Michael Robinson is out with a pitch for a company that he thinks will profit as “Tesla’s silent partner” in “Operation Bluestar” — and, naturally, Gumshoe readers are just dying to know who it is.
Without, of course, ponying up for a subscription to his Nova-X Report newsletter — though that is, apparently, Robinson’s “entry level” newsletter now, it’s currently $99 (and he says that’s a “92% discount” to what the subscription and the special reports are worth). The first newsletter he launched when he came over to Money Map Press a couple years ago was Radical Technology Profits, which they persist in trying to sell for $3,199.
The ads for his Radical Technology Profits letter have been flacking the idea of MEMS chips for ages now, focusing on the idea that MEMS will enable “one device to end all disease” but really just teasing the largest MEMS chipmaker (that report of his now seems to be freely available on their website, by the way) — and this pitch seems a bit similar to that, lots of big picture pie-in-the-sky possible technological breakthrough, the huge potential for electric vehicles from Tesla’s planned battery plant, but actually recommending a much less sexy company.
Which may work out well, who knows — but let’s sift through the very light clues and see if we can actually name that company for you, shall we?
The basic pitch is that Tesla’s “Operation Bluestar,” being spearheaded by wunderkind techno wizard J.B. Straubel (he’s the chief technology officer at Tesla, who also apparently invented some new propulstion system as a 14-year-old that made it into aeronautics and had his first company bought out by Boeing before he became the name behind the battery and propulsion patents at Tesla), is going to change the world as it brings electric cars to the masses.
That is a real project name, by the way — but Tesla doesn’t use it anymore. “Operation Bluestar” was the name they gave to their goal to build a mass-market electric car, an aim they’re still pointed toward (though now they just call it their “Third Generation” vehicle or their $30,000 vehicle — it used to be a “$20-30,000 goal five years ago, now it’s a $30-40,000 goal”). Tesla can obviously not ever become a profitable company worthy of even its current valuation (let alone the huge potential growth investors are expecting) by just producing 30-40,000 cars a year for the wealthy at $100,000 a pop… they have to get costs down and get capacity way up to make it possible for them to sell a car that middle class Americans could buy.
It’s going to take a while. Their plan is to have these cars in 2017, and that’s the number Robinson uses when saying they could be building 500,000 cars a year in three years, but that’s probably extremely optimistic — the basic idea is that they’ll build this massive “Gigafactory” to dramatically increase lithium-ion battery production somewhere in the Southwestern US, and when that factory is hitting its stride in a few years the plans and designs for the new, smaller and probably more distinctive, “Operation Bluestar” car will be ready for initial production. So yes, the plans for their massive new battery manufacturing complex are a key part of their plans to roll out a mass-market car.
(Of course, other carmakers aren’t sitting still — BMW’s i3 is the car that’s most often compared to what Tesla might eventually build for the high end of the mass market (the people who now buy the cheapest Mercedes and Audis), and it’s already for sale in the $40,000 neighborhood, as are less-sexy and less expensive EVs from Chevy, Ford, Mitsubishi and others).
But anyway, a massive cut in the costs of lithium ion batteries would be a big boon for Tesla and give it a chance to get real scale in their car production, and may also help advance EVs from other carmakers (Tesla makes batteries and powertrains for some other manufacturers too, though in small numbers at the moment, and Toyota is thought to be interested in the “gigafactory” too (Toyota is a Tesla customer and was an early strategic investor in the company). As of their last earnings release (last night), Tesla is now saying that they’ll break ground on two different locations for this huge battery factory in the near future — I don’t know if that’s really because they want to build two massive factories instead of one, or if they’re still just playing the possible host communities off one another like a NFL owner trying to get a new stadium built.
And Robinson has claimed that the key “secret partner” who will be working on the new battery factory (or factories) with Tesla is not really well known, but that he’s been following the “paper trail” and gabbing with his high tech contacts, and he knows who the key partner will be.
So that’s the tease, that Tesla’s partner on these gigafactories will see huge gains. Who is it?
In Robinson’s words:
“I’m going to reveal the “silent partner” I believe, Straubel is turning to in order to carry out BlueStar…
“And I anticipate, in the coming weeks, when the identity of this “silent partner” is made public – it’s going to ignite an unstoppable profit inferno…
“Where an overlooked tech outfit that has strategically set up offices in eight states – could see its share price begin to surge 2,000%, nearly overnight….
“For 5% of the cost of a single share of Tesla… You Could Make 2,000% Gains off its “Silent Partner!”
“Its identity is expected to be revealed in the coming weeks.”
They’re pretty good at wordsmithing these pitches, eh? Our greedy little investor brains say, “hey, he thinks this stock is going to quickly go up 2,000%!”, but what he actually said was it “could see its share price begin to surge 2,000%, nearly overnight” (my emphasis). Which really means, “I think it will go up, and it might eventually go up a lot.”
And no, I probably can’t give you a 100% solid answer on this one — there aren’t enough clues — but I can feed the clues we do get into the Thinkolator and give it our best shot.
You saw one hint in that bit above, which is that the stock of this “secret” potential “silent partner” is trading for about $10 a share (5% of the cost of a Tesla share, TSLA is in the $200 neighborhood even after their post-earnings beatdown today).
Here are the rest of the clues:
Robinson runs through a long bit of chatter about this “Operation Bluestar” and the “Gigafactory” Tesla is planning, including requirements that it be in a solar-friendly state with a lot of land and some nice tax treatment and a rail line to California to reach Tesla’s assembly plant, but that’s really just storytelling to keep getting you excited — it has nothing to do with who this partner will be.
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And yes, the other major requirement is money. It will cost at least $5 billion to build the “gigafactory” and Tesla, as an unprofitable company in a tight-margin and capital-intensive business, doesn’t have $5 billion. They’ll raise some of it, no doubt — but if they sell a few billion dollars worth of stock right now the shares will probably crater, so they want to spread the cost to partners. Here’s more from Robinson:
“Operation BlueStar Requires a ‘Silent Partner.’
