Verizon 5G Fixed Wireless Home Internet Review

For the past 18 months, all of my work-from-home and personal Internet use has been going over the Verizon 5G ultra-wideband network. And I really haven’t noticed any change at all compared to my traditional cable-based ISP (Cox).

Well, that’s not entirely true. I have noticed the difference in my bank account. I was paying about $110 a month for cable Internet, but this new Verizon 5G home Internet only costs about $25 a month (now, it is either $35 or $45 per month). When I signed up, it happened to come with a $25-a-month bill credit for the home internet service plus two phone lines. It may be more accurate to say it is free.


When I first received the wireless modem router, I unboxed it and set it up. It didn’t quite work. I ran into numerous problems trying to activate it on the Verizon network. I don’t know what was wrong. I called Verizon and worked with them, and after a few days of leaving it alone (not at their direction, I was busy with other things), it was online.

The box is a small, white box that plugs into power, and that is it. It offers WiFi and a web-based management interface. It has two ethernet ports on the back if you want a hardwired connection. I used these to connect to my Asus Mesh WiFi routers, which switched into AP mode so that all my devices are on one big network, regardless of what WiFi network they connect to. [As a side note, I also used the opportunity to buy some MoCA adapters, which are much faster and more reliable than previously, so I could hard-wire the backhaul between the Verizon router and the two mesh nodes.]

Within the first few months, I had a few hiccups where the device would randomly reboot itself. Most of the time, it wasn’t an issue because it would be back online within two or three minutes — except for one occasion during a Teams call with my boss. Go figure.

After that, however, the service has been nearly flawless. Since I cut the cord from Cox and switched to Verizon 5G home Internet as my only Internet service provider, I’ve had one time where the modem rebooted itself during the daytime when we were using it.


My service level is 300 Mbps down and 20 Mbps up. I have yet to notice when I’m getting noticeably slower speeds. It is to my advantage that I live about 600′ away from a Verizon tower. And while I would like faster speeds, getting the promised speeds almost always means I’m not having any issues with slow downloads or buffering. I only noticed that my speeds were slower than cable when I downloaded a big software update from Microsoft or Apple. Otherwise, it is smooth sailing – Teams meeting after meeting, Bluey episode after Bluey episode.

Verizon can deliver these sorts of speeds on a day-in-day-out basis because of the new spectrum acquired in the C-Band auction. The final tranche of that spectrum was released in August 2023, and Verizon and AT&T were able to unlock huge chunks of spectrum to provide users with high speeds.

The best part is that Verizon 5G Home service doesn’t have any monthly transfer caps or penalties for data overages. Before I cut the cable cord, I was subject to a 1.25TB/mo data cap, and it would be $50/mo additionally to have “unlimited” data.

Tech Support

The good news is that besides the initial setup, I have not needed any support from Verizon. Speeds are strong, and the service is reliable.


As I mentioned above, I’m paying $25 per month, and with a $25 bill credit, it is effectively free. The bill credit will run out after two years, and there is a price lock guarantee. It is hard to beat the value per dollar. Right now, I believe the same service as a new customer would cost $35 or $45.

Some users may be able to access higher speeds if they live near a tower enabled with mmWave equipment (speeds closer to 1Gbps).

Bottom Line

If you live near a Verizon 5G tower with C-Band spectrum deployed and you get good speeds on your Verizon 5G C-Band enabled phone, check it out and see if your location qualifies and toss that overpriced cable service. I strongly recommend the service if you can get it and have good signal. Given the current service level and pricing, I won’t be leaving my Verizon 5G Home internet until the Fiber-to-the-Home salesman comes knocking on my door.

Optimistic Vaccine Roadmap

While things look terribly dark in the short term for the US COVID-19 outlook (pro tip: wear a mask, it works), it seems like there is hope soon to come. This is my forecast for what I expect to happen, and how I feel like we’re closer to the end that the beginning. I’m not a medical export or logistics expert but I’ll still give it my best shot.

Still though, wear a fucking mask. I’ve been to Target and Costco lately and there are a few assholes who wear them to get in the door and then put them away or under their chin once they’re far enough into the store and away from the front doors/cashiers.


