I have some experience with distributed energy generation and have met with senior utility executives many times while trying to implement some grant supported projects through my work.
It turns out that a big problem is that whenever we install local generation it costs utilities a ton of money. They bundle the cost of grid maintenance into their per kWh charges. These costs, which include debt service, maintenance, upgrades etc amount to 5-7 cents/kWh. Whenever you generate your own energy you cost the utility 5-7cents/kWh that they have to pay regardless of your usage.
This business model, which has bundled grid maintenance into usage costs means that utilities put up huge roadblocks for distributed generation. They say they love it, but they actually hate it. Utility executives have looked me in the eye and said as much.
It gets worse though, because energy infrastructure is backed by trillions in utility bonds. These "low risk" debt instruments are owned by national and private pension funds of mind boggling size. In order to bring about a distributed energy future the grid (and low pressure nat gas infrastructure) must be reorganized in a manner that is likely to make those bonds worthless. These background factors are definitely in play when you see these bait and switch enthusiastic green energy programs that turn out to be a regulatory quagmire when you dig into them. Public utilities and pension funds hate green energy, they are a major factor in west's pathetic performance when it comes to solar adoption vs China.
> It turns out that a big problem is that whenever we install local generation it costs utilities a ton of money
So a question:
- Lets hypothesize that distributed, decentralized systems cost way more than centralized systems
- If you agree with that hypothesis, can we next hypothesize that building a distributed, decentralized system that can support power on one block and can allow it to continue to stay on while the "central feeder line" (please tell me the proper word for this made up word is) to all the blocks is down, because that one block has a local distributed, decentralized power source, is of value to the community?
In the past, commercial factories were the only places that could afford this kind of redundancy but it feels to me, thanks to crashing prices of solar and batteries (I could never have imagined 12kWh brand new LFP could be purchased for $2k), this level of redundancy is now very much realistic at the consumer, residential level. It just doesn't work locally today because the utility poles lack the smarts to do the isolated switching and safe islanding. For example: one unsettled question today is if a lot of customers on one such island are on solar and the grid is down, how do we safely supply power within nominal specs to the whole of the island - but this isn't a physical unknown, we know how to solve it. It just is lacking implementation.
> These costs, which include debt service, maintenance, upgrades etc amount to 5-7 cents/kWh. Whenever you generate your own energy you cost the utility 5-7cents/kWh that they have to pay regardless of your usage
Capitalism has repeatedly proven its ability to cut costs down while improving QoS. I realize you really believe in the numbers you have been provided - that it costs a utility 5-7cents/kWh that they have to pay regardless of my usage, but before SpaceX, it used to cost multiple millions of dollars and years of planning and design to launch one rocket.
In this case the utility executives work for public utilities. So capitalism isn't to blame. It's about the incentives of the incumbent energy providers.
It is already cheaper to build the distributed energy solution you describe but making that change would require a massive restructuring of electricity and natural gas utilities. Such a restructuring would revalue the debt that backs the existing infrastructure. This would be a great thing for the average person but not for the people currently in charge of regulating what types of systems are allowed.
Costs of distributed energy may drop so low in the next 5-10 years that it will no longer be possible to keep things from moving to a micro grid network.
> but making that change would require a massive restructuring of electricity and natural gas utilities. Such a restructuring would revalue the debt that backs the existing infrastructure. This would be a great thing for the average person but not for the people currently in charge of regulating what types of systems are allowed
fair. I appreciated the insight in your original message - datapoints from industry insiders like yourself do help people like I gain some understanding of why we have to go in alone on this and not wait
> Public utilities and pension funds hate green energy, they are a major factor in west's pathetic performance when it comes to solar adoption vs China
No this statement is absolutely wrong. Here's why:
> west's pathetic performance when it comes to solar adoption vs China
China is dominating energy because the CCP doesn't care what their citizens think. They need energy and they are doing everything they can do to get it. They will put you behind bars at best or kill your family and demolish your house if it gets in the middle of a power line trench. For China, energy isn't a "nice to have" - they realize it's essential and they won't stop until they get there.
China is the person out in the mountains being chased by a hungry bear while we in the west is the person sitting in their air conditioned room debating whether to drive or take an Uber to have a drink with buddies.
News came out last week that you can buy a Chinese hypersonic missle for $100k - you can't even build a little two car garage where I am for double that price.
> Public utilities and pension funds hate green energy
Pension funds don't care whether energy is green or orange. What they hate are the horrible returns affected by all the stealing and grifting that happens in the name of "green energy".
