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Article: Cobalt supplies will limit Model 3 Production to max 250k per year?

Article: Cobalt supplies will limit Model 3 Production to max 250k per year?

The article claims that "There’s nothing Tesla can do to build cathode material supply chains (Cobalt production) that will permit production of more than 250,000 Model 3s per year in the foreseeable future."

https://seeking alpha.com/article/4115479-cobalt-cliff-will-cap-teslas-model-3-production-capacity-250000-units-per-year

The author furthers to speculate that for this reason Tesla is a dead-end company.

While the article makes technical sense... I can't help but believe that Elon has a long-term plan and has taken this into consideration somehow? Thoughts?

topher | 24 octobre 2017

Seaking Alpha are not a reliable source when it comes to Tesla. Probably not even worth debunking.

For exmaple there are other Li-ion formulations that don't use Cobalt, what is keeping Tesla from changing over?

One is left wondering about BMW, Volvo, GM, VW, all Chinese car makers are they also dead-end companies.

Thank you kindly.

stockbandit91 | 24 octobre 2017

That's also 250k all large battery versions by their math, or 375k small battery version, or about 300k+ of a combo of both, honestly that sounds about right for 2017. They also assume they will not source any cobalt from anyone other than Panasonic, or no new contracts by Panasonic to increase their supply, basically I don't see 300k+ Model 3s in 2017 as a limiting factor. Panasonic also had positive comments on Tesla today.

Remember how we were to hit "peak oil" 30 years ago, yup, all these fearful articles don't take into account how increased demand leads to innovation and increased supply.

andy.connor.e | 24 octobre 2017

Remember, peoples opinions should not be taken as fact.

Electric_Sheeple | 24 octobre 2017

@andy, so very true.

carlk | 24 octobre 2017

You don't think if a Seeking Alpha writer could see it Elon could not years ago when he was planning on making EVs? He always works out every detail before he proceed with his plans. BTW that's why he did not go hybrid or FC because details did not work out in them.

cascadiadesign | 24 octobre 2017

So Seeking Alpha wants us to believe that Elon built the Gigafactory without considering the world's supply of raw materials?

Then by extension, I guess we are also supposed to believe that every major automaker shifting towards EV's are making the same miscalculation.

andy.connor.e | 24 octobre 2017

Remember that EVs are exclusively a Tesla thing. Everyone else must not be thinking. If raw materials were in short supply, ICE manufacturers would have no incentive to transition.

riverFox | 24 octobre 2017

Material supply chains will increase to meet demand.

nadurse | 24 octobre 2017

FUD news

nadurse | 24 octobre 2017

also, generally speaking, seeking alpha is a dumpster fire of a news site.

andy.connor.e | 24 octobre 2017

^ nadurse

Its not a news site. News is people reporting what is happening. That is a website where people can plaster their opinions.

nadurse | 24 octobre 2017

True its a poser news site, and shows up in my google news feed way more than I like.

Shock | 24 octobre 2017

First, Seeking Alpha hates Tesla, so the source needs to be considered.

Second, does anybody have a good counter-point other than faith that tesla knows better? Because this article hints at the same thing: https://www.teslarati.com/tesla-model-3-worlds-lithium-ion-battery-supply/ Essentially a significant supply chain challenge for raw materials.

I know people are always looking at new battery tech and one day we'll have something better than lithium batteries, but for now they are the best we have for cars.

rxlawdude | 24 octobre 2017

Seeking Alpha articles are a topic in ethics (a pharm company using SA to pump and dump) for one of my courses.

phil | 24 octobre 2017

"Material supply chains will increase to meet demand."

I have no specific expertise in cobalt supply, but this sounds right. Human ingenuity (if allowed to operate in a free market) tends to solve these issues as they arise. The only known force in the universe stronger than human ingenuity is human stupidity.

andy.connor.e | 24 octobre 2017

This is a concern, that is not a concern for the consumer. This would be something that Tesla should be concerned about, not me. The individual consumer should not care for something like this, unless you have millions invested in this company. Then thats an investment question. And unless you know whats going on at the executive level, you should not be digging holes all over the place and trying to tell someone you might find something, therefore - "DIG MORE HOLES".

