The Tesla Files
How Tesla going to start transform into a giant over the next 24 months.
🧵 As shareholders we can all get caught up in the short term movements of stock price. As of today, DEC 30, 2022, Tesla stock has taken a 70%+ dive from all time high price reached in 2021.
The stock market has started to price it closer to a typical car company ahead of a possible recession. In this post, I will lay out why this is the worst mispricing in history.
Toyota was just a loom factory until 1934 before becoming the largest manufacturer of cars in the world. Amazon started as just an online book store before becoming world's largest online retailer.
This is how TSLA 0.00%↑ is going beyond cars in the next 24 months:
🔘 Everyone is sleeping on Megapacks. Megapack production at Lathrop alone will reach target output of 10,000 units/year. Each unit is priced at $2.6 million. That is possibly $26 billion in revenue per year from 1 factory and it is rumored to have 60% profit margin. It feels funny even hypothetically adding $12B to the profit projection from 1 factory. If Megapack proves to be a high margin product next year, Tesla will make several more copies of this factory. We will keep a close eye on this business in the next 12 months. This revenue stream does not face consumers and is pretty much recession-proof.
🔘 Launch of Robotaxi > 50% chance. I believe all existing Tesla fleet on roads will earn money for their owners, not just the FSD owners. With million of Robotaxis on the road, Tesla becomes a major transportation company. If Tesla charges 50 cents per mile, it puts Uber and Lyft out of business, but operating costs of a driverless taxi are much lower than that. We can debate the timeline but it is going to happen sooner or later.
🔘 Tesla will begin sourcing raw materials to scale its own next gen batteries. We have seen manufacturing breakthrough at Kato Road pilot facility. 4680 cell production is scaling up. Proprietary cells will make a substantial part of the battery supply by end of 2024.
Tesla aims to cut cost of batteries by 56% by 2026.
🔘 Release of a Low Cost Car > 70% chance. Elon Musk alluded to cutting costs by half, meaning it could cost as low as $16K for Tesla to make it. After Robotaxi is launched Tesla may choose to keep many of these low cost cars to operate its own fleet near major population hubs. It is more efficient to do maintenance of large fleets near big cities: cleaning, charging, checking etc. ROIC on owning and operating its only fleet will be greater than selling cars.
🔘 As Tesla EV opens production to mass market segments through lower price vehicles, it may increase demand on energy grids increasing demand for Megapacks and Tesla Solar.
🔘 Tesla will deploy first version of Optimus bots at its own factories further lowering costs of Tesla products > 50% chance.
🔘 Tesla will be making CyberTruck and Semi at volume by end of 2024. Both of these may end up looking inconsequential compared to the huge TAM of Lower Cost Car and Robotaxis.
🔘 Tesla may also release a van as per a leaked document on future production. This could get configured for both as passenger Robotaxi and a Robo-delivery van, further expanding Tesla's transportation business.
2025 and Beyond:
🔘 As Humanoid Robots actually more productive, the implications are too big to imagine in a linear fashion. It requires exponential thinking. Utlimately, it will expand the limits of world's productivity even more than the industrial revolution.
🔘 With Robotaxis, transportation becomes affordable worldwide. This opens up huge lower price markets in South Asia, South America and Africa. Tesla will need to build factories closer to these markets.
🔘 By end of 2026, Tesla should be well on its path to becoming the most valuable company in the world as a major supplier in Automotive, Transportation, Robotics and Energy markets. If you plan on holding this stock forever, that is great, but we should see major step change by end of 2026.