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Elon Musk Calms Down, and More From Tesla's Shareholder Meeting
June 6, 2018 6:00 am|Comments (0)

When Elon Musk was a kid, he had so much trouble managing his time, that his younger brother Kimbal would lie to him about the bus schedule. Elon would show up a few minutes after the supposed arrival—and have just enough time to hop aboard. A few decades on, the whole world knows about Elon’s habit of blowing deadlines. And he admits it can be a problem.

“This is something I’m trying to get better at,” he said from the stage of Silicon Valley’s Computer History Museum on Tuesday afternoon, at Tesla’s annual shareholders meeting. “I’m trying to recalibrate these estimates.”

A few days after a Twitter rage fest aimed at the media, a month after refusing to answer questions about Tesla’s financial state during an investors’ call, and two months after getting in a public spat with the feds investigating a deadly crash in one of his cars, Musk’s attitude when he appeared before his fellow shareholders was conciliatory. He even seemed emotional at times. “We build our cares with love,” he said, with a slight quaver in his voice. And he noted how brutal the auto industry can be, especially to newcomers. “It’s insanely hard just staying alive.”

For an hour and a half, Musk patiently fielded questions on just about every part of Tesla’s sprawling business. He said the Model 3 production rate will hit the long-promised 5,000 cars a week rate later this month, predicted an enormous increase in battery production, announced upgrades to the Autopilot semi-autonomous system, and even appeased PETA. If you missed the meeting, here are the key takeaways.

Elon Retains the Reins

The official business of the meeting included voting on the reelection of venture capitalist Antonio Gracias, Elon’s bus-catching brother Kimbal, and 21st Century Fox CEO James Murdoch to Tesla’s board of directors. (Only a third of the nine board members come up for election at a time—it’s like the US Senate that way.) Last month, activist investor the CtW Group urged Tesla shareholders to replace the trio with people who had automotive and manufacturing expertise. Another investor, Jing Zhao, filed a proposal to strip Musk of his position as Tesla’s chairman, which he has held since 2004 (he took the CEO job in 2008). But the shareholders stuck with Musk, reelecting the board members and nixing the leadership change by an overwhelming majority. (Tesla will file the exact vote count with the SEC in the next few days.)

The loss didn’t surprise CtW executive director Dieter Waizenegger, who argues control of Tesla is too concentrated in people tied to Musk. “This opinion is shared by a significant number of shareholders of Tesla,” he says. “We expect the final vote tally to reveal that.” Even if he’s right, Musk remains fully in charge.

More Model 3

Musk’s acknowledgement of his timeline trouble didn’t stop him from announcing that, by the end of the month, Tesla will be building 5,000 Model 3 sedans every week, which should be enough to start turning a profit on the car. The uptick is thanks to Tesla’s rebalancing of the workload between humans and robots in its factory in Fremont, California, where the company is adding a third Model 3 production line. It is also planning to open a factory in China, to go with its plants in Fremont and the Netherlands.

Meanwhile, Tesla is gradually expanding options for Model 3 owners, who so far have been limited to the version with an upgraded battery and premium interior, which starts at $ 56,000. By the end of this year, Musk hopes to start production of the version closer to the car’s $ 35,000 base price, with the smaller battery pack. Also coming soon: right hand drive.

New Products

Even as it struggles to build the Model 3, Tesla is planning on three new vehicles: the Semi truck, the revived Roadster, and the still mysterious Model Y. Musk told shareholders he’s hoping to start production of all three in the first half of 2020, though he has yet to specify where he’ll do that, or how. He’ll unveil the Model Y in March (it will be “something super special”), and expects the truck and the sports car to deliver better specs than the already very impressive numbers he announced last fall. Oh, and he’ll never build an electric motorcycle.

Autopilot Advances

Without getting into details, Musk said Tesla is making steady progress to improve its Autopilot feature, and is now working on adding the ability to change lanes and handle highway on- and off-ramps (Musk noted he was testing new software around 1 am this morning). For drivers who aren’t sure they want to spend $ 5,000 on the feature, Tesla will soon start offering free trials. Musk also reaffirmed his distaste for lidar, the laser shooting sensor most autonomous vehicle developers say is key to building a safe, capable robo-car.

SuperChargers

Tesla now runs nearly 10,000 Supercharger stations around the world, the stations where its drivers (and no one else) can plug in and charge a depleted battery to about 80 percent in 30 minutes. And Musk is working to keep improving charge times, saying a three- or four-fold improvement is possible. (That’s only true for relatively new cars, he added, disappointing the 2012 Model S owner who asked him about it.)

