I wanted to discuss a recent Elon interview with Johnna Crider. The interview begins with Lots
of interesting talk about consciousness and the universe. Which Elon sums up as Tesla's
goal is to ensure a good future for Earth. Of course SpaceX is to make life multi-planetary,
to ensure the long-term survival of consciousness.
Two pretty major goals, that you might imagine will keep you busy.
I am going to try and stay
focused on the Tesla related content in the interview, but like I have said in the past,
listening to these kind of interviews, I try and understand the person, motives,
and self interest of Elon Musk, what are his objectives. I find understanding Elon,
helps me decide where I think Tesla is headed the best, in bringing it back to the mission.
Anyway, Johnna asked Elon about poverty, I think she was mainly talking about what she has seen in
the US. Elon points out that said poverty is still a substantially higher living standard
than what many had only just 100 years ago. Elon goes on more to talk about the
rest of the world, and how they don't have internet, and still illiterate.
I think this is spot on to what I have been talking about lately with
Tesla and Robotaxis. I think a lot of you Americans need to look outside of America,
or even the developed world. Tesla is not making consumer oriented products.
The whole "customer is always right" mantra doesn't play with Tesla. That's just some
marketing cliche. Tesla are offering products of extreme value for consumers. Absolutely
miles ahead of all the competition is good enough. Tesla don't need to bringing out Plaid Model 3s,
and super cool consumer products. Tesla need to be making products that reduce carbon emissions the
most. Of which in my opinion would be a cyber Robo-van for developing nations. That theory
aligns with what Elon is saying. Elon is trying to have the most impact on the world, not America.
So like I also say, the dedicated Robotaxi will not be for the US,
they have plenty of Model 3s and Ys, because the US is a wealthy nation that can afford to. Whereas
impoverished nations would be more willing to pool in a robotaxi, as it's a much higher jump in their
current living standards, whereas the American living standard, has a much higher bar set.
Anyway, I just thought it was good to hear Elon say that, as it tracks back to
our current thoughts on where this company is headed. Which is what we are here to work out.
I am trying not to go over things we have
been told before. But Elon does talk about Tesla insurance, and how it will not be discriminatory,
it will be proportional to how safe you drive. Which is something I hadn't thought before.
Imagine being a young new driver, usually your insurance is very high,
and you usually you have less money then too. So Tesla offering very low cost insurance
has got to be appealing to a lot of drivers. Of course you have to earn this low cost insurance
by being a good driver, and you are thus rewarded.
Tesla are literally paying people to behave better in society to reduce deaths.
Ok, but more or less up to now, Elon
hasn't really said anything new. But then Johnna asks Elon about Tesla getting into the mining
industry. Elon clearly states that they do not want to go into the mining or refining industry.
Elon brings up the refining industry as he thinks that is more where the limitation is in the
industry. Not the actual physical mining itself, at least this is certainly the case with lithium.
Especially when it comes to EV grade lithium. You have to take the ore that contains lithium
and refine it to battery grade lithium hydroxide or lithium carbonate, and must be extremely pure.
Impurities will cause the battery cell to fail. And as we have researched recently,
just about all refining and processing of the minerals required for EVs is done in China. So
not only is there potentially a bottleneck in the supply chain, with the processing in China,
it is also under the control of one nation, that is under a communist regime.
We talk about Tesla's vertical integration, and the next level down for Tesla to go is the
refining of the minerals. It doesn't sound like this is a path Elon wants Tesla to head down.
You might think, but if the vertically integrate to mines, then they will save even more on the
cost of their vehicles, and eventually the workers can be replaced with robots. Well possibly,
but Tesla doesn't have abundant resources, for Tesla to go into mining or processing,
that takes energy away from Tesla perhaps building another giga factory. Said giga factory will
likely make more profit than Tesla could ever imagine saving in minerals by processing them.
I would also say it would be similar for Tesla and microchips. They don't need to start their
own semi-conductor fab. Just because Tesla can do something, and it may save money, with
more vertical integration, it doesn't mean they should. Some things just aren't feasible to do.
Basically, Tesla will do whatever they have to, in order to fulfill this mission.
If they really have to get into mining then they will. But it won't be to save money by
vertically integrating. It will be simply because the other mines aren't offering
enough supply. But ideally Tesla would rather focus on tasks that no one else can solve.
There are only so many talented people to go around. Tesla would rather focus on growth.