In December, we should have FDA Emergency Use Approval (EUA) for the first vaccine (Pfizer), which means that the government/military, and front-line health care workers will start to receive the vaccine. By the end of January I’d expect most if not all front-line health care workers to have received the second dose shot, along with other Tier 1 people (government officials, all health care workers who work in hospitals or communal living situations). The interval between shots for this vaccine is 3 weeks, not 4, and the conferred immunity is “effective” 4 weeks from the first dose if everything is on schedule.

We may also have the second EUA from Moderna. Depends on whether the federal government stays open through all of December (there is currently a December 11 deadline to pass a budget resolution). There is significant de-mobilization and re-mobilzation effort within the federal government if a budget isn’t adopted in a timely manner (not December 12 at 1AM). This could impact EUA review at the FDA.

However, this is the darkest month for COVID in America, I expect we’ll likely hit at least 3,000 dead from COVID per day sometime in December (if not more, 5.000 is not unreasonable if people’s behaviors don’t change) and a lot of families will have a terribly sad holiday, missing the 300,000+ friends and family members who died from COVID since the beginning of 2020.

Cumulative population started vaccination: less than 5 million (<2%)

Cumulative population completed vaccination: ~50,000 (those who enrolled in phase 1/2/3 studies in the US in the vaccine arm, and those in the placebo arm who opted into getting the real vaccine at the end of the trial)


Second vaccine (Moderna) gets EAU after reporting out final results in late November, if they didn’t get it in December. By the end of January, most states will have their top tier of those prioritized for getting the vaccine to have their first dose (about 5% of the population, about 30M doses) with the health care workers having received their second doses.

And President Biden is inaugurated.

Cumulative population started vaccination: 30 million (10%)

Cumulative population completed vaccination: 7 million (2%)

February and March

Most states have their top tier groups fully vaccinated, and are working through their second tier (the next 15%, cumulative 20%) which includes teachers, medical staff outside of the first tier, people who work in supermarkets, meat packing plants, and other high-risk areas (Amazon warehouses, not gonna lie). This will require another 100M doses on top of the 30M doses from the end of 2020, which should be achievable by the end of March, especially if we have at least two vaccines going at this point, and probably more.

In February in March, Johnson & Johnson should receive their 1-dose vaccine emergency approval (assuming its effective) and will likely be able to start to vaccinate, and it might be a bit slower to rollout if they need to target various sub-groups if the data on the mRNA vaccines show that they are less effective on certain groups while this vaccine is more effective in those same groups (older, younger, etc.). J&J estimates they may have 100M doses ready by the end of March (worldwide) so I’d expect 30M or so doses for the US.

Also, the Oxford/AstraZeneca vaccine should receive EUA during this time as well as Novavax (again, assuming they are both effective). Each one of those could contribute tens of millions of doses by the end of March, however it will still be early in their logistical ramp.

Cumulative population started vaccination: 100 million (30%)

Cumulative population completed vaccination: 80 million (25%)

April through June

Where the rubber hits the road.

With at least three successful vaccines at this point, and possibly up to five, there is where the logistics and how we go about getting people vaccinated matters to ensure we don’t waste doses to get the bulk of the 80% of the unvaccinated portion of the country through the regimen. In the logistic curve, this is the steep middle part.

I expect once we get further down into the lower tiers, there will be some lottery system (based on birth date?) that will determine when you (or your household) gets vaccinated.

While not everyone will be able to get vaccinated (children under 12 and pregnant/breastfeeding women, for example) I would expect that most of the rest will be vaccinated during this period. By the end of June 2021, I’d expect somewhere in the neighborhood of 60% of the population of the country would be vaccinated. Combined with a weighted vaccine effectiveness somewhere around 85%, that puts us at an effective population immunity at 51%. Not great, so we’ll have to probably wear masks for the remainder of 2021 when we go out in public until the new cases per day is less than 50 per state. Ideally we’d want to have effective population immunity above 70% which reduces the “R number” of COVID-19 to less than 1 which means that each infected person, on average, infects less than 1 person, over time, reducing the infection rate down to close to zero. The higher the number (and the longer we keep wearing masks) the faster the number goes to zero.

Cumulative population started vaccination: 250 million (77%)

Cumulative population completed vaccination: 200 million (63%)

July Onward

Mass-vaccinations may drag on into July and maybe August based on logistical issues, but it won’t be much longer. From then on, it’ll be more about maintaining the current levels of population-level immunity, and trying to reach out to those refusing or just otherwise missed their opportunity be vaccinated. This means immunizing adults when they are eligible for the vaccine (done with pregnancy or breastfeeding) and kids as they turn 12. Children under 12 make up around 15% of the population, so until the vaccine can be proven safe for children, they’ll remain unvaccinated.

