Everything thinks Tesla and Elon are amazing, they have this whole thing planned out, the
entire business, industry, and future of transportation, energy and labor for the world, and it looks
amazing, almost a utopia.
If anyone doubts them, then they are asinine, how on earth could a small brain like theirs
comprehend anything that Elon Musk, and his army of savant engineers are aiming to achieve?
People like that are playing checkers, whilst Elon is playing 3D chess, or even 4D chess
according to some people.
Except that's not the case is it?
Things have not developed how Tesla have told us, we have not seen the plans come to fruition,
Tesla has a dynamic business plan, and is pivoting continually to where the greatest
success may lie.
We know this because they have laid out the plans in front of us and literally called
them Master Plans.
Tesla have achieved some of this plan, there is an affordable car for the masses, depending
on your definition of the masses, but having a cost of ownership comparable with the Toyota
Corolla can be argued as one of those definitions.
But I think most of us really infer it to mean the $25,000 Tesla, aka the Model 2, or
compact Tesla, or whatever you want to call it.
Elon calls it the Robotaxi, but also says the Model 3 and Y are Robotaxis too, so it
doesn't help narrow down what indeed this gen 3 car actually is, or will be.
With no sign of a reveal coming yet, but hopefully sometime this year.
I mean they will start building a factory for it soon, so we surely we are going to
find out within the next year one way or another.
But the $25,000 vehicle didn't come out, and even
on one earnings calls Elon openly said we are no longer working on a $25,000 car, and
instead to think about affordable travel on a per mile basis, rather than cost of ownership.
Implying that the affordable car is going to be a Robotaxi, not a $25,000 car.
And if Tesla are able to solve FSD to a high enough level to reach Robotaxi status, this
would be the most profitable avenue to pursue.
It's just hard to know if and when FSD will be solved, as we have been told it will be
happening this year for the last 7 years.
However, over that time there has been massive improvements in the technology.
So the future of the company was meant to be FSD and Robotaxis, but has still not happened.
However, in the meantime, Tesla discovered a way of reducing the costs of EVs significantly.
The most expensive part of the EV being the battery pack, and Tesla worked out how to
reduce the cost of the cell with new manufacturing techniques, and new cell design, namely tabless
cell design that mean larger cells with higher energy density, and dry battery electrode
processes that reduce capex and production speed by almost an order of magnitude.
Of course I am referring to the 4680 cell.
However, it turns out this was not an easy cell to produce at scale, and even to this
day we still don't know if it is as scalable as Tesla had initially hoped.
We know that are approximately in the region of perhaps 2% of the run rate that we would
were initially told on Battery Day.
Yes, 1/50, which is basically negligible compared to the promises.
In the meantime though, Tesla did discover just how popular the Model Y became.
The Model 3 was a great seller, but nothing close to the Model Y.
Tesla really hit the jackpot with that car.
It seemed to really resonate well with the auto market, and has become the best selling
vehicle in many markets.
There is no denying the popularity of that product.
But Tesla didn't know it would be that popular, if Model 3 sales were anything to go by.
And if the cost could come down through the new battery manufacturing techniques, then
this car would really sell, around 2 million units a year.
So Tesla built more factories so they could indeed reach a capacity of 2 million Model
Ys a year, except these new factories are only doing 1/4 of that amount so far.
This is also due to the 4680 hold up.
However, Tesla is a huge company, and have shown that they are capable of high volume
EV production in Shanghai, and producing a lot of Model Ys there, even without 4680 cells.
The Chinese LFP cells have been a savior to Tesla's future.
So now without 4680 potentially ramping any time soon, and without FSD potentially that
soon, Tesla have had to look at the chess board again, and work out what is the best
play.
Well what pieces do they have?
They have a very popular Model Y, and scalabale LFP batteries, at relatively low cost.
On top of that Tesla were fortunate enough to receive the inflation reduction act, which
is huge.
Indirectly potentially allowing Tesla to sell their vehicles for $10,000 less, and receive
the same profit.
And this included any vehicle and cell made in the continent of North America, including
Mexico, or even Greenland for that matter.
But Mexico carries more advantages, it has low cost labor and obviously borders with
Tesla's biggest market, the United States.
Tesla have also been researching and rethinking manufacturing techniques once again for electric
cars.
Right, so what would you do with all of that?
Well Tesla are building a new massive factory in Mexico, that will likely make a smaller
version of the Model Y.
It will use an LFP battery, or possibly something more advanced from CATL like their new M3P
cell, but either way the cathode will be mainly iron based.
But it can still be a structural battery pack, use front and rear castings, and will use
Teslas new unboxed parallel manufacturing technique to reduce cost and increase production
output.
Along with other advances like a 48v system supposedly using 1/4 of the current amount
of copper used in EVs.
If the cells are made in North America too, rumored that Tesla are partnering with CATL
with a new 100 GWh a year facility in Texas, then there will be a further saving of $35
per kWh for the cells.
So it would appear that this is where Tesla pivoted to for now.
These vehicles may very well also be designed to be perfect for Robotaxis too, as I am sure
Tesla believe that they will one day solve FSD, and need as many vehicles in the fleet
as possible.
They will have hardware 4, better braking, improved cameras, faster processing, and more,
of which will make them ideal for Robotaxis.
Tesla also realize there is a large market for electric vans too.
Think of the advantages you can with an electric van, especially for people in various trades.
Or delivery vans that drive a lot of miles each day, and can thus save a fortune on gas.
Like I said Tesla couldn't call check mate yet with the 4680s or FSD, so they have had
to retake a look at the chess board and see what pieces they had.
This isn't 4D chess, this isn't even 3D chess, its plain old 2D chess, and there's nothing
wrong with that.
Tesla still have some pieces left, they may have lost their queen, but there's always
the chance the pawn can make it to the end and save it once again.
They have exceptional players who have learned more than anyone else about this game, with
more resources, data, and expertise.
If we are looking at demand of 5 million units for these next two products, then there going
to find some ways of making some great profits, especially given all the incentives.
5 million may sound like a lot, but I think it likely these vehicles wont be just for
the US market, I think they will export them, and Mexico will be the export hub for the
van and compact.
Although we are hearing rumors that Tesla are building a sister factory somewhere, and
it sounds like currently the most likely location people are thinking is potentially Korea.
Compacts are the most popular vehicle in a lot of markets, like China and Europe for
example, but not so much in the US.
Anyway, this is my thoughts on where Tesla are currently headed, and how they will pivot,
and therefore 4680 or FSD will not be essential for Tesla's growth in the meantime, and they
can get on with growing the industry whilst they are working on those projects in the
background, and we hope for some break throughs, which when occur will be like winning the
lottery for a lot of us.
However, without them there is still a growing EV business.
Yes, of course we have energy as well, but it will just be a nice supplement, it wont
be as big as EVs in the financials.
And sure the potential for bots, and perhaps the AI software will be more suited to bots
at first, as if a bot crashes into something, there is a significantly lower chance of any
fatalities when compared to a car.
And I am not robot expert, but I like to think I have observation skills, and those latest
Tesla bot videos look pretty impressive to me.
So who knows maybe Tesla will end up pivoting from vehicle robots to labor robots whilst
they still figure out the kinks for the cars.
Again more chess pieces they have on the board.
Tesla have been working so hard, with so many intelligent people, they have created incredible
feats in engineering and technology.
They can re-use them in other areas that perhaps they were not initially designed for.
So although Tesla may not be quite on track for the Master Plans, in the meantime they
just may deviate slightly to pick some of the fruit they can reach already.