“Thanks to J.B. Straubel, Tesla is proud to say that their battery packs, electric motors, on-board chargers, and universal connectors are all homegrown.
“However, it still requires the work of an army of suppliers, just to roll one vehicle off the assembly line.
“Tesla keeps their full list of suppliers classified, but 26 are known to the public.
“From high-performance brakes from Italian leader Brembo…
“To Michigan’s Fisher Dynamics for power recliners…
“To Japan’s Panasonic for their lithium-ion cells…
“And Japan’s Harada for antenna systems….“So After Publicly Declaring They Were Looking for a Partner to Help Them Build, Fund, and Run Operation BlueStar’s Gigafactory…
“Speculation Immediately Began to Run Rampant About Who Will Be the Handpicked ‘Silent Partner.'”
Possibilities? He throws out a few names that have been mentioned:
“Japan’s Panasonic was the early leader, since they do supply Tesla with their lithium-ion cells.
“But they aren’t guaranteed this business in the future. Japan’s Sony is also in the conversation.
“In South Korea, LG Chem and Samsung SDI have been mentioned.
“In China, the companies being touted include Lishen, and Amperex Technology Limited.
“But many believe the frontrunner from this Asian superpower is BYD.
“That’s because China controls 5.4 million tons of lithium – and BYD has developed China’s top electric vehicle battery technology.
“Plus, years back Warren Buffett invested $230 million into the company. So that’s a softball choice for the press.”
Who, then, is the leader that he thinks will be most likely to come in as this “silent partner?”
“Everything I’m hearing, and all of the evidence I’ve gathered, points to one company that, for many, is going to come out of nowhere.
“But if you follow the money… it leads you right to Operation BlueStar….”
First he says that graphite technology will be a key:
“You need three elements in lithium-ion batteries: lithium, graphite, and cobalt.
“So if a potential ‘silent partner’ in Operation BlueStar happened to have a competitive advantage in graphite technologies – that would give it a nearly insurmountable head start…
… fortune smiles upon an exciting tech player, with a long list of graphite technologies….
“One, in particular, involves a thin graphite-polymer film sheet that is four times as conductive as copper and can withstand temperatures up to 400 degrees Celsius.
“That will surely come in handy inside high-voltage cars like the type Tesla produces.”
Well, that actually points us to one of Tesla’s existing partners — I’ll keep you in suspense for a moment. More clues?
“This same unheralded tech company has just allocated $150 million to upgrading its facilities, so that it can accommodate a rapid demand increase for a device that connects to Tesla’s patented battery pack innovation….
“They aren’t the only company that provides this technology, but everybody now believes they are the top dog.”
And the company is already of substantial size, and has a US presence:
“This prospective ‘silent partner’ already operates in America, employing thousands.
“It has strategically placed facilities in eight states on the East Coast, in the Mid-West, and the South.”
He also implies that it’s important that this company is located in the US, with widely distributed business that will somehow help with the rapid expansion of Tesla’s supercharger network (they’re not waiting for governments and third parties to build EV chargers, they’re building a network of chargers to help combat the “range anxiety” that deters some customers from going electric). That seems to just be more storytelling, frankly, this “secret” partner certainly isn’t a US lithium producer or an operator of truck stops that host EV chargers (though Tesla is talking with graphite, nickel, cobalt and lithium companies, and will need a fair amount of development in those areas in the near future to get all of their materials from North America, as they say is the plan — with the possible exception of some of the nickel producers in Canada, none of these companies have enough money to be partnering with Tesla to build a “gigafactory”, they’d all be the kind of partner who pre-sells production to Tesla, not the kind that kicks in capital for a new plant).
More clues?
“This “silent partner” has already petitioned and received very specific exemptions from the U.S. Departments of Transportation and International Civil Aviation.
“These exemptions allow it to handle lithium-ion batteries, which are viewed as a hazardous material by our government….
“Those exemptions were granted on January 1st of this year.
“Right when the whispers of this deal began to circulate.
“So it appears this prospective “silent partner” was given a helping hand from Uncle Sam as well.”
And then we get a few clues as to the valuation of this stock — which sounds like it’s awfully cheap:
“… this company is currently sitting on a forward price-to-earnings (PE) ratio of about 7.6….
“Wall Street’s bargain-hunter ratio is nicknamed PEG. It takes your price-to-earnings ratio and adds another layer… its earnings growth rate.
“If a stock’s PEG ratio is 1.00 – that means the market says it’s fairly valued.
“If it’s below 1.00 – it’s cheap.
“This company is sitting at .37.”
Of course, PEG ratios are not universally beloved or accepted — but it’s true that they’re a good barometer of whether a stock is expensive or not based on its current valuation and growth rate (though both forward PE and growth rate are analyst estimates, and five-year growth rates are really more like guesses).
But that does indeed mean that this company is pretty cheap. So who is it?
Two more clues:
“Since January of 2013… Since the Beginning of Last Year… All the Way Up Until Right Now – Today…
“Not One Corporate Insider Has Sold a Single Share of Their Stock.”
And …
“They’re stockpiling equity.
“The company itself has covertly repurchased an estimated 543,651 shares of stock… all without capturing any attention… except mine.
“They’re preparing for something big.
“Something that could transform them from a forgotten player on Wall Street…
“Into one of the biggest companies in the world.”
And then, of course, we get that last bit of promised riches:
“you can decide whether you want to try for fast gains (150% in months), or the historic windfall (2,000%+) that’s waiting as this story develops.”
So who is it?
Well, as I said I can’t give you 100% certainty on this one — but the Thinkolator has been chugging away, and it looks like the stock he’s teasing is, well, the obvious answer: Panasonic (6752 in Japan, PCRFY for the sponsored 1:1 ADR on the US pink sheets… the pricing in Japan and the US is very close right now, so the ADR doesn’t trade at a bit discount or premium to the “real” price in Japan).
