Welcome back everyone!
I’m Jordan Giesige and this is The Limiting Factor.
Seven months ago, I launched this channel with a video series on what I expected to
see from Battery Day.
Now, it’s time to close that loop with a video series to review what was unveiled.
This is the first video, and preamble to the series.
It’s my thoughts and impressions on Battery Day from a non-technical perspective.
Before we begin, a special thanks to Bradford Ferguson of Halter Ferguson Financial and
the Patreon supporters listed in the credits.
It’s the support on Patreon that keeps me grinding away on niche topics.
Let’s get right into it.
What we saw at battery day was five projects that spanned from lithium mine to battery
line.
If Elon had made Battery Day about any one of these projects, Battery Day would have
been impressive.
At a high level, after reviewing Tesla’s battery technology strategy, I’m left with
one clear impression.
Tesla is pushing at the edges of what’s possible and taking big risks along the way.
But with big risks, come big rewards.
When Tesla delivers on this plan, they’ll also be delivering the keys to a process that
will go a long way to solving air pollution and global warming along with profits for
investors as icing on the cake.
The vehicles that these batteries go into will be absolutely dominant over ICE vehicles
in every department, including cost, if there was any question of it before.
And those vehicles will continue to get better and cheaper.
Although the plan Tesla unveiled at Battery Day will be ridiculously hard to execute in
the next 1-3 years, I don’t think Elon was being overly optimistic his estimates.
I think the internal goals are as aggressive or more aggressive than what he stated.
However, I also don’t think it was sandbagged in terms of what we can expect to see delivered
in the timelines provided.
The key enabler for the 4680 cell is the mighty 20 gigawatt hour dry battery electrode manufacturing
line.
I don’t expect this to slip and I also don’t expect to be rolled out early.
I don’t expect it to slip for two reasons: This is the most critical component unveiled
at Battery Day because the 4680 cells are planned to go into production vehicles next
year.
Second, Elon stated at Battery Day that there is a clear path to success.
This leaves me with the impression that it’s a matter of tightening up tolerances and increasing
speed.
Elon nearly said as much when he said that the machine works, they just need to get the
yield up.
I don’t expect Tesla to roll these lines out early because they will want the most
advanced and high yield rate version going into production to support the Cybertruck
and Semi at Giga Texas.
This is based on Elon’s comments about machine revisions taking 3-4 months, the current revision
being number 4, and revisions 6-7 being ready for large scale production.
Tallying that up, we’re looking at about 9 months for production ready.
When the machine is installed, it will then need to ramp with vehicle production over
the next 6-9 months.
That puts the timeline at exactly 18 months for just this project, which lines up with
the timeline Elon gave at Battery Day.
With all that said, there is one last point worth noting on yield rate.
When your batteries cost 50% less than the competition, it leaves a pretty huge margin
for error on yield rate.
At such low capital and production costs, Tesla can keep invading larger portions of
the auto market.
I’m left with the distinct impression that even if Tesla hits some stumbling blocks they
could very well take 40% of the US auto market by 2030 in the same way that Apple took 40%
of the mobile phone market by the time the I-phone was in full swing.
If it’s a smooth production ramp, god help the legacy automakers.
As always, this isn’t investing advice.
This is my opinion.
As I said before, there are risks.
Elon was clear on these risks during the presentation.
I’m not terribly concerned either way.
This isn’t another bet the company moment like the 2017-2019 Model 3 ramp.
Drew Baglino was using words such as easy and simple, which attracted some criticism
from pundits.
However, it was clear to me that Drew was referring to the high level concepts of what
was being done, rather than saying that that it wasn’t difficult.
These are two different things.
Drew’s devoted his life to this work and he’s well aware of how difficult manufacturing
is, much more so than many of the pundits.
The concept of any elegant solution should always be easy to grasp if the explainer knows
what they’re talking about.
The act of making it happen is always the hard part.
This is important to understand, so I’ll dwell here for a second.
Some people are good at coming up with ideas but have no ability to execute.
Other people don’t have an original thought in their brain but can like execute mad.
It’s the classic contrast between the disorganised artist vs the starchy businessman.
This trope isn’t true of Elon Musk.
