Seeking Alpha
View as an RSS Feed

Randy Carlson  

View Randy Carlson's Comments BY TICKER:
Latest  |  Highest rated
  • Tesla: Shattering The Lack Of Demand Myth [View article]
    And now, Tesla will start working off the "California" 85D model backlog...

    It may be worth remembering that cars sold in other "ZEV states" also earn ZEV credits.
    Apr 19, 2015. 01:23 PM | 1 Like Like |Link to Comment
  • Tesla: Gigafactory Tipping Point [View article]
    Solar Guru,

    This difference is "specsmanship". If you look at slide #9, the cells are 3.1AHR at 3.6 volts (presumably the "average" voltage over the SOC range).

    Now, if you look at slide #12, the capacity is 3.25 AHr at 4.35 volts (voltage at max SOC, presumably). The issue being that the cells are "derated" to 4.2 volts maximum charging voltage. It is not clear just who is doing the "derating"...

    Slide #12 does give us the "hard information" that Tesla's battery contains 7104 cells. Using the "actual" values from slide #9, Tesla's battery capacity would be:

    3.1Ahr x 3.6V/Cell x 7104Cells = 79,281 W-hr = 79.3kWh.

    Tesla "rates" their pack at 85kWh. Pay your money. Take your choice...
    Apr 19, 2015. 01:10 PM | Likes Like |Link to Comment
  • Albemarle: That Wildly Ignored Dividend Stock With 12% Annual Growth [View article]
    Albemarle has bet heavily on lithium with the Rockwood acquisition. With the take-off of the lithium battery business and more carmakers start entering the BEV - PHEV business it will be interesting to watch for "material" deals between Albemarle and players in the lithium battery supply chain.

    As the world begins to switch from gasoline and diesel to electricity for surface transportation, Alberbarle's play in the lithium business nicely counterbalances their refinery catalyst business. And remember, as lithium batteries continue to improve, storing more and more energy in each battery, it is the other battery materials (cobalt, nickel, graphite) that there will be less of in each battery. The amount of lithium stays pretty much the same in relation to the energy stored. Over time lithium, and the precision lithium chemical feed stocks going into the lithium battery supply chain are not only going to increase in total amount, they will become an increasingly significant proportion of the total battery value.

    Albemarle is well positioned among lithium suppliers, with both raw material supply AND extensive precision feedstock refining capacity / expertise to capture value from the lithium battery supply chain.

    It is their long-term, big-strategy approach that underlies Albemarle's ability to generate continuing growth. They are not only competent players in chemicals / catalysts / lithium, etc. They are bold and innovative enough on the business side to seek out and pursue broad, new opportunities, even if this causes some 'unevenness in year to year earnings.
    Apr 19, 2015. 12:47 PM | Likes Like |Link to Comment
  • Why Truckers Are Slow To Embrace CNG Fuel Systems [View article]

    The following item appeared in my inbox a couple of days ago.

    It looks as though California hasn't been able to 'give away' their Natural Gas vehicle subsidies... This situation would seem to speak to the premiss of your article.
    Apr 17, 2015. 12:50 PM | Likes Like |Link to Comment
  • Why Truckers Are Slow To Embrace CNG Fuel Systems [View article]
    Great article and very interesting insight into the real-world economics of Natural Gas as transportation fuel.

    I wonder how the shipping contracts are written in those markets where Natural Gas is more popular (e.g Europe, India...)?
    Apr 17, 2015. 11:43 AM | 1 Like Like |Link to Comment
  • Did Tesla's Actions In Detroit Put Its Patents In The Public Domain? Why Investors Should Worry [View article]

    Actually, compared to Apple, all the Android phone makers out together haven't made all that much money...
    Apr 14, 2015. 05:41 PM | 1 Like Like |Link to Comment
  • Tesla: Shattering The Lack Of Demand Myth [View article]
    When thinking about the future viability of autonomous cars, it may be helpful to briefly review how guidance systems work - in this case missile guidance systems..
    Apr 7, 2015. 11:44 AM | 3 Likes Like |Link to Comment
  • Tesla: Shattering The Lack Of Demand Myth [View article]
    Ivan Gault,

    Your analysis suggests that the number of cars in the delivery pipeline is zero at the end of 1Q. While it is likely to be less than the 1,400 units at the end of 4Q14, it is certain to be greater than zero - perhaps 250 - 300 cars at least (i.e. a week's production or a bit more)
    Apr 6, 2015. 04:39 PM | 13 Likes Like |Link to Comment
  • Tesla Motors delivers 10K vehicles in Q1 [View news story]

    I think you have missed the advantages Tesla DOES have vs, Samsung, LG.

    1) Tesla already has scale at the pack level. They will continue to have this advantage as a vertically integrated BEV manufacturer.

    2) Tesla is a system integrator - both batteries and power electronics and data communications and central aggregation - all things that put together dramatically increase the economic value of these small, grid-connected systems.