Panasonic used to be the biggest brand name owned by Japanese conglomerate Matsushita Electric, but they changed the name of the company to Panasonic back in 2008… and then, just a year ago, they decided to delist from the NYSE to save some money (that’s why the ADR is on the pink sheets now, no longer actually listed — but volume is still decent, at least for individual investors).
Why is Panasonic the match? Well, beyond the obvious fact that they’re Tesla’s battery supplier and are widely expected to partner with them on the new battery plant, and have already signed a letter of intent to that effect, they also match all these “silent partner” clues:
They’re priced right around $10. And, yes, a 2,000% gain would put them among the largest companies in the world with a market cap of about $500 billion (they’re around $24 billion right now).
And the estimates on both Bloomberg and Yahoo Finance put their forward PE in the neighborhood of 6 or 7 for the US ADR (though the actual Japanese listing comes in on Bloomberg with a forward PE of 16 — there is often substantial confusion in publishing earnings estimates across currencies on these financial portals). And yes, the Yahoo forward estimate does also give them a PEG ratio of 0.37, though it’s based on just one analyst’s estimate.
So it’s a reasonable match for the clue, but that doesn’t necessarily meant that’s the “real” valuation of Panasonic shares right now — those Yahoo and Bloomberg numbers aren’t necessarily particularly on-target, particularly for foreign listings. Panasonic’s own guidance for fiscal 2015, which started on April 1 for them, is for JPY140 billion in net income — that would translate into a current fiscal year PE of about 17. (Actual performance was JPY120 billion in profit for the fiscal year that just ended, so the trailing PE would be about 20 and earnings growth is expected to be about 15-20% next year.) The data collected at adr.com pulls in more analysts, they have a forecast of about 50 cents in earnings this year and 80 cents next year, so you could call that a forward PE of 12 or so (they also have one analyst estimating $1.30 for 2017, which would be a PE of about 7.5… but that’s going out pretty far). So you can see that it’s a bit of a hodgepodge when it comes to actually figuring PEs for this stock — but it’s not particularly expensive and earnings are growing out of a trough (unfortunately, earnings growth has come not only from jettisoning unprofitable operations but also from the weak Japanese Yen, which benefits exporters … so there could be big swings in expectations as currencies shift).
They did also resume paying dividends this past year, after taking a year off from dividends during the very weak fiscal 2013 (mostly calendar 2012), but it’s a pretty small dividend — 13 yen per share, that’s pretty close to 13 cents so it would mean a trailing yield of just over 1%. The expectation is that the dividend should rise as earnings rise.
And yes, Panasonic does sell those specific graphite sheets Robinson mentioned in his tease — you can see their offering here if you’re curious.
And they have gotten the rules adjusted as of January 1 of this year for transport of li-ion batteries — exempting the smaller ones, like the ones that Panasonic makes, from some rules against transport by air. Panasonic shares the details here, though I don’t know if they were actively involved in getting these rules adjusted or not… as one of the major global battery manufacturers, I presume they were involved.
They’ve also, as teased, recently (last Fall) invested another $150 billion in expanding capacity for lithium ion battery manufacture in their Japanese plants, as covered in this article.
I have not checked buybacks or insider trading, because doing so is a pain in the neck for Japanese listed stocks (and there isn’t much of a tradition of owning company stock among Japanese managers and executives, frankly). 500,000 shares bought back would be fairly meaningless, given that they have 2.5 billion shares outstanding — that’s a buyback of 2/100ths of a percent of the outstanding shares. But with that confluence of matching points, Panasonic is the Thinkolator’s best guess for today’s tease solution (no, we don’t usually guess — I prefer and can usually deliver certainty, but you work with what you’ve got).
And it is, actually, an interesting company that is indeed reorganizing and refocusing — in large part, to put more emphasis on their big business-to-business divisions (like automotive and energy storage) and less on their well-known consumer electronics brand, where competition is extraordinarily tight and where overcapacity is a problem in areas like LCD televisions. They’ve been putting a lot of effort into automotive systems lately, including battery supply to Tesla but also batteries and power systems for other electric cars and in-cabin electronics.
If you’d like to read into Panasonic’s transformation a bit more, their short presentation about the reorganization is here, and their Fiscal 2014 press release for last month’s earnings announcement is here, past results and releases are on their IR site here. There was a Reuters sum-up of their earnings release in this article if you like a little more chatter with your numbers.
And yes, Panasonic is quite likely to be a substantial partner in the Tesla gigafactory. Whether that generates substantial earnings growth for them in the next five years is an open question, I’d say, and they haven’t actually agreed on terms, but they’re a key Tesla supplier and it’s quite likely that will continue. Several stories have come out today about the commentary on the gigafactory plans from the Tesla conference call, here’s a taste. And there’s still plenty of time, so you can research at your leisure — If Panasonic is the match, the “profit inferno” Robinson hints at has yet to be ignited (Panasonic has doubled from it’s pre-restructuring woes of 18 months ago, and got some hedge fund attention last Summer, but is not likely to move in huge swings like Tesla’s stock does — though coincidentally, the two companies have almost exactly the same market capitalization… by point of comparison, TSLA trades for about 12X sales, Panasonic for about 0.3X sales).
And, of course, if you’ve got a better guesstimate for a secret “silent partner” that matches the clues from Mr. Robinson, well, feel free to send it along — we stand by the 99%+ accuracy rate of our teaser solutions, but we have gotten a half dozen or so wrong in seven years. Also, naturally, we’d be delighted to hear about other favorites of yours as secondary Tesla plays, or as battery companies even if they don’t match the clues — feel free to pile on with a comment below. Thanks!
It’s Panasonic all right. I have the Nova-X report right here.
What about Alcoa’s aluminum air water battery that will last 1000 miles on one charge, won’t this make lithium battery obsolete????
This is a whole lot of bullshit – all of it. Stock investment scam sites like this one and moneymorning.com are trying to gin up “bluestar”; it doesn’t exist.
He gives you Panasonic in the AD, so i dont think that is what he is talking about. I think it has to do with Graphite.