Sometimes Elon does get out over the tips of his skis with his grand plans, but he can
execute like hell.
And, he has an army of engineers working for him that he’s selected for and cultivated
to do the same: Think big, execute with force and urgency.
Some people felt that the Battery Day presentation came off as light on details.
This is true, but it’s also the nature of protecting trade secrets while trying to take
investors on the journey.
Other people were concerned that Tesla had given out too much information, which would
allow their competitors get an edge.
There’s no risk of this.
There are hundreds of researchers out there working on many of the technology solutions
that Tesla unveiled at battery day.
However, they’ve been unable to execute on those technology solutions.
In my view, Battery Day was brilliant marketing with some sick next level engineering thrown
in.
But, also something more.
I’ve watched my whole life as American manufacturing went into decline.
It feels like Tesla’s resurrecting the rusty giant of American manufacturing that’s been
dormant for 50 years.
This wasn’t a presentation about a shiny phone shot in a white room.
This was about batteries.
In the manufacturing b-roll, you could smell the iron and the machine oil in and everyone
on stage was wearing work clothes.
These are the engineers you never get to see, making pieces of your cars that you’ll never
see, in a factory that you may never see the inside of.
But, that’s where the magic happens and it’s the engine room of the entire economy.
If you don’t have people who make things, you don’t have things.
I think this is part of the of the reason why we’ve seen such passionate responses
to Battery Day.
Sure, the environmental message is inspiring, Tesla is bringing us into a sci-fi future,
and if that wasn’t enough a lot of people have made a lot of money off Tesla.
But, more than that, it’s giving people purpose in their lives to see other people
doing something that’s meaningful and rewarding.
In other words, besides the technical significance, battery had a cultural significance.
Purpose in a time when it seems like all our institutions are paralyzed in the face of
epic challenges.
And then there’s Tesla, doing what needs to be done to push humanity forward.
I was thrilled by the presentation and the technical boldness of the plan, but it also
left a lot of technical questions.
For example: Polymer coated silicon anode has been the
subject of a large amount of research.
However, among other things, it’s always suffered from cycle life issues.
Tesla didn’t explain how they solved that problem.
It would take more than just a polymer coating.
There’s some secret sauce in there.
That’s what this video series is all about.
Taking a hard look at what as unveiled at Battery Day to see what makes it tick.
If we can uncover what’s happening at a deeper level, we can adjust our mental model
to account for what we learned.
The closer that mental model aligns to reality, the more accurate we can forecast how reality
could play out.
If I were to choose one technology that was most important for Battery Day, it would be
the Dry Battery Electrode.
It’s the key enabler for battery lines that are an order of magnitude more space efficient
at 75% lower cost per gigawatt hour.
With the Dry Battery Electrode lines at the front of the line cranking out batteries,
the rest of the line had to innovate to keep up.
In short, the dry battery electrode has the most direct impact on Tesla’s goal of accelerating
the world’s transition to sustainable energy of anything that was unveiled at Battery Day.
For me, the Dry Battery Electrode was also the secret sauce of Battery Day.
There were quite a few technical gaps in the chemistry part of the Battery Day presentation.
A deep dive into Maxwell’s Dry Battery Electrode at the microscopic level may help fill those
gaps and explain how Tesla managed to make the tremendous chemistry gains we saw possible.
As always, I’m looking forward to sharing my thoughts and what I’ve learned.
I’ll release these videos as quickly as I can, but all the analysis and research will
be hard won, and it will take time to spin it into scripts.
At this point, it looks like a seven part series.
This video, a video to kick things off with Maxwell Dry Battery Electrode, and then 5
parts to cover the 5 main projects Tesla unveiled at Battery Day.
If you enjoyed this video, please consider supporting me on Patreon with the link at
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I am also active on Twitter and Reddit.
You can find the details of those in the description and I look forward to hearing from you.
A special thanks to Jasbinder (Jessie) Chimni, Ice Lakes Investments, Bryce Langlotz, Don
Browning, Sue Kim, Johan Knagenhjelm, Ahmad Qamar, Mark Hooker, and Rich Thor for your
generous support of the channel, and all the other patrons listed in the credits.
I appreciate all your support, and thanks for tuning in.