Disclosure: I held $TSLA and $ARKK stock for many years but have pretty much sold off all my individual stock holdings for $VOO and $VT. I don't currently hold any $TSLA shares. Nothing here is investment advice.
Hi everyone!
I thought I'd do a follow up on my last $TSLA post because it's been so super interesting to watch from the outside.
This is essentially what I'm talking about:
Unfortunately this chart only goes back 5 days instead of 7 days, but it definitely tells the story. You can see exactly when the Tesla Earnings Call was...
The stock market closed at 4pm on Tuesday, so no one could trade, the Earnings call was at 5:30pm and $TSLA stock pretty much went up in a straight line.
I legitimately thought it was going to go down. My post was filled with so many warnings and reasons why Tesla is in trouble and how that might be reflected in the stock price, and wow, does not stock market not care about any of that.
Many, many years ago, I bought 5 $TSLA shares because I was so tired of Short Sellers ($TSLA was the 2nd most shorted stock at the time after Apple) essentially organizing hit pieces on Tesla... which would then by uncritically repeated by every publication and news channel.
At the time it was mainly pieces about the batteries catching fire... battery fires are obviously not ideal, and I haven't heard about it too much lately so I guess it all got figured out.
When I saw this piece, the absolutely unrelenting bad news on Tesla made sense:
Source
In the above video, Jim Cramer explains how much money can be made by shorting a stock and then paying a relatively small fee to get hit pieces published... the ROI on that process was clearly incredible.
So, I bought my 5 shares out of short seller spite, and held onto them for years.
I also sold them out of spite when I realized that Elon is both very racist and a never-ending hype man.
The reason I brought all this up... is that I can now see the exact same thing happening, but in reverse:
So many publications and news articles that essentially just repeat whatever Elon says, without thinking about it critically or questioning if any of it is true or possible or likely.
Why did the stock pump so high?
There was a few things that I think pumped $TSLA directly after the Earnings call.
- A humanoid robot will be available in the second half of 2025
- New EV models will be available in the second half of 2025
- The computers in Tesla vehicles will be able to compute together to raise revenue for Tesla
- Tesla is not a car company but an AI company
- Licensing FSD to other auto manufacturers
Let's look into those things in detail instead of just repeating Elon.
Optimus the friendly factory worker
Martin Viecha
Thank you. The second question is on Optimus. So, what is the current status of Optimus? Are they currently performing any factory tasks? When do you expect to start mass production?
Elon Musk -- Chief Executive Officer and Product Architect
We are able to do simple factory tasks or at least, I should say, factory tasks in the lab. We do think we will have Optimus in limited production in the natural factory itself, doing useful tasks before the end of this year. And then I think we may be able to sell it externally by the end of next year. These are just guesses.
I absolutely love the 'These are just guesses' at the end. It might happen, it might be total lies, who knows?
The thing is, building a humanoid robot is so hard. The human foot is absolutely amazing in everything it can do, as is the human hand, wrist and shoulder. I am extremely skeptical that companies will receive delivery of a useful humanoid robot by the end of 2025. I put this in the same category as Elon predicting there would be a million robotaxis on the road by the end of 2020. [Source] Or this:
Which, to be fair, Elon still has a month to hit the 18 month part of the prediction...
Anyway, my point is that a humanoid robot is extremely hard to build and I haven't seen any proof yet that Tesla is even close to having a robot that is useful, let alone being able to produce robots on a factory line and sell.
New EV models?
Let's see what Elon said on the call...
Elon Musk -- Chief Executive Officer and Product Architect
In terms of the new product road map, there's been a lot of talk about our upcoming vehicle line in the next -- in the past several weeks. We've updated our future vehicle lineup to accelerate the launch of new models ahead, previously mentioned start of production in the second half of 2025. So, we expect it to be more like the early 2025, if not late this year. These new vehicles, including more affordable models, will use aspects of the next-generation platform as well as aspects of our current platforms, and we'll be able to produce on the same manufacturing lines as our current vehicle lineup.
So, it's not contingent upon any new factory or massive new production line, it will be made on our current production lines much more efficiently. And we think this should allow us to get to over 3 million vehicles of capacity when realized to the full extent.
New more-affordable vehicles might be produced this year?
Wow, okay, that's exciting... are there any renders of these new models? Usually it takes 10 years to go from the design sketch to the production line. If the new affordable models are based on current production lines, are they essentially stripped out inexpensive Model 3s? If the Model 3 has a 15% profit margin, what will the profit margin on these new affordable models be?
Later in the call, someone asked about an announcement for the $25,000 model... and Elon said they'd talk about it more on the 8th of August (the date teased to unveil Robotaxis)... but talking about something isn't necessarily an official announcement, so we'll see. Again, I'm extremely skeptical of what new models will be produced this year or next and if the market wants them (and if there is truly a $25K model).
Tesla is the hive mind?
I have to admit... this was brand new. I've been following Tesla a long time, and I don't believe I've ever heard this idea before...
Elon Musk -- Chief Executive Officer and Product Architect
I think there's also some potential here for an AWS element down the road where if we've got very powerful inference because we've got a Hardware 3 in the cars, but now all cars are being made with Hardware 4. Hardware 5 is pretty much designed and should be in cars, hopefully toward the end of next year. And there's a potential to run -- when the car is not moving to actually run distributed inference.
