Giga Berlin finally delivered it’s first Model Ys. This is a great occasion, it has taken a
long time to get this far, and has been a bit of struggle with the red tape, but we made it.
The delays however, had very little effect on the progress of the company over time.
As the one thing that hasn’t been delayed is the building of the new battery factory in Germany.
Why does that matter,
because at the end of the day, Tesla can make vehicles very fast on their production lines.
Much faster than they are leading on. It is the batteries that take a really, really long time to
make, and for good reason too, because we need so many. About 1000 times as many as there are now.
Therefore the rate of Tesla’s growth, is, and has always been, the rate at which they can
acquire batteries. If no battery manufacturing was delayed, then the overall progress was not
delayed either.
We did get to hear a few words from Elon at the event, and whenever Elon talks,
I always like to listen, and trying interpret what it might mean for the company.
I don’t want to go over everything, just the important things for the company,
but Elon did like to say how happy he was that these cars are coming out. Along with the hope
and excitement this factory brings to our future. I am sure you have seen the video already,
I will try and keep the clips short, and just the ones are the most important,
but so much was just said, I don’t feel like anyone is close to talking about it enough.
Elon has been
talking about the master plan part 3, and has been talking about scaling to
extreme size. This is what I mean when I am saying we need a lot of batteries.
Elon mentions about more vehicles coming out of Europe after the Model Y, something we assumed,
but perhaps never officially mentioned. FYI there is no way 500,000 Model Ys a year will
be close to meeting demand. The need to build new fabs for more vehicles. But I suspect the current
factory could hit a capacity of 1.5 million anyway. Which is closer ot meeting European
demand. But I bet it would only about meet UK demand. These vehicles are just too popular.
Everyone is wanting electric vehicles, and when these new Tesla factories are up,
Tesla’s market share will probably triple, in the meantime all the others are stuck
trying to figure out volume production, or build excessively large battery factories.
And these EV companies are doing all this at a loss, with no sign of a potential profit on the
way, aside from big price rises.
Then Elon asks if anyone has any questions, I’ll just bring up some of important ones.
“Our orders far exceed our
production”. This is what I have been saying. Tesla are overwhelmed with Model Y orders,
they are doing everything they can to make as many Model Ys as possible, to try and meet demand.
The demand is absolutely insane, and if you have driven one, then you can understand why.
Not only that, the demand is getting higher and higher, not just as more Teslas sell Teslas,
but now everyone just got a big shock at the pump, and has started researching electric vehicles.
The demand will continue to increase. Especially when Tesla offers autonomous vehicles too.
Why would Tesla start bringing out more models if they can’t
get close to the supply for their current. The Model Y is so profitable and it’s a relatively
expensive vehicle. Tesla are doing everything they can to make as many of them as fast as they can,
at as low a cost as they can and too busy for more models.
This is big enough. Not only that,
there is a chance that by the time they get close to catching up with demand,
that they crack Robotaxis, and instantly demand quadruples again or something crazy.
After that, then Tesla will probably concentrate on the Model 3 ramping that up to meet demand,
a 4680 version probably to come.
This answer wasn’t even from someone asking about additional vehicles or Cybertrucks,
they were asking about different markets. Tesla hasn’t even started adding the Model Y to a lot
of markets still, it’s only recently been added to the UK for example. Because Tesla can’t keep
up with just a few products in a few markets as it is. Sure the markets are pretty big, but
there is a still a massive backlog for demand. Why spend extra resources and capital in starting
in different markets, when you haven’t met your current market. What about first mover advantage.
Well Tesla is still the only first mover in my opinion anyway. They can afford to take their time
entering other markets. Let the Chinese enter Australia first, Tesla don’t care.
As soon as the Model Y is for sale in Australia, it will be sold out for months instantly.
But Tesla have some really big factories now, hopefully Texas can stay on top of US demand, and
Berlin most of Europe. It’s going to be interesting to see. And as I have said in the
past next year is when it’s really going to start to unfold. The 4680 batteries will be ramped up,
and these new factories will be getting closer to capacity. We are going to be blown away by the
profit this company is going to show us.
