Hey, I’m Steven and this is Solving The Money Problem.
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Tesla’s mission is to accelerate the world’s transition to sustainable energy. This isn’t
a BS corporate slogan. It is literally WHY Tesla exists.
Starting a new car company is almost an impossible task. Just ask everyone who tried and went
bankrupt over the last century.
And starting an electric vehicle company? Absolutely insane.
But Tesla not only tried, they’ve succeeded. They’re now producing over a billion dollars
of free cashflow every year selling NOTHING but electric vehicles, solar and battery storage.
In their own words:
“We believe the notion that a sustainable future is not economically feasible is no
longer valid”.
This is a warning shot whose scope and scale reaches far and wide. Tesla has in its crosshairs
trillions of dollars of industry. Big oil, legacy auto, utilities and more.
This week, Tesla released their 2019 impact report sharing everything that matters about
their effect on the environment from factory operations though lifetime use of its products.
And while I’ll touch on the environmental stuff, in this video I’m putting on my investor
hat and following the breadcrumbs to see where they lead.
The 57-page report is laden with important clues about the future of Tesla, its business
and its products so this is where we’ll focus. What hints can we find that might help
us as investors? What can we deduce or speculate about the company’s future?
Let's find out.
But before we dive in, I just want to say congratulations to all the Tesla shareholders
who saw the stock pass $1,000 for the first time this week. The first thousand is always
the hardest. Here’s to the next!
And while we’re talking about stocks
--what a smooth transition--
Webull have an awesome offer for US residents. You can get a free stock just by opening an
account and a second free stock valued up to $1400 dollars by funding your account with
$100 dollars using the link below. And if you’re in Australia, New Zealand or the
UK you can get a free stock with Stake also linked in the description. Let’s get back
to it.
So let’s run through some highlights from Tesla’s 2019 Impact Report and consider
what they might mean. This is an exercise in informed speculation, deduction and well,
a little bit of imagination. I’m thinking out loud, not forecasting the future.
Tesla Mission & Ecosystem
Let’s read:
“We are focused on creating a complete energy and transportation ecosystem from solar generation
and energy storage to all-electric vehicles that produce zero tailpipe emissions”
Does “creating a complete energy and transportation ecosystem” sound like a company who plans
to stop innovating, disrupting, developing new products and growing?
Not to me.
Let’s look at the numbers.
Tesla is going after Electricity, Heat Production and Transportation, which together account
for 47%--HALF of all greenhouse gas emissions generated by the economic sector.
Tesla is not playing in the sandpit.
Tesla vehicles are tackling transportation. Tesla batteries, solar and autobidder software
are going after electricity.
What about heat production?
Glad you asked.
My prediction? Tesla will make a Heating, Ventilation and Air Condition system in the
future for use in residential and commercial buildings.
Let’s read on.
“Tesla also manufactures a unique set of energy products that enable homeowners, businesses
and utilities to produce and manage renewable energy generation, storage and consumption.”
Hmm. “Homeowners, businesses and utilities”. That’s literally everyone. “Energy generation,
storage and consumption”. That’s literally everything.
Seems to me like Tesla is going after EVERYTHING and EVERYONE.
I have an idea. Let’s look at the world’s largest companies by revenue.
Isn’t that interesting.
6 of the top 10 are Oil and Gas companies.
A further 2 are automotive.
And 1 is an electricity company.
If you suck at math, 9 of the top 10 companies on PLANET EARTH are in the crosshairs of Tesla.
9. Not 1. Not 2.
This is Tesla’s future revenue.
And with Tesla’s track record of incredible execution, relentless innovation, perpetual
disruption and endless optimization, I have little doubt we’ll see Tesla ascend this
list in coming years.
Oh yeah. #11 is Apple. There’s some overlap there, too.
Robotaxi Batteries
Innocently tucked away on page 8 of the report was this gem. “What emissions per mile could
be if the Model 3 were used for ridesharing over one million miles using cell chemistry
from our energy products”.
Wait, what? Tesla is modelling use of battery cell chemistry from storage products in their
vehicles -- at least, those intended for use as Robotaxis?
YES.
This makes sense. Batteries used in stationary storage and robotaxis will do many more cycles
over any given period of time than the battery of a Tesla solely for personal use.
Does this mean we’ll see a bifurcation of Tesla products in the future with two battery
options? Robotaxi and personal/performance?
Let’s continue.
“It is also reasonable to assume that our high-mileage products, such as our future
Tesla Robotaxis will be designed for maximum energy efficiency as handling, acceleration
and top speed become less important. That way we will minimize costs for our customers
as well as reduce the carbon footprint per mile driven.”
Sounds pretty clear to me. Tesla will be using two separate battery cell chemistries in the
future. One for stationary storage products PLUS the Model 3, Y and future compact car.
And the other chemistry will feature in their performance and high spec vehicles -- the
Plaid S & X, Roadster, Semi and Cybertruck.
Speculation? Yes. Informed? Definitely.
Reducing Carbon Footprint Even Further
Here, Tesla explains why a million mile battery matters: increasing vehicle utilization.
Most vehicles get scrapped after 130-200 thousand miles. A million mile battery would greatly
reduce emissions per vehicle produced.
But let’s read on.
“A relatively small number of vehicles such as taxis, delivery vans, trucks or buses account
for a disproportionate amount of vehicle miles and, as a result, a disproportionate amount
of emissions”.
We know robotaxis are coming. So too is the Tesla Semi. I recently speculated about Tesla’s
secret van which I’ll link below. And as for buses. My hunch is that Tesla’s high-passenger
density boring company pods aim to displace these over time.
In short. Tesla is going after ALL major forms of terrestrial transportation. Not just luxury
sedans or SUVs. ALL MAJOR FORMS.
This matters.