So, kind of like AWS, but distributed inference. Like it takes a lot of computers to train an AI model, but many orders of magnitude less compute to run it. So, if you can imagine future, perhaps where there's a fleet of 100 million Teslas, and on average, they've got like maybe a kilowatt of inference compute. That's 100 gigawatts of inference compute distributed all around the world.
Essentially what Elon is saying is that the computers within the cars could be used by Tesla when the vehicles themselves are not being used.
Of course, my immediate questions are:
Would owners be paid by Tesla to use the vehicles computing power? Would owners have to pay for the electricity used? Would owners have to pay for the data sent back and forth on their Wi-Fi or cellular plans?
I'm not an expert in this field... but distributed networks like this are so hard, especially when network connections are spotty. If you think of the Bitcoin network, the miners essentially work out their math equation and then ping the network to see if its correct, so something like that could technically work, but anything that is constantly sending data back and forth is very difficult.
This honestly sounds like a total pie in the sky idea and I don't truly think Tesla will actually spend time trying to get it to work.
TSLA is Now ALL About AI & Robotaxis
The frustrating thing about this is that FSD has been sold for $8K, $10K, $12K, $8K on 2 promises, that your car will drive you around, and that you'll be able to earn passive income while your car operates as a Robotaxi when you're not using it.
Neither are currently true, FSD killed another motorcyclist 2 weeks ago while the driver wasn't paying attention. The driver has been charged with vehicular homicide. [Source]. Tesla has been very clear to call it Supervised FSD.
Elon mentioned a few times that he's confident that Tesla will solve driving autonomy, which means it's not solved yet, so I'm still fairly confident the Robotaxi/Cybercab being showcased on 8/8 will not much more than a concept.
Anyway, back to the frustrating thing... the frustrating thing is that FSD was sold under the promise that owners could earn passively from their vehicles, and now it sounds like Tesla will now be competing with its own customers on the Robotaxi network.
Elon Musk -- Chief Executive Officer and Product Architect
And something I should clarify is that Tesla will be operating the fleet. So, you can think of like how Tesla, think of it as combination of Airbnb and Uber meaning that there will be some number of cars that Tesla owns itself and operates in the fleet. There will be some number of cars and then there'll be a bunch of cars where they're owned by the end user. That end user can add or subtract their car to the fleet whenever they want, and they can decide if they want to only let the car be used by friends and family or only buy five-star users or by anyone at any time they could have the car come back to them and be exclusively theirs like an Airbnb.
Tesla's Cybercabs will be competing with their own customers on the Robotaxi network.
Uber is finally profitable after 15 years [Source] and that is a total mess of a company, with more safety-related lawsuits than anyone truly realizes.
Is Tesla going to take legal responsibility for any and all accidents both the Cybercabs and the customer-owner Robotaxis? FSD constantly needs to be disengaged by alert drivers at the moment, how long will it take before Tesla is comfortable taking full responsibility for autonomous vehicles?
I'm also so curious about the eventual pricing too. Uber essentially had to undercut taxis to disrupt that business, and now it's pretty much the same price as Taxis were... and now Taxis are rebuilding their fleets to compete with Uber again.
How cheap would Robotaxis and Cybercabs need to be to compete with Uber and Taxis (and Public Transport) in order to get over the fear the public will have of no human driving? Will that price point be able to cover the wear and tear of those vehicles?
I just have so many questions about the logistics on all of this.
Elon can say that Tesla is an AI company, but I don't think its currently made any money from AI products to date, and it has all those gigafactories to pay for. If it is an AI company, it surely has the biggest overheads of any of its competitors.
Does the F in FSD stand for Ford?
Martin Viecha
OK. Thank you. The next question, have any of the legacy automakers contacted Tesla about possibly licensing FSD in the future?
Elon Musk -- Chief Executive Officer and Product Architect
We're in conversations with one major automaker regarding licensing FSD.
Elon said something similar in 2021 and that hasn't seemed to amount to anything, so again, I don't think this is real. "Being in conversations" can mean anything.
Just like Tesla, another manufacturer using FSD, would be open to all sorts of legal issues.
I thought this was a really good comment about it:
But I cannot think of a major manufacturer that can take the liability risk that represent Tesla FSD represent.
This is a key point. The insurance premiums on a Waymo robotaxi are enormous, reportedly they would account for half the cost of using a human driver. And that is a system operating at low speed in a geofenced area. Imagine what they would be for a Tesla robotaxi if not geofenced.
And why are they so high - the concept of punitive damages i.e. if someone was injured or killed by a corporate owned robotaxi, the damages claim would multiple times that of a human driver especially if negligence is found in the system
Even though there have been a bunch of articles that have reported it like its a real thing happening... I just... don't truly believe it.
The stock has jumped 20% since the Earnings Call when these things were discussed, and I really do think that the stock will gradually fall as people realize all of these things are either not practical or profitable. I think Tesla's 10-Q report comes out this week that'll go into all the actual numbers of Tesla the car company, and I assume it'll be less promising than people expect it to be. I'm definitely curious to dig into the numbers.
So what do you think? Am I superwrong and too cynical? Or am part of a growing gang of people who are exhausted by the constant Tesla hype?
Thanks so much for reading!