Rocky_H | 24 octobre 2017

@JYOinSA, You should learn a bit more about what Seeking Alpha really is. "They" don't really write anything. They are like a campus bulletin board in the student union building. Anyone who wants can post things on it. So people with the intent to say bad things about Tesla go there because they can publish anything without any review or accountability or editor oversight.

Frank99 | 24 octobre 2017

OK, so the writer starts by making 5 bold claims of fact bulleted at the top of his article. And proceeds to provide backup for precisely zero of those claims. I can write a definitive statement that "Donald Trump is an alien, sent to earth to create disruption and divisiveness in preparation for an attack" - but that doesn't make it true.

There appears to be no way to invoke an "appeal to authority" here - the writer's an unknown attorney writing about chemical supply chains. If Jeffrey Dahn or Elon Musk were to make these statements without supporting them, I'd be much more inclined to believe them.

Then the writer makes some real goofs. He talks about limited Cobalt supplies, then gives a completely immaterial derivation of the amount of nickel in a Tesla battery pack ("939 grams of nickel per kW") and waves his hands to extend that to the amount of cathode powder required ("1.93 kg of cathode powder per kWh.") and uses that to calculate the total capacity of batteries that Tesla can ship ("28.3 million kWh", "250,000 long-range Model 3 battery packs per year "). He uses the possibility that Panasonic or Sumitomo might have other customers to conclude that the situation might be even more dire - without considering that Panasonic might have other SUPPLIERS than Sumitomo.

The author's post is also not a new thesis - here's an article with the same argument from 2015:
https://www.wallstreetdaily.com/2015/01/13/cobalt-electric-car-battery/

To make his argument, the author is making the argument that Elon Musk and Tesla, whose business depends on access to Cobalt (and Nickel, and others...), is oblivious to the supply situation with Cobalt, and is launching $18 Billion worth of production (400,000 cars at $45K) without having secured supplies of Cobalt. This makes Tesla management completely incompetent. Alternatively, he's making the argument that Tesla management knows that there isn't enough Cobalt in the world, and is taking investment money and making production estimates knowing that they can't possibly meet them. That's criminal fraud that would get them thrown in prison (well, unless Elon's on Mars...).

The interesting thing to note is that the 9kg of Cobalt in that he quotes costs about $534 today. That's up from what would have been about $200 two years ago. Another doubling of Cobalt price would probably require a bit of a price increase of a Model 3, but certainly wouldn't be a make-or-break consideration.

cascadiadesign | 24 octobre 2017

Maybe Elon has discovered cobalt under Los Angeles and that is the REAL reason he started the Boring Company !

The fact he can then build a high speed transportation system underground is secondary :)

ReD eXiLe ms us | 24 octobre 2017

Cobalt has been used for decades to make a bazillion gajillion stainless steel items and no one has claimed any industry that depends upon it will be facing shortages. Same thing for thge numerous industries that rely upon Lithium. Such stories are pure FUD, and quoting such an article from [SINKING ANCHOR] helps no one at all. ¿Habla, [BOLSHEVIK]...?

ReD eXiLe ms us | 24 octobre 2017

Oops... I was thinking about Nickel, which is used in stainless steel. Cobalt is used in pigments, paints, glass, and is an essential component of B12 vitamins. It exists where ever animalks live on Earth. Pretty much anywhere that you will mine Copper and Nickel will also feature deposits with Cobalt compounds. It is considered a 'trace element' not because it ius 'rare', but because you will find a trace of Cobalt in just about anything you test on Earth. Shortage? Not really.

georgehawley.fl.us | 24 octobre 2017

Cobalt shmobalt. If the article fails to take into account cell production for Tesla Energy applications, it is a hoax.

hsadler | 24 octobre 2017

There is no shortage of Cobalt!!

