Musk's asset accrual and paying for Mars

[Zed_Noir]

<snip>
Then, as much as I know Robotbeat disagrees, I firmly believe that Starship will open up asteroid mining for SpaceX. If you can cheaply transport 10,000 or so tons (100 orbitally refuelled Starship flights, so maybe 500 Starship launches in total) of equipment to an asteroid rich in precious metals to set up a mining facility, then it simply becomes a matter of transporting the extracted resources to earth for less than the market price of said resource.

E.G, if gold is worth say $50k per kg, that means Starship can transport $5B worth of gold back to earth on a round trip. So once they get the all inclusive cost of the extraction and transport down to say $4.5B, they can make $500M worth of profit per Starship round trip.

Something NOBODY else can even dream of without the enabling technology that Starship represents. Essentially SpaceX becomes the ONLY company that can economically access this new, virtually limitless source of resources, thanks to Starship.
<snip>

Well, disagree that SpaceX will be a company that can extract the asteroid resources. Since Barsoom (Mars) run by Musk in his retirement will be a nation state with a fleet of Starships. It is more like an "East Indian Company" entity than any current multi-national corporation. Like the "East Indian Company" this entity can make and enforced rules on a lot of things along with acquiring extraterrestrial resources for own use or trade.

[docmordrid]

Just a few data points;

IIRC Starship has a return payload of 25 tonnes.

The current above ground mass of gold is ~198,000 tonnes, with 54,000 tonnes in below ground reserves.

Yearly mining adds about 2,500-3,000 tonnes to the above ground mass.

Carry on...

[M.E.T.]

Just a few data points;

IIRC Starship has a return payload of 25 tonnes.

The current above ground mass of gold is ~198,000 tonnes, with 54,000 tonnes in below ground reserves.

Yearly mining adds about 2,500-3,000 tonnes to the above ground mass.

Carry on...

It can be a slow return, if they have regular flights cycling through - slow enough to enable the returning Starship to park in LEO with 100 tons. From there it is a trivial cost to send 3 additional cargo ships up to LEO to spread the 100 tons payload across 4 landings.

As for the reserves on Earth, that is irrelevant. All they need to care about is the market price and the ability to source the product for less than that. They become just another gold producer. It's not about waiting for Earth based reserves to be depleted first.

[Robotbeat]

I mean, Musk himself seems pretty skeptical of space mining of precious metals.

Anyway, side note: Musk already has the same order of magnitude of wealth as Bezos has/had when we all realized he had so much that it’s actually be a challenge to spend it all usefully. Let’s say Musk’s wealth grows to $250B by the time he’s 60-65. Can he actually usefully spend $10B per year on this goal? I guess he could pump it into renewable energy infrastructure to help fuel his Starships. At the rate of Starship launches needed to actually use up that wealth, we’re talking millions of tons of LNG per annum.

I wonder if much of his wealth might end up in some sort of trust for Mars. I also worry about his public image.

[docmordrid]

>
I wonder if much of his wealth might end up in some sort of trust for Mars. I also worry about his public image.

"...the amount of eccentricity in a society has generally been proportional to the amount of genius, mental vigor, and moral courage which it contained. That so few now dare to be eccentric, marks the chief danger of the time.”
~~ John Stuart Mill, On Liberty

[Robotbeat]

>
I wonder if much of his wealth might end up in some sort of trust for Mars. I also worry about his public image.

"...the amount of eccentricity in a society has generally been proportional to the amount of genius, mental vigor, and moral courage which it contained. That so few now dare to be eccentric, marks the chief danger of the time.”
~~ John Stuart Mill, On Liberty

Oh sure. Right now I think the overall public likes Elon. But if the vast majority start disliking him, then his freedom of action will be reduced.

[RonM]

Musk could setup a trust for settling Mars worth tens of billions of dollars. Then it could spend billions of dollars per year until the end of the US economy. Not the next depression, but an apocalyptic economic collapse.

[Robotbeat]

Musk could setup a trust for settling Mars worth tens of billions of dollars. Then it could spend billions of dollars per year until the end of the US economy. Not the next depression, but an apocalyptic economic collapse.

