tesla\'s huge mistake: why thin-film lithium ion batteries won\'t power the ev revolution

This is my first article, dear reader. NASDAQ:TSLA)
The company is famous for its electric cars.
Over the past six months, I have gradually combined this article, when several articles on SA even mentioned Gigafactory.
However, after the launch of the Model X, Tesla\'s focus has finally shifted to its biggest efforts.
Gigabit factory is a fascinating topic. Mr.
Musk told 2014 of investors that he wants it to be the largest building in the world, and even that it will revolutionize the industry as a whole.
These wonderful claims seem to coincide with the fact that the only thing that hinders the electric car revolution is our current battery technology, which is underpowered and overpriced.
Fundamentally, cheaper batteries will also make home energy storage affordable and possibly even personal electric flights.
Like many of the Tesla bulls, I believe these are more than just dreams.
I believe we will have these revolutions soon.
After thorough research, however, I have come to the conclusion that the risk of failure of the project is much greater than what Tesla\'s stock valuation allows.
These risks include construction errors and accidents, supply-
Tesla may be forced to pay too much for the investment, which can pose catastrophic risks, such as thin-
Thin film lithium battery technology
In the study of this article, I started to really understand the entire battery industry, including everything from battery science to investor ideas and industry trends.
For the latter, I find these very helpful from a historical point of view --
After all, we have been experiencing industry turmoil for over 200 years, as promised by the electric vehicle revolution.
Given the many different topics I\'m going to discuss, for readability, I split the article into three parts: Part One: everything about the battery.
Until modern times, the history of their science was condensed, followed
Study the changing scientific and economic environment of this important industry in depth.
Section 2: Gigabit factory.
A brief summary of the Gigabit plant development to date, followed by my own research on possible strengths and risk factors.
Section 3: conclusions.
How the Gigafactory project is linked to the company features of TSLA and why Gigafactory is most likely to go bankrupt in all the bold projects of TSLA.
Section 1: Early history of the battery: * Note: If you are familiar with how thin the current is
Please skip to the paragraph titled \"Public opinion on current technology.
The earliest electricity experiment took place more than 2000 years ago, involving rubbing a piece of amber on wool.
To put it simply, Amber will scrape the electrons off the wool.
Since Amber is a bad conductor of electricity, the extra electrons will remain near the surface, bringing a local charge to Amber.
Until 1800AD, when the famous Italian scientist Volta folded zinc and copper plates together, separated with some cloth and bathed in salty solution, nothing changed.
His Volt piling is the first batch of batteries, similar to the one shown below: Source: demo slide 4 on the new paper battery.
The basic principle of separating the reactants, allowing the ions to flow from one side to the other, and routing high-energy electrons through wires to today to power the battery.
In the year 00 s, hundreds of different cells were developed until 1896, when Carl Gasner of Mainz, Germany (
It is also a small town for invention and printing)
Invented stem cells
These are the first practical batteries that represent the beginning of our modern era of portable electronics. Mr.
The principle of Gassner\'s dry battery has so far provided power for alkaline batteries.
But there is a problem: the battery is very heavy.
Tesla\'s car has a weight of more than 1000lbs.
What makes things heavy? In atoms, 99.
The mass of 9% exists in the nucleus.
However, the nucleus does not participate in chemical reactions.
Lead, for example, has 82 protons and 120 neutrons that make it mass, and these protons and neutrons are attracted to a huge, almost empty electron cloud of positive electricity.
But in chemistry, only a small number of electrons outside play any role.
So in order to get more power at the smallest weight, the answer is to use lithium, third-
The lightest element after hydrogen and helium.
Lithium batteries were first mentioned in 1911.
How it works: thin current
Thin film lithium ion battery.
Experimental lithium metal batteries have been in the literature for decades, but are considered too dangerous due to their unfortunate tendency to explode.
And finally, on 1981, Dr.
John Bannister Goodno of Oxford University has made a breakthrough in inventing modern lithium-ion batteries, especially cathode materials that make them possible.
* Attached note: inventor is now 92 and still working.
This is a fascinating story about him and I highly recommend reading as it looks back in detail on the whole development of lithium batteries until 2015.
This article is a valuable resource to put the also mentioned gigafu factory in the historical context.
Interestingly, in this article
Goodno\'s research team claims to have found another breakthrough, which will reduce the cost of lithium batteries by 70%.
