Are you a proud Tesla owner? Well done, although you did get an exceptional vehicle for the
money, you have also made a philanthropic act.
From the start
of the Tesla Roadster, the customers have been funding the research and development
for future customers for the Model S. From there the less expensive Model S paved the
way to a more affordable EV for the mass market. Until Tesla launched a vehicle with a price
point at which they can't come close to matching demand.
As the Model 3 and Y, and even the others, keep scaling up, it creates more economies
of scale, and further improvements in technology. All of Tesla's car sales fund R & D for future
better vehicles and technology. Buying a Tesla funds R & D to make an affordable renewable
future. These advances in engineering, that come mainly from consumers in developed nations,
have helped revolutionize the technology enough, that Teslas are now also going to be feasible
in less better off nations, particular ones that have bad pollution and suffer from congestion.
The entire plan has been to replace as many ICE vehicles as possible. But this is an absolutely
gargantuan scale. There is barely enough money in the world for such a project, the supply
chains don't exist, nor the manufacturing, and there isn't sufficient technology, so
it was going to take a long time. And nearly 2 decades later here we are. At a stage, finally
starting to approach the big auto sales numbers.
With what will be 2 to 3 million EVs produced next year for Tesla, this puts Tesla's production
numbers up with BMW or Mercedes. Finally becoming a mainstream selling brand. As these numbers
continue to rise, from here on in, they start to get big. And despite all this vertical
integration everyone likes to discuss, and that how it will benefit economies of scale
so much, well they haven't been even felt fully. Of course along with Tesla's latest
manufacturing techniques, and FSD, resulting in profit margins so much higher than what
we have seen before.
Combine that with the additional economies of scale, and we are talking serious profits,
which the street has not valued in. Massive, massive profits, insane free cash flow, and
operating profit.
Well that is a lot of profit for Tesla to
keep and not pay dividends. What will they do with all that cash, buy back shares perhaps?
Maybe, but Tesla probably have a better idea on how to spend it. Tesla get exceptional
returns on investments. What did Ron Baron say once, that Giga Shanghai cost $1 billion
and was generating $2 billion a year. That is an absolutely insane return. Likely better
than Tesla can get even buying Tesla shares.
Then what should Tesla do with all this cash. I mean some people think it might accumulate
to 1/2 trillion dollars by the end of the decade. Wouldn't it be stupid to hold on to
that much cash, especially when we could experience more volatile inflation. These currencies
could be a little delicate for some time.
Of course Tesla won't just save up the cash, they are going to be investing into more factories,
and R & D. Except when a factory costs $2 billion fully fit out, and you are profiting
more than that every month, well there are only so many factories you build. Sure you
can further vertically integrate and start mining companies, but this is a lot of cash.
What will Tesla do with it?
Now a lot of people have been concerned, that Tesla may stop selling vehicles to consumers,
and we will all have to use Robotaxis. Now I find this unlikely, people want to own their
own car, it's an extension of their individualism. On top of that, someone who purchases a vehicle
from Tesla and pays for FSD, well believe it or not, they are a lot more valuable customer
to Tesla than a Robotaxi passenger.
But, I think it's fairly obvious that Tesla will not be selling the dedicated Robotaxi.
Now the Model 3 or Y Robotaxis, they had to be funded by someone other than Tesla. Tesla
could not afford their own Robotaxi fleet, especially if they stopped selling cars. Or
Tesla can't afford to currently, but when Tesla is producing a few million vehicles
a year, that is a lot of profit and Tesla could easily fund their production of their
own Robotaxi fleet.
The end product Tesla was looking for, was
going to be an autonomous indestructible robobus, as that is what would have the most impact
on the mission. But that was going to cost an absolute fortune, not to mention creating
the technology for self driving vehicles. So Tesla had to start somewhere. Tesla needed
to find ways of funding the R&D and production.
Tesla managed to get their customers to pay
them $10,000 or so, to fund learning FSD. Just stop and think there for a second just
how clever that was. No one else has come close to anything remotely the same. Waymo
had to pay drivers to drive around to collect not even a fraction of the amount of data
Tesla has. Through this Tesla has managed to make a self
driving car, ok sure it might not be quite perfect yet, but supposedly as good as an
average human driver this year. That is an absolutely astounding achievement. And is
only a tiny fraction of the potential has been priced into the stock.
Anyway, you may have thought it was all funding FSD, or Robotaxis for you, but I think it
is funding Robobuses for developing nations. All the outrageous profit Tesla have been
making, and re-investing into the company, although to be honest, their re-investments
are relatively small. It is absolutely insane the progress Tesla make relative to the amount
they spend in R & D. Another reason why Tesla are only going to continue to increase their
lead ahead of the competition. Not to mention the difference in expense on cell factories,
around 1/10 relative to GWh output. I don't think enough people understand that not only
are the competition not catching up, Tesla is actually increasing their lead ahead further.