Elon sums this up by saying "we want to work on the things that accelerate sustainable energy
the fastest". I know some of you don't really care about the mission so much,
or your mission is just a $5,000 stock price. But either way, to understand the company,
you have to understand the mission. So if you wonder would Tesla do this or that,
then you can just ask yourself, which would accelerate sustainable energy the fastest?
Elon talks
about energy storage, and brings up his 300 Twh target for battery storage for the world. Which
is an average of nearly 40 kWh per person, of course this includes industry and transport.
Elon goes on to talk about how this is
covered by master plan part 3. Now my opinion on Master Plan Part 3, is that it will be all about
scaling to the extreme, and will be about how Tesla is going to get all those minerals out
of the ground and into batteries. I don't think anyone has an idea of how large a scale this is.
We talk about sizes like 100 miles by 100 miles of solar, and it will be enough
solar energy for the globe, or something like 4% of land will be used for energy.
Which doesn't actually sound that crazy, when you think about half is used for food. Is it really
that absurd to think that 1/10 as much land can be used for energy than food? No, not really.
Although I do wonder though, it's not just about where the solar farms and batteries are,
it's also about where they came from. Perhaps some numbers
like it will also require about another 1000 miles of holes in the ground in the world too,
perhaps to give us some extent as to the total planetary cost.
I think there will be a lot of large lakes in the future though, to fill in all those mines.
But this is what Tesla is working on. This company is going to such extremes,
it has to be careful not to disrupt too much of the world. Not just the environment though,
but also the economics. Tesla will displace a lot of jobs, so much so, it's not just about
getting customers, it's about trying not to disrupt industry too extreme, along the way,
that there is still labor that can participate in the economy.
The discussion moves on the grid
and Texas and how batteries can improve it. Elon saying that even without renewables, batteries
can load balance the grid. So whenever there are any power spikes, the batteries can absorb them.
Batteries can smooth the power fluctuations. Tesla's Megapacks and Powerwalls can help level
this out. Which I am sure is something you all realize and have thought about before.
I could do an entire video on how I see the economics of energy with a Tesla Autobidder
system. Elon breaks this up into a combination of large batteries, at a utility scale. And then at
the local level Power Walls can collectively stabalize the grid within a neighborhood.
No mention of V2G, Elon has not officially confirmed that we will be able to sell power
from our car batteries, into the grid. If it was ever done, it would still have to be
done through a Power Wall. But I think it seems obvious to have such a massive battery there,
that could also be helping as a demand or supply buffer for energy.
Then they talk about all
the attacks Elon and Tesla have been facing. And Elon likes to end with once again explaining just
how easy and basic making a concept car is, so much so that pretty much someone at kindergarten
could make one. They are absolutely moot and irrelevant, if they can't go into production.
Forget about vehicle designers to make a good looking car, it takes serious engineers,
because it's about how it can produced much more than how it actually looks.
Now I go on and on about volume production, and how important it is, and how important it is to
also make a profit if you run a company that plans on surviving for more than 2 more years.
But Elon goes into some new specifics. He says Tesla can make a prototype of anything with
just 100 people in 6 months. But to get that to volume production, and try and have the price be
affordable as possible, yet still having positive gross margins, that takes 10,000 people, at least
2 years. Elon also says that's 2-3 times faster than the rest of the industry.
Tesla managed to get the Model 3 to volume production in less time than 2 years,
so I am not entirely sure what he means, perhaps he is including a lot of the
practice they had with the Model S and X? But I think he is staying that even if a
competitor was to get to volume production with 10,000 people and take 2 years,
that would still be 2 to 3 times faster than the pace the rest of the industry is moving.
Implying perhaps some of these other EV OEMs will hit volume production in a few years time?
Just to point out, Tesla is already past volume production, Tesla is into
high volume production. Which sounds like it might not be achievable by anyone else this decade.
Elon goes on to say that he think more talented
people she go into manufacturing, and too many go into finance and law, because that's where the
money is. The finance industry is something like 40% of the globe's profits. The cliche is that
wall street attracts too many rocket scientists, who become quantitative analysts - or quants.
Hopefully Elon, Tesla and SpaceX are looking like more attractive alternatives for this talent.
Elon eventually says "the limiting factor is the rate at which we can
increase battery production". Great, because that is exactly what we have also been saying. Alright,
they were the highlights I thought were the most interesting to Tesla.