in four buildings, right, they're all over the place, there's Giga Texas Giga Berlin Giga. Shanghai and Fremont, but there's a lot more going on in Buffalo and Lathrop and I think there's a lot more that we don't realize, yeah, there's that Palo Alto, that million square foot building near Houston, Texas, yeah , that may just be a distribution center, who knows.

I think it could be the next Mega Factory, but yeah, yeah, you know, we focus on these big factories and we have to recognize that there are a lot of other things going on that require. additional buildings etc., you know when you are going to grow from they delivered 500,000 vehicles or close to 500,000 vehicles in 2020, we are going for 2 million in 2023. That is 4 times more, yes, you need a lot of support for everyone. I think the vision was that you would probably want to try to do as much as possible within your main factory because then you have to move things shorter distances, but sometimes that's just not a practical reality.

Yeah, I didn't think you knew we had. At this Investor Day presentation and there were these two guys who were presenting on supply chain, they weren't actually presenting on logistics like we've never heard from Tesla, like how is their logistics, you know how they're innovating in logistics and you would expect that they did it. You would expect there to be some Vision within Tesla that we need because you know I've seen Elon Doc before about you want to move molecules the shortest distance possible yeah so you would expect they were taking a first principles approach . about how we can better manage our logistics and how we can make this more efficient.

As far as I know, we have never seen that presentation at an event. Yeah, Scott Walter, he had a fascinating insight that let's say you're making the batteries and, but you're the manufacturer of the car, but someone else is making the batteries, they put them in a box, so when the module manufacturer wants to make the modules, I think it's usually the automaker that does that. to unpack it, then there are all these robots to unpack it and get rid of all the materials and sort them and then they have to retest them because the batteries were in transit for 20 days or whatever, you have to retest it, it really slows things down and you have all this space to unpack and test where Tesla is doing with their batteries and their modules with 4680, you make the 4680 in one place, test it and put it in the module. and then you try the module as a whole, there are advantages like that.

Yeah, I was very impressed with the scale that Tesla has and maybe with what they're doing in Lathrop. I don't think they have 1500 workers. in

lathrop

ia um so it seems like they're doing well with a um you know a somewhat restricted number of workers yeah just to put that into context they have 1300 workers that's one percent of Tesla's total workforce at the level worldwide, that huge complex that you just showed with you know five or six Tesla buildings employ about one percent of Tesla's total employment, which gives you an idea of ​​the scale and the size of Tesla.

You have these ridiculously large buildings and that's just one percent, yeah, and it's growing. Another Insight was on the mega pack, each one of those Mega packs when sold to a large project sells for about two million dollars and with these 2 XLS mega packs the margins can be as high as 50 percent, so yes, each one of those trucks passing by, I was Thinking well, that's worth two million, but that's worth a million dollars in profit if, if they're doing it, let's say 10 a day, I mean, any average quarter is 90 days, that's 900 million dollars per quarter at a rate of 10 per day.

I say that 5,000 megapacks multiplied by two million dollars would be rounded up from uh 12 or whatever, but that would be 10 billion dollars in revenue, which if I had your energy revenue on my screen, your energy revenue for the room quarter would be 1150. 1.1 billion, so they have a rate of five, let's say five billion a year in revenue for that, but that's all energy and storage, so Lathrop alone, let's say we go with their 12 and is rounding up to the number of days. or whatever, yeah, you know that could work if you think about it, 10 Bill 10 billion a year, um, that could be five, um, that's, well, no, because 4040 gigawatt hours is the right goal with four megawatt hours per Megaplex approximately, so that's it. 10,000 megapix, right, so we're just talking about, we're optimistically saying that they could deliver 5,000 this year and that would be 10 billion in revenue, but in the long term it's 40, it's double that and it's 20 billion a year in revenue. and just for context, in 2022 Tesla's total revenue is 80 billion so I don't think people will get carried away with the mermega packages, you know the mega package will be big and I hope the revenue for 2023 will be closer at 120 billion and you know we're not going to get there, so you know that 10 billion out of 120 billion is still less than 10 percent of the revenue, so you know that the four or five billion revenue in 2022 for energy and storage were five percent.

