Blows my mind and you know I know it. The demand is just far more
than we could reasonably make. High volume and high margins. Well powertrain
is pretty damn good. I mean it's way better than anything else out there by a
country mile. Plaid power train is like mind blowing I think. This was like alien
technology. It's insane. Hey this is Warren Redlich. I'm really excited about
Tesla's investor presentation yesterday there's a lot of big news that came out
of it. A lot of people are talking about a lot of different things. Let's get
started with what's really exciting. The biggest one is batteries. Batteries
batteries batteries are going to talk about that first. Other things I'm going to
talk about include CyberTruck, Model Y, full self-driving and feature complete
and when that's coming. Powertrain, StarLink and Tesla and how Tesla might or
might not use Starlink, and Dojo. But I want to start with batteries. Elon talked
about - he was asked about batteries - and I think something that a lot of people are
missing. People get excited about Cybertruck. People get excited about Tesla
Semi or the Roadster, and there's this point that Elon made that they have to
make more batteries. This is all about battery production. We have this image of
Tesla as this huge growing company but in order to make all the cars they're
talking about making they need to make enough batteries for all those cars. And
right now they're constrained. There's a big constraint that has always
been holding Tesla back for a long time now has been battery production. Because
as Elon put it you know we can make different models but until we make
enough batteries it's just a question of which model we're making not that we're
making more cars. If you don't improve battery production capacity then you end
up just shifting unit volume from one part to another and you haven't actually
produced more electric vehicles. And they are growing but they're growing too
slowly and Elon talked about getting to 2,000 gigawatt hours a year. We've got a
very steep ramp in battery production and continue to improve the
cost per kilowatt hour of the batteries. How do you get from here to a couple
thousand gigawatt hours a year. Tesla in total produces like 50 or 60 gigawatt
hours per year. You want to get to 2000. That's more than 30 times as many
batteries. In order to produce all the models they're talking about producing
you need to produce enough batteries for all those models. Plus you need to
produce batteries for storage. Another side to that is if you can make things
more efficient then you get more out of each battery. But I think this is the big
thing. Battery Day is coming. We're going to talk about this on Battery
Day, which is probably April. It's gonna be a very compelling story that we have to present.
I think it's actually going to blow people's minds. Blows my mind and I know it.
Elon said that battery day would be in
April. I think if we go on Elon time maybe it'll really be June. But Battery
Day is coming and at Battery Day I think the expectation is that
Elon and Tesla will be explaining what changes they are
making to be able to deliver more efficient batteries with a higher energy
density with a lower cost per kilowatt hour.
So more kilowatt hours per kilogram and lower cost per kilowatt hour and then at
the same time increase production dramatically. The biggest problem - right
now I think the batteries are pretty good they're going to get better and that's
important. But the big focus now is increasing the volume of production. We
just need more batteries. If we can increase batteries dramatically that's
where the growth story is. If Tesla can't get more batteries there's a limit to
how many cars they can make and that limits the growth story.
Briefly there was a short discussion about Cybertruck - plays into this thing
Cybertruck doesn't matter unless you produce enough batteries for Cybertruck.
What really stood out to me about Cybertruck was just Elon's reference
to - demand is so strong that there's more demand than they really can make.
The demand is just far more than we could reasonably make in the space of
three or four years. There's enough demand already for three or four
years of Cybertruck production when they're at full
production. So there is no demand issue with Cybertruck. Lots of people want it.
There was another reference Elon said to the technology inside Cybertruck is
even more amazing than people realize. There's things in there we don't know
about yet. That's a nice little teaser for when Cybertruck is revealed
in full. The production model is revealed in 2021. Who knows what
else is being thrown in there. This is going to be really exciting. I confess that
I have an order in. I got my order in the first hour. My reservation for a dual
motor Cybertruck and I'm very excited and can't wait to get it. Another detail
Elon talked about was full self-driving. Someone asked him when it will be
feature complete. He had suggested it might be feature complete by the end of
2019. That hasn't happened. In response Elon said I hoped it would be
feature complete and it's not. He was very clear in defining what feature
complete means. Feature complete means very simply that it is capable
with some probability of being able to drive you from home to work with no
intervention. It's looking like we might be feature complete in a few
months. Feature complete just means like it has some chance of of going from
your home to work with no interventions.
It doesn't mean the features are working well. It means it has above zero
chance. So I think that's looking like maybe it's gonna be a couple months from now.
You get in your car. You say take me to work and it takes you to work.
Press the "take me to work" button and it is above a zero probability that it will
make it without you having to intervene. At this point
feature complete isn't there yet. He thinks it's a couple months away.
Related to that what really stood out to me - and this was another one of those big
moments. Batteries I think the biggest. But this is one of those big moments is
talking about what's going on behind the scenes that will make autonomy happen.