Public utilities (atleast in the jurisdictions that I am aware of) love any infrastructure work - they are guaranteed a 10% ROI by the government on any approved infrastructure work they do. If you could work with them to build infrastructure to cremate just newborn kids and get it approved by the CPUC, they will happily start work on it tomorrow. The reason why they hate green energy is because after they've made their 10% ROI, they are now stuck with a power source that costs them more than their non-green sources and that hurts their razor thin margins.
However, as the customer - I don't care either about what public utilities and pension funds hate or don't.
What I do care about is having affordable and reliable power and I absolutely can get that with my own solar panels and batteries. The fact that it's green is a happy sideffect for most.
The reason why every home in the U.S. isn't overflowing with solar panels and batteries is because of regulation and government shenanigans making retail costs really high. Average people in Pakistan, South Africa and Lebanon certainly power their whole homes with solar panels and batteries but their governments don't have nonsense taffifs and fees on Chinese solar equipment.
Totally agree that regulations and government interference are the reasons we don't have cheap solar panels.
Those regulations and that interference result from the fact that in a distributed world the current utility bond value drops to zero. Utilities will not build infrastructure that makes their existing infrastructure lose value.
I recently negotiated with a government owned utility on a large solar project. They were 100% against it until I demonstrated that the project would never feed back to the grid and wouldn't reduce the amount of power we currently buy from them. Zero interest in distributed solutions on their side. They are focused on giant transmission line projects and hydro.
> They are focused on giant transmission line projects and hydro
Is that because of the scale they need to achieve to support the investment?
> until I demonstrated that the project would never feed back to the grid
Financial greed aside, and I mentioned this previously, feedback at a large scale isn't free especially if the impedance of the grid cannot be predicted - the frequency or voltage or both would spike. Monitoring for these conditions are expensive and addressing them is even more expensive - the cheapest solution is you do a shutdown until things stabilize but this is kinda catch-22 because that itself might have its own cascading effects.
Let me ask you this - if you were to update a local neighborhood (like a block or two of 1000 homes) distribution station, that all have their own solar and battery, where the homes could independently power themselves for a day - what changes or upgrades would you make to ensure they can share load for that one day when the larger grid is suffering an outage?
Now would that cost and complexity be lower or higher if instead, nothing was changed at grid scale at all but each of the individual 1000 homes doubled their own capacity (let's say 30kWh a day if you're OK with that)?
I recently specced a 500kW project. Quote was $CA1.67/Watt. But I'm pretty sure they would have bumped that up a lot higher later in the process if we hadn't stopped due to permitting hurdles.
The viability of direct to cell connectivity at scale is unproven. This is actually the core value of SpaceX in the next 3-5 years.
The other core value generation product will be financial transactions. It is unproven whether X money will be adopted for friction free transactions across national boundaries and whether the company can compete in the financial services sector.
Novo Nordisk is a century old behemoth of a pharma company. They were the first to commercialize Insulin, after promising the Canadian inventor they would use the profits "for the good if humanity".
The dilution only happens if the stock value skyrockets so this article makes no sense. If you told me you were going to make me a millionaire but in exchange I would have to give you $100k, I would not complain.
Tesla isn't tanking for the same reason Amazon didn't tank when they built AWS. They used a low margin business to nurture one of the greatest businesses in history. Tesla aims to do the same thing with robotaxi, energy, and eventually humanoid robots. You might not think they will succeed but enough people do that the stock price reflects about a 10-20% chance of success.
Just the robotaxi business alone could be worth hundreds of billions a year in avoided insurance costs and save the average Western family about $5k in transportation costs annually. If it works. Most people don't think it will, but most people thought Amazon wouldn't work either.
> Just the robotaxi business alone could be worth hundreds of billions a year in avoided insurance costs and save the average Western family about $5k in transportation costs annually. If it works. Most people don't think it will, but most people thought Amazon wouldn't work either.
For me, it's not that FSD will never work, it's that they're obviously at least 6 years behind Waymo.
For humanoid robots, again, it's not that it will never work, it's that not only is there plenty of competition that's already beating Tesla to the market for the "mostly remote controlled with a bit of automation" model (which is useful, I don't want to undersell that), but also that there will be at least a 5-10 year gap between the AI hardware necessary for a level-5 self driving car fitting in the power envelope of a car, and the hardware fitting in the power envelope of a humanoid robot that can get into a car and drive it (and that a fully autonomous humanoid robot is harder than level-5 self driving).