From Tesla's revenue, we expect energy to grow faster. The mega package is a big leap. It's like a step change in their ability to produce energy storage, so it would be reasonable to see that push them to ten percent of revenue maybe next year. I don't know if this year it's possible um if you think about profits I was trying to make a quarterly profit um let's go with your numbers and then 10 billion in revenue oh sorry I got my numbers wrong it was 1.7 it was 1.3 billion in revenue for the fourth quarter, it's still about 5 billion a year, but you know, the profits you just have to put this aside because people say this about Tesla's profits in the mega package and the quarterly figures were 1.3 billion in energy revenues. generation storage and 1.15 billion in cost so you know the profit margin is 10 maybe um I think as they scale the potential gross margin is really high but the current gross margins with everything energy generation storage just aren't there yet. you're open to being wrong and being wrong less well, yes, no, no, I'm just saying, look at the fourth quarter, look at energy generation and storage, 1.3 billion in revenue, 1.15 billion in costs, that's it what you know, yeah, 150 million 1.3, you know, that's a little over 10 gross margin, let me give you a little bit of context, so what the mega packages coming out of Nevada cost, we think they cost Tesla about of 300 per kilowatt hour and when those agreements were made, most of the agreements were made around 300. per kilowatt hour, what changed?

The reason Tesla made those deals at that price is because the price of lithium went up quite a bit, so it used to be that the cost was lower, but because the price of lithium went up a little bit, that is. Why aren't you seeing gains from that in the fourth quarter and Lathrop was just scaling like maybe it was two or three a day in the fourth quarter? So like they haven't gotten over any kind of Hump to be profitable from that site, um, yeah. You know, solar doesn't seem to be making much profit, but the way the mega-bundle contracts are designed protects Tesla from fluctuations in the price of lithium and the contracted price is five hundred dollars or more per kilowatt hour.

I can do? One point for people to understand, please, a little further down. I'm fine, I just want to make a point for people to understand that the battery is maybe a fifth of the cost or less of a model, say, and you probably already know that. closer to a tenth of the cost of a Model S or Model X, but the battery is almost more than half of the cost of a mega package, it could be three quarters of the cost of a mega package, it is the battery, so the impact that lithium has on the cost of a car It is much smaller than the impact of the cost of lithium. it has the cost of a mega pack because the mega pack is basically just a big battery, there's no drivetrain you know, there's no windshield wipers, there's no wheels or tires, it's basically a big battery with some electronics to support the battery that cars have. battery and electronics to support the battery as well, but cars have a lot of other things going on, they have glass, they have seats, yeah, so it's like a giant server rack where you have these in server racks, you have these computers and you have Plumbing so you can liquid cool the electronics and you have wires attached to them and very similar mega packs where they have them placed on racks where they can just put each battery pack on a shelf that they have.

Plumbing, they have electricity and it's a big box. and they can ship it, you know, via truck, yeah, it's much simpler, they have an inverter, so there's a lot of inverter that goes in, um, but yeah, it's mostly battery, that's the cost, yes, so your opinion is. Because I've been pushing back against people who say mega-pack profits are huge, it makes sense to me that mega-pack profits are high margin in the long run, but I don't think they're there yet because they have to ramp up and they have to amortize the factory over the number of units that are produced and when they reach their full ramp, then the cost of amortizing the factory, the capital expenditure on each unit goes down and you know, I think from the beginning They are not generating.

From an accounting perspective, they're not generating as much profit with the mega packs, but as they increase and scale production and become more efficient in their production, we can see fifty percent higher gross margin. I think that's your opinion on that. additional incremental mega pack, so I don't think Tesla power is close to that because they have solar and they have the older mega pack that is working, but Matt Smith has seen it and has worked with me at Tesla. and we think the margins could be 40 or more, so we're pretty optimistic and we think Tesla is getting maybe $500 to $450 per kilowatt hour with the mega packs and its cost is $250 or less with these larger ones.

