TESLA: Tech Direction & Financial Outlook 2024
“ If somebody doesn’t believe Tesla is gonna solve autonomy, I think they should not be an investor in the company. But we will. And we are. “
- Elon Musk
Quick Recap on Tesla News:
(Time saved: 45 minutes of scrolling tech news)
Tesla's latest FSD 12.3.5. update introduces groundbreaking AI-powered self-driving capabilities, replacing 300k+ lines of code with an Automotive Neural Network. This utilizes Tesla's Dojo supercomputer, featuring the custom D1 chip for rapid model training—1 quintillion calculations per second.
The update's swift release in 18 months showcases Tesla's agility in tech.
Leveraging vehicle data, Tesla trains AI models like Optimus, with a primary focus on video data for pattern recognition.
Their in-house hardware and software development signal a shift towards AI and robotics, beyond just cars. This commitment to innovation is evident in their significant tech investments (thousands of chips just for Dojo), positioning them as a major client of Nvidia.
This was the fastest news recap. Onto the Q1 2024 Shareholder Update!
We turned 1 hour into 8 bullet points for you, of course 😎
Bite-sized Q1 Call Highlights 🍿
(Time saved: 1 hour and 11 minutes)
Tesla's Confidence in Autonomous Driving: Elon Musk reiterated the company's focus on AI-based autonomous driving and its potential.
FSD Ride-Hailing App: The call discusses features of Tesla's upcoming ride-hailing app, including 3D mapping, interior climate controls, and estimated arrival times. The ride-hailing app aims to provide an ideal autonomous ride experience which will be mainly controlled by Tesla.
Rapid Growth in Autonomous Miles: Tesla's FSD system has driven more than 1 billion miles in total! The rate of data collection is accelerating, especially with the release of FSD version 12, achieving over 10 million miles a day 😲
Training Capacity and Dojo Cluster: Tesla's bottleneck for FSD development has been compute, not data. With the expansion of its Dojo training cluster and around 85,000 Nvidia H100 GPUs expected by the end of the year, training capacity is set to increase substantially.
Version 12 FSD Expansion and Improvements: Tesla is continuously improving its FSD software, with upcoming versions like 12.4 and 12.5 expected to bring significant enhancements. Musk highlighted the rapid progress of FSD, intending to surpass human driving reliability soon.
FSD Licensing and Partnerships: Tesla is in talks with a major automaker about licensing its FSD technology. Although the licensing process is lengthy, there is a possibility of seeing FSD licensed to other automakers in the future.
Global Regulatory Progress: Some states in the U.S. have started approving autonomous vehicle laws, paving the way for broader adoption. Tesla expects to expand FSD to other markets, including China, once regulatory approval is obtained. (We will talk more about China later in this article)
Tesla as an AI Robotics Company: Tesla is focusing on becoming an AI and robotics leader beyond just the auto industry. They don’t call themselves an EV manufacturer either. The company envisions leveraging its cars' compute power to handle large-scale distributed inference workloads.
Let’s see a diagram of Tesla’s footprint that expands beyond EVs.
Q1 2024 Earnings call for its investors highlights Tesla's dedication to advancing autonomous driving technology, emphasizing continuous improvement, global expansion, and licensing opportunities, all powered by its significant investments in AI and computing infrastructure. We will cover all of them in detail below 🤓
We bashed through the most important parts fast and by now, you should have a good idea about the following:
🔥Expansion of Dojo training cluster.
🔥Continuous FSD improvement.
🔥Global regulatory progress.
🔥Q1 2024 earnings call highlights.
Bril! Now is a great time to dive deep into analyzing the FSD landscape and understanding Tesla's worldwide financial and technical outlook.
Behind the Tech: Self-driving, Robo Taxis and Safety Threshold
FSD Adoption Surges
Tesla's Full Self-Driving (FSD) program has come a long way in just three years, hitting the one billion-mile mark in cumulative miles driven. And here's the crazy part: 90% of those miles have been collected just in the past year. This surge highlights people's growing interest in the tech. Right now, Tesla's FSD-equipped vehicles are logging 10 million miles daily, and are running on a powerful neural network. 📈🚀
This progress puts Tesla on the path to achieving greater autonomy. But how do we measure this progress? Here's where the SAE (Society of Automotive Engineers) levels come in. SAE classifies vehicle automation into six levels, ranging from Level 0 to Level 5.