However, don’t expect things to be “normal” again for a while. Countries still may not allow foreign nationals to enter until a country has certified that most of its population is vaccinated and there is little to no community spread within the country.

Travel within the US will likely return to normal by late 2021. Expect crowded airports and very expensive flights for Thanksgiving and Christmas 2021 – a lot of older airplanes and older pilots are retiring during the pandemic which means that when travel tries to bounce back, it will run into capacity shortages of both planes and pilots. Travel by car will still be popular, but not by choice.

The Cold Chain

There is a lot of concern about the “cold chain”, that the first vaccines (mRNA-based) will need to be kept at very low temperatures (negative 70-80 degrees Celsius). While this does present some logistical issues, I don’t believe they’re out of hand or will pose major problems. At the cheapest level, dry ice and a very well insulated container can keep it cold (dry ice sublimates at -78.5C). Moderna said their mRNA vaccine doesn’t need to be kept as cold, standard medical freezers would work for 6 months. And Pfizer said they were are currently conducting studies at higher temperatures and will have more in December. But vaccines shouldn’t be stored for more than 6 months – shots belong in arms, not cold storage.

It really comes down to whether you have a can-do attitude or a can’t-do attitude about this whole project.

Communication and Managing Expectations

The final thing that experts and politicians need to start doing as we turn the corner and prepare for large-scale vaccinations is to set public expectations.

Encouraging Vaccination: sadly, this is first on the list. Do whatever you can to ensure individuals to get vaccinated. I worry about a lot of anti-vax pushback (a recent poll showed 12% of people were considering delaying or rejecting a COVID vaccine). Estimating that 15% of the population that can’t be vaccinated initially due to age or other issues, that is a total of 27%, which is pretty high even for a 90% effective vaccine if we want to force the virus out of circulation. The encouragement also needs to be bipartisan. We can’t make it through this if one party rejects the vaccine for political gain.

Masks: you will still need to wear your mask in public for a while after you are vaccinated, even beyond the 7-14 day window from your last dose. One of the underlying unknowns of these studies is that while we know the vaccines prevent symptomatic infections, we don’t know if they prevent asymptomatic infections, and if those individuals who have asymptomatic infections after being vaccinated shed enough virus to infect others. You will probably need to wear a mask until the number of new cases per day in you state drops below a certain threshold (~50 cases a day over a 7 day moving average, more or less depending on state population). The worst-case scenario is that vaccinated individuals have asymptomatic infections and then infect the unvaccinated population (who may or may not have a choice to be vaccinated).

Return to Normal: It will still take a while for the economy to return to normal. Specialized and targeted stimulus might help speed up the process (e.g. lets help all those families who used to run restaurants and went out of business start new ones). We shut everything down in a matter of weeks, but don’t expect things like packed stadiums and concert halls right away. By the end of 2021 and early 2022 I expect the economy to be close to where it was in fall 2019. However, areas that rely on international tourism or business meetings may continue to see economic impact since it will take much longer to open up international borders (CES 2022 will be smaller, but I expect CES 2023 will be back to close to normal).

Source for vaccine amount estimates:

NY Times – The Vaccines Will Probably Work, Making Them is the Hard Part

Good-bye $35,000 Model 3, which we never knew

So Tesla has revamped their product lineup again. Just two months ago I was happy to greet the $35,000 model (and have since purchased the mid-range Model 3, which was then discontinued within 48 hours after my order).

I predicted that the “plus” edition of the standard range model would be the better option, and that model proved to be more popular – 6x more popular than the cloth-seats edition of the model 3 according to Tesla. So much so that they killed the base $35,000 model this week and promised existing buyers that they would get a software locked version of the model 3 SR+.

I also predicted the base model would go away and that was correct too. I just thought it would be 12 months, not 2. You’d think this would teach Elon not to pre-announce prices but he did it again for the Model Y in March so I’m not sure he learned this lesson in time.

Logistically, the original base model would have been hell to deal with. All the additional different parts – cloth seats, manual steering wheel, manual seats, etc. – would have been a supply chain pain in the ass considering the low volumes of SR purchases. It was cheaper for the company to just offer the same SR+ car and software lock it because of the reduction of unique parts for Tesla to stock and manage inventory at their factory as well as service centers around the world.