* Back to modern lithium batteries: Sony paired the new cathode material with the charcoal anode in 1991 to commercialize the technology.
The revolutionary battery has become an instant blockbuster that has helped Sony sell a lot of devices
Handheld video recorder
All modern lithium batteries, including Tesla, are directly derived from this technology.
To put it simply, it is a system consisting of two parts: the cathode is high
Energy Aspects of attracting Li-
Ions and electrons during discharge
The cathode is a porous crystal solid composed of cobalt, nickel and other elements. Li-
The ion enters this porous structure and forms a chemical bond with it, which is a process that requires electrons.
This combination is done by releasing energy and \"pulling\" electrons through our motors and electronic devices.
The anode is a \"storage tank\" of lithium made of graphite \".
During charging, the applied voltage keeps the electrons and lithium ions away from the cathode, forcing them to travel and combine with the graphite anode.
When the battery is discharged again, the anode releases lithium again in the form of electrons and ions to complete the cycle.
The whole unit is bathed in the electrolyte so that the lithium ion can be dissolved first through the anode, separator, and then dissolved into the cathode.
Lithium metal does not form at any time, which makes the technology safer and explains why it is called lithium ion.
This is a picture showing the discharge of lithium batteries, please ignore what it says about anode Silicon: Source: nexon, the company has developed better silicon anode chemistry.
In ordinary batteries, graphite replaces silica gel on the negative electrode.
Shape and variety of current batteries: Shape: due to the very slow propagation speed of lithium ion in solid cathode and anode materials, it needs to be very thin.
Therefore, modern batteries are made up of multi-layer films. Like paper (
Imagine a stack of $20 bills or a continuous band)
, The film can be stacked or rolled up, which explains two major battery types: flat or cylindrical.
Flat packaging has several advantages, such as more uniform material stress, higher cooling surface area and more dense packaging possibilities, but there are also negative effects, such as during use, the puncture resistance and volume expansion of the battery pack are reduced.
Tesla uses a cylindrical battery that is considered safer but less functional.
The overall industry trend has greatly improved-
Packaging in recent years.
Some of Tesla\'s competitors, such as Volkswagen, recently announced that they will pursue tablets. Packaging technology;
The others will stick to the cylindrical battery like Tesla.
Chemical change: For anyone interested, here is a link to explain the five small changes in cathode chemistry.
All of this is the subject of an alkaline cobalt mineral cathode/graphite anodefilm method.
By contrast, each of them has 20-
30% there are advantages in some areas but disadvantages in others.
The battery today is very expensive: There are many design challenges that make Li-
Expensive ion technology.
Example: source the basic 18650 battery currently used in Tesla\'s packaging, showing its scrolling-up structure.
Source: 24M Tech.
Demonstrated their improved design next to the conventional battery\'s flow structure.
It\'s hard to improve today\'s batteries: lithium batteries improve at an average rate of up to 8% a year.
For example, this speed is much lower than improvements in computing processor capabilities, data storage, or transmission. Why?
The engineers are facing a lot of problems.
This is a video of the manufacturing process.
How complex and picky thin is not enough emphasis
The structure of thin film lithium battery is actually.
Some concrete examples of why thin
The thin film battery is hard to improve: apply the fragile electrode to the hair
Thin current collector (sheets of hair-
Thin aluminum and copper foil)
, Then it is difficult to assemble the packaging from the coated paper correctly.
The cathode/anode coating is very brittle, hair-
Metal films that are easily oxidized, sticky, torn and other more than a dozen problems.
There are many more steps, such as calendar, annealing, filling electrolyte in controlled atmosphere conditions, connecting valves, especially cylindrical batteries, welding current collectors together, which are difficult to optimize.
Once the line is running smoothly, the operator may hesitate to shut down the line for an upgrade.
It\'s a tough choice between strong production and less
Power the battery and invest in the latest but risky optimization.
From a scientific point of view, historically, the actual cellular chemistry is more difficult to improve than the production process.
This is because the new chemistry requires thousands of charging cycles to work, but also to stand the test of time, which is not always fully simulated by a fast charging/drainage cycle. Late-
The stage problem may be a branch crystal (crystals)
Formation of puncture and shortening of delicate film, material stress, peeling, irreversible side effects, thermal behavior, running potential
Reaction, etc.
