I was outside mowing the grass this morning (on my EGO electric zero turn!) thinking about all the odd Tesla news we've seen the past few weeks, when a thought occurred to me which would be very relevant to TSLA investing IF its accurate:
What if Tesla is pivoting away hard from consumer EV development?
The plan stated by Tesla (regarding EV's) has been to grow Tesla auto production at around 50% CAGR hitting about 20,000,000 EV production in 2030. This includes vehicle and supporting functions like superchargers, insurance, etc.
But lately we've seen a lot of statements by Elon coupled with changes by Tesla which don't seem to support this plan:
- Pausing Giga Mexico and not announcing any other new Giga's, essentially pausing car production growth.
- Sidelining the $25K Tesla (and possibly redesigning it into low end 3 & Y) to instead focus on the robotaxi.
- Redistributing nearly all R&D spending away from auto growth and towards AI & autonomy.
- Laying off 10% of the company currently focused on auto production.
- Firing product development and public relations teams.
- Firing the supercharger team, a consumer EV support product (robotaxis might use a different charging infrastructure, possibly inductive).
Elon seems to be in what the Isaacson biography termed "demon mode", where Elon makes huge changes and shifts plans seemingly without regard for public optics or anyone else's opinions. Its very clear that Elon is changing Tesla's direction as of late. The plan to ramp consumer EV production to 20 million by 2030 does not seem to be on the table anymore, because at this point 20 million by 2030 is nigh impossible.
Note this probably doesn't mean Tesla will stop making consumer EV's, but what's available today might be it. Meaning the Model S, X, 3, Y, CT, and Semi, followed by some cheaper low end variants of the 3 & Y later this year by the sound of it. I think these could possibly be the only consumer EV's Tesla is planning now, and production of all combined might never exceed a couple million cars per year out of the current existing factories. So something like 3-4 million consumer EV's per year out of Fremont, Austin, Berlin, and Shanghai. New factories might be only for robotaxi / Megapack / Optimus production.
At this much slower EV production rate with minimal growth, a slower supercharging deployment schedule could be more prudent. Especially with OEM's also slowing their own EV production too. Like Elon said today, Tesla will continue to build and deploy new SC's, just at a slower pace. It doesn't sound like he's concerned about supporting 20,000,000 EV's per year by 2030 anymore.
So, why would Elon do this?
Well, in my own Tesla Excel model, I predict the company financials going all the way out to 2035.
Now of course my model is wrong, nobody's model going out that far is accurate. But I do believe my model shows the trends of Tesla's businesses fairly well, and a few things stick out to me:
4) Even at 20 million EV's per year, Tesla's EV business will eventually be the smallest segment they have.
3) Tesla Energy will very likely make more money than Tesla EV's in time.
2) Tesla Robotaxis have enormous revenue potential, like several times more than EV sales, and I model it very conservatively!
1) Tesla Optimus will likely one day make more revenue than everything else Tesla does combined, and that includes RT's.
Now I believe most Tesla investors who really study the company thoroughly would agree with the rankings of Tesla's future businesses a decade from now. Sure the valuations of the sectors are subjective, but the order of their relative sizes is probably spot on.
Given that, and knowing that Elon sees this too, Maybe Elon is simply ending R&D of the smallest sector (consumer EVs) as it mostly is today? Maybe Elon has decided to move the company forward onto bigger things now instead of spending lots of time and money on a sector which relatively won't matter much ten years from now? Many people believe (I know Elon does) full fledged Robotaxis will eventually dwindle car ownership down over time anyway, is it possible Elon just doesn't want to spend any more time or money on a dwindling business? If auto ownership does decrease over time then anyone in the business of making consumer autos will be in for a world of hurt. Much like blacksmiths, or typewriter manufacturers, or film developers, or flip phone companies...
These are just Deep Thoughts I had on a very quiet tractor, none of us knows for certain, less of all myself of course. If accurate though it would explain Elon's statements and behavior as of late. And honestly it might be a great decision in the long run if this is what he's thinking.
Of course it hinges on FSD getting solved and Robotaxi services becoming a very big thing, which they aren't yet. But then Tesla could easily survive on the current EV business scaled up to around 4 million EV's per year too, so even if the bet failed Tesla would likely survive it just fine.
Anyway I thought it was an interesting theory.
done. Companies love to bring a little of that magic into their organization from his "rejects".