Specifically Graphene…
Thank George for sharing the big secret. Interestingly enough I was in Rome New York in Jun. I was speaking to a former researcher and entrepreneur that now consults. He was working at the Griffis AFB in the research lab and they had developed a plastic film battery that could be rapidly charged and plugged in easily. The patent and the technology was purchased by one of the large battery producers and buried.
Were those patents buried next to the 200 mpg carburetor ?
This Article is Dated in May 2014.
An update is that the Tesla GigaFactory was announced to be built in NEVADA outside of Reno. Panasonic was not mentioned at the unveiling.
Yes, Panasonic is still the major partner in the “gigafactory”. Don’t know what that will mean in the years to come, but they’re committed. The press release about their partnership deal is here, I haven’t followed up on the details of the plant beyond that or on progress thus far.
Entirely apart from all pros and cons about EV vehicles, stability of Li-ion batteries, etc., the supply of easily accessible lithium is limited. IMHO, the proposed Giga-factory would quickly consume more than could be produced without other major developments in terms of sources and production costs of lithium salts; see, also my article on “The Lithium Squeeze” at http://canadafreepress.com/index.php/article/the-lithium-squeeze
True, there hasn’t been much invested in lithium production capacity because prices haven’t risen that much yet — though Tesla is certainly sparking interest in these names again in recent months. If you see lithium as continuing to be critical, the easy money would be in Rockwood Holdings (ROC) and SQM, who are the only real low-cost producers (neither is a pure play), or Orocobre as an interesting emerging name in South America. Chile and Argentina have massive lithium reserves, though I don’t know what the capacity is to increase production dramatically without a big local impact, particularly on water. Both produce in Chile, where more than a third of lithium comes from now — Bolivia has a lot of investing to do to catch up, Argentina has similar reserves to Chile but is less developed, and Mexico, Nevada and other places with desert mountains are looking for these old salt brines to exploit but are far behind.
Most actual mining of lithium has been abandoned because it’s so dramatically more expensive than the salt brine evaporation production method. I suspect there are plenty of reserves for even full adoption of completely electric cars, and reserve life could be extended at most projects (there’s no point to exploring to define more reserves if you already have a 100+ years of reserves at current production levels, as in Chile), but we won’t get anywhere near that point and the inexpensive reserves would, of course, run out well before then. Probably new battery technologies will continue to develop as well, including new materials, but that’s even harder to predict.
http://trib.com/business/energy/lithium-discovery-could-be-new-industry-for-wyoming/article_2ca58b1c-31af-5400-a5fa-635cda9c43b0.html
Thanks for the link, Greg.
I’m going to step out on a rather thin limb here, and go with Power Japan. The battery they build is going to really bring the cost of electric cars down. The battery last’s longer, doesn’t have the heat buildup that the L-Ion does. The carbon battery is going to revolutionize the battery industry.
The new carbon nano technology could drive the price of gold into the sewer. Carbon could eliminate the need for gold in circuitry. This is because the nano carbon is several times more conductive than gold.
What will the Carbon Nano technology do to Ag (Silver)?
Aren’t you assuming gold is mainly used in the industries which is not true. If recall correctly, the main consumption of gold is by consumers and gold bugs.
Thanks for the idea – I couldn’t find a stock symbol for power japan.
Can you tell me what it is? Thanks!
Bill Powell
I suspect that Tesla know a little more about the supply of lithium than we do Klaus. I’m not so sure they’d be going ahead with this technology if such a supply issue actually existed. Even looking beyond lithium-ion batteries and whatever the battery technology will be in distant Tesla models, they’re not going to talk about this now and give away their intentions, but rest assured the Gigafactory will be capable of producing whatever they need. Tesla wouldn’t build an expensive “industrial park” that will be obsolete in a decade.
Lithium is indeed limited, China presents political and geographic risks as does South America where most Lithium is produced. But read about the recent discovery of enormous lithium brine deposits in southwestern Wyoming. Then follow route 80 to the biggest little town in the world, then look to see who has applied for the mineral rights and who has the largest soda ash (integral for lithium production from salt brines) facility in the world located not 50 miles from the discovery! This may well be the real silent partner, not that they need Tesla.
Did anybody listen to the whole thing, there is a 720 year supply of thestuff
I got a about ten minutes further than that, bt had to click off after hearing the phrase “silent partner” one to many times…
Left unanswed or even asked was how many years supply of graphite, cobalt or as mentioned by Reg above, soda ash are estimated to exist.
It’s also worth noting that Tesla have stated their intention to source their raw materials completely from North America. This article has a lot of info to consider: http://www.bloomberg.com/news/2014-03-28/tesla-to-use-north-american-material-amid-pollution-worry.html
The current cost of synthetic graphite for these batteries is $20k per ton. ZENYATTA Ventures has a unique deposit in Canada that can produce synthetic grade graphite, have over 20 years LOM and the cost to mine and process is under $1k per ton most likely. Tesla could really cut down on the battery costs if they could acquire this company and just pay a miner to mine it.
Didn’t he say it will be all American. Si my guess is Burlington Northern and it belonsg to Mr. Buffet
Nevada is abundant for lithium production. That must have been a driver in addition to the low taxes.
which symbol would be the correct one if I decided to buy?
PCRFF or PCRFY
Elon just announced Panasonic to be their partner in Beijing today
log
which symbol would this be traded under? This article says PCRFY and an article from Tesla says PCRFF.
PCRFY is the sponsored ADR and has dramatically better liquidity, PCRFF is the pink sheets symbol that your broker could use to buy from a market maker on the Japanese market and get it for you. They are the same size portion of the same company, but PCRFY is easier to trade because of much higher trading volume (50-100X higher volume) and I find sponsored ADRs somewhat more reassuring.
Quit being so cute. What does “log” mean? Can’t you people just type out the words?
I’ve been noticing that the last few days. People submitting comments simply saying log, or subscribe. Haven’t figured out their meaning. Could someone please explain?
THANKS!