The biggest problem is the dissolution of the electrode: when lithium enters and exits from the cathode, its size expands and shrinks. Dr.
The main breakthrough of Goodno is that his materials can withstand the cycle of repeated expansion (
Called plug-in industry terms).
Even so, it is limited to about 1000 cycles until the current electrode technology is irrevocably crushed. Here\'s a link (pdf)
For those of you who want to know more about the failure mode of the current battery.
What I would like to point out is the basic chemical and physical structure of the current thin
The thin film lithium battery is difficult to use and it is difficult to improve.
Theoretical limits of battery power: Let\'s take a step back from the fierce competition that is improving lithium batteries.
The fact is that since 1991, the focus of the industry has been on evolutionary improvement, not a revolutionary leap in technology.
In this regard, the battery industry is more conservative than the trend of computing software/hardware.
However, the silicon processor chip has reached a large engineering ceiling: The transistor cannot become smaller due to the quantum tunneling effect.
So is the battery.
To understand the reason, it is instructive to understand what the theoretical limit of battery power is: what jumps out is that we are 10 to 30 times lower than the theoretical limit.
This is because the current physical structure of the battery is relatively small lithium content. How little?
A typical battery of 18650.
75g of lithium on the entire 44g Battery.
Another example: my rather large laptop is powered by a lithium battery weighing about 3 M & M.
In a laptop, this tiny metal mass is distributed on a film with a pool table area.
Another fact is that the investment cost of Tesla\'s car battery is only $20000, while the investment cost of lithium metal is only $150.
It\'s no wonder that the 1000-pound battery pack contains less than 50-pound batteries.
Read this paper from Stanford University and learn about the mathematics and structure behind the battery.
Public perception of the current battery: there is an important point to consider before I proceed, which is directly related to Tesla and Geely cars.
Why do we think the battery is so good now?
I think, from a theoretical point of view, investors basically don\'t know how weak the battery is.
Another question to consider may be how the society knows about lithium batteries.
This is my personal experience: I started using Li-about ten years ago-
The ion battery was first used with an LED flashlight.
The quantum leap from 2 hours of dim yellow light to 20 hours of bright blue light dazzled me for years.
It looks amazing and impressed me that lithium batteries are a \"enabling\" technology that makes new things possible.
Experiences like mine may be an important factor in the valuation and fate of Geely\'s factory.
For example, having a huge mobile phone that powers all day with a small flat square is amazing for anyone around 90 and 80 years old.
This impression may affect the perception of even the most savvy financiers who bought bonds for the Gigabit factory in 2014 or will buy TSLA shares in the latest offering.
The acceleration of modern lithium power tools and Model S is easily dazzling.
With this mindset, it seems like a good idea to invest in a huge battery factory.
But let\'s not be fooled: the current technology has reached a very high ceiling, but there is no physical law that prohibits the power of the battery from increasing by 10 times, the charging time is shorter, or 10 times cheaper.
Batteries that use cheap metal or organic matter can still easily beat our weak, expensive technology.
Since chemistry contains trillions of possibilities, it is unthinkable that there are no millions of ways to make ideal, safe batteries.
This situation is fundamentally different from the problem the silicon chip is facing or the hard jump in the loop
Software processing based on continuous computing.
Public perception of battery breakthrough: another important factor for Geely and Tesla\'s current valuation is our 30-year experience in thin batteries
Thin film lithium battery.
It turns out that it is very difficult to improve them, which affects the industry\'s perception of battery innovation.
But since the launch of the first iPhone, Research on battery technology has really started.
Research capital flows like never before, and of course, the media reflects the growth rate and interest in battery innovation: news reports over the years on the next big technology are gaining momentum, so much so that this Tesla MB poster wrote in response to a post about aluminum
Air Battery: this dismissive attitude shows a well-known bias in behavioral finance: Once the model is established (
In this case, the News of the magical battery breaking-
Never entered the market)
We hope it will continue.
This has been true for the past decade.
With the development of gigabit factory tools, Tesla has actually bet that there will be no fundamental breakthrough in the manufacturing of cylindrical films during the lifetime of the Gigabit plant. film Li-
Outdated ion battery
This is a key point for any investment paper about Tesla.
In this case, however, even senior leaders
The tech industry undervalues the potential for innovation in their own field, which is too common, even if they are not constrained by 30 years of frustrating tech life.