Beyond that margins would probably have been eaten up by those different low volume parts. By keeping the same interior and just decontenting the car they can keep their margins up.

The other change, including the base autopilot (which is traffic aware cruise and auto-steer), is probably a good idea and the take rate was probably near 100%. The value proposition for buying a Tesla is not nearly as good if the car doesn’t drive itself.

But it’s remarkable to me how much the product lineup has changed in the last two months. I wouldn’t call it “flailing” but having to try a lot of things to see what sticks. If I were to buy today, I don’t think I’d be as happy with my options than I was a month ago when I ordered my blue mid-range 3.

Today I have the choice of either getting a SR+ which is decontented below what I want in a car, or I can get the long range AWD which is too expensive for my budget. I can call for the LR RWD or go into a store but that means the option won’t be around for much longer (and the price isn’t listed on the website).

I understand and agree with dropping the 35,000 base model. The new cheapest model 3 is just under $40,000, but you do get autopilot included. Dropping the LR RWD model isn’t something that I think is good for Tesla. The price jumps from 40,000 to 50,000. A 45,000 option for the RWD model would be perfect in between and the margin should be adequate to keep up the overall profits.

All about that base (model): Tesla’s $35,000 car is here

Today, Tesla announced some very interesting moves. Some are incredibly risky, others have been expected but weren’t expected today.

First, Tesla has announced that the Model 3 Standard Range is now available for sale. For the promised-two-years-ago price of $35,000. The base model is a base model – cloth seats, no power seats, manual steering wheel adjustments, etc. The range is 220 miles per charge, which is fine for a commuter car or to run around town, but maybe not the best road trip machine (even if Tesla’s supercharger network is fairly robust around the US). The most interesting part is that the base trim has a cousin – the “plus” edition that has parts of the premium interior and a slightly longer range – 240 miles – for only an extra $2,000 (which I think is underpriced, I would have made it 3k, add another $1,000 to the mid-range too). I think in hindsight, this is what Tesla would have made the base trim if he didn’t put his foot in his mouth two years ago about the base trim being priced at $35,000. I would expect in a few years the standard range model at $35,000 will go away, and the “plus” model will become the new bottom of the line.

Ultimately, I’d say that for most people the “plus” trim is the Model 3 to get for those who want to get the “cheap” Model 3. You get a little bit better range (an extra 20 miles) but also much nicer interior – power heated front seats, vegan leather seats, better sound, and smartphone docking. For only $2,000 that seems like a steal (again, I think it should be more). If you’re going to spend this much on a car, make it a good experience.

ModelBase PriceDifferentiating Features
Standard Range$35,000N/A
Standard “Plus”$37,000vegan leather seats, better audio, power heated front seats
Mid-Range$40,000264 miles of range, full premium interior (heaters for all seats, satellite view on maps, in-car internet and streaming media, etc.)
Long Range (RWD)$43,000
Full premium interior, 325 miles of range
Long Range (AWD)$47,000AWD, 310 miles of range, full premium interior
Performance$58,0000-60 in 3.2 seconds. ’nuff said.
Option Price
Paint colors: gray, blue$1,500
Paint color: white$2,000
Paint color: red$2,500
Autopilot (traffic-aware cruise, auto-steer$3,000
Full Self-driving (pending regulator approval)$5,000
White interior (full premium interiors only)$1,000

Second, they revamped the autopilot and full self-driving (FSD) option feature sets. What used to be called “Enhanced Autopilot” is now split across AP and FSD. And while EAP used to cost $5,000. AP+FSD now costs $8,000. Of course, the prices of the car as a whole didn’t change, which tells me its not about getting more money out of the consumer, rather its about figuring out what the right options mix, understanding your fixed and variable costs, and getting the ASP of the cars just right so they can meet their profit goals.

Next, and by far the most risky thing Tesla has ever done since the falcon wing doors is the shuttering of their retail stores. Tesla will become a pure online sales company, while they continue to expand their service network. Most stores and galleries will close. This is a radical turning point in the company’s history (whether it’s a good one or not, only time will tell). Tesla is now relying on buyer’s risk appetites (you can return the car within 7 days or 1,000 miles) and other owners selling people on the car, rather than on the ability for someone to go down and see them in person and take a test drive.