Allen – Until yesterday, if one wanted to receive an email alert for each new comment made on an article, one had to make a comment, click in the subscribe box, and then press the “SUBSCIBE” button, both of which were below the comment box. Some members kept the comment short by saying “Log” (for Log In, I suppose) or “Subscribe”.
Yesterday Travis initiated a new system in which one no longer needs to make a comment in order to subscribe. Go to the bottom of the page and click on the word “Subscribe” that is green and underlined.
Travis, as Dr. KSS would say, “You da man!”
A quick way of going to the bottom of the page is to press and hold the “Ctrl” key and then press the “End” key. “Ctrl” and “Home” will take you to the top of the page.
There is no need to use the Ctrl key. End and Home will do as you described all on their own.
Note to self – do not reply to emails that say “Do not reply”.
Note to Travis – I did.. In case the reply was not received, here is what it said:
“Hi, Travis — Since you asked,
The subject headers on all emailed comment notifications read
“There is a new comment to Microblog: { Article Name }”
The subject takes up about 75 % of the width of the window in my email program. The emails can be sorted alphabetically by subject – but the important part of the subject is w__a__y o__v__e__r there in the center of the line.
It would be great if you could rearrange and shorten the subject format to:
“{ Article Name }: New comment on the Microblog ”
It would facilitate searching the emails by subject.
Hope you can add the comment number to the subject line! Don’t ask for much, do I? It would also facilitate searching.
‘Preciate you! “
===================================================
I have another suggestion. Like I said above, I don’t ask for much, do I?
The text that I enter in the comment box runs off the right edge of the box by two or three words, making it a tad difficult to proof what I’ve entered. Would it be possible to widen the comment box ? The box could be as wide as the page until it’s posted. And would it be possible to add a vertical scroll bar?
Let me think. Can I think of anything else . . . . . . . . . .? “>)
It appears America and Japan is printing tons of paper money. How can they turn paper money into real money in the near future? Think again fellows.
FYI, interesting analyst report from a broker on lithium reserves and demand here. This is a sample chart showing the potential lithium consumption numbers given various levels of adoption of electric cars (5kg of lithium per car would be typical of an all-electric vehicle, apparently, maybe half a kg for some hybrids — I don’t think most hybrids use lithium yet, the standard Prius doesn’t yet but Toyota seems likely to switch it over to li-ion with the next model).
And those numbers are averages for all new vehicles sold globally, so the 5kg in the chart would mean that every vehicle sold is fully electric, in which case (they say), current lithium reserves would last 30 years (well, probably more like 15 because extraction of reserves is nowhere near 100% efficient). I don’t know if they’re right, but it’s interesting to think through.
How much credibilty does an analyst report have that’s blatently wrong on basic facts ? In this report a major player in Chile is identified as ” Foote Mineral (now Chemetall)”. Well, Chemetall was acquired ten years ago (!) by Rockwood Group, and the subsidiary active in Chile is Rockwook Lithium. If they can’t get the name of major players right (which takes one minute to google), why should we trust their production and consumption numbers ?
subscribe
First off the reason Panasonic and other delisted was because of the costs of complying with the Sarbanes-Oxley law, not to save a few pennies.
Now the stock trades two ways, both on the pink sheets, the ADR as PCRFY and the ordinary Japanese share as PCRFF, both equal to 10 Japanese shares. The prices are significantly different: The F right now is at $10.49 and the Y at 10.395 (I looked it up). However the Y (the ADR) is subject to fees which can mount up which buying directly in Tokyo can save you from.
So the dividends for the F share will be higher, in theory, because of there being no ADR fees. Some foreign companies pay the fees on shareholder behalf but I don’t think Panasonic does. You get 1099 paperwork in both cases and your broker will deliver proxies and reports as with a US share.
I am pretty sure that both Panasonics are illiquid because Tokyo is shut when Wall Street is open and visa versa, so I disagree that this is a factor.
I have no way of explaining the wide range of historic p/e ratios being reported by websites except that they are posting figures from people who cannot use an adding machine.
My own plays in this area are much more fun: a Canadian company making stackable electric storage baggie batteries; and a wild Australian miner of lithium in Argentina in coop with a state-owned company to protect against Cristina Fernandez. They are much more risky but at least will benefit in double or triple digits if Tesla et al. make electric cars work and sell big numbers of them.
Panasonic is way to big to feel this, just as it is way too big to feel it if any of its staff sell shares they the get.
There are still a lot of US shareholders in Panasonic, who were routed to the ADR after they delisted — so average volume for the Y is about 200k shares a day, for the F about 4k.
Vivian, your Australian play has just sold a plant in China for $230 mill so it has some cash in the bank ATM.
Vivian, can I get some names for the companies you mentioned?
A few months ago I went with Western Lithium just as a small very speculative Nevada play, as well as a LIT lithium ETF [LIT], but I’m long Tesla, Panasonic, and SolarCity for that matter too, who will almost certainly be providing solar panels for the Gigafactory.
Thanks for ‘taking the bait’ on this one Travis.
Great work as always!!
The market appears to have been linking the fortunes of Panasonic with Tesla for some time, so they might qualify as the loudest “silent” partner of the year. PCRFY is off 20% and TSLA off 30% from their March highs (or should I say March Hares?) after today’s pounding. I only buy companies with unsubsidized GAAP earnings, so it’s mox nix to me.
Quincy, what do you mean by “unsubsidized GAAP earnings”? Meaning PPS reflects future and not yet realized gains and overpriced because of hype?
Thanks
This stock is down 20% so far this year. Does anyone think its heading back to its late 2012 price of $5 or is this just a dip before continuing its rise toward previous highs and beyond. ?
If it drops much further I’d like to buy some more. Definitely just a dip in my opinion.
Thank you sir. I searched for Solar City but nothing came up. Symbol ? thanks
SCTY
Thanks again.
Way to go Tom ! A late 2012 play and a recent partial sell of this one.. Awesome. Sorry I missed. I believe there is a great future in solar and would like to find the “next” solar City.