Mega packs now, the other thing is that I believe the latest Mega pack uses lithium iron phosphate cells which are not eligible for inflation reduction tax credits, so one of my theories on the Houston building is that they're talking about Houston's million square foot building in Houston probably at some point Tesla wants to start making lithium iron phosphate batteries in the United States and maybe their own adjustment of lithium iron phosphate with manganese or some another element by doping it to get a little better performance once they start receiving tax credits. If you consider that, then their cost of producing megapacks actually goes down, it might show up in a different part of their accounting, yes, but you know, if they get a tax credit of 35 per kilowatt hour plus ten dollars per kilowatt hour for the modules and they use. lfp and it costs them seventy dollars per kilowatt hour to produce lfp lif-p l i fepo4 lithium iron phosphate batteries for those who want to be picky um then their cost of producing mega packs drops dramatically since most of the cost of the mega pack is the las Batteries are fine and there's no limit on how much tax credit they can get, yes, but at a certain point the government might say, oh, this is way beyond our projections, yes, that's possible.

Sure there are 13 tax credits in the inflation reduction law that helped the buyer. like utility, they can get anywhere from 30 to 70 percent off, depending on where they put it, that kind of thing, so it allows Tesla to get a higher price on these mega bundles, so there is some benefit and you don't like it. uh they still get that 30 to 70 percent discount even if it's a Chinese made battery or whatever else you have in mind, well since you mentioned uh lfp you know the standard range model three could lose The creditprosecutor, so I. m I'm a little curious to know what will happen there.

I'm guessing the standard range will be 5000 less than the performance possibly for the model three so I think maybe Tesla will reduce the price a little bit to make up the difference a little bit um I'm curious to see you know don't you think they'll let to manufacture the lfp model three? and at least I'm sorry, look, don't you think they will stop selling the lfp model? 3 in the US and they only ship to the 2170s, uh, if they get enough 2170s, you know LG has certainly been producing them in larger quantities, I mean, as long as they're produced in the United States, so they're receiving the tax credit from them or I don't think they have to be.

They have to be produced in the United States. If they're black, I don't know how that's going to work, but, I just think I mean. That's all like a tax strategy and I think Tesla focuses more on the long term than short term things like that, but still, if you can increase your profits a little bit and it gives you more money to be able to do more expansion later , the other pieces about earnings, so you stopped me, but if you think about um, let's say they're doing 10 a quarter and there's 90 and a quarter days, essentially they're done and let's say they have a margin of 50, you can adjust it however you want, so when you multiply it, it's 90 million 900 million per quarter in profits and Tesla has about 3.2 billion shares or something like that, so that's about 30 cents a year. share profits per quarter once once this 10 a day starts to affect Tesla's finances yeah last year they made about a dollar a quarter you know that should probably go up so if you look at a dollar plus 30 cents per quarter, that's a 30 boost for the company. broad earnings, you're talking about earnings per share, yes, no, financial advice, well, you know, the other thing I keep noticing.

I was watching a CNBC panel talking about Tesla, maybe it was cnbc8 with some other channel and they were saying something. about how Tesla's margins are declining and it's like, wait a minute if you were listening to Zach, the gross margins might go down a little bit, but the operating margins are still strong, yeah, and it's like I don't know if these guys don't know that. . what they're talking about or know what they're talking about, they are deliberately misrepresenting, or deliberately misrepresenting Tesla's margins, which I feel sorry for people who don't know that the gross margin is what they make in revenue from the car minus what they It cost them to build the car and then there are other things to run the business, so you subtract that and you get your operating margin and then there's actually a little bit more profit to get the net profit, which is what goes into the earnings per share, but the point is that if you could keep your operating margins high even if your gross margin drops, your net numbers are still good now and your earnings per share are still good, so I feel like a lot of people know that Zach was Pretty clear on that, but a lot of people are missing that point and we're starting to hear about more and more mega-package factories.

Are you hearing other stories about that was the term Megafactory Megafactories? Did you make it up? Yes, I did, do you think there is? We're likely to see another Mega effect, as if there wasn't a report that they might be building one in Shanghai, yes, and I think they might. Maybe they will be forced to export them and, um, but if they deliver them to China. They can have someone else put their software on it if they're worried about American national security software and, uh, in the Chinese energy system, so I think who would be worried about that, who would be worried about the national security of China or America China yeah, no, I don't know, no, I don't get the sense that China is that worried about it, it's connected to their network, um, we've seen some things where they are, they're starting to block or be picky about catl or byd um putting this kind of mega package in the US um it makes sense for a factory to be in China otherwise because you're right next to the catl or you're very close to it so it doesn't have to traveling so far, it seems like we work too much, that's just my opinion, we worry too much about these national security issues and let's focus on doing better things and maybe we could all learn to work together more, yeah that's my user bio Twitter, uh, you know, let's cooperate, you know, we think of the world as a zero-sum game and you know what China gets, what we lose or something and the reality is that the universe is an infinite sum game and if we work together we could have more, yes we will stop fighting among ourselves, but that is a bit away from the topic of the video, well I think as Tesla gets more. and more successful and increasingly important for the global economy, that are going to be supported by more governments, well, if they generate jobs in a country, if you know, I think I have this whole theory that the reason why China gave the welcome Tesla, as you know, allowed them to establish their only owned factory in Shanghai, something that had never been done before.

