Kyle Teegarden's Profile

Very interesting article!

I was shocked to see the price difference between what Nestle is charged to withdraw water versus what it sells for in stores. This is, no doubt, an immensely profitable operation for the company. To address your first question, I think the most recent drought in California really underscored the fragility of the nation’s water supply, especially in the American SW. Without true market forces being applied to the price, the state ends up running out of water instead of the price increasing, which largely hurts the environment, farmers, or both. I think the government should take a far more aggressive role in pricing water to corporations like Nestle, especially given their insane margins. It makes sense to use higher pricing as a tool to incentivize Nestle to move bottling plants to regions where water is less scarce.

To your second question, it is also important to realize that bottled water is just a drop in the bucket compared to the water used for industrial, agricultural, and environmental purposes. There are larger water issues at play and Nestle can be viewed as a scapegoat in some ways. However, even a few million liters of water on the margins can make a big difference in the overall ability of a region to meet its water needs.

Very interesting and well-researched!

It makes sense that KCS is seeking to limit risk by focusing on domestic markets in both Mexico and the US, especially given their extensive rail connections internal to each country. Would it make sense for the railroad to invest in other logistical infastructure in Mexico, such as ports, in anticipation of factory output increasingly traveling to overseas markets as opposed to the US?

I also wonder if there are financial instruments KCS could use to hedge on the risk of NAFTA being dropped. Some sort of insurance arrangement could potentially offer some risk buffer if the worst were to happen, giving the company additional capital and time to find new market opportunities.

Thanks for a great article!

As a consumer, I like both the shift to lighter-weight metals and electric power in vehicles. But not all consumers would agree. Since Aluminum is known by most truck-buyers to be a weaker metal than steel, Ford has made a point to only advertise it as “military-grade” aluminum. Meanwhile, competitors have attacked the use of aluminium in commercials, emphasizing that their trucks are made from stronger stuff [1]. In reality, the Aluminium is going to work just as well, but there may be a lasting perception on the part of consumers that by making the F-series more eco-conscious, the product is not as good.

I wonder if the same goes for building hybrid trucks. I don’t believe Ford has ever released a hybrid F-150, although they have a number of other hybrid models. Actually, I’m not aware of any hybrid full-sized trucks, despite some car companies offering hybrid powertrains in SUVs. Trucks would likely be great as hybrids–torque, which is essential in trucks, is actually better delivered through electric motors than internal combustion engines. I would guess that development of hybrid trucks has been stalled, however, due to perception. No truck owner wants to be seen as driving a glorified Prius.

[1] https://www.youtube.com/watch?v=76NUSwNQa7Q

Thanks for this well-written article.

I am firmly in favor of Tesla’s pursuit of additional automation. I also agree with RVD’s comment–I think Elon has massively underestimated the increase in difficulty of manufacturing thousands of cars per quarter, as opposed to hundreds. Traditional car companies have spent decades optimizing their supply chain with suppliers, not to mention the actual efficiency and quality of manufacturing itself. Tesla is just beginning to scratch the surface of volume manufacturing, and it’s not pretty. Automation could certainly be a way to short-circuit this learning process. It offers increased quality, fewer labor issues, and scalable output–all fixes for current areas of concern.

My fear, however, is that Tesla doesn’t have the know-how, time or capital to make this a reality. It seems like they want to make their factory the world’s most advanced, which is a tall order. They are clearly trying to build the know-how, but factory innovation isn’t quite as nimble as product innovation. And it certainly will cost a lot of money and time to get it working well. The factory might be another product for Tesla, but given that all of their other products have been released years late, I’m not sure if they can afford that mindset.

I thought this was a really interesting article!

As an electrical engineer, I have a soft spot in my heart for RFID. I agree that Macy’s is in quite a difficult position–being squeezed from above by Amazon and below by discount retailers like TJ Maxx. It makes sense to double-down on the one area where Macy’s might actually have a strength: their stores. I really don’t see a downside to using RFID inventory tagging. In the worst case, it will make their operations more efficient. In the best case, they can introduce a better customer experience by leveraging the RFID technology (like Smart Mirrors, as you mentioned). Having a differentiated in-person experience could drive people to stores who (like me) would otherwise just purchase online.

Amazon is actually exploring this as they (ironically) open brick and mortar stores. They’re called “Amazon Go” stores [1], and they allow consumers to walk in, pick up items, and walk out, without ever needing to scan the items or pay. I believe Amazon is using cameras and other sensors to achieve this, but I don’t see a good reason why Macy’s couldn’t implement something similar. It would further make Macy’s more efficient by eliminating the need to have personnel checking out customers.

[1]: https://www.bloomberg.com/news/articles/2017-11-15/amazon-s-cashierless-store-is-almost-ready-for-prime-time

Really enjoyed reading this article.

As Victor mentioned, it’s amazing to see how much regulation can impact this rapidly growing industry. I found it interesting that the stock price of Sunrun is doing so much worse than its peers. Is it more heavily dependent upon solar panel imports than other installation firms? Or is it more exposed to the regulatory risk in a different way? I also wonder if Sunrun is able to exert any lobbying influence upon the government. Even if they cannot convince the Trump administration to resist the import tariff, they could potentially lobby state governments for higher subsidies to make up for the higher import costs. Especially in states like California, where tens of thousands of jobs are at stake, there might be greater incentives at a state level.

As you mentioned, this could create some intriguing opportunities for First Solar, which may become the most cost effective producer of solar panels available to American installers. I could also see this hurting First Solar, however. Asia-based manufacturers may switch their focus to thin-film panels since they are not subject to the same import restrictions, flooding the market and applying price pressure on First Solar. Perhaps there will be another tariff a few years down the line!