Are you or is anyone aware of the solar film developed by 3M Corp in the mid 90’s that was 7 times more efficient than standard cells and costs a mere .03 per square ft.. I personally read the media release in the Seattle Times but have heard nothing since except that it was restricted to government and military use only but can’t verify that is a fact. Any input or info..
I’m aware of 3M’s solar film but they do so many other things that it’s not enough of a pure play for me. SolarCity don’t manufacture though, they’re a distributor/installer, with no upfront costs if you go for their lease option. They’re more of a utility company really, and they’re due to partner with Tesla on battery storage – something everyone is waiting for. You may also want to look at Sun Power [SPWR] who have been doing well recently and do manufacture, as well as installs and power plants. I made a small investment recently.
I bought TSLA at $222. and am wondering after the decline today will it take a further dive? Is this a hold for the long term?
I have a hard time valuing it at more than $50-60 at this point… But you probably don’t want to listen to me, I was also skeptical back when it was at $35.
Gayle, I bought Tesla at $33 and have added more at various stages since, most recently at $213. Although in hindsight I perhaps shouldn’t have made that most recent purchase, long term I’m not worried. I will try to time the bottom of this dip and get a few more shares. They have a groundbreaking product, a brilliant CEO with an important mission that will benefit us all, a huge and ever-increasing following, a fantastic brand, and they’ve achieved all this without spending a penny on advertising. Do a quick search on Twitter for “want Tesla” and you’ll see a LOT of people craving a Model S or longing for Tesla’s more affordable Gen III car and the gas-free transport it represents. Other auto manufacturers will try to compete, and no doubt sell cars in decent numbers, but that’s OK. Raising the profile of the all-electric car is what counts, and from what I am seeing there’s a huge market for the Gen III. In my opinion Tesla will reach $500 at least, probably much higher. You’re looking at an Apple-esque revolution here. I could go on about Tesla forever but I’ll leave it there…!
I calculate the FV by DCF to be (47) and when I look at its chart it is stock for which I would by PUTS (I don’t short) I would suggest waiting.
Patience but not negligence.
i was just looking at the Panosonic page on Yahoo Finance and noted they’ve just signed a longterm contract with Polypore (PPO) for separator devices for Lithium Ion batteries. This could also be a lucrative play on the assumed Panosonic-Tesla partnership, in fact it appears it already is, as of this posting (7pm CDT, 5/8) ppo shares are up over 5% in after hours trading. Thoughts anyone?
Is there enough spare capacity in lithium mining to supply the metal for this factory?
Doing a search I found this:
Rockwood Holdings, Inc. (NYSE:ROC) announced today that it entered into a joint venture (“JV”) with Chengdu Tianqi Industry Group (“Tianqi”) giving Rockwood a 49% ownership interest and Tianqi a 51% interest in Talison Lithium Pty Ltd. This transaction is expected to close during the first quarter of 2014, following receipt of regulatory approvals.
To quote the Australian Government’s Geoscience Australia: Most of Australia’s lithium resources are in the Greenbushes Lithium Operations spodumene deposit, 250 kilometres (km) south of Perth in Western Australia (WA), and the bulk of the growth in Australia’s EDR of lithium reflect a large increase of resources at this deposit. The Greenbushes Lithium Operations is the world’s largest and highest grade spodumene deposit.
Just one small question,,,Where do you propose getting the electricity to run a national fleet of electric vehicles. Figure all the inputs/requirements before answering. fa
Upstart Extension Cords ???
Good one Pockets 🙂
Good question fa….the answer is coal. Back to the future anyone?
Now there’s an interesting question for a retired electrician to dig into – Where to get that power? – but proves more taxing than simply googling “How much excess power is produced in the US?” (I spent most of the morning sifting impertinent and/or arcane reports!) Nevertheless – despite the obscure methodology of the EIA – I was ultimately able to find useful data at these 2 links FYI: http://www.eia.gov/electricity/capacity/ and http://www.eia.gov/forecasts/aeo/MT_electric.cfm#cap_natgas?src=Electricity-b1
along with gaining a whole new insight into the ‘Sovereign State of Texas’ – which (uniquely among all 50 states) operates its own indigenous power grid (see http://www.window.state.tx.us/specialrpt/energy/uses/electricity.php ) – along with many other revealing power production, transmission & storage factoids!
The net of these two EIA resources shows that 1) consumption ‘growth’ has been on a steady rate of decline for 60 years (?) 2) there IS excess generating capacity available particularly at night when any reasonable person might choose to ‘refill’ their ‘electric fuel tank’ (via Pockets’ “upstart extension cords”) in their own garage!
I recently assisted an acquaintance with the installation of 2 such ‘extension cord’ systems at his home and business and ascertained therefrom that 30 amps at 220 volts for roughly 2 hours (12.2 kWh) will ‘fill the tank’ of his Nissan EV providing about 2 hrs. drive time (120-150 miles) at highway speeds. In our service area that translates to about $2.50/day driving his electricity bill up enough for his wife to force an audit by the utility!
Now for the ‘higher math’ of this question. The pertinent data:
1) According to the EIA total consumption for 2012 (latest I found) was 3,826 billion kWh (3,826 gigawatt/hours)
2) 2011 net summer PEAK generating capacity (EIA) was just over 1,000 gigawatts (continuous) which translates to 8,760,000 gigawatt/hours annually
3) the TOTAL number of drivers (licensed) in the US is about 196 million.
So – if I’ve understood the EIA’s data correctly – there is an annual excess peak generating capacity of some 8,756 gigawatt hours available for distribution to 196,000,000 drivers.
At a measly 12.2 kWh/day, the annual electrical power consumption to refuel an EV daily for each of them would be 872,788 gigawatt/hours…Uh-oh…a 1,000% shortfall!?!
Perhaps, this was your point Frank?!
Nevertheless, we could facilitate 1 in 1,000 drivers’ transition to purely electric vehicles.