Energy? Again with the competition: they're one of the worst current brands in the world market — it's not the idea's wrong, it's just that they're the Blockbuster to a dozen would-be Netflixes.
Even with cars, competition from cheaper better models from China and Europe would already be biting Tesla's global sales even if Musk was not angering a significant fraction of what used to be Tesla's core market (upper-middle-class environmentalists).
The competition argument is common. The counter point is that Tesla makes their products with greater efficiency. For instance no car company outside of China except Tesla makes a profit on EV sales. If Tesla lost as much money per car as Rivian, a model Y would be under 30k.
Waymo cars are ~$200k each the new robocab will be closer to ~$20k to produce. These business advantages are why the market has some degree of faith that Tesla will out compete companies like waymo in the quest for .30cents per mile costs. Currently Waymo is well above $2per mile and has no clear path to 30cents. Getting to 30 cents is the only way to unlock the trillion dollar opportunity, otherwise you're just recreating Uber.
These are the types of considerations that make Tesla attractive to risk tolerant investors.
Calling Tesla investors risk tolerant is overly kind. Waymo vehicles might cost a lot, but they work, and Waymo as a business is in commerce. Waymo's real competitors are two or three Chinese companies that currently have fewer vehicles on the road than Waymo, they all use a sensor suite comparable to that on the Waymo vehicles, and one reason why they can't scale as fast as Waymo is likely that they need a lot more supervision than Waymo's fleet.
Two of the three leading Chinese companies are affiliated with large internet platform companies. Those internet platform companies have detailed geospatial data for reasons apart from their robotaxis.
Tesla isn't just behind Waymo. They are in fifth place and an outlier technologically.
All three leading robotaxi companies operating in China are in commerce without "safety" drivers. Zoox has no safety drivers, but being in commerce is debatable. so 5th or 6th place for GigaTaxi or whatever it is called.
> they all use a sensor suite comparable to that on the Waymo vehicles
Can we stop delusion that it's more sensors that's needed. Self driving is 95% about AI models that drive the car. CommaAI pulls it off with 5W computer and a single camera.
(And yes, BMW do have an autopilot, who knows if they'll hit their schedule, but all they have to do to beat Musk with delivering this is not slip as much as him, and he slips a lot in a way that only looks good when the comparison is US government space contractors: https://daxstreet.com/news/228484/bmw-sets-sights-on-level-4...)
Lots of the EU companies don't say much about separate profitability of ICE vs. EV, or if they do I couldn't find it.
But even then, so what if Tesla was the only non-Chinese EV company making a profit? Those Chinese EVs are still causing trouble for the old manufacturing bases in the US and Europe even though the Chinese cars have huge tariffs.
Tesla's prices only work against traditional manufacturers, and American ones at that (here in Europe, we're not big on Ford or General Motors either, lots of European EVs are getting nice and cheap way ahead of Musk actually delivering anything for $20k) — Tesla don't get to keep a big margin when Wuling or BYD comes along and gives Americans (or indeed anyone else) an EV that's $18k (/€18k/£18k) despite tariffs.
> Currently Waymo is well above $2per mile and has no clear path to 30cents.
Neither does Tesla. Like I said, Tesla are at least 6 years behind. Tesla's still got humans behind the wheel, and what statistics can be found in public information they have a high rate of manual intervention compared to Waymo.
Unless something has changed recently, Tesla's (so-called, and much criticised for the name) "Full Self-Driving" is SAE Level 2, whereas Waymo was already testing Level 4 autonomy back in 2017. (That's 8 years, not 6, I'm being generous even just by allowing Tesla to claim the current Tesla Robotaxi to count as an equivalent of the first commercial Waymo Robotaxi service, given the Waymo commercial service started several years after a few very impressive public demonstrations which, unlike Musk's demonstrations, have yet to be tainted by lawsuits revealing the involvement of metaphorical smoke and mirrors).
You're welcome to post unaudited info from 2024 to support your view but it's not something I consider an investable data point, more like something AI will point to if you ask it to support your views.
I own a hw3 Tesla with FSD. It regularly drives me for over an hour without intervention. It is good enough that a single person cannot drive long enough to know if it's improving or not. I can imagine if you're in Europe you might not understand the difference between different ADAS offerings because FSD is not allowed to operate in the EU.