Going Vegan

Unlike many automakers, Tesla has been offering leather-free versions of its cars for years, appealing to its vegan and vegetarian fans. But it’s still using some leather in its steering wheels, and a People for the Ethical Treatment of Animals (PETA) rep took the mic to press Musk on it. He explained Tesla can make leather-free steering wheels, but the work has to be done it its design studio, making it something of a pain. But he promised it’ll be easier once the Model Y comes around. Now he’s just gotta hit that 2020 goal.


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Wall Street Breakfast: Eyes On Tesla's Shareholder Meeting
June 5, 2018 6:01 pm|Comments (0)

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Tesla's electric motor shift to spur demand for rare earth neodymium
March 12, 2018 6:04 pm|Comments (0)

LONDON (Reuters) – Tesla’s shift to a magnetic motor using neodymium in its Model 3 Long Range car adds to pressure on already strained supplies of a rare earth metal that had for years been shunned because of an export ban by top producer China.

FILE PHOTO: A Tesla Model 3 is seen in a showroom in Los Angeles, California U.S. January 12, 2018. REUTERS/Lucy Nicholson/File Photo

Efforts by governments around the world to cut noxious emissions produced by fossil fuel-powered cars is driving demand for electric vehicles and the metals used to make them, such as lithium and cobalt which are key ingredients for batteries.

Now the spotlight is on neodymium. Several auto makers already use permanent magnet motors that rely on the metal because they are generally lighter, stronger and more efficient than induction motors that are based on copper coils.

But it is the switch to neodymium by Tesla, an auto maker that has staked its future solely on the electric vehicle, that is showing the way the industry is moving and the direction of demand for the rare earth metal.

Research group imarc estimates the market for the neodymium-iron-boron magnet used in the motors is now worth more than $ 11.3 billion, with demand for the magnets rising at a compound annual growth rate of 8.5 percent between 2010 and 2017.(For a graphic of Neodymium market balance click reut.rs/2FD6bUb)

“Some electric car motors use the permanent magnet technology, probably the most famous is the Tesla Model 3 Long Range. All the other Tesla models — Model X and Model 3 standard — use induction motors,” said David Merriman, a senior analyst at metals consultancy Roskill.

Global demand of 31,700 tonnes for neodymium last year already outstripped supply by 3,300 tonnes, he said. Demand was expected to climb to 34,200 tonnes this year and 38,800 tonnes in 2018, leaving larger deficits.

“Tesla’s decision to switch to permanent magnets has completely changed the dynamics of the market,” said a source at a fund manager that specializes in metals.

The price of neodymium is now about $ 70 a kg, well below the $ 500 hit after China held back shipments to Japan in 2010 during a row over disputed islands but it is still 40 percent higher than at the start of 2017.

(For a graphic of neodymium prices click reut.rs/2DlOHtE)

China, which resumed neodymium exports in 2015, imposed strict export quotas across a range of rare earth metal in 2010, saying it wanted to curtail pollution and preserve resources.

COSTLY PROCESS

“People seem to have forgotten China’s export ban. It could happen again. China is really the main producer, no one else has invested as much in rare earths,” a rare earth trader said.

Despite their name, rare earths are found in many places around the world, but the process of extraction is difficult and expensive, as it requires separating multiple different metals from a single deposit. This is unlike the much simpler process, for example, of recovering copper from ore.(For a graphic of Rare Earth Producers click reut.rs/2Fu5HnE)

China has invested heavily in the rare earth metals process but its crackdown on mining, smelting and other polluting industries is forecast to slow supply. It already helped push the neodymium price to a two-year high of $ 96 in September.

“Rare earth production is as bad as you can get in terms of environmental damage,” the trader said. “China used its dominant position before, what’s to stop it doing so again?”

Such supply concerns are encouraging automakers to search for ways of cutting down neodymium use. Toyota Motor Corp (7203.T) said last month it had found a way to cut use of the metal in electric motors by about a fifth.

The Japanese firm said it had developed a magnet which replaced some of the neodymium with more abundant and cheaper rare earths — lanthanum and cerium. Toyota aims to use the magnets in electric vehicle motors within the next 10 years.

Other manufacturers of electric vehicles that use permanent magnets include BMW BMWG, Nissan (7201.T) and Geely (0175.HK).

Several companies produce rare earth metals outside China, including London-listed Rainbow Rare Earths (RBWR.L), Canada-listed Namibia Rare Earths (NRE.V) and Australia’s Spectrum Rare Earths (SPX.AX).

But, for now, auto makers making permanent magnet motors remain heavily reliant on China, which according to Roskill accounted for 85 percent of global output of rare earth oxide estimated at 161,700 tonnes in 2017.

Morgan Stanley analysts estimate electric vehicles will total 50,000 units in 2020 or 2.3 percent of the total, rising to 400,000 in 2025 or 17.4 percent, and 975,000 in 2030 or 40.9 percent.

Reporting by Pratima Desai; Editing by Veronica Brown and Edmund Blair

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