A Really Good Q4 Earnings Call Question

[Bob Anderson]

Toni Sacconaghi

"Elon, I was wondering if I could just follow up and ask. You talked about your product road map and also your goal to keep growing at 50% per year or better. That would put you at 3.2 million vehicles or more in 2024. And I think you made reference to Cybertruck maybe being 250,000 vehicles. If there is no $25,000 vehicle being worked on, is it really realistic to think that you can sell more than 3 million vehicles with two very high-volume cars and Cybertruck in 2024, or how do we think about that or what else is missing in that equation?

Elon Musk

Yes. I mean, it's apparent from the questions that the gravity of Full Self-Driving is not fully appreciated. If an asset has 5 times more utilization than the -- it's like dividing the cost of that asset by 5. So, if you have a $50,000 car, it's like having a $10,000 car all of a sudden, but maybe better than that because still you don't want to drive. So the person can be engaged in productivity or amusement instead of having to onerously drive through traffic. So, it's probably better than 5 times, I don't know. Yes. I mean, basically, if the cost of our cars do not change at all, we would still sell as many as we could possibly make."



I thought this was a really good question from Toni. I have no doubt that the M3 and MY will become top selling vehicles in world. W/ 4680s and its benefits will only make them more popular. However, as much as I'd like a MY, it doesn't work for my family situation. I do question how growth will continue to scale with only 2 models, especially at their current price points. I do think with 4680s the price will eventually go back to $35k, but at some point the market will be saturated and want something else.

I also believe FSD is years away.

 

[CyberGus]

The current FSD beta is on the right track architecturally, and is showing rapid improvement. I think L3 or L4 autonomy is possible in the 1-year timeframe.

That said, I think Elon is nuts when it comes to the value of FSD. Making a safer car is great, but:

a) I don't want strangers in my vehicle, no matter how much money it saves me, and​

b) getting 5x usage will reduce lifespan by 5x as well​

Plus, there are waaaaay too many logistical problems for people commonly farming out their cars to be robotaxis. With no adult driver, the occupants will have their worst impulses unleashed.
What happens when your car gets stuck across town with a flat tire or dead battery? Or is vandalized, or in an accident?

Maybe Tesla will own and operate the robotaxi fleet themselves, which is great, but it sure ain't worth no trillion dollars.

 

[Ogre]

FSD is getting a lot better in the past year. Better enough I think it’s possible this year will be Level 4. That’s a long shot from Robo-Taxi, but still very nice.

I’m not sure on the value either, not sure about 5x usage, but I can see it increasing the value of my car a lot. Lots of times and places where I’d love to have my car drop me off and return later. For example if I go to a show it might be cheaper or more convenient to have it drop me off and park somewhere free. Lots of bike and kayak specific stuff with the truck also.

Also, I wasn’t feeling well today and would have sure felt better having the car drive me home rather than driving home feeling poorly. I can imagine in the future having the car drive me to the hospital.

I’m less worried about puke in the car, there are cameras for that, you have their credit card info and insurance for serious vandalism. If you vandalize cars, you get banned from Robotaxi… the dirtbags will be purged.


I’ll probably buy FSD on my next car. If they have Robo Taxi as a service you can enroll your car in, I’d probably sign up for that part time too. I don’t see it being 5x value, but can easily see the $14k number which has been floated.

Also, it’s likely to be mostly subscription. One of my big use cases is getting around unfamiliar cities while travelling. I could see leasing it for that.

Rambly…

 

[Ogre]

I thought this was a really good question from Toni. I have no doubt that the M3 and MY will become top selling vehicles in world. W/ 4680s and its benefits will only make them more popular. However, as much as I'd like a MY, it doesn't work for my family situation. I do question how growth will continue to scale with only 2 models, especially at their current price points. I do think with 4680s the price will eventually go back to $35k, but at some point the market will be saturated and want something else.

I also believe FSD is years away.

It is a good question.

My feeling here is they flood the market with as many Model Ys and Model 3s as they can. Then if they see demand start to slack off, they release some lower cost models of those and tool up for their lower cost vehicle.