For example, in his early 80 s/90 s, Steve Jobs himself did not think that personal computing would take off as before.
Similarly, many of the Internet\'s early inventors and biggest supporters were then skeptical about whether the World Wide Web would become popular outside academia.
They are rational, very smart men and women.
The mistake is that they just push out the industry trend from their own limitations and then are shocked by the unexpected speed of external innovation.
The equally positive surprise is that if Tesla is not linked to a production method, improvements in battery power will boost it.
In my opinion, Tesla\'s Gigafactory project is like an early Microsoft building a huge factory to make a cheaper floppy disk, or betting the farm on improvement like an Internet entrepreneur
The modem that brings the network to the public.
In my opinion, Tesla has left its core competitive field (
Construction/marketing of electric vehicles
Even if it\'s just subconscious, producing something everyone knows is obviously a product with insufficient motivation.
Historically, similar efforts usually end in failure.
Source: Gizmag magazine, November. 28 2015.
Before studying scientific research, I want to have an understanding of what already exists.
This article lists 43 established companies pursuing new technologies.
This is just a snapshot of the largest or most famous company, arguably the tip of the iceberg.
Here are some of the competitors and some of their facts: the purpose of the above list is not to show the personal competition of the Geely factory, although every competitor has a lot of potential to surpass Tesla in a way that investors may not consider at present.
Instead, it is designed to give the industry a sense of breadth and speed.
Just list all the battery competitors I have studied and I need 3 long articles!
By the way, I think there are unique investment opportunities in the battery space.
Most likely, the investor sentiment I described greatly underestimated the potential for technological progress, while overestimating efforts like Gigafactory.
Before a great success, it is possible to make considerable profits by choosing the right chemicals.
Market side-
Technology has entered the mainstream, and it has to be mentioned that in the field of mobile Internet,
The improvement of ion batteries is especially in the huge and later stages.
The past 2-
Months, many documents have voluntarily reported durable improvements in power density/2X reduced costs to existing 5X thinfilm Li-Ion framework.
A few years ago, expensive labs were needed for the same improvement. Grade of materials.
Now we hear the news about these organic Li.
Polymer Battery: \"Li-
PBQS batteries have excellent energy density (734 W h kg-1)
Stable length compared to commercial inorganic cathode-
Bicycle performance (
1000 cycles, 86%)
And excellent fast
Discharge/charging capacity (5000 mA g-1, 72 %)\".
This paper also points out that a cheap and economical route for the synthesis of the required materials has also been developed.
The role of secrecy: one thing to keep in mind: For the entire business high-tech sector as well
The most valuable and breakthrough research is almost always silent.
In addition, after initial success was released with the new method described above, a large number of university researchers were employed in the private sector, where they were banned from further release.
This limits disclosure and gives a-
There was no paper, a promising approach was reported, and then nothing was heard.
It is likely that there is a complete area in the dark that can post explosive success messages at any time.
However, one thing is certain: there are now thousands of 3rd-Square confirmed methods that have greatly improved compared to the existing thin methods. film Li-
Ion battery technology
What are the chances that each of them will fail?
Many of these improvements are \"down\"
Type, such as a better, cheaper electrode formula that can be used with existing equipment.
Similarly, how likely is TSLA/Panasonic to get the best technology license in more than ten years?
Of course, Tesla also has its own iron in the fire.
The company hired a famous doctor.
Jeff Dane played an important role in perfecting the current NCA cathode chemistry.
Tesla hopes his research will save costs by gradually replacing graphite anode with silicon.
Graphite itself is a very cheap material.
Structured products needed for batteries are expensive.
However, even using silicon can save money, Dr.
The chemical theory of Dahn cannot provide 2-
Other published methods demonstrate 5X power increase.
The combination of silicon anode will only bring a small progress.
The Smart Power density increase announced by Tesla will be the plan.
Of course, there are also problems: first, silicone expands by more than 300% when absorbing lithium, causing the anode film to crush itself.
In addition, the technology is not unique to Tesla: For 50 years, the literature has disclosed silicon anode, nexon and other companies to provide anyone with improved silicon technology.
Tesla and Panasonic do not have and do not intend to produce any batteries that are revolutionary and improved.
The research of new battery technology has become a broad field.
I recommend philes.