“How many gigawatt hours of battery are produced, that will be the limiting factor”. You see? Elon
said it himself, I know a lot of you already get it. But this reinforces it further. Tesla
are battery limited, they have so much demand, but cant make enough cars because of batteries.
So all you need to do, to judge the success of Tesla is keep researching the batteries.
Elon then extends this to how many terawatt hours can they produce per year.
And then wow, we get the answer, I do not believe we have ever heard this number before. The amount
of batteries that is actually required, 300 Terawatt hours. Now that’s a very very very
big number. Wow, I knew it would be a lot, I have been telling you. And I am sure that you
are struggling to get your heads around how many batteries that really is, how much iron would come
out of the ground for that many batteries. As you should be, that number is too big for
the human brain to fathom or grasp. I told you though, we need a lot of batteries. I
should probably do some financial projections on how much profit might be in those batteries.
I hope some of you are starting come around now. Tesla is a battery company now. They can
make or purchase as many batteries as possible, and each of them are ear marked for a product,
whether it’s a vehicle or energy storage. They are a money printing machine, except in the currency
of kWh instead of dollars. And the more they print will deflate the economy rather than inflate it.
Elon is asked about graphiene, and ends up
talking about the battery components. He then says the current one his nickel and its for long range,
which is currently what we are using. I think that is safe to infer that the
Model Y coming out of Texas with 4680 batteries is Long Range.
Elon then talks about how you have to use common materials are you can’t scale, which is why I
have been talking about LFP for so long, as there is so much iron, there isn’t any other choice.
A lot has changed
with Tesla and the way things are headed, it’s not the same as we initially thought.
Sure the commodity prices affect things a little, but eventually they should find their way back
to a more normal price, are least relatively. The other things I am thinking might have made
Tesla change direction, is their demand for their cars, meaning they will just double down on the
current ones more. On top of that, I think there have been some pretty big break throughs in FSD,
encouraging Tesla to push the company more forwards in the direction of Robotaxis.
You can tell me how many people would use Cybertrucks for however many applications,
you can tell me how much the economy could benefit from semi trucks. But it’s all pale in comparison
to Robotaxis. If Robotaxis look likely, then everything will take a backseat to Robotaxis.
Implying Tesla will keep making more Ys and maybe 3s and more and more batteries.
As for batteries, Tesla are buying more CATL LFP batteries. But it’s still relatively small,
it’s not going to make the impact Elon is talking about. Why? Because they can’t be
scaled enough for Tesla’s production. Tesla have to take LFP into their own hands,
because no one is coming close.
Elon mentions a Cybertruck update, it seems a little hopeful, but possible
next year in production. That may or may not mean it needs a new purpose built fab.
Along with a Semi truck update, and Elon hoping to have enough batteries for that, and the new
roadster. Stationary storage, new version of the solar roof, powerwall 3, and lots more things.
Wow, we just got told a lot of the product pipeline. This was
a lot of information about the future of the company, delivered in such an informal manor.
Honestly Elon was just open to taking any questions, and being very candid,
someone else asked in a best case scenario how many more gigafactories in the next 10 years,
and Elon said 10 Gigafactories. One a year. Then we are told 20 million cars in 10 years,
and everyone cheered. Compared to Battery Day, when they were confident to achieve 20 million
cars easily before 2030, less than 8 years time. But we never know how much sandbagging Elon does.
20 million actually isn’t a great number by then. It wont have that much of an impact on the global
fleet, it takes too long. At best, highly, highly unlikely, the competition may also
make 20 million cars a year. Well this would mean there are probably still another 20 million ICE
cars adding to the fleet. These numbers do not add up. Tesla cannot transition the world like this.
It would take 100 years at 20 million a year to replace the global fleet.
Sure Robotaxis help somewhat. So I really hope Tesla are sandbagging. Their actions
speak louder than their words, and they appear to be capable of hitting 5 million before 2025.
However, 10 more gigafactories, at 2 million vehicles a factory, would also be 20 million. Wow,
there is so much being said here.
Anyway, I am sure you all saw the video, so I didn’t want to go over all of it,
just the clues we can take away for the future of the business. There was a bit said here,
it does give us a better idea of the future of the company, but it needs a lot more thinking about.