Reaching full autonomy means aiming for Levels 4 and 5 on the SAE autonomy scale. At Level 4, cars can handle most driving situations independently but still need occasional human intervention. Level 5? That's the dream where cars drive entirely on their own, no human input needed at all.
Are you scared? Are you excited? I need to know… 🤪
Although FSD v12 has garnered positive feedback, it still currently falls between level 2 and 3 of the autonomy scale. This means drivers must remain vigilant and prepared to take back control at any moment. The ultimate goal is achieving Level 5, where cars operate entirely on their own. However, reaching this point requires significant hurdles: technological breakthroughs, regulatory green lights, and public trust.
The Vision: Robotaxi Network 🚕
Imagine a world where your Tesla can earn money for you while you sleep. That's Tesla's vision for a "robotaxi" network, where cars drive themselves completely. Tesla's robotaxi concept blends the convenience of ride-hailing services like Uber with the income-generating potential of platforms like Airbnb, all powered by self-driving vehicles. Practically, owners could let their cars work for them, and anyone could grab a ride whenever needed. 🏝️
Of course, to make this dream a reality, Teslas need to be incredibly good at driving themselves. That's the whole point of Elon Musk's push for FSD. The company is constantly improving the system, and all those cars on the road are collecting tons of data to train the AI, all in an attempt to reach level 4 or 5 autonomy.
Now, here's the tricky part: regulations. While other robotaxi companies like Waymo and Cruise have gotten the green light to operate around the clock in California, Tesla still doesn't have the permits to officially launch its network. Despite this, Elon Musk announced on X (formerly Twitter) that the Tesla Robotaxi will be unveiled August 8, 2024.
Yeah about that…obtaining regulatory approval for autonomous vehicle use is a lengthy process - companies have to do robust testing, meet safety protocols, and ensure compliance. Honestly, with all the rules and regulations in place, having everything cleared by August 8th seems like a pretty tall order.
But hey, we’re not in the driver's seat here!
Neither is anyone really… 😂
Welcome to Tesla, take a seat.
Not the driver’s seat…
Ok moving on to more important topics!
Hardware Limitations: Another Potential Safety Risk?
Tesla, with its reliance on a camera-based system (Tesla Vision), faces its own unique set of concerns. While there are advantages to a camera-centric approach, questions remain about its reliability in conditions like rain, fog, and glare.❄️ The removal of radar and ultrasonic sensors on newer Tesla models also raises concerns about potential compromises in distance estimation and object detection.
Relying solely on cameras means losing the redundancy that radar and ultrasonic sensors provide. This redundancy is crucial for safety, especially in fast-paced traffic. Plus, the Tesla Vision system requires a lot of processing power to analyze the visual data and make real-time decisions, which is critical for safely navigating roads. Sounds familiar? Because most next-gen humanoid bots seem to suffer from the same problem, not just T 🤖
While Tesla's AI-based software is promising, its potential rests on significant investments in data collection and regular software updates. It also highlights the fact that rigorous safety testing is crucial to ensure the technology can handle real-world conditions.
That pretty much sums up all technical aspects of FSD initiatives which leaves us with one thing to cover in order to understand T’s future plans thoroughly: Overseas Financial Outlook.
Tesla in the APAC Markets, Rising Star: China
Last week, during Elon Musk's brief visit to China, the largest electric car market in the world, Tesla obtained a crucial security clearance. Despite the increasing presence of local car manufacturers, Tesla vehicles continue to maintain their status as top sellers in the Chinese EV market.
Why Should You or the Investor Care About APAC?
Oh, I love this question. Let’s stay with the China example.
Years ago, Chinese farmers engaged in a mass movement from urban towns to cities to work at factories and eventually earn more income. This movement is practically the reason behind China’s and many other East Asian countries' rapid growth, in manufacturing, automative and retail. (cf. Rise of China’s Middle Class)
Meaning?
Volkswagen, for example, sold about half a million cars in China in 2005.