What we're seeing now when you see videos of people doing their cars on
smart summon or people driving their cars on self-driving is you know it's
not perfect. It's got flaws. They're still working on it. But Elon made this
reference to that with what they're working on - He didn't say the word
Dojo but I think he was referring to Dojo. That they're working on being able
to process video and he referred to an improvement in "labeling efficiency."
A really fundamental thing is moving to video training and all eight
cameras simultaneously. in terms of labeling efficiency arguably like a
three order of magnitude improvement in labeling efficiency. Which relates to
object detection and other things that are going on behind the scenes. But the
labeling efficiency - and he said a three order of magnitude improvement in
labeling efficiency. This is something that's going on behind the scenes that
is enabling Tesla self-driving cars to be much more effective at being able to
do self-driving. Labeling efficiency is about things like object detection.
Recognizing objects, recognizing events perhaps, and labeling what they are and
how they're going to act. And a three order of magnitude improvement- for those
who aren't familiar with math - a three order of magnitude improvement. If you go
from one to ten that's one order of magnitude. If you go from 10 to 100
that's an order of magnitude. If you go from one to 100 that's two orders of
magnitude. This means going from one to a thousand so it's basically a thousand
times better. They're going for a 1,000 fold improvement - a three order of
magnitude improvement in labeling efficiency. And this is a critical
feature in making self-driving work. So when he said that my eyes popped! Three
orders of magnitude! That's what they're going for.
Between dojo and the full self-driving chip hardware three and maybe where
they're heading with hardware 4, that's what's coming. Another really big moment
in the investor call was talking about powertrain efficiency. Elon was
bragging about how effective the Model S powertrain is.
He compared it to the Porsche Taycan. Well powertrain is pretty damn
good. I mean it's way better than anything else out there by a country mile.
It's worth knowing for example that the Model S has a 100 kilowatt
hour pack. The Taycan has a 195 kilowatt hour pack.
Model S is steadily approaching 400 miles range. The Taycan has 200
mile range. So we must be using that energy pretty efficiently and the
powertrain is a big part of that. He mentioned, by the way, that the
powertrain is so efficient in the Model S that it's approaching 400 miles in range.
380 miles. It's not officially rated that by the EPA but they're seeing it's
effectively got a 380 eighty mile range and they're still
improving. He talked about powertrain and he made this reference to the Plaid
powertrain and he almost said it under his breath when he said plaid it was
hard to hear in the call. Plaid powertrain is like mind blowing I think. Coming out
later this year, end of the year probably. That's our goal, get Plaid powertrain out end of the year.
And then it's gonna be like this was like alien technology.
It's insane. I didn't even think we could do ... yeah, no way. The plaid version of Model S
is coming, he said, towards the end of the year. He described the powertrain in
the Plaid version - the Plaid powertrain - which i think is the same powertrain
that's going to be going in Cybertruck or at least in the tri-motor Cybertruck
and also perhaps in the Roadster. He described the Plaid powertrain as
like alien technology.
Model Y is now rated for 315 miles of range in the all-wheel drive model.
It was originally rated for 280 miles of range. We managed to achieve by far the
highest energy efficiency of any electric SUV ever produced at 4.1 miles
per kilowatt-hour. Model Y all-wheel drive got an EPA rating
of 315 miles. This is an indication again about that improved efficiency of the
powertrain and perhaps battery chemistry as well that they're doing some amazing
work here. This will help sell Model Y, which is already gonna sell great.
There was another reference that Elon made to when it comes out there will be
a teardown. When people do a teardown of Model Y I think they'll be impressed.
For those who really follow the stuff there's this guy Sandy Munro who does teardowns
of various cars and does reports so that people can understand what's going
on with the technology inside. He's done some Tesla teardowns and he said
some really interesting things to say about what Tesla's doing he's generally
very impressed. Although he's been critical of some issues. There's some
speculation about what is going on with the Model Y, how they're making it.
There's a lot of people who think they may be using whole frame casting. That
the entire frame of the vehicle is cast in one piece. That this is more
efficient and it saves weight and makes it stronger. There's also a lot of
people think - I think both of these we'll see - that they're using this new
wiring system that uses far less wire which reduces weight and makes
it more efficient and may make it more efficient to manufacture. Improving how
Model Y is made will eventually turn into perhaps improving how Model 3 is
made. There was a reference by the way to the Shanghai Gigafactory. How it's
laid out and making Model 3 is much more efficient than how the Model 3 is made
in Fremont. We can expect that something similar will happen in Berlin in
Brandenburg where the European Giga factory will be built. We're going
to see manufacturing efficiencies there. Tesla seems to learn every time so
Gigafactory Berlin is the third iteration. Don't be surprised if they come
up with even more efficiencies in Gigafactory 3 and everything becomes
even better. A small detail but worth noting - I thought this was a
possibility and now looks like at least I was wrong in the short term. An analyst
asked Elon about whether Tesla would be using StarLink
for Tesla and Elon was pretty dismissive of that at least in the short
term. Do you see potential for Tesla vehicles to be fitted with user
terminals that are compatible with the Starlink constellation in the near or
medium-term future? It's certainly something that could be happening in
coming years. There's no plans to do it this year. The focus of Starlink is
really for high-bandwidth low-latency connectivity for homes and
businesses and you know I guess aircraft and boats and that kind of thing. But the
antenna for that high bandwidth, low latency thing is about the size of a medium
pizza. You could put it on a car but I think is more bandwidth than you
would really need. I mean technically you could buy one and just stick it on the car.
