What if the cybertruck will not be made at the new gigatexas facility.
In case you didn't quite understand what Elon said, the Cybertruck isn't likely
to be launched until sometime next year, or possibly longer.
Now given the rate at which the existing fab at giga texas was constructed, there would
be enough time around now, to start building a cybertruck fab, in time for the Cybertruck launch.
Now this would mean the entire giga texas could be used for building model ys. Or possibly some model
3s too. Elon just said no new models. Anyway, the footprint of giga Texas is about 4 times the size
of Shanghai. It is also hosted on multiple floors, with an overall 7 story height. Thus
giving it a much larger volume, than Shanghai. And remember Elon talks about volumetric efficiencies.
Or the whole 3D chess analogy, in literal application, 3D manufacturing. This is amazing.
This must mean that Texas is probably over 10 times the volume sized building than giga Shanghai
Model Y line. Now we have witnessed Model Ys come out of Shanghai as fast as every 33 seconds,
which is close to 1m a year. Texas is using new manufacturing processes,
front and rear die casts. 300 fewer robots than Shanghai,
and look at the difference Shanghai has made just with the rear die cast molds.
Along with other processes like the seats attached to the battery pack, and likely new paint systems.
Alright, so if Shanghai can do 1 million a year, does that mean Texas should be capable of over
10 million? Or even more due to the fact we are using improved processes and have learned so much
since, and from, Shanghai. And would it not be more efficient per cubed foot too?
10 million does sound outrageous, but it does make 4 million sound more plausible. A lot of people
generally speculate about 2 million a year capacity for the current fab. But there isn't
really too much basis on this, especially when you factor in the run rates we have seen in Shanghai.
Don't get me wrong either, 2 million capacity is also great for Texas. But Elon said,
the more you work on a production line the faster you can get it, as if there is no limit.
But over $10 billion eventual total spend at the Texas site alone, and this building
only cost just over $1 billion. Even if we raise all total capex to even $2 billion,
then we would still expect 5 times more expansion. Granted some of it could equally
be for energy. But those will still be factories that will be contributing to Tesla's profit too.
Perhaps demand is just too insane to add more complexity with more models. It doesn't progress
the mission further. Tesla still have enough demand from just the Y and the 3. They are
exceptional cars. And they are about to get so much better. My Model 3 Performance is already
so amazing, with structural battery pack, front and rear die cast molds,
4680 batteries and all the other new additions, then it would be unimaginable.
I think I would have to sell my current Tesla and buy this new version as soon as it was available.
Texas will of course start off with the Model Y Long Range and Performance, but rather than
introducing another line for a standard range, I think they might add another line for a Model 3
Long Range and Performance. FYI, I don't expect to see a Model Y Standard Range in the US for quite
sometime. Likely using Tesla's own LFP batteries, and reaching a range of at least 260 miles.
Why would Tesla wait so long to sell Standard Model Ys in the US, rather than adding more
Model Ys, as Model Ys are so popular. Well just becuause Ys are so popular, don't downplay the 3s.
There is more profit in one of these new 3s too. And a lot more profit on the long range
3 than a standard Y. Not to mention how much a standard Model Y will cannabalize the long range.
Don't down play the Model 3 just because the Model Y has taken so much popularity. Just
because the Y will sell millions, doesn't mean the 3 won't. The Model 3 is becoming the biggest
selling vehicle in many markets, not the Model Y. The Model Y is of course highly popular as is the
SUV cross-over vehicle. Also the Model Y was able to be sold higher, and thus produce more profit.
The Model 3 will be able to produced a lot cheaper at Texas, and will thus have a lot higher margin.
Like I am saying, it's not Model Ys that Tesla want to sell from Texas, it's Long Range and
performance models. These are the vehicles with the highest profit margin, especially when we
are using 4680 batteries. I expect Tesla to ramp up the Model Y Performance and Long Range on one
production line, and then next production line to be a Model 3, with performance and long range.
Now why would consumers want a Model 3 over a Y? Well the 3 is lighter and smaller,
so it's going to be a better drivers car. It will also be quicker and have more range, and of
course cost less than the Model Y. If it's range, performance, or value for money you want, then the
Model 3 is going to be better over the Y. But basically it will also be a lower cost vehicle.
What if the new Model 3 long range, actually had a range of 400 miles too,
only a 20% increase from what it has today. And what if the new Model 3 Performance went
0 to 60 in 2.8 seconds. That is a serious upgrade on performance.
Is it possible Tesla could make a million of these model
3 long range and performances in Texas alone, and sell them all domestically?
Well what if the price dropped a little if necessary, to eventually match the demand?
Or would the demand be high enough already. In case you didn't realize, the reason the factory
will only be producing 3 and Y is because Tesla can make more vehicles focusing on fewer models,
and the demand is that high. Yes, the demand is already that high for Tesla's electric vehicles.