Org is a great resource that looks back on the whole field of science in an approachable way.
Search for \"Lithium Batteries\" on their website or just \"batteries\" and get thousands of articles.
Similarly, Google Scholar shows more than 20.
There are 000 new papers on this topic every year.
Grants for research have surged in recent years, from a huge collaborative effort to a small group of post-
Doctors and graduate students working on their own projects.
At this point, I would like to remind you how little Lithium is used in modern batteries and how low our maximum power is.
I really think the field of battery technology is probably one of the last areas where individual researchers can still be single
Discover and build something that goes far beyond the current level of art.
The possibility of success has never been so bright.
Better algorithms, supported by 10-fold computing power a few years ago, search for millions of chemical possibilities, while better measurement techniques such as neutron scattering and more powerful X-
The first study of nano-materials has been made possible by Ray crystal
The battery goes through the process behind many failed modes.
The following is my personal experience, so I am still skeptical: I recently walked through the physical chemistry wing of my former university and stopped to chat.
Several teams are working on battery technology there (nano-
Tube as a better electrode material and a very interesting study of a new type of boron
Organic liquid flow battery in regular battery size format, powered by cheap micro-pump).
Compared with a few years ago, the number and size of the team have increased, and the air is filled with an unprecedented atmosphere of excitement.
I was told that another researcher in the department was entitled to purchase her technology.
She\'s still working there but she doesn\'t even know what\'s going to happen with her breakthrough (
Lithium battery regenerative anode material made of anchored carbon
Graphene/Silicon foam nanotubes).
My personal impression is that there is a renaissance going on in this field.
Here is the Energy Department\'s infographic showing the process by which their researchers commercialize technology: Source: The Energy Department.
Note Step 2: IP protection slides about Doe, I would like to add that patent applications can be kept unpublished by the allowance day.
The patent application process usually takes 2-
4 years, so no one can guess what is going on.
Finally, there is a small choice here.
As we all know, the published chemicals have greatly surpassed the technology of Geely factory.
I numbered them.
Purely my subjective judgment)
According to the Energy Department 1-
Phase 7 process.
I can go ahead and list 100 promising papers and technologies, but I urge everyone who has an economic interest in Tesla to confirm that their research has surged.
It is particularly instructive to check the differences between old papers (2009 and beforeand newer ones.
Before disclosing many warnings, however, such as the need for expensive gold nanoparticles or rare elements for experimental batteries, the current study is extravagant to tell us that it is invested by ordinary, cheap.
Conclusions about the battery industry: even more than when our current technology first appeared in its 80 s, the world was eager to get better batteries.
Similarly, our basic understanding of lithium batteries has finally reached a satisfactory level (
Link is an inspiring undergraduate research project).
There is no obstacle to the adoption of new technologies: the battery is the ultimate drop
In ready-made technology.
It\'s good, because everyone agrees in a way that things need to change: The phone can hardly make it a whole day, and after a few minutes the drone drops from the sky, tesla\'s car can only travel about 200 miles.
To achieve this feat, the Model S needs several thousand pounds of very expensive batteries.
I agree with Tesla 100% that the sooner the world turns to electric vehicles, the better.
But I don\'t think so.
Thin-film lithium-ion technology like Gigafactory plans to produce will lead this charge.
Instead, it will be a revolutionary scientific advance that may have been discovered and that will make our electric car dream come true.
We are moving towards making better batteries than most people think.
Many technologies like magnesium and sodium have been sold, and their improved curves are 30 to 50% per year.
However, some trends have forced us to ignore or belittle the claims of battery progress, even if they have been widely confirmed by 3rd parties and their economic conditions are reasonable.
Many of the most successful researchers have joined the private sector and stopped publishing, another factor in our collective blindness --spot.
Historically, many industries have been blindfolded by sudden changes, although in almost all cases there was ample evidence at the time that the situation was changing.
Even Nikola Tesla, who has the same name as the company, can provide us with a good example: the invention of AC makes it possible to distribute electricity cheaply without limiting the loss of DC current to 1-
Miles radius around the power supply.
Still, gas supporters
Although the cost function of emerging technologies shows everyone that gas lighting is destined to fail, the lighting industry has pushed forward large-scale investment in its industry.
The gas lighting industry simply thinks the new technology is like the old DC technology.