And is about to make several major step change jumps in technology and scaling.
All these luxury EVs that we have been buying
in developed nations, are going to be generating so much profit soon. I mean so much, an absolute
fortune, as you well know. Well supposedly at the end of 2024, Tesla
will be at volume production with their dedicated Robotaxi, so perhaps 2 and half years away.
I mean we might expect Tesla could even be at a 5m a year run rate, plenty of reasons
for that to be the case. But, even anything around there is going to mean absolute insane
cash flow.
Right well with that much cash it might mean we finally get some dividends, yay!
Ha, no, Tesla will not pay dividends, Tesla always have better ways to spend the money.
What if Tesla are generating around 10 to 20 billion dollars free cash flow each quarter?
Are they going to be be building 5 giga factories a quarter with that? I doubt it. What will
this money be used for. Well Tesla will fund the development of their Robotaxis. As in
they will pay and own all their Robotaxis.
Perhaps these taxis may cost around $50,000 to produce, to be to this rugged standard
that is likely required. I think the dedicated robotaxi may have upgraded cameras for improved
vision to help aid FSD further and maybe the cameras are positioned higher to see above
vehicles better, along with other upgrades. I don't think it's necessary to cheapen out
on the vehicle, as after 1 million miles the cost of the vehicle is almost negligible,
not to mention the intrinsic value remaining through recycling. The extra expense can go
into utility making this vehicle more versatile for more applications.
Or maybe I am wrong, and it is a lot cheaper. But either way, Tesla should be able to fund
around 2 million Robotaxis a year, without taking on any debt. Of course, this would
probably double each year, as the vehicle output increases, but so does Tesla's profits
to fund the expense, along with Robotaxi fares starting to accumulate, until Robotaxi growth
becomes self funding, which shouldn't take long.
But perhaps cost should be spent on configurations for the robobus, perhaps ways of easily adjusting
seating for more comfort when times are less busy. And perhaps in rush hour more standing,
maybe over 20 or so people in each taxi. That could reduce motorcycles or cars by a step
change.
Well maybe that's not realistic cramming so many people in one Robotaxi, on the other
hand I doubt it would not be too dissimilar to a subway. Even developed nations expect
to be cramped up at rush hour on the tube, or underground. It's just there aren't many
other options for most people. So I am pretty sure that people would be prepared to ride
in similar discomfort in a Robotaxi when necessary too, especially when it's still that much
better than the alternative.
On the other hand Governments may want to
subsidize the Robotaxis or work in with Tesla other ways, if growth was constrained by income.
I don't know, governments could maybe get rid of all other transport in parts of the
city, at least to start with as tests, and build it out in areas, if they were perhaps
considering going all in Robotaxis.
As outstanding as the Cybertruck is, I believe
it's purpose was actually not to serve as an electric pick up truck. I think it's purpose
was to fund research and development for 30x cold rolled stainless steel and the armored
glass. Has it clicked in your head yet? The dedicated Robotaix is going to be a dedicated
cyber robo bus.
It is obviously not going to have a paint job, as it can be so easily scratched. Therefore
it will of course have stainless steel, and it will of course be the cybertruck stainless
steel. And it will of course be an exoskeleton. I think you get it now. This truck will be
indestructible. It can survive being hit by a massive mallet, and not dent or scratch.
There will likely be a protective coat to prevent graffiti too.
Then the windows, basically impossible to smash, even if you throw a metal sphere at
them. It is the fact we have people in the US willing to pay $100,000 for the Cybertruck,
that can go into R&D in improving the Cybertruck, until it's ready to evolve into a Robobus.
Perhaps there will also be a solar roof for the Robotaxi, as it will have a much larger
area roof, than say a Model Y, and we have heard rumors that the Cybertruck may have
solar panels.
I am always in awe of this company, but seeing
how much of where we are today, was envisioned going back 20 years ago, is astonishing. Elon
has managed to maintain this path, which looking back really does seem impossible to have achieved,
but by some miracle, Tesla are still very much around today, despite what still gets
thrown at the company and CEO.
The objective of this plan, is that even people in developing nations, can have safe, low
cost, clean transport. As there are a lot more of them, and they don't have the money
to afford a new EV. Elon has managed to find a way, that even the poorest of nations will
eventually have this improved form of transport. Of course the next step will be energy, and
eventually we will see Tesla's LFP power wall, which should be low cost enough, again, for
the entire world.