    3) Tesla has a close, cooperative, established relationship with SolarCity which is a functioning, very large installer of residential solar systems, to which these battery systems are an adjunct. SolarCity is ALSO an established power-house at the financial engineering that makes all of this work for the customer and effectively enables the mass market.

    Samsung and LG have NONE of these advantages...
    Apr 6, 2015. 10:52 AM | 4 Likes Like |Link to Comment
  • What Will The New Tesla Product Be And How Much Will It Cost? Here's My Best Guess [View article]
    There is a very important, fundamental aspect to grid storage that the 'static' view, of panels / batteries as directly offset local energy use misses altogether.

    The largest economic benefit of grid connected battery storage comes from short-term, fast responding regulation, not from diurnal energy shifting. The reason this is true is that a) this short-term regulation function MUST be performed to keep the grid stable and b) the alternative way to accomplish this short term regulation is to maintain 'spinning reserves' - power plants that run continuously, generating little energy. A battery + inverter system on the other hand incurs no operating cost from just being connected and 'ready' to source or sink power.

    If residential battery storage can be 'aggregated' and made available to the ISO for this kind of short-term regulation, a value several times greater than the value of diurnal energy shifting (i.e. rate arbitrage) can be realized.

    This is where Tesla and SolarCity come in. If your residential solar / battery system can be aggregated with similar systems to provide short-term grid stabilization services you can easily afford to share the much greater economic value with the aggregator. California operates 'day-ahead', 'hour-ahead', and '5 minute-ahead' electricity markets, and will do something similar for 'regulation services'. To access these markets, there must be an 'entity' that interfaces between the 'resource' and the market/ISO. If the resource being sold into the market consists of many, distributed installations such as residential solar / battery systems, the aggregation function becomes complex and this is where Tesla / SolarCity bring their value-add. By handling the 'information flow' that makes it practical to use many distributed storage systems to stabilize the grid, the aggregator greatly increases the value of the residential battery storage system. Some of this value can be passed along to the residential customer through lower prices / better financing terms - in other words, financial engineering.

    The role of aggregator is well established. Companies like Enernoc currently aggregate 'load shedding' resources and sell these to the ISO in California and elsewhere. If Tesla does something similar, they will be, once again, doing a system optimization that extracts as much value as possible from their hardware and will both save their customers money AND deliver profits for their shareholders over the long term.
    Apr 5, 2015. 11:41 AM | 6 Likes Like |Link to Comment
  • What Will The New Tesla Product Be And How Much Will It Cost? Here's My Best Guess [View article]

    SolarCity's value-add goes beyond selling, financing, installing and maintaining these systems, at least potentially so.

    If Tesla retains some control over when these systems take power from / return power to the grid, they can 'aggregate' this function and effectively sell it to the ISO as grid regulation service. Such services have MUCH greater intrinsic value than the energy (kWh) involved. With additional renewables (wind and solar in particular) coming on to the grid, the need for short-term, rapidly responding regulation will grow and there is a HUGE market to be addressed for these grid stabilization services. With appropriate 'financial engineering' this value can be shared between Tesla, SolarCity and the customer, effectively lowering the customers electricity cost and returning profits to Tesla / SolarCity.

    Other companies are setting up to offer grid stabilization services with dedicated, larger scale battery systems. And these companies are headed to fail. Why? Because Tesla / SolarCity will have fundamentally lower costs and will out-compete them in the open electricity and grid service markets in the US Southwest, and elsewhere.

    Tesla already has battery costs that are very competitive with other battery technologies, and with the GigaFactory their costs at both the cell level AND at the pack level will be further reduced. It is important to understand that there is little if anything to be gained in $/kWh when going from 10kWh to 10,000kWh in a single installation IF you are already assembling tens of thousands of kWh of cells into automotive size packs.

    An argument for large scale battery systems is that the proportionate cost of the land, grid connection, site security, control systems is lower than it is for many, smaller systems. But, this doesn't apply to Tesla's residential batteries BECAUSE the grid connection and the site are provided by the customer - and if the lease is skillfully written, the customer will pay the insurance and property taxes, too! The marginal cost of installing a Tesla home battery is very low if it is part of a residential solar system. All that is required is to bolt the battery box to the wall and connect the wires. The grid-tie inverter is paid for as part of the solar system, and adding charge functionality to the solar inverter design should have only minimal cost impact. Even the control system, communicating over the internet is typically included with a SolarCity residential solar system.

    This is just one more case where Tesla is thinking 'bigger' than their competitors. Could General Motors, or Daimler, or even Panasonic get into this business? Sure. But unless they integrate the pieces - the battery manufacture, pack assembly, solar sales / finance / installation, data communications and functional aggregation - ALL at scale - they won't be in position to compete.

    The interesting thing for Tesla shareholders is that the capital for these systems is supplied directly through the customer's credit-capacity, not through large, dilutive new capital flowing into Tesla. What will happen here is that Tesla will be entering the very, very capital intensive utility market, using 'other people's money' (specifically NOT shareholders money) and reaping significant profits from the installed equipment.