The stores closing give me mixed feelings. I recently brought my wife to the local Tesla store, and had her test drive a Model 3 (ostensibly to gain her approval, but also to test the fit of our kid’s car seat in the back). Being able to go see the cars in person and sit in them is a great asset to the company (the gallery approach), but I have to say I was disappointed with the sales rep and the test drive experience – the test drive was literally over within 7 minutes and the total route was less than 2 miles. I think we sat in the car explaining all the do-dads prior to the test drive longer than the actual drive.

I think the galleries would be a much better approach than dealership-style experiences. And Tesla knows that unless you get a lemon, you’re not going to go through the hassle of buying a car and then return it within 7 days (especially not a sexy Tesla). But ultimately people want to at least sit in the car before they buy one. It is very risky. I’d almost be tempted to tell Tesla to bring back a much much much more modest version of their referral program with the store closings to get owners out there and use the network effect to sell the car to new customers.

Finally, Tesla made a few other changes to their lineup – bringing back the Model 3 LR RWD, discontinuing the Model X “Standard Range”, and un-derating the Model 3 LR RWD range back up to 325 miles (it was always that, but Tesla voluntarily de-rated the range).

Things that are actually risk factors for Tesla

With all the crazy reasons the shorts have to short the stock and talk negatively about Tesla, let’s look at the actual risk factors that face Tesla over the next 12 months

1. Lack of demand. This would probably manifest itself and some form of economic recession. The good news for Tesla is that the wealthy tend to prosper no matter what, and that is their target market. 

The other possibility is if Tesla can’t get to the point where they can offer the $35,000 standard range model. A good chunk of the pent up demand will evaporate if those reservation holders can’t buy the $35,000 car. Given Tesla’s work in Q3 2018 to reduce the cost of the car, it is likely they’ll be able to continue that work 10-15% cost reductions per quarter) to allow them to offer the base price car. This has already manifested itself through the Medium Range vehicle now offered because of work done to reduce costs. 

The other ways that a lack of demand could be a problem don’t seem likely – specifically other car manufacturers figuring out how to build compelling electric cars in large enough volumes to meet demand, and choosing to sell them nationwide. Companies like GM and VW promise they’ll introduce a ton of EVs and plug-in cars, but will probably only sell them in CA and OR and anywhere else required by law. And the US is last to get the cars because Europe and China currently have stronger requirements for EV sales. Global manufacturers will design, build, and ship cars for those markets first and the US is an afterthought. 

2. Product mix. This quarter will be the highest average selling price the model 3 will ever have. Because they aren’t selling the cheaper models. The only models sold are the $75,000 performance, $55,000 LR AWD, and $50,000 LR RWD. The average sale price was north of $55,000, which won’t be the case probably ever again (I think it’ll eventually settle around $47,000 – lots of base models with modest option mix and many AWD/LR models and few performance units). 

This means that the free cash flow and the profit Tesla earned this quarter might be only about 15% less than what they will ultimately earn at a full run rate of 7,000+ Model 3 units a week at an average sales price of $47,000 and 25%+ gross margin. So expect somewhat flat free cash flow and profits for the next 6 quarters (which is fine if they bank it and pay off their debt and their stock price rises to above $360 so most of their outstanding convertible debt becomes shares rather than debt). 

3. Paying for future expansion while paying off debt. Specifically the factory for the Model Y vehicle – how much does it cost and where does it get built? Fremont/NUMMI is full and can’t accommodate another model line (if it could there wouldn’t be a tent), so it has to be assembled somewhere else. If the factory costs $3B most of that capex will come in the second half of 2019 and first half of 2020. While Elon wants it to be an alien dreadnought it is more reasonable to expect that there will be incremental improvements – things that have already been discussed are wiring harnesses and wiring bundles that are easy to manipulate by robots so allow more mechanization of the product line. 

4. Federal investigation. Apparently there may be a federal investigation of Tesla going on. Not quite sure what they’re investigating (the SEC has settled the civil charges over the “finding secured” debacle) so we’ll see but unless there is outright fraud going on I don’t think we’ll see charges. If no banking executives were charged criminally after the 2008 crash I find it hard to think that Elon or anyone else will he charged for being too optimistic on their projected growth or anticipated production rates. 

Tesla and Hype

There has been much made recently about Elon Musk going on the offensive (and sometimes being offensive) on Twitter in the last week or so.