By 2019, total sales were 4.5 million cars 🙃
And so, APAC joins the chat!
Digging Deeper on the Investments and Growth Projection for APAC
EV investments go way back but in recent years things started to pick up rapidly.
Just a couple of months ago, Tesla built a Gigafactory in China to produce 1 million $25,000 Model 2 EVs.
And now, Elon Musk’s mighty visit wins Tesla a huge security clearance.
There are certain industry-specific benefits for the brand too, most of which are reinforced by the local legislation nudging consumers to go electric to cut on urban air pollution, high greenhouse gas emissions, and growing dependence on oil imports. So the EVs are favoured by the government even though they come with certain costs (stuff like increasing global battery prices for EVs).
On the bright side of this government push, did you know that the Chinese government provides subsidies and exemptions from license plate lotteries for electric vehicles (a system that limits vehicle ownership to control congestion and pollution), which boosts Tesla's sales in the country? Even though we see a decrease in government funding/support towards EV transition, buyers made sure to jump on this in the past which is now a good indicator of the country’s growing EV interest.
Security and Strategic Expansion
On the security front, Tesla's focus on enhancing its FSD features aligns with China's stringent data and privacy laws, while collaborating with Chinese tech giant Baidu for maps and navigation further strengthens Tesla's position in the market.
Good wins for a short visit 👏🏼
Collective efforts and strategic attention on the region demonstrate Tesla's dedication to expanding its footprint in China (and likely neighbouring countries), even amidst intense competition from domestic rivals such as BYD.
In the global scheme, challenges persist, particularly regarding the cost of FSD and consumer willingness to adopt it. Analysts suggest that without FSD, Tesla risks losing its competitive edge in a market where consumers expect frequent EV updates and advanced features.
Quick note here, APAC consumer are CRAZY about their updates and if you wanna stay in the game, you better make it cooler every quarter 🔥
Anyway let’s talk money to put a reason behind all those vigorous efforts.
Assuming all goes well, the Bank of America is estimating that Tesla FSD in China could add $2.3 billion in annual earnings by 2030.
Cha-ching! 💲
Goodbye for Now
Hope you enjoyed Tesla’s Financial Outlook, Investments and Tech Direction. Although we didn’t hear much about the India leg of global meetings from Elon Musk, which was recently cancelled, Tesla shows promise of carrying a collaborative agenda forward into the next year.
Now is the time to bid you farewell with a well-structured conclusion paragraph, bringing all the key takeaways together.
Yeah… we won’t be doing that 🤪
Conclusion paragraphs are so 2008.
Have a fantastic week tho!
And remember to appreciate the little things, little achievements, little joy, a little walk in the park - whatever might come your way :)
Much love,
Tech Giants 🦁
🔗 Resources:
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Bloomberg. (2024, February 23). GM’s Cruise Prepares to Resume Robotaxi Testing After Halt. J. Love & D. Welch. https://www.bloomberg.com/news/articles/2024-02-23/gm-s-cruise-prepares-to-resume-robotaxi-testing-after-grounding
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Hawkins, A. J. (2024, April 23). Tesla teases robotaxi ridehailing function in its app / Elon Musk calls it a combination of “Uber and Airbnb.” The Verge. https://www.theverge.com/2024/4/23/24138580/tesla-robotaxi-ride-hail-app-preview-earningsq1-2024
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REUTERS. (2024, February 8). Waymo robotaxi accident with San Francisco cyclist draws regulatory review. Reuters. https://www.reuters.com/world/us/driverless-waymo-car-hits-cyclist-san-francisco-causes-minor-scratches-2024-02-07/
Sarwar, N. (2024, February 16). Everything To Know About Tesla's Dojo Supercomputer. Slash Gear. https://www.slashgear.com/1516714/what-to-know-about-tesla-dojo-supercomputer
Templeton, B. (2024, March 5). Waymo’s Double-Crash With Pickup Truck, Cyclist & Arson Examined. FORBES. https://www.forbes.com/sites/bradtempleton/2024/03/05/waymos-double-crash-with-pickup-trucks-and-more-examined/?sh=19a0b4cc170e
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