Mass investment production thin
The film lithium ion battery with great potential has a bigger revolutionary leap in technology, and all of this is a sign of a very unwise decision. Thin-
Thin-film lithium-ion batteries are modern whale oil: In the long run, it is clear to everyone that this power storage is simply inappropriate.
We will find another choice.
Part 2: Origin of Geely Automobile: History of 2015 Tesla Geely Automobile: first released in September.
In one off-2013
Elon Musk commented that the initial plan was to build a 10mm square foot Gigabit plant at a cost of $5 billion.
5 to 2B will be funded by Panasonic.
TSLA improved by about 2.
At the beginning of 2014, $3 billion was obtained through convertible bond sales, and the specially publicized debt was designed to fund the construction of the Ji processing plant.
Bond interest rates are very low;
Even then, the company was praised for locking in huge financing.
After the problem, JPMorgan doubled the price target for TSLA to $340.
In addition to paying attention to two points, I will largely ignore the finances of TSLA: 1)
Despite the commitment, the funds raised from the bonds are mainly used for SG & A and 2)
Important collateral need to be posted, such as property deeds, machinery, etc.
Shareholders will eventually receive any compensation if prices plummet or worse.
This also means that bondholders may have a huge impact on the company.
If they need to transfer shares, history shows that there will be serious dilution for existing shareholders.
Due to generous rewards, Reno, Nevada was selected as the site of the site.
Construction officially began in 2015, with a construction with only 17% of the planned shell and 2015 completed earlier this fall.
The project, which was originally expected to be put into production in 2017, is now advertised to start production in 2016.
TSLA did not share the clear reason for narrowing the project.
Nevertheless, the building is still a huge project with a construction area of more than 1 million square feet.
As the current news cycle has shown, sunk costs have exceeded 0. 2 billion and spending is accelerating.
Panasonic is Tesla\'s current battery supplier and a partner in the Ji processing plant.
According to the disclosure of their contract, Tesla is solely responsible for building, installing pipelines, etc.
After completion, Panasonic will install and run (
Have their own staff and technology)
Practical machinery for the production of cylindrical batteries.
TSLA will then assemble the battery pack directly from these batteries in the same building.
These packages will enter the car or constitute the power products that the company plans to sell in bulk.
Tesla has started mobile batteries as of November 2015to-
Package the components into the building.
How Gigafactory wants to make the battery cheaper: the fact: a typical 18650 battery costs about $1.
35. Construction costs and other materials cost about 30c.
Tesla\'s Gigafactory plan is to adopt a very complex battery production process and replicate it hundreds of times in the same building.
It is believed that an extreme economies of scale could squeeze out the last bit of profit that other manufacturers have not seized.
These savings naturally apply only to the 30c currently used for construction, not to the cost of inputs.
This is understandable because there is almost no discount on increasing material purchases: for example, the cost of 100 tons of copper is almost the same as the cost of 500 tons of copper per kilogram.
As demand for gigabit plants increases, some materials may become more expensive as their manufacturing/mining capabilities do not yet exist.
There will be more reports later, but from the face value, the price of the above $1 fell by 30%.
40 C can be saved with 35 batteries.
This clearly exceeds the current labor costs.
The estimates for battery costs vary, but in no case will the manufacturing cost per battery exceed 30%.
Obviously, not only does Tesla expect a significant cost savings in battery assembly that nobody has suspected so far, but elsewhere.
The only place to save so much money is to save material or handling costs.
I would not guess what exactly Panasonic is rumored to be using chemistry and techniques for batteries, except to repeat what Tesla explicitly disclosed: The batteries planned to be manufactured at the Gigabit plant will contain the usual cylindrical electrode structure, with industry-
Standard chemistry.
These cells look almost the same as 18650 s, but are a bit large and have increased the volume by 30%.
It is difficult to save materials.
As such, these additional savings must come from the size of the procurement chain, the cost of transportation, or the further efficiency of both.
I have summarized the following positive factors: Advantages of Geely factory: risk factors: breakthrough of Geely factoryeven only in 7-
10 years: Execution risk span time-
From construction delays to long periods
Outdated terminology.
But especially the threat of new technology is important because Tesla itself plans
In 10 years, the Geely factory has achieved a balance of payments.
So, over the next decade, projects are beginning to pay off and there will be no major changes in basic technology.