It took about a year to get the Model Y online after they had the Model 3 running. I suspect a third car on that platform would come up quickly.

 

[Crissa]

b) getting 5x usage will reduce lifespan by 5x as well​

That's not how lifespan works with BEVs. Charge cycles cause aging, but time has an equal amount of impact - so if you can get more charges in a time period (and not overheat), they're basically free. Electric motors also mostly don't age from use, but exposure to air and heat.

That means the more you use a BEV in a given time, the more miles you can literally get out of it.

For instance, my Zero turns eight this year. But its battery is not much better off than the bikes that have traveled tens of thousands of miles in their lifetime - but my bike basically got a hundred miles a year before I had it.

It's just not miles that wear out a BEV, but time itself, really. Aging of plastics and oxidation of metals.

Second, a fully autonomous car means you, yourself, don't have to drive. Even if you don't rent it out, you could be doing something productive when you would otherwise be driving. Or the car can pick up groceries or takeout or whatever without you. That's time you could do something else.

-Crissa

 

[Throwcomputer]

This is also one of those instances where Elon musk is conflating his own personal belief and desire that everyone would want fully autonomous vehicles to drive them around because maybe he doesn't enjoy driving.. when the real world demands for fully autonomous personal vehicles is most likely much less than he believes. There are a great many people who would prefer to drive their own vehicles, and no matter how much pining for the opposite and projecting your own beliefs onto society will make that a reality for those who would rather not have fully autonomous driving for whatever reasons.

So this reality of a certain not small subset of society preferring not to own personal fully autonomous vehicles makes his cost and value arguments invalid. Even more so because it's like he's supposing that literally everyone wants it, and the extra costs incurred by purchasing it as an add on will negate themselves over time. But that argument only works if you remove it as an option, but force everyone to own fully autonomous vehicles by making it not an additional cost add on, but a standard feature included in the base price. Otherwise, some people will choose not to purchase it.

I realize in this specific community, this idea of having no interest in your car doing everything for you is not common, but this specific community is not an accurate representation of the greater community of vehicle owners.

There are car people who enjoy driving, there are luddites who fear their autonomous vehicles would have a mind of is own, or be hacked by nefarious people, there are people who just couldn't care enough to spend extra money for that, there are poor people who couldn't afford it even if they wanted it, and there are people who would love it. My point is he is overstating the percentage of the last group.

 

[charliemagpie]

I moved from the IT world into retail in 1994.

It was there that I was introduced to the people of the world, the sick, the poor, the unemployable.

I reckon 80% of the world would love to get into a car that provides door to door service for less than the cost of a bus. (or car ownership)

Tony Seba's youtube presentation on future transport is essential viewing.

The beauty is that the demand will be through the roof, we will come up with new ways to facilitate.

 

[Ehninger1212]

Yeah.. FSD sounds super cool. But i'd likely never buy it. I have terrible motion sickness.. I can become nauseous for days.

 

[ajdelange]

The current FSD beta is on the right track architecturally, and is showing rapid improvement. I think L3 or L4 autonomy is possible in the 1-year timeframe.

Please don't take this wrong but I have to ask whether you have ever been in a Tesla with FSD doing the driving.

 

[Bill906]

I don't want strangers in my vehicle, no matter how much money it saves me, and

I agree with you on this, however they don't have to be strangers.

I grew up in a community where everyone had their own car. Mom, Dad, my sister and I all had our own cars once we turned 16. My paternal grandparents each had a car. My maternal grandparents each had a car. That's 8 people and 8 cars. I am sure if we all worked together, we could EASILY have had 4 cars support the 8 of us if the cars could drive themselves. In a pinch, with some difficulty and serious scheduling, I think it would be possible to have one car support the 8 of us. RoboTaxi isn't the only way to get the full benefits of FSD.

 

[Ogre]

This is also one of those instances where Elon musk is conflating his own personal belief and desire that everyone would want fully autonomous vehicles to drive them around because maybe he doesn't enjoy driving.

