Interpreting more what has been said, and re-listening to the earnings call,
I think I have established in my head what I think a likely roadmap of the company will be,
judging by what were told.
I think this roadmap might bring us to about 2025. I think it would be nearly obtuse to try
and predict what a post 2025 Tesla might resemble. But up to then I can't see Tesla launching any new
vehicles. Possibly not even the cybertruck, Roadster or semi. Let's review the roadmap.
Now the roadmap is based on what I think would be most inline with the mission,
going by the recent information we have been told. The mission
being what would transition us off fossil fuels the fastest.
It's obvious that we need all sorts of different EVs for all sorts of varieties of utility,
application and lifestyle. But Tesla really only make two in any decent
quantity. Therefore it would be axiomatic to assume that more variety of vehicles
would help transition us faster, to thus serve more applications. But this would
only be necessary if there was more supply than what Tesla currently offer, which there is not.
We know however, what will replace the most ICE vehicles. It is Robotaxis.
As we talk about how a Robotaxi can replace the equivalent of 5 vehicles. Not only does
this replace the most ICE vehicles, it is also the most profitable to Tesla,
and lowest cost to the consumer. If you think the profits from the EV business are high,
they are pale in comparison from any potential Robotaxi profit.
Now if there is enough demand for just the 3 and the Y,
especially when we factor in the extra demand that will come from the 4680 specifications,
and then the additional demand from FSD, and then the additional demand for Robotaxis.
Well I think that could take us to 2025, and we still have no need for any new models,
due to their being plenty of demand still for the and 3 and Y.
It's easy to get caught up in thinking more models is better for Tesla,
or even better for the consumer, the market likes hearing about new products too. But
if you add an additional model then you may make 1m more vehicles a year of this model,
but it might be at the cost of making an additional 2m more Model 3 and Ys. The trick
is to just find more and more demand for the 3 and Y. By adding more and more features to the
car. Improving specifications. Major software updates, self driving, and application.
This would then take demand until Robotaxis are able to grow. This will help demand,
because every Tesla may suddenly be worth $25,000 a year in Robotaxi income. So imagine
the demand for Teslas then. Why would someone need to spend $25,000 on a compact Robotaxi,
when you can make that much a year. We don't need compact Robotaxis. We never did.
Alright I have explained why Tesla will continue to have tons of demand just for the 3 and Y for
sometime. Therefore here is the roadmap. The Model Y Long Range and Performance is the first
vehicle Tesla will ramp up to really meet demand. This is the highest profit margin vehicle of the
mainstream models. Therefore it makes sense to have plenty of these for sale. Perhaps a 4680
Mode Y Long Range might cost $65,000, but have a range of 360 miles. The profit margin could
be $35,000 to 45,000. Then if they add FSD on to that, there is even more profit again.
Anyway, that is a huge amount of profit per vehicle you sell. Tesla will ramp up as many of
these as they possibly can. Perhaps one million, and maybe slowly drop the price down from $65,000
to $59,000. Until the market clearing price has been set, where perhaps waiting lists are only
about 1 month. Perhaps one million Model Y Long Range and Performance deliveries from Texas,
and 1/2 million from Berlin. Remember Berlin will be able to offer more affordable prices too,
due to no import tariff that Shanghai was facing, and of course all the transport costs.
There will however be higher cost labor. But this could again be offset by the new manufacturing
techniques. All in all, I do expect the cost per vehicle to be lower in Berlin than Shanghai.
If Telsa were selling 1.5 million 4680 long range model Ys a year globally, then that must be close
to around $60 billion gross profit a year. This rate is possibly hit sometime in 2023,
and FSD should hopefully be available, which should help maintain this high demand.
But this is just the top of the totem pole. We are still constrained by batteries,
so Tesla are only selling their highest margin mass vehicle. And perhaps it
saturates at around 1.5 million vehicles likely sometime next year. This would like
mean the current Berlin factory is at full capacity for lack of better word,
but there is a new Berlin factory extension that has likely just opened around that time.
As for Texas there is still plenty of room there, even if Austin is producing 1 million Model Ys.
With this spare factory space in Texas and Berlin, the next phase I believe,
once Model Y Long Range and performance have reach saturation. Can you guess what the next version
that will be scaled up to meet the market? I think it will be the Model 3 Long Range and performance.