Could be transnational and thus potentially survive a US apocalyptic economic collapse (if the operators of the trust were pro-active enough to move the money well before such an apocalyse, i.e. before politicians started seizing and/or freezing assets).

[OTV Booster]

When comes to recession new expensive luxury items are first things consumers stops buying. Unfortunately for Tesla their current vehicle range falls into expensive luxury item bracket.

The car industry as whole is going to be hit hard as consumers hang on to existing cars till things get better.

"Stops buying" is shorthand for "significant drop in demand". The drop for BMW was 5% in 2008 and 10% in 2009. Then it's risen every year since. The great recession was barely noticable, really.

Tesla has grown volume by about 50% per year. If Fremont could have stayed open, I think they could still have gotten fairly close to that for 2020. But not being able to produce cars naturally means selling fewer cars. Seems like they've had to close for about 1.5 months - if they were on track for a 50% increase, which I think they were, 2020 might see an increase in sales of something like 30% over 2019.

Basically, the promary concern for Tesla is supply, not demand.

It needs to be remembered that the ones who will still be buying are the ones with large incomes. Recessions and depressions don't effect them as much. It is the average to poor people who get hit the hardest.

In the traditional car business the profit is in the luxury end. Normally the economies of scale come from the inexpensive but heavily produced cars but as in so many things he touches, Elon is standing this on its head.


Tesla started with the high end and now that it's up and running and they have learned their way through most production issues, they are looking at the lower end that will improve the economies of scale.


In the meantime, as you say, the high end will keep selling.


Phil

[OTV Booster]

Musk isn’t an investor. His only assets are the companies he starts and controls so paying for Mars is about what he plans to do with Tesla and SpaceX (with TBC and Neuralink more hobby scale currently).

Tesla has plans that are influencing it’s stock price even now (It’s got the second highest market cap of any auto company after Toyota) It can be a multi Trillion dollar market cap company if it succeeds with Tesla Network robotaxis.

SpaceX Starlink has lot’s of paths to generating vast wealth too. Consider Financial Data & Analytics - dominated by Bloomberg and Thompson-Reuters. Bloomberg bills about $2000/month to over 325,000 users. Reuters a bit less to about 200,000.  Suppose Elon went after their market with a Starlink subsidiary. Many startups have tried and failed. It’s not that hard however for Elon to duplicate the Bloomberg terminal functionality and Starlink gives his version a killer advantage. It’s faster. If you don’t subscribe your competition will get critical information before you do. Other FD&A  platforms can’t match it because Starlink has it’s own end to end internet and light travels faster in a vacuum than in fiber even if there was fiber in the direct path you need (which there isn’t). It’s an offer they can’t refuse. FOMO would let them take over the global market for FD&A.

FD&A doesn’t need much of Starlink’s capacity, it’s just alphanumeric data, it just needs to have routing priority for the lowest latency. In return it would yield billions in steady income for SpaceX to invest elsewhere. What’s it called? Elon has X.com sitting around doing nothing but returning a lowercase x. That would work as well as being a reference to his return to global finance that he got forced out of a couple decades ago.

Probably all wrong but an example of possible paths.

Think in 10 years Tesla will be trillion company, at that time if Elon sell his stock, will not bring company down, like Apple didn't crash when Steve died. 200B will be great pocket change to build city on Mars.

Apple didn't crash when Jobs died but it isn't the same company. It's still big and still profitable but it's somehow adrift. Elon's greatest challenge is to create a legacy that will not just survive him but continue to thrive.

[raketa]

Musk isn’t an investor. His only assets are the companies he starts and controls so paying for Mars is about what he plans to do with Tesla and SpaceX (with TBC and Neuralink more hobby scale currently).

Tesla has plans that are influencing it’s stock price even now (It’s got the second highest market cap of any auto company after Toyota) It can be a multi Trillion dollar market cap company if it succeeds with Tesla Network robotaxis.