Disclaimer: I’m an EV fan, drive a Chevy Volt, and own $TSLA and some Lithium mining stocks.

Drawing the line in the sand

Recently, Elon drew the line in the sand, effectively saying Tesla wont raise another dime from Wall Street (bonds, stock issuance) during the Q1 conference call by cutting off a “boring” question from a Wall Street analyst, and taking a question from a YouTube analyst. He has stated that in Q3 and Q4 of 2018 Tesla will be profitable, and he has pushed his company to start efforts to conserve cash and increase margins.

Good. This is probably something long overdue at Tesla and will help their gross margins on their products and increase profitability (or reduce losses). Tesla right now is roughly 400M a quarter in the hole from a balance sheet perspective (the operating profits from selling cars and other stuff don’t pay for all the overhead of running the company), so they’d need to generate that much to at least break even (not including any increases in debt service coming up in future years).

But the PR and news coverage…

The PR coverage over the last few weeks has been bad for Tesla. Between the Consumer Reports non-recommendation of the Model 3 (which was reversed yesterday after they updated the car’s performance via OTA software updates), and Elon has been going to war with the media and random people on social media, and having his mom defend him on Twitter (was not expecting that). It can be difficult for a non-enthusiast to think Tesla will be able to deliver, or even be a solvent company, by the end of the year.

Timing is everything

I learned something about myself and probably others this weekend about the news and PR and current events. It was announced that ICE had “lost” 1,475 children, and that minor children were being separated from their parents at the border. I drew the conclusion that ICE was taking those kids away and lost them. But that was not the case, in fact they are two separate things – ICE places children with family/extended family/suitable adults and is then no longer legally responsible, but does follow up with the kids occasionally to make sure they’re OK. Following up is good. Separately, ICE separates minor children from their parents at the border. Bad. But I had erroneously linked them in my head until I read a twitter thread about it. And it corrected my thinking on it.

Elon essentially did the same thing – by saying things like if Tesla made the $35,000 version of the car now, they’d bleed money and die, and then turning around and announcing the availability and prices for the AWD and Performance models of the Model 3, he linked those two items in people’s minds. So the media and people are having a collective freak out over the fact that Tesla isn’t going to be able to deliver a $35,000 model at all. Although having done this once before (the 40kWh version of the Model S) doesn’t help Tesla’s case.

While his timing was bad (layoff the twitter, hire more PR people, let them deal with this rough patch), none of the bad press has any material impact on whether or not Tesla will succeed in its goals. It might have an impact on the stock price, or if he has to go back to Wall Street to raise money, but that isn’t in their plans right now. It certainly wont deter the true believers who handed Tesla $1,000 more than two years ago.

Some napkin math

Tesla’s stated goal is that they will have 20% gross margins (profit on each car, minus the costs of the parts, assembling the car, set-asides for warranty work, etc.) on the car. So on a $35,000 car, that is $7,000 of gross margin and $28,000 in parts and assembly. But on a $60,000 AWD car, the gross margin is $12,000 and the parts and assembly cost $48,000. (these aren’t the actual numbers, typically the gross margins on the cheapest car are smaller than the goal while the gross margins on the highest-end cars are more than the stated goal)

The next battle, once Tesla (hopefully) gets to 5,000 cars a week at the end of Q2 is all about gross margins, getting the cost of manufacturing the car (assembly) down enough to make it a cash flow generator for the company. The first option I can think of is to work to trim the hours per car (through automation or otherwise). Right now the plant runs 24/7 – three 8 hour shifts per day everyday of the week. The first step is to reduce that to six days a week, and maybe down to five, and still produce 5,000 cars per week. Then move from 3 to 2 shifts. That trims the hours worked from 168, to 120 for M-F, and then down to 80 hours for two shifts. This is a reduction of 14% for each day they trim, and a total of 55% for 2x8x5, but is probably an even larger impact on labor costs due to overtime, shift premiums, etc. that Tesla is probably incurring with the 24/7 operations. This is easily six months of effort (Q3, Q4), if not longer but the gains are nearly immediate and flow to the bottom line quickly.