Surprisingly, in another ten years
The thin film lithium battery will have a history of 50 years.
But if industry trends remain the same, it will be disastrous.
Here is an example: Eriksson Aircranes (NASDAQ:EAC)
Thirty years old and healthy
Respected helicopter services raised a lot of money in 2013 to significantly increase its fleet.
Everything looks good and the EAC promises scale efficiency that will dominate their industry for decades.
Like TSLA, debt is secured by the company\'s core assets.
When the deal was made, the EAC industry performed well and dropped sharply in less than two years after the \"Good Times\", which was rarely foreseen at the time.
Thanks to its illness. advised, debt-
Now, the EAC is close to bankruptcy, as follows: the situation does not exactly match Tesla, but there are important similarities: the spirit of Tesla\'s commitment to the positive assumptions that EAC may make about the growth of their respective markets.
Just like the EAC, while no other industry participant has done so, Tesla is also expanding significantly for \"Scale efficiency.
As the EAC shows, it is assumed that the expected demand will put the otherwise healthy company in trouble, especially in the case of excessive liabilities.
Shareholders of the EAC have seen their holdings decrease from $20 to $2 as other investors have delayed the money given to the company, and they are rightly concerned that their investment could suffer a total loss.
And EAC is not a plush bubble stock: their brand is the most respected in the whole industry, they are highly diversified and still bring hundreds of millions of dollars in revenue every year. A good brand-
When numbers don\'t work, names alone can\'t save companies from bankruptcy.
It seems to me that cases like EAC are worth looking at as their failures can provide a lot of lessons, including how quickly our market can price previously popular companies as a liquid death
For Tesla, the lesson is that speculative expansion, especially in the case of strong growth, can be very bad when it comes to excessive debt.
The situation has changed, especially in the battery industry, and there will be great turmoil sooner or later.
Tesla has voluntarily linked its fate to the fate of Geely\'s factory, and no matter how reassuring its current shareholders are, the downside risk can be disastrous.
Just because the brand is the best in the business and sales are booming, there is no guarantee of future success.
Tesla home storage battery: One thing I noticed related to TSLA bulls is that there is a keen belief that home energy storage will soon become a big business, so I will discuss it here.
It is hoped that this future demand will provide a broad new market for Geely\'s products.
But simple economics suggests that arbitrage in electricity prices (
Charge at night when the rate is low, use during the day)
This is not possible: an average homeowner may save between $100 and $300 a year, but doing so requires thousands of dollars worth of battery and installation costs.
Since the battery used on a daily basis does not exceed 5 to 7 years, there is absolutely no way to break-even.
Let me explain the situation more clearly: in some places around the world (
In some parts of Australia, for example)
There is a very high difference between day/night electricity charges, which is almost impossible to push rate arbitrage to a breakthrough
Even more than ten years. But industrial-
Scale storage matures faster than home storage
Battery, by the way, its idea has been around since 1860.
Given the low cost of storage on an industrial scale, how likely is an economically reasonable price difference still to exist in a decade?
In addition, the current easy-on easy-
The shutdown of gas turbines will stabilize energy prices.
As prices for fossil natural gas remain cheap for a long time, utilities are investing more.
Solar adds Finishing touches: it produces during the day with the highest demand.
More importantly, cost and safety.
Other battery chemicals on the market are already cheaper and longer
Longer lasting and safer than Tesla\'s planned batteries, although they hardly start to be used on a large scaleproduced.
Their rate of improvement is also much higher, about 20-50% per year.
Investors are clearly excited about the potential of Geely\'s battery to take a favorable position in the home power storage market.
Prior bubbles in the mood are observed to help identify when the current occurs.
So for your enlightenment, I am referring to almost the same situation in agriculture four years ago: it is believed that planting covered crops such as willow switch or Mans will soon provide infinity for biofuels and power generation
To some extent, Tesla has dug up exactly the same secular interests (
Revolution in cars and electricity).
Seed Company (NASDAQ:CERE)
Speculative ethanol producers took advantage of what some had said at the time, and when the economy had no chance to solve the problem, the bubble burst predictably.
Then the whole industry collapsed. 99%.
By the way, if you are interested in reading the stocks that I have been engaged in agriculture/environmental protection for a long time, please study Acadia Biosciences (RKDA).
Another example is that the tech-stock bubble burst due to excessive expansion.