SpaceX Starlink has lot’s of paths to generating vast wealth too. Consider Financial Data & Analytics - dominated by Bloomberg and Thompson-Reuters. Bloomberg bills about $2000/month to over 325,000 users. Reuters a bit less to about 200,000.  Suppose Elon went after their market with a Starlink subsidiary. Many startups have tried and failed. It’s not that hard however for Elon to duplicate the Bloomberg terminal functionality and Starlink gives his version a killer advantage. It’s faster. If you don’t subscribe your competition will get critical information before you do. Other FD&A  platforms can’t match it because Starlink has it’s own end to end internet and light travels faster in a vacuum than in fiber even if there was fiber in the direct path you need (which there isn’t). It’s an offer they can’t refuse. FOMO would let them take over the global market for FD&A.

FD&A doesn’t need much of Starlink’s capacity, it’s just alphanumeric data, it just needs to have routing priority for the lowest latency. In return it would yield billions in steady income for SpaceX to invest elsewhere. What’s it called? Elon has X.com sitting around doing nothing but returning a lowercase x. That would work as well as being a reference to his return to global finance that he got forced out of a couple decades ago.

Probably all wrong but an example of possible paths.

Think in 10 years Tesla will be trillion company, at that time if Elon sell his stock, will not bring company down, like Apple didn't crash when Steve died. 200B will be great pocket change to build city on Mars.

Apple didn't crash when Jobs died but it isn't the same company. It's still big and still profitable but it's somehow adrift. Elon's greatest challenge is to create a legacy that will not just survive him but continue to thrive.

Tesla will be like Ford with Model T make America move around. They replicate in Europe after second war 30-40 years. Today ford is regular company.

[Exastro]

It needs to be remembered that the ones who will still be buying are the ones with large incomes. Recessions and depressions don't effect them as much. It is the average to poor people who get hit the hardest.

Actually, I believe the opposite to be true: the income of the wealthiest people comes predominantly from the growth of companies rather than from wages or salaries, and therefore rise and fall much more dramatically with economic conditions.

You can see this in the impact on governments that derive a large fraction of their tax revenue from high-income people: revenues tend to plummet just as demand for transfer payments (and taxes to fund them) rises.

[ncb1397]

You can't justify Tesla's valuation at Toyota + Volkswagen combined with just luxury sales. It is dependent on non-luxury vehicles. If the anticipated high volume non-luxury sales don't show up like anticipated, the market will correct. People here seem to be forgetting that Tesla was worth a quarter what it is today 4 months ago. The market is conflicted about how exactly to value this thing. As such, don't count your chickens until they have survived for a significant amount of time (unless you sell them). Probably a better idea would be to base it on the average market value of Tesla over the last 12 months, rather than any particular day. Average for Tesla over 1 year is more like $100-$110 billion compared to the current market cap of $286 billion.

[MikeAtkinson]

More likely I think that Musk will set up a proper bank, offering full financial services: Loans, insurance, money transfer, bank accounts, investments, commercial banking, credit, etc. A Tesla + SpaceX bank. In which they park their excess profits as  Tier 1 capital (cash, etc.).

By the magic of fractional reserve banking they can then lend up to 20 times their Tier 1 capital. This will be very useful for Tesla as they can lend some of it out for purchases of cars, solar roofs, corporate battery projects, etc. SpaceX can also lend money to martian settlers and those wanting to set up businesses on Mars. Most lending would have to be for property and commercial [1], but even so hundreds of billions could be lent for Mars settlement [2]. SpaceX have a relationship with the settler as both customer and perhaps employer within the martian settlement and the bank would have a relationship as both a lender and bank account (into which their wages are paid) so this lending is pretty safe [3].

Elon wanted to turn PayPal into a full bank fit for the 21st century, but it never happened after it was bought out. Central to this was a tight relationship with their customers using mobile phones. This will be his opportunity, if Tesla and SpaceX make as much money as some think they will, then this bank could easily become the biggest in the world.