But what is going to happen when Tesla sell their autonomous vehicles.
Feature complete FSD, what will the demand be then? Will the demand for self driving
vehicles be even higher again than the demand for electric vehicles.
Are people willing to buy Teslas on the sole basis that they just drive themselves,
and the fact it is an EV is only the second factor of moving to a Tesla.
What if there are going to be so many model 3s and Ys in the US alone, that there is enough
supply for a sufficient Robotaxi network already, without having to resort to the compact model.
On top of that, imagine if these vehicles become money makers for people as well, and people buy
them as an investment. I am still uncertain about how the pricing will go when this occurs.
Think about it, suddenly perhaps you vehicle can generate $25,000 a year from robotaxiing.
How much is that worth to you? There is some work involved,
in cleaning, maintaining, storing and charging the car. But perhaps it's worth $100,000 to you.
Yet the car may have only cost $40,000. This is a huge discrepancy.
However, at the same time, there are only so many Robotaxis that are required,
I estimate it might be as low as 2 million in the US, but even if its 5 million,
20 or 30 million Teslas in the US. Therefore the Robotaxi supply should saturate. Which then
makes you wonder what will become of Robotaxis. Will the prices of them drop, to meet the extra
supply? i.e. $25,000 a year turns into just $10,000 a year. And then the $100,000 asset,
only drops to around $50,000, which ironically is about the price of a standard Model 3 with FSD.
On the other hand demand for Robotaxis will likely be much higher than for Uber.
So perhaps a market clearing price will be set.
Maybe demand would be that crazy, for autonomous Teslas. Could that Texas factory really produce
10 million vehicles a year? I think Tesla would probably need a standard range version
perhaps. And as I say, this needs to be done with Teslas in-house LFP batteries.
But what if they are still a couple of years away hitting volume production,
and there is all this extra potential capacity in this new factory not being utilized?
Well what if Tesla actually bring out a standard range version using 4680
batteries in the meantime? If Tesla really crank out 4680 batteries,
they are still best used in vehicles to get their highest value. If Tesla's run rate of
their 4680 batteries far exceed the demand for long range and performance versions,
is it possible to consider that they may offer a standard range with 4680s? I am not sure,
but the plan is definitely changing, as we are seeing Tesla somewhat double down on 3 and Y.
Or possible CATL are able to ramp up even more LFP batteries in the meantime for Tesla to sell the
standard range model 3 from Texas. That would take a lot of batteries. The ironic thing is though,
that Tesla would likely be paying more for CATL's batteries than their own 4680s. So I
would say this would to be avoided, as it will also cannabalize some of the long range sales.
Therefore I expect only 4680 vehicles from Texas until Tesla have actually started producing their
own LFP batteries. I just wonder if Tesla will use 4680s in the standard range. We
had previously assumed that 4680s were more ear marked for the likes of Cybertruck. But if Tesla
can release more vehicles by selling a standard range 3 and Y with 4680 batteries, then that will
likely get more vehicles produced. And there will be the demand for these standard models.
Or perhaps the Model 3 standard range will use LFP batteries,
as the range is still adequate, and then the standard Model Y may use 4680s,
and be able to generate a reasonable amount of range, compared to the Shanghai standard model Y,
which likely doesn't have a sufficient enough range for the US market.
Tesla could decide on what range they wanted to offer, likely somewhere between 250 and 270 miles.
The margin just wouldn't be anywhere near as high, as it would be about $5,000 cheaper
but only perhaps a $1,000 lower cost in batteries. That's $4,000 less profit margin
per sale. So perhaps that's not the way either. Is it possible that maybe the prices will simply
come down. And it makes more sense to sell a Model Y Long Range at $50,000 eventually.
Rather than introduce a lower cost model. The point of the standard range version is that
it can use LFP batteries. As that makes for a huge saving in battery. However, Tesla's 4680
batteries are already at a lower cost than CATL's LFP batteries, so it does cause some dilemmas.
But according to Elon's timeline, FSD will be ready this year. And this will be the largest
increase in asset valuation the world has ever seen. Implying so much value addded
to these vehicles, which is another way of saying a high increase in demand. So much
so that, that perhaps it's possible for the next 2 years Tesla will have enough
demand for Texas at full capacity selling just Model Y and Model 3 long range and performance.
Making absolutely massive margins. The question is, is full capacity 4m or 10m vehicles a year.
We hear Berlin will have a 250 GWh a year battery production
line. Well Texas is a lot bigger than Berlin, it will possibly have
more battery production capabilities. 250 GWh is enough for likely 4 million vehicles.
This has changed the business a lot. Ok, as a consumer this may not be great,
no new exciting Teslas coming, just Model 3 and Y for the time being,
of course along with the higher end X and S. Yea nothing much exciting on the horizon in the way
of new models. Nothing more affordable coming any time soon either, maybe even the opposite.