Since I've said it, it must be true.

Steam613 | 25 octobre 2017

Cobalt is an ingredient in most knee and hip replacement implants. Talking to my industry rep's they have no knowledge of supply issues. For what it is worth.

Madatgascar | 25 octobre 2017

Cobalt supply can always be increased. Only 2% of cobalt comes from direct mining of cobalt. As its value increases people will seek it out. Right now most of the world's cobalt comes from the Congo as a byproduct of copper and nickel mining, and most of that is controlled by China. DRC is a war-torn country than uses child labor in the mines and is probably highly susceptible to disruption. It would be good to have a backup plan.

andy.connor.e | 25 octobre 2017

Give us today our daily FUD. And lead us not into speculation, but deliver us from reality.

SamO | 25 octobre 2017

Ramen

bayareakid2008 | 25 octobre 2017

I debated the author of that article all day yesterday. Kept pointing out all the cobalt mines coming online, he kept calling them "insignificant". He's nothing more than a Tesla bear.

andy.connor.e | 25 octobre 2017

No one talks about the limited supply of oil in the ground. Lets talk about that.

Electric_Sheeple | 25 octobre 2017

In full disclosure, this popped up in my Tesla Google News feed.... I've never heard of SeekingAlpha before.

@Andy.connor.e - perfect response!

carlk | 25 octobre 2017

"He's nothing more than a Tesla bear."

And they can only rely on wishful thinking but nothing else.

ReD eXiLe ms us | 25 octobre 2017

JYOinSA: Unfortunately the few censorship tools available to Google users do not work on the News section at all, only general searches. I mostly have [SINKING ANCHOR] (I never refer to the site by name) blocked on my devices.

Tiebreaker | 26 octobre 2017

The author of the SA article, John Petersen, is a known Tesla bear. He predicted the demise of Tesla in 2012, 2013, 2014, 2015, 2016, and now in 2017. At times he goes into bear hybernation, when events prove that the reality is the total opposite of his predicrions. But then wakes up with a new set of claims and a new Tesla demise date. He,s been known to have a large interest in led-acid batteries for stop/start operation of ICE cars, so naturally he does not like Li-Ion batteries, everything EV, and Tesla in particular.

Frank99 did a good analysis above, applicable to all Peterson's articles that I had read.

Shock | 26 octobre 2017

"Give us today our daily FUD. And lead us not into speculation, but deliver us from reality."

That was good :)

andy.connor.e | 26 octobre 2017

thanks! i skipped my lunch break to come up with that

psusi | 26 octobre 2017

Seeking Alpha sits right on the shelf in the checkout lane next to the magazines talking about area 51 and bat boy.

bernard.holbrook | 26 octobre 2017

Seeking Alpha publishes opinions about stocks. Pretty much anyone can write an article. Many are attacks on Tesla written in many cases by those who shorted the stock and many are highly optimistic written in many case by those who are long in the stock.

There are often ideas in that mess that are food for thought but it's a tough website to get unbiased ideas from. It's like the insane haters and the insane fan-boys yelling at each other and neither side is listening.

andy.connor.e | 27 octobre 2017

I wish people would talk about something other than their stock.

ReD eXiLe ms us | 27 octobre 2017

psusi: I tend to think that Agent Kay was right, when it comes to investigative reporting. [STINKING ASH-HEAP] is composed of the rejected articles from supermarket tabloids. It is the articles from 'respected news organizations' that you can seldom trust in print.

[after telling J that they're going to check the "hot sheets," K buys some tabloid newspapers]
Agent J: These are the hot sheets?
Agent K: Best investigative reporting on the planet. But go ahead, read the New York Times if you want. They get lucky sometimes.

Daily Star, National Enquirer, The Star, National Register, Metropolis Inquisitor, Daily Globe, Daily Bugle...