Back to the top, if Tesla needs 400M a quarter, at an average selling price of $45,000 and a gross margin of 20% ($9,000) that comes out to needing about 45,000 cars per quarter, or “only” about 3,500 to 4,000 units per week. If they want to be profitable (generate money for the Semi, Roadster 2.0, etc.) anything beyond that they’ll want more cars – like maybe 5,000 a week, 12 weeks a quarter for 60,000 cars.

It seems doable. I’m optimistic about their chances (if I wasn’t I would have sold my stock). Don’t believe the (negative) hype, but you should be skeptical of Tesla’s constantly moving goals, which look more like timelines for software projects that I’ve been a part of, rather than a mass-produced physical product.

Oddly Specific SMS Spam/Phishing Attempt

So this isn’t good – got a spam SMS at one in the morning. It’s a bad sign when the SMS is specific enough that it uses your name, your wife’s name and its sent to your phone number only. The action to take was a link hidden behind URL shortening. It said “there is a new request from {wife’s name} 5 mins ago trying to connect right now” from a number 706-752-xxxx.

I’m trying to think who would have all those pieces of information (my name, my phone number, wife’s full name) and how they could be compromised. Was it a company like Amazon or some other online retailer? Could it be my employer or health care provider? Financial?

In some ways its kind of scary to think how many people have access to this information. I know better than to click on these kind of links, but it is incredibly annoying to sit and wait for the other shoe to drop (the company involved announcing they’ve been hacked) and then work on remediating whatever needs to be addressed. In the meantime, maybe I need to change my passwords again for my email and online shopping websites.

Tesla’s First Lithium Agreement

Last week, Tesla announced they have made a deal with two companies for a mine in northern Mexico to mine Lithium products (Lithium Hydroxide, 29% Li by weight, and Lithium Carbonate, 18% Li by weight). The companies involved still need to get funding to build the mine and commence operations, but it should be a bit easier for investors know they have a deal lined up with Tesla Motors to buy all that lithium that will be mined.

The deal starts with 35,000 tonnes of Lithium initially, and may scale to 50,000 tonnes of Lithium as the production at the plant scales up. So how many kWh does that translate to?

Lithium Ion batteries vary in their amount of their elemental lithium (vs. lithium hydroxide or lithium carbonate) based on the type of chemistry and other materials present. The NCA cells found in the Model S use about 300 g of elemental lithium per kWh. This translates roughly into either 1.67 kg of Lithium Carbonate (LI2CO3) or 1 kg of Lithium Hydroxide (LiOH).

Let’s assume that its a 50/50 mix of both Lithium products, which yields a requirement of 1.33 kg of Lithium products per kWh of battery produced. At 35,000 tonnes of Lithium, that is 26.3 GWh of manufactured cells, assuming that there is no waste product from the lithium coming into the factory (this is not likely the case, so the 26.3 GWh will be the upper bound for our 50/50 assumption). The maximum initial production would be 35 GWh if 100% of the supplied lithium product was Lithium Hydroxide, and the minimum initial production would be 21 GWh if 100% was Lithium Carbonate.

At the contract maximum of 50,000 tonnes of Lithium product, you’re looking at a minimum of 29.9 GWh, a midpoint of 37.6 GWh, and a maximum of 50 GWh of battery cells for the Gigafactory.

So given the inputs and assumptions, we can estimate 26.3 GWh of battery cells to start with, and 37.6 GWh of cells at the top end of the range. If 75% of the cells manufactured go into cars, and the other 25% of the cells go into Tesla Energy products like the Powerpack and Powerwall, it would mean a production of between to 350,000 and 500,000 55 kWh battery packs for the Tesla Model 3 (55 kWh is my estimate for the average pack size sold).

Tesla’s initial stated capacity for the Gigafactory is 35 GWh of cells (and 50 GWh for battery packs – meaning 15 GWh of finished cells are delivered to the plant). However recently Elon has stated that the manufacturing capacity may be even higher than that, as they seek to more efficiently use floor space in the manufacturing process. Tesla may be able to build the same sized building, but rather than get 35 GWh of cell manufacturing capacity, they could get 50 GWh or more. Its currently unknown how much additional capacity they might be able to get, we won’t get our first look until the first phase opens in the first half of 2016 for Tesla Energy cell manufacturing.

(part of this post cribbed from my own Ars Technica comment on this same story)

As a postscript, I’m disappointed the company I had money invested in, Western Lithium, was not Tesla’s first choice for Lithium for the Gigafactory, despite that the mine for the Lithium was in the same state as the Gigafactory and less than 200 miles away. It might be that Tesla needs more than one lithium supplier, and there is still a chance for Western Lithium. And Tesla is not the only game in town either – other battery factories like LG Chem also need Lithium.