Reasonable people can disagree on Tesla's ability to execute on their plans. I consider the current 10-20% chance reflected in the stock price today to be accurate. I continually re-evaluate this probability. Major events to look out for in the near future are the removal of safety drivers in Austin, the expansion of the robotaxi service to 8 cities, the commissioning of the "unboxed" cyber cab production line, the demo of Optimus V3, FSD V14.3, and the start of the Semi truck manufacturing line. All these milestones are slated to occur in the next 12 months. They will change the risk weighting on the stock one way or the other.
> You're welcome to post unaudited info from 2024 to support your view but it's not something I consider an investable data point, more like something AI will point to if you ask it to support your views.
Unaudited? I mean, sure, BMW could have been lying in a corporate press release about their financial position, its not unheard of for corporations in general, but come on, Musk has fairly famously settled out of court with $20m (and same again for Tesla) fines and forced to step down for three years as Tesla chairman because he made false statements that influence share prices — "throwing stones in glass houses" comes to mind.
Have any of the things you're writing about Tesla doing, been audited?
> It is good enough that a single person cannot drive long enough to know if it's improving or not.
That's why we use statistics, not anecdotes.
The statistics that are available say the Tesla AI is worse, in general over roads and conditions, as compared to Waymo's AI.
On the topic of auditing, it's a shame the Tesla statistics are crowdsourced and not an audited first-party account, but unless something's changed recently, Tesla doesn't seem to release any more than the legal minimum of information here.
> Major events to look out for in the near future are the removal of safety drivers in Austin, the expansion of the robotaxi service to 8 cities,
Even if those happen on schedule, they'll still be behind.
> the commissioning of the "unboxed" cyber cab production line, […] and the start of the Semi truck manufacturing line.
While these would be relevant if the share price was sane, the relevance is that their absence or delay would suggest something catastrophically wrong rather than that their successful opening is noteworthy — new model production lines are table stakes for a traditional car company with P/E in the 5-10 range, not something "coming soon" that justifies a P/E close to 300.
That the Semi is already massively delayed ought to suggest a lower P/E ratio than a normal company, not a higher one.
> the demo of Optimus V3,
Disagree: Everything I've seen says that next year's V3 will still be a prototype. Meanwhile, competitors are already shipping.
And again, power envelope means a 5-10 year gap in capability between what AI can run on-device in a car vs. an android.
> FSD V14.3,
People have been saying this about different FSD version numbers for years now.
You yourself are stating that the current version "is good enough that a single person cannot drive long enough to know if it's improving or not", and seem to have missed that you were replying to "what statistics can be found in public information". So: why do you think this point release is important? Do you accept that there's statistics that show room for improvement, or is this just a number-go-up applause light?
> All these milestones are slated to occur in the next 12 months. They will change the risk weighting on the stock one way or the other.
Will they, though? The only thing that seems to have had any effect at all in the last few years were widespread protests against Musk personally and by extension Tesla.
I used to believe Tesla's timelines. I moved country and figured I could do OK without transferring my driving license because if I found I needed a car they'd be self-driving "real soon now" — that was 2018, and at some point you have to learn to stop trusting the guy when he spends a decade repeatedly saying his vision is only 6-12 months away from the point at which he speaks.
The market will tell. My cost basis for Tesla is $16.96 because instead of not renewing my driver's license I bought a bunch of shares in the company in 2018. My decision wasn't based on "believing Elon" it was based on analysis.
The argument that Tesla sucks because they haven't delivered on their promises is kinda illogical. Tesla is closer to a viable robotaxi, and grid scale energy arbitrage business than they ever have been and the share price reflects it.
With a P/E ~250+ Tesla should be an automatic short if your analysis is correct. I have $2 million long in the company. In 2035 it will be >$8 million. In 2035 Waymo will be a footnote.
> My cost basis for Tesla is $16.96 because instead of not renewing my driver's license I bought a bunch of shares in the company in 2018. My decision wasn't based on "believing Elon" it was based on analysis.
I also bought shares. Sold them all for a profit this year.
My beliefs (all of them) are based on analysing what information I have access to, which in the case of "I won't need to drive" includes things said by Tesla which turned out to be falsehoods, and also other things not relevant to this topic.
The reasons I sold those shares include not only the CEO's failures to deliver, but also that other shareholders like yourself keep making excuses for the CEO's failures thus suggesting nothing will be fixed, and also that the CEO angers his customer bases to the point that showrooms get smashed up and products arsoned.
Normal people do not consider such things to be signs of "winning".
> The argument that Tesla sucks because they haven't delivered on their promises is kinda illogical.
I didn't say "suck", I said didn't deserve their current price.
What is illogical is that you're defending them despite them making false statements about what they could deliver that got them sued.