Sort of like he projected his personal belief that EVs were the future onto the rest of the planet?

Often the best ideas are things that few people say they want before they happen.

Musk sees the number of fatalities on the road and the source ** 99.999% human error ** as fundamentally solvable. Much like he saw emissions from ICE vehicles as fundamentally solvable. This is the big piece Musk is trying to solve.

It’s not about enjoying driving. You can enjoy driving in some circumstances, but recognize many parts of driving are mundane drudgery. I love driving windy mountain roads. But after a 2 hour drive, navigating the highways of Portland (or any city I’m largely unfamiliar with) in the dark and the rain and trying to follow the instructions the computer gives me is not my idea of fun.

Anyhow. I’m no FSD salesman. It’s been “Next Year” for 5 years running and while it looks closer. It might be close to fulfilling it’s ADAS role. But Robo-Taxi—the piece which would get you the 5x he’s talking about—is likely another 3-5+ years out. Very hard to spend money based on that when he’s been so bad about deadlines to this point.

 

[Ogre]

I agree with you on this, however they don't have to be strangers.

I grew up in a community where everyone had their own car. Mom, Dad, my sister and I all had our own cars once we turned 16. My paternal grandparents each had a car. My maternal grandparents each had a car. That's 8 people and 8 cars. I am sure if we all worked together, we could EASILY have had 4 cars support the 8 of us if the cars could drive themselves. In a pinch, with some difficulty and serious scheduling, I think it would be possible to have one car support the 8 of us. RoboTaxi isn't the only way to get the full benefits of FSD.

Having a car which could take your unlicensed kids to school/ soccer games would be huge.

Just sharing a car between spouses becomes much more manageable. Drive to work together. You don’t have to worry overmuch about who gets off work first because they can just summon the car then pick up the other one.

No doubt in my head that a personal “Robo Taxi” would be awesome even without the sharing thing.

 

[Ogre]

Back to the original question.

Why do car companies need 10+ models which are just tiny variations on a theme?

Look at Toyota’s home page (setting aside the Sienna). How many of these cars could be replaced by either the Model 3 or the Model Y? Half of these are “This is our energy efficient way to get from point A to Point B”. The other half are just variants on door placement How many slightly different configurations of 5 doors do you need?

Even the Supra can be replaced by the M3P.

Their SUV page has even more vehicles which can be replaced by the Model Y (Plus a chunk of bigger ones).

 

[Crissa]

Like the difference between the different Bolts is what, 4"? Yes, if you need the extra 4", it matters, but how fine of steps do you need?

Toyota sold 2.3 million cars in the US last year. So maybe they did need that many models. If they sold as many of each as Tesla sold Model S and X combined the peak year, that's 38 models. If they sold as many of each as Model Y, that's still 14 models.

And in Toyota, a bunch of these named models the only difference is the body or the motor. A bunch of the Priuses all share the same motor. The sports models only have a nicer motor and share the body with a non-sporty model, etc.

-Crissa

 

[Ogre]

Like the difference between the different Bolts is what, 4"? Yes, if you need the extra 4", it matters, but how fine of steps do you need?

Toyota sold 2.3 million cars in the US last year. So maybe they did need that many models. If they sold as many of each as Tesla sold Model S and X combined the peaks year, that's 38 models. If they sold as many of each as Model Y, that's still 14 models.

And in Toyota, a bunch of these named models the only difference is the body or the motor. A bunch of the Priuses all share the same motor. The sports models only have a nicer motor and share the body with a non-sporty model, etc.

-Crissa

If all of the cars in their lineup were EVs. What is the point of having the Prius as a separate product line at all? A lot of this is just brands trying to appeal to slightly different demographics with slight variations on a theme.

I think later Tesla will broaden their lineup some. Much like originally there was one iPhone and now they have 4 different models.

The bigger point here is that there is a ton of crossover between models. Tesla eliminates a lot by making their base car fast, efficient, and filled with technology and comfortable affordances.