Doing it this way would enable Elon to keep his Tesla and SpaceX shares and still meet the vast capital requirements for Mars in a couple of decades. SpaceX and Tesla would also probably pay dividends, but only when they cannot see internal uses for the money. These dividends can be used by Elon to directly fund the Mars settlement, i.e. inward investment.

[1] To pass stress testing.

[2] Loans would be made to settlers for their tickets, who then repay with interest out of their wages. SpaceX then make an immediate profit out of the ticket, which then gets passed back to the bank in higher capital. This enables the bank to make more lending (most of which is on Earth so it is not a pyramid scheme).

[3] As long as the martian settlement is economically viable (note that does not mean break even because inward investment can supply added capital for a long time).

[Coastal Ron]

More likely I think that Musk will set up a proper bank, offering full financial services: Loans, insurance, money transfer, bank accounts, investments, commercial banking, credit, etc. A Tesla + SpaceX bank. In which they park their excess profits as  Tier 1 capital (cash, etc.).

Tesla is a publicly traded company, and there are limits on what the companies Board of Directors, who have a fiduciary responsibility to the shareholders, will allow the CEO to do. Car companies have had their own financial entities, but once you start venturing outside of financing Tesla products then I think there would be pushback from the Board.

Otherwise I agree that Elon Musk could set up a financial institution that is focused on the well being of Mars colonists, just like my credit union is focused on the well being of its customers, who are also the shareholders.

Whether SpaceX or Tesla need to be a part of such a financial institution is debatable.

[MikeAtkinson]

More likely I think that Musk will set up a proper bank, offering full financial services: Loans, insurance, money transfer, bank accounts, investments, commercial banking, credit, etc. A Tesla + SpaceX bank. In which they park their excess profits as  Tier 1 capital (cash, etc.).

Tesla is a publicly traded company, and there are limits on what the companies Board of Directors, who have a fiduciary responsibility to the shareholders, will allow the CEO to do. Car companies have had their own financial entities, but once you start venturing outside of financing Tesla products then I think there would be pushback from the Board.

Otherwise I agree that Elon Musk could set up a financial institution that is focused on the well being of Mars colonists, just like my credit union is focused on the well being of its customers, who are also the shareholders.

Whether SpaceX or Tesla need to be a part of such a financial institution is debatable.

Agreed about fiduciary responsibility, but Tesla already has financing and insurance and probably will soon be into payments for their ride hailing service. Knowing how both Tesla and SpaceX like vertical integration it is not much of stretch that they will vertically integrate banking.  For both SpaceX and Tesla the motivation is the same, ensuring that their customers have ready finance and other services and building up a relationship with their customers that can lead to further sales.

[oldAtlas_Eguy]

More likely I think that Musk will set up a proper bank, offering full financial services: Loans, insurance, money transfer, bank accounts, investments, commercial banking, credit, etc. A Tesla + SpaceX bank. In which they park their excess profits as  Tier 1 capital (cash, etc.).

Tesla is a publicly traded company, and there are limits on what the companies Board of Directors, who have a fiduciary responsibility to the shareholders, will allow the CEO to do. Car companies have had their own financial entities, but once you start venturing outside of financing Tesla products then I think there would be pushback from the Board.

Otherwise I agree that Elon Musk could set up a financial institution that is focused on the well being of Mars colonists, just like my credit union is focused on the well being of its customers, who are also the shareholders.

Whether SpaceX or Tesla need to be a part of such a financial institution is debatable.

Agreed about fiduciary responsibility, but Tesla already has financing and insurance and probably will soon be into payments for their ride hailing service. Knowing how both Tesla and SpaceX like vertical integration it is not much of stretch that they will vertically integrate banking.  For both SpaceX and Tesla the motivation is the same, ensuring that their customers have ready finance and other services and building up a relationship with their customers that can lead to further sales.