Elon was able to persuade them. Hey, you want to breathe clean air. I can help you clean your air. Yes, and it doesn't matter how rich or powerful you are. you are a Chinese bureaucrat or know a political figure, your grandchildren still have to breathe dirty air and if someone can come in and say, unbelievably, I'm going to clean your air, you might be motivated by that and China is not the only country like that. . I think India you also know that there are many places in the world that have dirty air that is not the leading cause of death in much of the world and you would probably prefer your grandchildren to breathe cleaner air, it doesn't matter. how much you care about power no matter how much you care about power no matter how much you care about money if you don't if your grandkids breathe dirty air and it's causing lung cancer or whatever, you're going to care about that, yeah, and that's something that Tesla literally likes to get people talking about climate change and I, you know, I'm a little bit I'm not a true believer in the climate change story, but I'm a true believer. that coal pollutes, yes, that fossil fuels put particles in the air and that is a major cause of disease and death and of humanity and if we could reduce particle emissions and that is what solar energy and technologies do batteries, cells learn batteries. have a tremendous impact on reducing air pollution, yes, I think everyone is, I think everyone is against lung cancer and I think we can all get behind it, yes, people will find out in time, I'm an optimist, yeah, and I think you know we have all this conflict in the world, but I wonder how much of the conflict is for show and how much of it is genuine and I think Elon and the team are very good at working with other governments to say "hey, let's work together on this" and Basically stay out of the fights and there's another thing that's like, "Sorry we're going off on a bit of a tangent, but there's this obsession that people have with China about to invade Taiwan, which as far as I know , China has been about to invade Taiwan for about 50 years, yes, and they haven't, so I don't know why people think that suddenly China is going to invade Taiwan.

They have a shrinking population every time. minor. They have their own problems like you. I know the whole Taiwan thing to me is like it's an excuse to get people angry about things but they're never going to do anything about it. Yeah, I mean, maybe I'm wrong, but where is that? Where is the clue? Don't know. I know if it's coming, but if you look at this moment, China's economy is struggling after going through Covid, yes, there may be many companies that closed and people unemployed and we are seeing Prime Minister China Z trying to make peace between them .

Russia and Ukraine want peace, they want the world economy to move forward, and if they did something with Taiwan, that would be terrible for the global economy, so yeah, and terrible for their own economy, yeah, yeah, and I like it. this rejection from people you know, I have a belief that the boring company Elon's Tunnel Company will eventually build a tunnel in the Bering Strait and connect Asia with North America and maybe go along the outer circle of art to connect both with Europe and being able to send cargo a lot. more efficiently, much cleaner, much larger volume and that would be a huge advantage for China and people like well, you know, that would leave it subject to Putin and like zizing, Ping will take care of Putin, they will just buy the right boot, People think that's all.

You know, evil or whatever, like Putin just wants power and money and you know if China is getting what he wants, they'll pay Putin to get what he wants. That's my opinion. I think people have the idea that we take credit for our own. reasons for others like we're trying to control the world so we think other people are trying to control the world yeah and I don't know if China is really trying to control the world they're just trying to grow their economy and they have a big problem with their shrinking population, yeah yeah, so I almost think the idea of ​​countries trying to be expansionist when their populations are shrinking is starting to get silly, so okay, we digress, we've gone off course , here's something else. do you want to close with no, that's fine, let's close it thanks Warren, uh, thanks everyone for watching, check out the t-shirts, this is critical thinking in Latin, discriminate kojitandi, check out the t-shirts on elonbitz.com, please check out my other videos. please support me on local platform daily lie on patreon or youtube channel member check out bradford on uh on twitter bratisferguson yes sir and like this video share and subscribe thank you to all.