Ark Invest provided detailed metrics for their bull case analysis for Tesla through 2024.
Besides the self-driving aspect, there are two key factors for Tesla:
the efficiency of factory construction and
lowering vehicle costs while growing margins.
Tracking Tesla’s factory construction rate and efficiency of factory production is a critical aspect of the bull case.
Tesla confirmed that $1.6 billion in financing was necessary for its Shanghai factory, which has an initial capacity of 150,000 vehicles. There are various reports of expansion of Tesla Shanghai capacity to 250,000 by the end of 2020 and to near 500,000 by the of 2021 or in 2022.
Tesla captured 23% of China’s EV market in June.
The initial capacity seems to have been made by investing $10,700 per unit of capacity.
Investing $11,000 per unit of capacity for Shanghai, US factory and Berlin factory expansions would validate several of the bull case scenarios.
Tesla has been lowering the price of vehicles. If auto revenue gross margins are grown to 30% by the end of 2020 while the prices were lowered, then this would validate the lowering cost aspect of Ark Invest bull scenarios.
If Tesla can get to 7 million cars per year by 2024, they will need to have 14 gigafactories producing 500,000 cars. There could also be fewer factories producing 1 million cars each.
Fremont 500K
Shanghai 1M (2022 fully scaled to 1M)
Berlin 1M (2021 250K, 2022 500K, 2023 1M)
Texas 1M (2022 250K, 2023 500K, 2024 1M)
Oklahoma 1M (2022 250K, 2023 500K, 2024 1M)
Europe 2 500K (2023 250K, 2024 500K)
China 2 1M (2022 250K, 2023 500K, 2024 1M)
Asia 1 500K (2023 250K, 2024 500K)
Asia 2 500K (2023 250K, 2024 500K)
6M more cars per year would need $60B at $10K per unit.
Ark Invest notes that the auto industry expects EV to reach factories with $7K per unit investment.
If Tesla reaches $7K per unit for factories then only $42B of capital investment would be needed for the 6M more cars per year. Tesla has $8B in cash now. If there are no factory shutdowns then Tesla will be producing 200K cars per quarter for $10B per quarter in revenue and $3b per quarter in auto gross margin. This would be about $2B in profit per quarter. $8B in profits per year reinvested in 2021 and higher profits in 2022, 2023 and 2024.
It would be good for Tesla to raise $20-40B over 2020, 2021, 2022 to build the extra factories.
SOURCES- Ark Invest, Tesla
Written By Brian Wang, Nextbigfuture (Brian owns shares of Tesla)
Brian Wang is a Futurist Thought Leader and a popular Science blogger with 1 million readers per month. His blog Nextbigfuture.com is ranked #1 Science News Blog. It covers many disruptive technology and trends including Space, Robotics, Artificial Intelligence, Medicine, Anti-aging Biotechnology, and Nanotechnology.
Known for identifying cutting edge technologies, he is currently a Co-Founder of a startup and fundraiser for high potential early-stage companies. He is the Head of Research for Allocations for deep technology investments and an Angel Investor at Space Angels.
A frequent speaker at corporations, he has been a TEDx speaker, a Singularity University speaker and guest at numerous interviews for radio and podcasts. He is open to public speaking and advising engagements.
Maybe. I don’t see indications that they intend to ramp up rapidly any time soon – lots of talk, not a lot of action. If it does happen, it might only be because they’re pushed very hard by government mandates and subsidies (like Biden’s proposal to build 500,000 EV charging stations).
I suspect the automakers are more scared of failing to get a handle on self-driving technology, since if SD taxi (and shuttle bus) services really take off, the market for personal vehicles will shrink, creating fierce competition for what remains.
EV rollout may seem like a distraction from that coming/potential ‘war’. However, my guess is that cities, having more control over taxi fleets, may commonly mandate a transition to EV fleets before or in parallel with any transition to SD taxis and SD buses.
Don’t expect it to be forever, these cars are too deep in the game and even if late, they are coming.
Typically the problem with these “competitors” is that they keep slipping into the future, OR they are real but available in tiny numbers and only to people who demand to be sold one because the typical car dealer really doesn’t understand them well and maybe doesn’t really want to sell them because they won’t generate as much parts and repair business.
E.g. Hyundai has had the Kona electric since 2017, and just got to cummulative 100,000 sales – globally – in June.
In fact, I recently made an amazing discovery – feel free to use this one weird trick: I went into a dealership, dreading the high-pressure salesperson treatment. But when I mentioned that I was interested in learning more about their electric cars, the salesman quickly passed me off to a junior salesman, who didn’t really seem to have any answers and after a few moments invited me to ‘look around’… After that we wandered the lot with zero interference!
By the time Tesla luxury transport buses become common, we could be past all this. If not, they’ll have to do compartment sterilization between every use and apply the equivalent of that paper strip hotels used to put on toilets.
Unless he also builds out tunnels with the Boring Company, that bypass all the rush hour traffic at 100 mph. He becomes his own public transportation.
In that respect a PRT pod system with adequate sterilization is the only practical alternative for public transportation, though with the attendant system level burden of active pod distribution (and demand forecasting).
Not to mention H cars, a form of EV.
Assuming of course that public transport ever becomes popular again even after it stops being banned for disease control reasons.
Tesla is creating a lot of qualified competition, and investors are heavily financing these project. Not only one company can create a technology and economics breakthrough EV’s. The EV market is growing as a whole. Free markets create a biosphere of EV solutions:
https://www.autoblog.com/2020/04/20/read-this-lucid-rawlinson/
https://electrek.co/2020/07/01/nissan-electric-ariya-premiere/
I find it interesting that Musk is talking about self-driving electric buses as well as robo-cars, and not needing to sell nearly as many cars (and selling them at much higher prices than currently!)
The thing about the Tesla plan to displace most personal cars with far fewer robo-taxis is that it doesn’t work for long rush hour commutes from suburbs to urban centers. But if they make luxurious robo-buses, with private compartments for 6 to 8 passengers, you could be picked up at home by a robo-taxi that takes you 5 minutes to within a few steps of a robo-bus that leaves a few minutes after you board and delivers you to your workplace. Robo-taxis could quickly recycle to do more local runs.
The trip might take 10-15 minutes longer than a personal car with the small delay to load other passengers and then stops to let the other passengers off, but will cost much less per ride than a solo robo-taxi ride. And who cares if it takes 15 minutes extra, if you can work or amuse yourself or just sleep in comfort and safety? Not to mention that if everyone rode solo in a robo-taxi, traffic would likely be slower anyhow with 3 or 4 times as many vehicles on the road.
With that approach, producing 7 million vehicles per year might meet about half of global demand after 10 years.