But here’s the KICKER:
The implementation of a relatively-small PV system on each prospective EV owner’s home would offset their added consumption entirely. A good example would be a 2500 watt system producing electricity for 5 hours/day thereby creating 375 kWh each month (roughly the amount to ‘refill your tank’ daily). Without shopping around at all, I found such a grid-linked system available at a retail cost just under $4,500 (before any tax incentive rebates). It requires only 10 solar panels (approx. 320 sq. ft.) that should last 20 years. The net is that one could drive 120 silent miles per day for 20 years at a net ‘fuel’ cost of $0.62/day compared to a minimum cost of $12/day (120 miles @ 40 mpg = 3 gallons @ $4) for the most fuel-efficient internal combustion vehicles. Over those 20 years, the minimum fuel savings ($24,700) very nearly pays for one Smart EV coupe.
In investing parlance…that’s a pretty decent ROI…what say you?
Thank you, Blind Guide, for your analysis. Very interesting. I think I’ll wait a little longer to buy that extension cord. :>)
Blind guide; I commend you for a very good analysis. I am surprised at the price you got for the solar panels tho they are becoming less cost. One thing I note is that you did not figure in degradation of the panels and the battery. Over the life of the panel you need to figure about 65% of the original rating is what you actually get in KWH. The battery with present technology is going to need replacement about every five years at about $4000. With improvements in tech that may become less. Electric vehicles are surprisingly heavy for their size & in hilly terrain may not deliver promised range ,also battery power is inefficient for heating and cooling your car. In mild climates not much of a problem but where it is seasonally hot/cold there is a cost. Still electric is a usable commuter vehicle for short urban commutes. fa
@ FA
Thanks! You make very good points on the FULL analysis of costs; I stand corrected.
Nevertheless – as both an electrician AND an admirer of all things counter to the status quo – the illusion of garnering ‘free’ power from the sun to get around intrigues me! Admittedly, there is no free lunch to be had here nor is the individual able to ‘grow’ their own PV cells, lithium batteries, or high-efficiency electric motors, leaving us to merely disrupt existing transportation megopolies (wordsmithing, now) while facilitating new ones in their place. Alas, we are doomed…our own love of convenience the cause…only ourselves to blame!
That being said, I wonder how the numbers turn out given your apt observations?
Let’s see; a lifespan average efficiency loss of 35% would require installation of a 3,846 watt PV system to achieve the full 2500 watt power replacement used by the vehicle. Let’s say 4kW…$6,200… http://www.bluepacificsolar.com/solar-kits.html
I presume the necessary battery replacements you mentioned are for the car since the solar system is a simple grid-tied type…EV battery replacement costs appear to be a bit harder to nail down…anything from $2,305 for Chev’s Volt to something like $35K for to replace Daimler’s hand-built Gen II Smart ED battery pack…now the ‘rage’ seems to be lease/guarantees. Using my original example – The SmartForTwo – you can either buy the ‘glider’ (vehicle minus the batteries) for $20K or lease it for 3 years @ $139/mo and – in either case – lease the battery-pack for $80/mo including a max 10 year/ min. 80% capacity replacement guarantee reducing the actual cost of leasing the ‘glider’ to an unbelievable $59/mo! Check it out: http://www.smartusa.com/_assets/_pdf/smart_battery-assurance-plus_SEO.pdf
Being essentially such an ultra-conservative that I’m sometimes mistaken for a liberal (aaarrrggghhh!), I haven’t mentioned the cost-reductions available via tax incentive programs – however, since we are discussing ‘real costs’ we may as well look at ‘real-world’ conditions affecting the ‘bottom line’ here too The fact is that our ‘benevolent’ federal government will rebate $7500 of the purchase cost of one of these ‘marvels’ reducing the vehicular up-front purchase to about $12,500 and if you happen to live/pay taxes in CA, you can deduct another $2,500. Add to these ‘benefits’ the fed’s 30% (no max) incentive to install solar systems ($1,800+) and your ROI starts looking better despite the battery-aging problems. I haven’t run the numbers to see where you might break even by installing an over-sized solar system that could potentially pay back your total cost but it may be possible…or if a lease might offer similar incentive ‘benefits’…ran out of time & motivation for the time being. Fun to banter with you though!!
Frank, you’re making a lot of assumptions on electric cars without it seems really knowing the facts. Tesla’s Model S [and the new BMW i3 I believe] feature regenerative braking, whereby whenever you lift off the accelerator the energy generated by braking goes to the battery pack, increasing your range. So a journey of 50 miles for example doesn’t simply knock off 50 miles of range from your battery because at various points you’ll be braking. Long downhills are a dream because your range is only increasing during that period. You are correct that forever driving uphill would reduce your range more quickly, but at some point you’re going to go downhill and range is only added during those periods. And just to clarify, this does not add wear to your brakes, the regenerative braking works as soon as your foot comes off the accelerator.
The Tesla Model S is also very adept in cold conditions, both in terms of the battery performance and handling. A big battery pack brings both excellent range and a low center of gravity that delivers excellent handling and has resulted in the safest car on the roads today. Tesla have built a vehicle far superior than a “usable commuter vehicle for short urban commutes.”
This technology is not going to go backwards from here, it’s onwards and upwards.
And there you have it: a car that runs on sunshine!
Blindguy, you said, “At a measly 12.2 kWh/day, the annual electrical power consumption to refuel an EV daily for each of them would be 872,788 gigawatt/hours…Uh-oh…a 1,000% shortfall!?!…..Nevertheless, we could facilitate 1 in 1,000 drivers’ transition to purely electric vehicles.” My math indicates that a 1,000% shortfall would supply 1 in 10 electric car drivers, just as a 100% shortfall would supply 1 of 2 electric car drivers.
Isn’t Tesla giving you the Electricity for free? Further, if you go so far as investing in an electric car, might also invest in ALt power at home, the roof of your carport should suffice.