Elon seems to think that that's not a critical feature in a car at least not
yet. StarLink is more important for houses for boats for airplanes.
Definitely if you're outside a city it could be useful. It didn't sound like
there's any plans to integrate a StarLink antenna in a Tesla model. He
said you know you can put it on a Tesla and it'll work and you know it would
make sense for people who are going out somewhere where they're not gonna have a
good cellphone coverage but otherwise he thinks you don't need it. The last thing
I want to talk about is something Elon mentioned that relates to the long term
value of the company and for investors that's an important issue. It's an important
issue just if you're a fan of the company. I personally am a long-term
investor so I care about it from that perspective. But really I'm just excited
about what I see Tesla doing. He talked about high margins and
high-volume. The thing that's really gonna have a profound
effect on our financials is high volume and high margin obviously.
That high margin part comes from autonomy. As we get closer to full self
driving, that's just going to become more compelling . From a
financial standpoint that's the real a mind-blowing situation. High volume, high
margin because of autonomy. The first thing I mentioned with batteries before
you have to increase the number of batteries in order to increase the
volume of cars sold. The margin he referred to as having to do with
autonomy - When you make a car, you got to put steel in. You got all this labor
putting it all together. The cost of the car to the company making the car is
fairly high. If they sell the car for forty thousand dollars the cost of the
car might have been thirty thousand dollars. Which means there's a
margin - the ten thousand dollar gap between the cost of the car and what
they sell it for. The beautiful thing about software - there's no extra
cost in making another copy of the software. Autonomy is essentially
software. The price of full self-driving right now is seven thousand
dollars on a Tesla it was six thousand. It went up to seven thousand.
As full self-driving improves, as it reaches autonomy, the value goes up
tremendously. Let's say you own a Tesla Model 3 and you're able to send it
out as a Robotaxi and it makes you $30,000 a year for ten years. That means
you're making $300,000 off your $40,000 car. Well that means it's not a $40,000
car anymore. That means you would pay well over a
hundred thousand dollars for that car. The margin for Tesla of
selling a Tesla Model 3 goes from the difference between say $30,000
manufacturing cost and $40,000 sale price to $30,000 manufacturing
cost plus essentially zero cost extra for the software, selling the car for
over $100,000 maybe $200,000. Who knows what they're gonna go for. The margin
goes much higher once full autonomy is achieved. This is why cracking autonomy
is such a big deal. On the one hand Tesla can just make cars for themselves. It's
just a profitable business running their own Robo taxi Network with their own
cars. But selling a car to someone - you're now selling that car for $100,000
instead of $40,000. You may be selling it for $150,000. there's a tremendous value
add for Tesla and if you're a shareholder this is where the share
price comes from it's people think the share prices through the roof it's crazy
they're comparing it to Volkswagen they're comparing it to Toyota it's not
the same kind of company Volkswagen Toyota General Motors Ford Honda none of
them has this software angle to how they can increase their margins their margins
are never gonna be more than 20 25 30 % their margins are going to be stuck in
that low number where Tesla's margins are gonna be approaching a hundred
percent that is the beauty of what autonomy is that's why Tesla is making
so much effort into going into autonomy so Elon mentioned it in the call and I
think that's a final point that's worth discussing I still think the biggest
issue is batteries because yes that margins a big deal and it's great and
they'll make a lot of money per car but if they can you know make a lot more of
the cars right if they can double triple
make 10 times as many cars in the long run because if they're going for a 30x
increase in battery capacity some of that's going to go to storage but maybe
means they make 20 times as many cars do you make 20 times as many cars and you
make $100,000 a car well that's a huge amount of money and the share price
right now you know that the company's values in the ballpark of a hundred
billion dollars or a hundred twenty billion dollars or so this is a trillion
dollar company maybe it's the first true you know two trillion dollar company
tremendous value here for Tesla and let's not forget as I love to say about
in one of my recent videos this is great news for us whether you're a Tesla
shareholder or not whether you own a tesslar not what Tesla is doing is
making the world a better place it's reducing pollution whether you believe
in co2 or not all the other stuff coming out of a tailpipe from an internal
combustion engine isn't good either so it's reducing pollution it is making the
world it's making the cost of transportation lower for the average
person who can't afford a car now the cost of a robo taxi will be less than
the cost of an uber so many things that are wonderful about this so excited to
be living in this world and so looking forward to what's coming so thank you
again for watching and please below comment of course I'd love it if you
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