This will be a structural 4680 battery pack, front and rear die cast mold Model 3.
Again it might do similar numbers as to what the Model Y was doing. Bear in mind,
we might now have a Long Range Model 3 that is possibly hitting 400 miles of range,
with these new batteries. There is going to be so much demand.
Then about this time FSD should be a lot safer than a driver, and perhaps legally allowed to be
used. This will boost demand even further. Tesla may double down further on the Model 3 and Y.
Remember I have only spoken about Berlin and Texas. Throughout this whole time,
Tesla China will continue to expand as fast as CATL can produce batteries for them,
specializing in the lower cost standard range models. I own one of these vehicles,
and they are still incredibly impressive.
I believe Fremont may just end up serving the standard range Model 3, along with S and X.
Anyway, as we climb further down the totem pole, we have the standard range Model Y,
that could potentially be ramped up and saturated into the market.
Then we have the Model 3 standard range.
I would say both of these vehicles will have to wait until around 2024,
when Tesla has scaled up their own in-house LFP batteries, or other non-nickel batteries.
But then at the bottom of the totem pole is the compact $25,000 Tesla. This car is
looking less and less likely to be necessary. The customers could just use Robotaxis instead.
Tesla could serve them more efficiently this way. Tesla is making transport cheaper,
not necessarily the price of EVs. As Tesla progress more and more to Robotaxis,
and I see less and less need for a compact Tesla.
Put it another way. Tesla's first objective is to transition off fossil fuels as fast
as possible. This may not be best done by offering an affordable EV to the masses.
The demand for the 3 and Y is strong enough to sustain ramping for long enough until
FSD comes along, thus increasing demand further, to meet the further ramping up.
Whether this demand will last long enough until Robotaxis are in fruition is yet to be
seen. But perhaps this will all be done with Model 3 and Y with 4680 batteries for now.
If Robotaxis are not ready in time, then a standard range version of the
Model Y will likely be released and ramped up to meet demand,
as it is the next most profitable car, after that would be further standard range ramping.
This would possibly involve price reductions to increase demand to this level, taking margins to
what could have been in excess of 50%, perhaps down to 40%, and that's likely without FSD.
i.e. Tesla will sell whichever cars they can make abundantly that have the most profit.
So that's a long way down the totten pole, until you even begin to think about a $25,000 Tesla,
and we haven't even mentioned the Cybertruck, which should be before then too. This means that
it is likely Tesla reach Robotaxis, before there ever needs to be such a demand boost
to have to offer a $25,000 Tesla. And then if you did offer such an affordable EV,
then these same people will instead have to take a Robotaxi, as they can't afford a Model
3 or Y. In other words a $25,000 Tesla would have cannibalized Robotaxis, and possibly quite a bit.
The economics of owning a $25,000 Tesla could also have been argued as cheaper than a bus.
In fact for that reason alone its a good enough reason not to ever offer a $25,000
Tesla. They don't need to do it. Also think of all the hassle and stress of trying to make a $25,000
Tesla, and effort and resources that could be applied on future growth.
It's likely exponentially harder to make an EV that much smaller. A Robotaxi is a low cost enough
form of transport. Robotaxis are where the money is at, and what Tesla is focusing on the most,
and if you think about it, then of course Model 3 and Y are a better form of robotaxi. We often
think as if we need to just simply get the lowest cost of transport we possibly can, but sometimes
good enough, is good enough. If a Robotaxi ended up doing one million miles in its life,
then that would be perhaps a saving of 1c per mile, compared to the cost of a compact.
I think we can estimate that we are already at a low enough cost,
and the difference of having a 3 or a Y compared to a compact for passengers is well worth it.
Of course the added complexity of having to have an entirely different vehicle,
that people often only buy for fuel savings in the first place anyway.
It just seems like a compromise for everyone. But the added complexity, then it means a lot
of new different parts and processes. The 3 and Y already share a lot of parts. Perhaps
eventually they will share the front and rear diecast molds, and structural battery packs,
and there will be less different parts for each of them over time. The compact
would be of a different size, and not be able to benefit from these same economies of scale.
Therefore I think the roadmap is relatively simple, continue ramping Model Y and 3,
and make sure there are enough batteries to do so.