A must read article from Seeking Alpha written by John Petersen:
https://seekingalpha.com/article/41...n-risque-majeure?app=1&isDirectRoadblock=true
Tesla's Cobalt Blues; Growth Fallacies And Supply Chain Risque Majeure
Aug. 10, 2018 7:00 AM ET
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154 comments
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About:
Tesla, Inc. (TSLA), Includes:
PCRFF,
SMMYY
John Petersen
Long-term horizon, nano-cap, micro-cap, alternative energy
John L. Petersen, Attorney
(55,558 followers)
Summary
- In its Q2-18 shareholder letter, Tesla predicted that beginning in Q3-18 it will, absent a severe force majeure or recession, achieve sustained quarterly profits with continued rapid growth.
- In Tesla’s Q2-18 conference call, Elon Musk predicted profits and positive cash-flow for every future quarter, unless there's a recession or force majeure that interrupts Tesla’s supply chain.
- While Tesla may be able to manufacture and sell 7,000 cars per week, its battery supply chain can’t support higher production rates so continued rapid growth is impossible.
- Since the DRC dominates cobalt mining, China dominates cobalt refining and non-battery cobalt demand is extremely inelastic, the structural force majeure risks in the cobalt market are daunting.
- The Japanese have recently announced plans for a government sponsored cobalt procurement organization for their automakers that could easily morph into a force majeure that disrupts Tesla’s battery supply chain.
In his Conclusion he states in part:
"Most of us grew up in extraordinary times when the word “shortage” meant “it will cost more but you can still get all you want if your wallet is deep enough.” With each passing day, I’m increasingly convinced that the cobalt cliff will teach all of us that the word “shortage” means “not available in sufficient quantities at any price.”"
(20min delay)