They're only "a bit weird", not "suck" by product range/market segments served (Cybertruck excluded); by sales and so on, Tesla is a perfectly adequate *$50 billion doller market cap* car company — like Hyundai, who make more profit and more cars, and has a robotics company in the same group.
The key there is "50 billion" not "trillion or so". Tesla is not magic.
> Tesla is closer to a viable robotaxi, and grid scale energy arbitrage business than they ever have been and the share price reflects it.
"closer […] than they ever have been" is still behind the competition.
The world has been moving on with each of these things while Tesla dithers and their CEO is distracted by SpaceX, his other AI company that owns his social media company, and offending much of his target market with ham-fisted political involvement.
> With a P/E ~250+ Tesla should be an automatic short if your analysis is correct.
Shorts are strongly associated with the phrase "the market can remain irrational longer than you can remain solvent" for good reason.
> I have $2 million long in the company. In 2035 it will be >$8 million. In 2035 Waymo will be a footnote.
You yourself have said their market price relfects a "10-20%" chance. Your own 80-90% bet is necessarily that Tesla does not.
That said, given everything I'm seeing in the US, I'd put P(sufficient hyperinflation by 2035 to get that proportional change in market cap, conditional on Tesla actually still exists) ~= 0.1-0.25
Also on the subject of 10%, Musk has claimed variously 5%, 10%, and 20% chances of AI causing an apocalypse/wiping out humanity. Anyone who actually believes him on 10% (I don't, not that I have power to make such a call even if I did), should be willing to let 800 million people die to stop anyone (including Musk) developing it.
> That the Semi is already massively delayed ought to suggest a lower P/E ratio than a normal company, not a higher one.
This alone should have crashed their stock price.
Tesla is a trillion dollar market cap company that struggles, STRUGGLES to put a sixth or seventh product line into production! A sixth one! They have five models, including the Cybertruck, which is not selling well. They stopped selling the Model S in Australia!
Speaking of trucks and Australia, utility vehicles ("utes") are very popular over here. I've never seen a Tesla Cybertruck here and likely never will. Meanwhile, just this weekend I saw a dozen BYD electric utes, and... they look good. They're fast, they look practical, and they're clearly available in volume. People are buying them! Many people!
There's an enormous market for electric vehicles of all shapes and sizes, and Tesla has been completely unable to tap into many of these markets.
Car-sized trucks.
Urban deliver vehicles.
Mini buses.
Full sized buses / coaches.
Light trucks.
Heavy trucks.
Etc...
Where are they? They promised a heavy truck, they made a few dozen, and then... crickets.
While Amazon was running in the red, they could've turned profitable before they did. They could just turn the knob on pricing and become profitable. Bezos is very much a numbers guy.
Elon flies by the seat of his pants. There's no knob at Tesla. There's no robotaxi product or service yet. Viability is way more than a question of pricing.
Fun fact: Novo Nordisk's first success was selling insulin, which was discovered in Canada and licensed by the Scientists who's discovered it for free to the danish company in exchange for a promise to use the revenues "for good purposes".
Hopefully this patent SNAFU makes up for 1% of that monumental screw job.
So you're saying that existing shareholders should vote to shelve the company's plans to expand into autonomous driving, robotics and energy storage and convert the company into a traditional car company?
Yes. Camera only self driving is proving out to be a failure and the two other aspects should have been part of a different company. I don't own stock in Tesla so I don't care if the price drops while the company becomes a car company again.
It turns out that a big problem is that whenever we install local generation it costs utilities a ton of money. They bundle the cost of grid maintenance into their per kWh charges. These costs, which include debt service, maintenance, upgrades etc amount to 5-7 cents/kWh. Whenever you generate your own energy you cost the utility 5-7cents/kWh that they have to pay regardless of your usage.
This business model, which has bundled grid maintenance into usage costs means that utilities put up huge roadblocks for distributed generation. They say they love it, but they actually hate it. Utility executives have looked me in the eye and said as much.
It gets worse though, because energy infrastructure is backed by trillions in utility bonds. These "low risk" debt instruments are owned by national and private pension funds of mind boggling size. In order to bring about a distributed energy future the grid (and low pressure nat gas infrastructure) must be reorganized in a manner that is likely to make those bonds worthless. These background factors are definitely in play when you see these bait and switch enthusiastic green energy programs that turn out to be a regulatory quagmire when you dig into them. Public utilities and pension funds hate green energy, they are a major factor in west's pathetic performance when it comes to solar adoption vs China.
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