Battery Recycling
“While fossil fuels are extracted and used once, battery materials, in contrast, are
refined and put into a cell, and will still remain in the cell at the end of their life,
when they can be recycled to recover valuable materials for reuse over and over again.”
“Extending the lifespan of a battery pack is a superior option to recycling for both
environmental and business reasons”.
This is because all materials contained in a battery remain in their original form at
end-of-life and the vast majority of these materials are then captured in the recycling
process.”
What’s more, over half of the materials in a battery cell are metals, which are infinitely
recyclable.
Tesla is currently developing a unique battery recycling system at Gigafactory Nevada.
This may not sound super exciting but as an investor, this looks like a HUGE, HUGE piece
of Tesla’s future business. I’m talking billions of dollars of savings.
In their own words “We expect to recognize significant savings over the long term, as
the costs associated with large-scale battery material recovery and recycling will be far
lower than purchasing and transporting new materials to put into cells”.
Think of it like this. Why mine **** out of the earth when it’s already been conveniently
mined, refined and packaged into batteries for your recycling pleasure?
Emissions Credits And Out-Execution
How’s this for a flex?
“In 2019, we generated almost $600 million of revenue selling zero emission regulatory
credits to other OEMs. All of the proceeds from such sales will be used for building
new factories to produce EVs that will continue to displace other ICE vehicles.”
Tesla is basically being paid by other automakers to build Tesla gigafactories. That’s how
far ahead they are. It’s easier for Fiat-Crystler to pay Tesla a couple of billion dollars,
than to make enough electric vehicles to avoid massive fines.
This in itself should give you pause. Do you think automakers would be paying Tesla billions
of dollars if they didn’t have to? Unlikely.
The truth is, they’re so far behind on electric vehicle technology that they have no choice.
If we look closer, we see that “in 2019, Tesla delivered more than 2x as many EVs as
any other automaker in the world.”
The world is a pretty big place and funnily enough, it includes China, the world’s most
MATURE EV market.
EVs are the future and Tesla today is making twice as many as anyone else.
And their products are far superior.
Good luck catching up.
Price Equivalency
“Our focus from the beginning has been to develop products that are not only sustainable,
but also superior to fossil-fuel alternatives in every way.”
Tesla does what they say they will do. The jury is not out on this. Each Tesla vehicle
is in a class of its own, truly peerless. Should anyone need convincing of this fact,
my condolences. It’s not up for debate. Car of the year. Car of the decade. Car of
the century. Pick the award, Tesla has won it. They make the 3 safest vehicles ever tested.
And 3 of the fastest production vehicles ever built. I could go on. Every kid on the planet
knows and loves Tesla and they’ve never spent a cent on advertising.
The point is, now, not only are Tesla vehicles superior to everything else in the marketplace,
they’re at price-parity.
BMW, Mercedes, Audi are all ****ed.
And Tesla isn’t stopping there.
Toyota, Honda, Ford, GM and co are all next as Tesla continued to drive down prices and
add value through software, innovation and optimization.
Primary Driver
I’ve been astonished at how few people take Tesla at their word, and even more amazed
at how many fail to put two and two together and realise for example that, battery costs
are predictably declining over time meaning, you guessed it, Tesla products will predictably
decline in cost over time too.
Tesla is not a luxury brand. They’re a company focused on driving down costs of their products
to address an ever-growing market over time.
But don’t take my word for it.
“Making our products available to as many people as possible is key to achieve our mission.
Since its founding, Tesla has been focused on increasing the utility of products -- making
them better and more useful to customers -- while at the same time making them increasingly
more affordable.”
Tesla is doing exactly what they say and you’d have to be extremely dense not to see this
happening. Tesla’s over the air software updates alone have increased range, acceleration,
vastly expanded infotainment options, added security and safety features and embarrassed
literally every other automaker on earth.
And I didn’t even mention autopilot.
The cost of Tesla’s products will continue to fall indefinitely as their value, features
and utility continue to rise.
Corporate Governance
This may not sound like the most existing topic, but if you’re a Tesla investor, it
matters.
Tesla’s board are committed to the company’s long term goals.
I ask you to take a moment and consider, which board members of which other energy, transport
or automotive companies would have had the vision to:
* Manufacture and sell electric vehicles form the ground up rather than simply build powertrains
for OEMs * Establish Tesla-owned stores and service
centers rather than use the franchised dealer system
* Create a global network of Superchargers to enable long-distance travel
* Build the world’s largest battery factory to meet their needs and reduce battery cots
* Expand into energy generation (solar) and storage to create a vertically integrated
sustainable energy company * Compensate their CEO only if other shareholders
realize tremendous value
I really want you to think about this. Every step of the way, Tesla was mocked and ridiculed
by critics and skeptics over what looked like insane, risky, reckless investments in an
unknown future (sustainable energy).
But here’s the thing.
That future, the one most thought was uncertain, was in fact, inevitable to ANYONE who actually
did the work. You know. Looked at the data, did some thinking, and had vision beyond next
quarter’s financial results.
The world has been asleep at the wheel while Tesla has been busy building the platform
from which they will disrupt energy generation, storage and consumption across the planet.
It’s too late to catch up with Tesla now.
At best, it’s just a race for second place.
And in case you forgot. We’re not talking about vehicles. We’re talking about HALF
OF ALL sources of greenhouse gas emissions in the global economy.
THIS MATTERS.
And don’t forget your free stocks with Webull and Stake. Links in description.
I’m Steven Mark Ryan, this is Solving The Money Problem, and I love you all.
Thanks so much for watching. Let me know your thoughts in the comments below.
Have your read the impact report? What does it mean for the future of Tesla, transportation
and energy? And of course, if you have any ideas for future videos, let me know. I read
ALL your comments.
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