The superchargers are free, for folks who have the higher-end batteries that can handle superchargers (the base model can’t — or it couldn’t originally, at least, don’t know if they still sell the cheapest base model). Whether that continues forever, I don’t know, but the electricity cost is not huge, particularly in the superchargers that are powered by SolarCity panels. Depending on local electricity costs, I’ve seen estimates that recharging a big-battery Tesla fully would be somewhere in the $3-10 neighborhood. Don’t know if that’s true or not, but electricity costs for home chargers, I read, are likely to average something between 10%-30% of gasoline costs for most folks, depending on your electric rates.
Good points!
Enjoyed a lengthy but interesting discussion/research project with FA on the topic of fuel/energy production/maintenance costs early in this blog. You may want to scroll up to review that info.
Hi, it seems Panasonic invested $150 million not $150 billion in their Lithium battery manufacturing plant. No big deal, just saying …
Love all the informed opinions on the due diligence components of stock assessment but…FA asked the billion dollar question. Or I should more appropriately call it the Trillion dollar question.
Look at it in more of a macro sense. It could be nuclear, coal, wind, nat gas, it doesn’t matter. At the end of the day it’s all about electricity. Production of any kind is high maintenance.
I like the “kiss” principle and I’ll go with my nice safe high paying distribution MLP’s over this kind of speculation. Electricity is a perfect example of a commodity and any commodity is worthless until it gets to the user.
Cheers
Cabaokeguy —
When you say “distribution MLPs” I assume you mean power distribution, because all MLPs make distributions of their income.
I googled “distribution MLPs” but did not find any stocks for power distribution. Would you please tell us which stocks in this sector you like? Thanks.
A composite list of MLP’s can be found at http://www.dividendyieldhunter.com/master-limited-partnerships-yield
Enjoy
Anyone consider the possible unintended consequences of taking energy out of the wind to generate electricity? Windmills are ALREADY killing many hawks and eagles not to mention thousands of songbirds.
bj, I live in New Jersey, where, as far as I know, there are no windmills. But, I have driven through much of California several times, and the ones that I’ve seen rotate so slowly that any bird in its right mind should have no problem in evading the blades. I’m curious – if it’s not impact killing the birds, what is?
Those windmills may look as though they are moving slowly but this in an illusion driven by their great size. Actually the tips of the blades are typically moving faster than a speeding car.
If 60 mph is 88 feet/sec and the radius of the mill is 60 feet, then each time the blades complete a single revolution it covers a distance of 2 x pi x radius (sorry no “pi” key here!)
this is approximately 370 feet. So that even if the mill appears to be spinning at a “lazy” three seconds per revolution that’s almost 85 mph at the tip!
Interesting fact! Thanks, Frank.
There is a cluster of wind turbines adjacent to the Borgata hotel & casino in Atlantic City, NJ.
As an avid birdwatcher I was concerned about this story too, but everything I have read recently points to this not being as big a problem as first feared. I think the increasing awareness of this is resulting in more consultation taking place and wind farms either having to be built away from the migration routes of hawks and eagles, or existing wind farms having to employ technologies to detect birds and reactive the turbines when necessary. Still, I prefer solar and wave power.
I’ve heard that before. Sounds good BUT “migratory routes” usually coincide
with high wind areas! If I was a bird I’d prefer some back draft wind. Just spread
my wings and let the wind do the work. “Wake me up when get there.”
On this and so many eco-disasters going on where are the “eco-friendly zealots?”.
Strangely silent. Could their true agenda not be the environment as some
claim? They stopped a much needed coal plant in my state even though it was proven
scrubbers would exhaust air cleaner!! than what came in!! Facts are a pain sometimes.
In Palm Springs CA crews in trucks pick up dead birds before dawn each day. Totals
have been as high as 2,000 a day but now area is almost empty of birds so
numbers dropping. City famous for song birds. What did they do? They added audio
recordings of song birds from speakers hidden about down town. You still HEAR LOTS of birds but NEVER see even one!
Is the entire world going to smoke and mirrors to trick us all? More and more we are living in a false reality world. A friend owns large farm W. Kansas. Gvt. said “we WILL rent your land for windmills or will condemn it for $1 an acre”. He now has 700+ windmills on his 10K acre farm. BIG rent checks BUT he finally asked the daily “dead bird haulers” to take a different exit road as he couldn’t stand seeing the multiple trucks piled high with dead birds drive by his house every morning. He told me he has a valley that WAS famous for the American Bald Eagle. He spent thousands of his own money to build structures to help them nest. Counted over 700 beautiful birds in 1995. Today? Zero. Valley now filled with crows and vultures. Said vulture population with the bonanza of dead birds has exploded. Who voted for this? No response needed. Rhetorical question only. For eco-disasters — loss of ENTIRE species GOING ON RIGHT NOW subscribe to free http://www.enenews.com Pacific ocean becoming dead zone in certain areas. Evan algae is dying.
I believe Northern Graphite (NGC on Toronto) is being considered as a potential supplier of natural flake graphite for the Gigafactory. “Bissett Creek is the only true large flake deposit and the only one with a bankable Feasibility Study (the “FS”) and its major environmental permit. It also has the best infrastructure of any new graphite project, the lowest capital costs and the highest operating margin.” Expandable graphite is made from extra large flake (+50 mesh) graphite which will make up almost 50% of Bissett Creek production, by far the highest in the industry. The Company has developed a proprietary purification process which will enable it to produce and sell high purity expandable graphite (spherical for li-ion batteries) at a significant premium. Representative samples have been provided to a number of potential customers and substantial interest has been generated.
JUST A QUICK WORD….HAVE ONLY SKIMMED ARTICLE AND COMMENT$ & WILL LOOK MORE CLOSELY LATER. HAVE A LOOK AT OROCOBRE (ORE.AX ; ORL.TO) AND MASON GRAPHITE, INC. (LLG.V) I THINK, AT SOME STAGE, THE LATTER MAY HAVE BEEN MENTIONED IN S.G. SUE.
I don’t know if it has been discussed here, but the greenest graphite on the planet in any quantity is the Albany find by Zenyatta Ventures. Not in production,Very little processing to get it to compete with synthetic. This name has come up with repeatedly as the graphite of choice for Teslas green initiatives. Most likely through Panasonic.