    This is disruptive in very much the same way Apple's iPod and iPhone are disruptive of the music and telephone industries. People tend to look at companies like Samsung, HTC, Nokia as Apple competitors, while missing the fact that MOST of Apple's iPhone revenue (and profit) comes from phone companies who subsidize iPhone sales. Apple is sharing in the profits coming from wireless services without having to build, maintain, operate or pay for the infrastructure - or even pay the cost of their hardware (the iPhones) that effectively collect the profits.

    In a similar way, Tesla will be able to collect a portion of the profit from supplying grid stabilization services while their customers (not their shareholders) pay for the equipment, the grid connections, the installation sites, the taxes, the insurance, etc.

    I think more than a few of us are underestimating the economic, bottom line potential for Tesla from residential battery systems...
    Apr 4, 2015. 02:42 PM | 7 Likes Like |Link to Comment
  • Tesla Motors delivers 10K vehicles in Q1 [View news story]
    Tesla's reported deliveries are EXACTLY as expected.

    Sales in 1Q will be about a billion dollars. Gross profit on the order of $200 million. And, we are ~120 days from initial Model X deliveries.

    What's not to like?
    Apr 3, 2015. 09:54 AM | 55 Likes Like |Link to Comment
  • What Will The New Tesla Product Be And How Much Will It Cost? Here's My Best Guess [View article]

    It could go either way. They may very well start out one way, and at some point try the other way...

    It will be interesting to see what they come up with.
    Apr 2, 2015. 07:22 PM | 2 Likes Like |Link to Comment
  • What Will The New Tesla Product Be And How Much Will It Cost? Here's My Best Guess [View article]

    I see Tesla effectively selling these modules as a 'service' - perhaps by 'leasing' the units while retaining control of the charge/discharge operation and guaranteeing the customer some net economic benefit (e.g. lower rates than currently paid) that justify what ever the lease payment is.

    There is very significant synergistic benefit in using the customer's existing grid connection as compared to building stand-alone grid storage served with dedicated connection to the grid. There is also a large synergistic benefit when installing a grid battery in conjunction with a residential / small business solar system - just look at the garage installation in your article. If the installer is already putting in the solar panels, grid connected inverter, wiring, etc, the mounting and connection of the battery to the grid inverter represents minimal marginal installation / permitting / inspection cost.

    Utilities in California are being required, by the PUC, to acquire significant grid storage, and they are allowed to acquire this storage by purchasing the equipment, or as a service. Battery storage costs do not generally improve for large batteries as compared to smaller packs manufactured at automotive scale. Using the customer's grid connection and premises, and 'allowing' the customer to pay the property taxes (and insurance?) for storage equipment installed as part of a solar system, will position Tesla with very advantageous costs compared with suppliers building dedicated grid storage systems.

    This should allow Tesla to offer these systems at very attractive cost to the consumer, while monitizing the larger value of grid connected storage applied to regulation and stabilization of the grid under control of the ISO.

    Tesla's potential business model, if they implement aggregation, becomes somewhat analogous the the iPod/iTunes or AppleTV / iTunes model where in a piece of hardware is placed between the supply and the user and allows the provider of the hardware to profit from the flow of the commodity through the equipment BECAUSE the equipment supplier controls a critical part of the 'information' associated with overall system function.

    To make money at the grid storage business one must both make batteries cheaply, AND somehow extract as much of the value to the grid of the services delivered as possible. Tesla has the opportunity to accomplish exactly this ideal with their home storage systems.
    Apr 2, 2015. 03:19 PM | 8 Likes Like |Link to Comment
  • What Will The New Tesla Product Be And How Much Will It Cost? Here's My Best Guess [View article]

    At the end of the day, I see Tesla providing grid storage 'as a service' wherein they 'serve' both specific electricity users and the grid, simultaneously, with the same equipment and the same grid connections. I think they will go there BECAUSE, as I read things anyway, greater monitizable value is available when both the 'customer' is benefited against his 'retail rate structure', and the grid is benefited with short-term regulation services - something which is unlikely (near/medium-term) to be folded into the end-user rates.

    Another thing that isn't talked too much about is the practicality of using 'used' car batteries in grid storage applications. There would seem - at first thought - some problem with selling 'used' batteries in a 'new' piece of grid-storage hardware to an end customer. This problem would seem to 'go away' if the end customer is just buying a 'service' provided by Tesla, who can presumably put what ever battery modules they like into 'their' equipment which is serving the user.

    It is worth noting that Tesla's 400kWh industrial storage system appears to be built around six S85 batteries (i.e. 6 sets of 16 Tesla battery sub-modules). This would seem to be an ideal setup for fielding batteries taken from 'used' Tesla's, which would then perhaps be sold with new / upgraded batteries as CPO cars...

    Using six nominal 85kWh batteries would allow derating of final unit so that 400kWh is available while only operating over the 'middle' (10% - 90%) of the SOC range - and thus being able to provide continuous 200kW charge / discharge over the entire 'rated' capacity range.
    Apr 2, 2015. 02:43 PM | 5 Likes Like |Link to Comment