Expected Demand: 3D printing.
I think this is a new industry that is more promising than the power industry, but if the economy doesn\'t work, these overbought valuations will eventually shrink.
Actual example: if you put in $230NYSE:DDD)
Stock anywhere near the top, all you have left now is $20 in the area.
This is not to say that none of these ideas are perfect;
But good timing is a must for any type of investment, even long term --term.
I mean: source.
Where is Tesla on this chart?
A quick list of possible Gigabit factory catalysts: There are many variables to consider in the Gigabit factory, so I made two short lists to summarize it all.
I \'ve been using them to track the news.
And evaluate my prediction.
Positive development: negative development: Section 3: Conclusion: Chart of my first short position at TSLA.
Tesla is a young company led by a charismatic CEO.
They have just released an X-model SUV, a luxury 700 hp SUV with falcon wing doors and a 15-mile/hour top speed for women.
So they\'re bold.
Maybe too bold.
Since April 2013, Tesla has been valued for its dream of propaganda;
It can be imagined that this may last until revenue catches up.
But there is growing suspicion: a few years ago, technically, after the company\'s cash flow turned positive, it now relies more than ever on large-scale financing to maintain operations.
If it\'s just a gentleman
Musk\'s bet is sour (
Model X, gigabit factory, Model 3)
This will raise doubts about Tesla\'s entire financial structure.
Of all the bold attempts, the Geely factory is probably Tesla\'s most dangerous (
Although the unusual design feature of Model X makes it run well with money).
The meager profit from battery sales is a bad reward for display
Once the new technology comes out, stop risks such as the complete obsolescence of the company\'s largest assets.
The huge complexity of Gigafactory also brings the climax of the execution risk.
The last one is red.
The fierce competition in the commercial battery industry means that if the Ji processing plant is really successful, the business model will soon be replicated and lose any advantage.
If Geely\'s factory fails to meet expectations, this will seriously undermine investors\' trust in other companies in Tesla.
Because the failure of Gigafactory also means a huge financial loss, Tesla shares can easily fall
Oil prices are rising as investors may not be willing to fund Tesla at its current highest valuation.
As the Eriksson Aircranes example shows, having an industry-leading brand is not insurance for debt issues.
Because Tesla\'s R & D costs, debt and debt levels are very high, the failure of Geely\'s factory may even lead to self-
Especially in the case of competitors using better batteries, the decline in stock prices, the reduction in freedom of operation and the resulting loss of sales have intensified.
The customer is very concerned about the scope, and the lighter battery will bring the benefits of exponential level (
For example, the weight of the acceleration is small, so the engine is small, which means that the weight is still small, and so on. . ).
I really hope that Tesla\'s CEO will cancel this nonsense for the inevitable speed of our society\'s shift to electric vehicles.
Wouldn\'t it be better to spend these billions of dollars on battery research or just stay in the pure electric vehicle field?
Another smart idea is to reserve more money: even if sales lag one year, capital is needed for service centers, suppliers, interest payments, etc.
The recession is sure to happen in the end.
Alas, it\'s too late to change direction.
I suspect it would be a very bad thing to build a gigabit factory.
Pay goodwill to the company in a regular manner.
When a CEO sees a fuel cell as a \"fool battery\", I am concerned that they may not fully understand the risks of the future.
This reminds me of my last point: like many others, I have also noticed that Tesla CEO was referred to gambling frequently in a timely manner.
People like to say: \"Don\'t bet on Elon Musk.
\"But no winning streak will last forever, and his huge gamble on scientific progress in the battery field may be the reason to break the situation.
My current trading strategy is to short it according to Tesla\'s promotional cycle.
I have my own dragon.
Dated uses TSLA as a portfolio to hedge against a broad market downturn;
Of these, the most striking ones are the speculative names.
Still, I admire the company, but I don\'t think the status quo in the battery industry will always exist.
Disclosure: I/we are short for TSLA.
This article was written by myself and expressed my views.
I was not compensated.
I have no business relationship with any stock company mentioned in this article.
Additional disclosure: I have invested in a private company that has developed alternative battery technologies that I found during my research into this article.
The company is not mentioned in this article.
All my opinions and analysis are my own.
Editor\'s note: This article discusses one or more securities that are not traded on major US securitiesS. exchange.
Please note the risks associated with these stocks.