A First United Bank of Sol System.  Not just for Mars but for Earth, the Moon and other Solar System locations as well. It would handle little things like monetary exchanges from local Lunar or Mars or In-Space currencies to and from Earth currencies. Many Banks make a lot of money off of such currency exchanges. Why have a different currency for like Mars or the Moon? A different Political societal unit such as Mars or a Lunar colony need an ability to isolate themselves for the sake of the internal stabilization of internal trade, salaries, prices, etc. Else they become at the mercy of what happens to some other political societal unit's economic problems. Since most of the political societal unit's economy is based on internal supply and demand with some percent of external supply and demand trade it helps to cushion the local economy of say Mars from what is happening on Earth. If Mars or a Lunar or a grouping of In-Space habitat colonies are successful they will be a fairly rapid growing economies and definitely not stagnant. Each of the three possible colonies listed also would not grow at the same rates and so each would need it's own currency.

[ncb1397]

Tesla has risen another 10% today (normal trading hours aren't over though) putting market capitalization at the combined value of the next 3 biggest market capitilization automakers - Honda, Volkswagen Group and Toyota. The combined auto sales of all 3 brands is about 60 to 70 times Tesla's 2019 number. Or to look at it another way, Tesla vehicle sales last year were comparable to Volkswagen's Porsche unit - one of their smaller units.

So, what is driving this? There are a few possibilities that creates positive feedback loops.

1.) The stock is going up, so people buy, so the stock goes up
2.) One of Tesla's greatest assets is its ability to fund itself cheaply. How cheaply is dependent on the stock price. Owners of Tesla can get cash delivered on demand with very little dilution of their ownership of said cash. So, let's say that the stock rises by 10% on Friday. Well, the value of one of Tesla's greatest assets, unusually cheap access to capital just went up meaning the stock is worth more.
3.) Normal short squeeze behavior

Whether anything will break the feedback loop and reverse the melt-up is debatable, but arguably similar events have happened in the past with this particular stock. On February 21, 2020, when it hit ~$900 but promptly crashed back down to ~$450 within 30 days.

[DigitalMan]

Tesla has risen another 10% today (normal trading hours aren't over though) putting market capitalization at the combined value of the next 3 biggest market capitilization automakers - Honda, Volkswagen Group and Toyota. The combined auto sales of all 3 brands is about 60 to 70 times Tesla's 2019 number. Or to look at it another way, Tesla vehicle sales last year were comparable to Volkswagen's Porsche unit - one of their smaller units.

So, what is driving this? There are a few possibilities that creates positive feedback loops.

1.) The stock is going up, so people buy, so the stock goes up
2.) One of Tesla's greatest assets is its ability to fund itself cheaply. How cheaply is dependent on the stock price. Owners of Tesla can get cash delivered on demand with very little dilution of their ownership of said cash. So, let's say that the stock rises by 10% on Friday. Well, the value of one of Tesla's greatest assets, unusually cheap access to capital just went up meaning the stock is worth more.
3.) Normal short squeeze behavior

Whether anything will break the feedback loop and reverse the melt-up is debatable, but arguably similar events have happened in the past with this particular stock. On February 21, 2020, when it hit ~$900 but promptly crashed back down to ~$450 within 30 days.

One of the reasons I see written about is anticipated S&P inclusion.

[wannamoonbase]

Tesla has risen another 10% today (normal trading hours aren't over though) putting market capitalization at the combined value of the next 3 biggest market capitilization automakers - Honda, Volkswagen Group and Toyota. The combined auto sales of all 3 brands is about 60 to 70 times Tesla's 2019 number. Or to look at it another way, Tesla vehicle sales last year were comparable to Volkswagen's Porsche unit - one of their smaller units.

So, what is driving this? There are a few possibilities that creates positive feedback loops.

For those that are still thinking of Tesla as just a car company are missing 80% of the picture.  Tesla is also an energy company.  The PV and stationary storage part of the company is going to be at least as big and probably more profitable than the auto side.

I just keep buying more stock.  There will be ups and downs but it will be a multi trillion dollar company in 10 years.

If SpaceX needs funds, which may not be a problem with Starlink, that it would be a small matter of Elon selling TSLA to put more money in SpaceX.

It's taken almost 20 years for Tesla and SpaceX to get the momentum and funds they have now.  This is fun to watch.