Tesla will miss their Model 3 $35,000 target price, but not for *that* reason

Tesla will likely miss their $35,000 target price tag for the Model 3 due in 2017 or so. But not because the batteries cost too much, or production costs are too high.

Rather, demand will be what keeps prices higher.

It is my opinion that the demand for a 200+ mile range, well-designed, luxury Tesla EV will be so huge that Tesla simply raise the price to match demand with what they can supply. It might end up happening in a similar way to how Tesla cancelled the 40kWh version of the Model S. It might be bad PR, they might shrug their shoulders, but its smart business.

The initial roll out in 2017 or 2018 won’t feature vesicles at the $35,000 base price tag – in the pattern of the Model S and Model X launches, we’ll see the highest margin units go out first – signature, largest battery pack, AWD, supercharging, for around $50,000. It will be 6 months or more until they can start offering the lower priced cars (probably around 40K) that are the standard battery pack and trim levels.

Maybe after a year or so, they’ll get around to making the lowest margin units. But even then I don’t believe that Tesla will sell their base model for $35,000. Its likely that they wont get down to that point until about 2020 – after initial demand has been satiated and the Gigafactory is running full steam producing battery packs below $200/kWh.

Chevy’s 200 Mile EV

I’m quite happy to hear a mainstream automaker like GM will release a 200 mile EV that will be available for general sale (not limited to CARB states like CA, OR, NY) and it will be affordable. Its just their timing is bad. With gas around $2.75/gal around the country, people aren’t worried about switching to EVs. Its not until its back above $3.50 do people start to flinch and $4/gal is when they pitch a fit. We’ll see what gas prices are in early 2017 when the vehicle is released, and how that affects consumer behavior. I just don’t foresee a return to $4+/gal gasoline anytime soon.

I’ve been a proponent of raising the gas tax, and indexing it to inflation. I’d like to see the national gas tax raised 6c/gal, and then indexed to inflation. Boosting the current federal tax by 33% would allow the country to repair its deficient highway system, with the side effect of construction jobs.

Some notable pundits have suggested a “gas floor tax” of $3/gal, but that really wouldn’t work since oil companies, refiners and station owners would just keep the price at $3/gal and keep the profits for themselves, rather than sell it below $3/gal and turn the money over to the feds to bolster the highway fund. If you wanted to keep the price of gasoline elevated, you would need to create a supplemental gas tax that would index it to the price of a barrel of oil – an extra 25c the following month when the average oil price is below $60, 50c below $50, 75c below $40.

Ok, enough about infrastructure and gas taxes.

The other issue I have with this EV is that it’s built on the new Chevy Sonic platform. Which is pretty small. It’s almost as if GM is making a mistake putting 200 miles of range into a car that no one would be happy driving 200 miles/3 hours in. There is some amount of psychology built into that 200 mile number – people want to see a range number starting with a “2” before they feel comfortable buying an electric car, regardless of how far they drive it.

The concept has a little crossover style to it, which means it’s likely the batteries are going in the floor like Tesla and the car is sitting up on top of the batteries, 4-5″ higher than normal. This is a good design in that you still get trunk space and seating for 5. It might be that this car has a much narrower appeal in the US (where gas is relatively cheap and people like bigger cars), and higher appeal in Europe and Asia which is OK with smaller cars and higher fuel prices.

Another factor is fast-charging. Tesla has their supercharger network they’re constructing, but its proprietary (for now). The 90kW CCS charging standard needs to take off before people start feeling comfortable buying EVs. The recharge time on a 90kW station from a near-empty 200 mile EV battery is rather quick – the first 75 miles will recharge in under 15 minutes, allowing people to get around and finish their errands.

Finally, price. $30,000 after the federal rebate is still too much for a Sonic-sized car. Even factoring in a $3,000 premium for it being a crossover and $7,000 in first five years gasoline vs. electricity savings. The base model at $30,000 is going to need to be very well equipped (LT model) if it wants to attract buyers. I don’t think we’ll see a lot of price cuts until the $7,500 tax credit starts to expire for GM and Nissan, and they have to reduce the price of their smaller EVs to around $25K before people get interested.