Tesla Master Plan 3 + Investor Day // What to Expect

Tesla Master Plan 3 + Investor Day // What to Expect

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Welcome back everyone! I’m Jordan  Giesige and this is The Limiting Factor.  What should we expect from Tesla’s Master  Plan Part 3 and Tesla Investor Day on March   1st? In this video I’ll share my thoughts. Before we begin, a special thanks to my   Patreon supporters and YouTube members. This is  the support that gives me the freedom to avoid   chasing the algorithm and sponsors. As always,  the links for support are in the description.  Let’s start by reviewing what Elon’s said  so far about Master Plan part 3. If you want  

to get straight to the analysis, feel free to  skip this part and jump to the next timestamp,   which is titled “Elon’s Brain”. I’m going to read  through Elon’s quotes from the last in year rapid   fire in chronological order, and then I’ll lay  out my interpretation. These will get repetitive,   but I think it’s important to see which  things have been repeated the most.  First, on Twitter last march: “Main Tesla subjects will be   scaling to extreme size, which is needed  to shift humanity away from fossil fuels,   and AI. But I will also include sections  about SpaceX, Tesla, and The Boring company”  Next, the Q1 2022 earnings call: “At 5, 10, 20 million vehicle levels, you really   have to analyse the macroeconomic, the tonnage  of lithium that you need, of nickel, of iron   phosphate, of graphite, separators, electrolytes.  It looks like really just macro tonnage”.  “And when we need to think about  this for the world as a whole,   what are the limiting factors for accelerating  the advent of a sustainable energy future.  

Whatever the most limiting factors are, Tesla  will take action on those limiting factors.”  Next, in the annual meeting in Early August: “Big picture what does it take to make earth   fully self-sustaining? From an energy standpoint  just map it out. Tesla will try to be useful as   possible in this regards and hopefully lots  of other companies can join in and help”.  Then, later in the meeting: “Master Plan 3 is going to   be fundamentally about scaling, just looking at  the overall problem from a global macro-economic   standpoint and saying what are all the things that  are needed to achieve a fully sustainable economy.   I think a lot of people don’t really know what  tonnage of lithium, of cathode, anode, separator,   electrolyte, electronics. What are all the things  that need to be done. The sooner we do that,  

the better for the planet.” On August 10th:  “Part 3 is about scaling sustainable energy  at a civilizational level to enable a bright   future for earth.” Then, in October:  “Master Plan Trois is all about tonnage” Then, three weeks ago:  “Master Plan 3, the path to a fully sustainable  energy future for earth will be presented on   March 1. The future is bright.” And finally, two weeks ago:  “Looking forward to investor day. By this we mean  the broadest definition of investor, as in the   people and life of earth. It will be a message  of good hope and positivity for the future.” 

For me, these comments tell us as much about Elon  as they do about the Master Plan. And that matters   as much as what’s in the plan itself because  it’s the glue the holds everything together.  His wording is optimistic and consistent, and  he has a great track record of delivering on his   Master Plans. They’re not abstract thought  pieces but rather actual business plans. 

Why’s that important? Because Elon creates  inspiring narratives that people want to get   behind and then he works insane hours along  with those people to make the impossible,   possible. It’s leadership. Beyond that,  Elon wants to give hope for the future.  He’s said a number of times that it  depresses him that people think the   world is doomed due to climate change. The  reality is that climate change is solvable   if we can let go of the pessimism, embrace a  plan, and take action, and Elon’s coming to   the table with hope, a battle plan, and an army. But besides the classic hallmarks of leadership,   there’s also a philosophy at play here. There’s  a sense of urgency that underlies everything  

that Elon does and it’s no mistake that Tesla’s  mission statement says “accelerating” the world’s   transition to sustainable energy. There’s a book  that Elon’s recommended called “What We Owe the   Future” that basically says that the more you  can do and the sooner you can do it, the greater   the magnitude of your total impact over time. Or, put another way, it’s the area under the   curve. For example: if we compare a materials  constrained vs unconstrained forecast for EV   growth, the difference is roughly 400 million  EV’s produced by 2035 vs about 700 million that   could have produced. Not only that, the earlier  each of those vehicles is produced, the longer   they’ll be on the road reducing carbon emissions. That is, it’s not just about transitioning the  

world to sustainable energy, it’s about doing it  as quickly as possible because every year counts.   The faster that the transition happens, the lower  the likelihood that we suffer the worst potential   consequences of climate change deep in the future. So, with that philosophy in mind, Elon’s sense of   urgency makes a lot more sense. He’s been  pushing the sustainability stone up the   hill as fast as possible because he realizes  the impact of every single year on the next   50-100 years. That brings us to the Master Plans. Master Plan Part 1 was about building enough scale  

to make electric vehicles commercially viable.  Master Plan Part 2 was, on a surface level,   mostly about self-driving vehicles. However,  during that time, Tesla’s biggest achievements   have arguably been radically improving the  manufacturing of vehicle and energy storage   products, while on the software end creating  grid management tools and mastering AI software   and infrastructure. Now, Master Plan Part 3 will  be about solving the extreme materials challenge  

of shifting the world to renewable energy,  and that primarily means battery materials.  An analogy that comes to mind with  the Master Plans is strategy games,   where your first priority is to survive, then it’s  to build out your skill trees and resilience, then   it’s about collecting massive amounts of resources  to deploy assault forces to sweep the board.  The problem is that in the strategy game called  reality, the difficulty is currently set on   hard. Past 2025, the growth of global battery  supply is forecasted slow to an anaemic 16% per  

year. That’s a problem if Tesla wants to grow  from 100 GWh of cell consumption last year to   3,000 GWh of cell consumption in 7 years,  which is on average a 53% annual growth rate.  To put that in perspective, here’s Tesla’s growth  rate plans in comparison to global battery supply   forecasts. It’s clear that if Tesla only focuses  on their own needs, they’ll quickly outstrip   global supply. So, in my view, Master Plan part  3 will be an action plan at a planetary level   rather than a company level. There were four clues  to this in Elon’s comments over the past year: 

First, his wording around mapping the  transition to sustainable energy and how   Tesla can be useful as part of that. Second,  his repeated use of words like macro-economic,   global, earth, and civilizational. Third,  his call to arms for other people in the   industry to also pitch in to help. And then  fourth and finally, the fact that Elon said  

that Master Plan Part 3 will include sections  about SpaceX, Tesla, and The Boring company.  With the context and scope of Master Plan Part 3  out of the way, let’s go a level deeper in terms   of detail. The biggest focus of Master Plan Part  3 seems to be the tonnage of materials required   to transition the world to sustainable energy. Elon mentioned tonnage 4 times in the past year,   and he even mentioned specific battery material  materials like lithium, separators, electrolyte,   cathode, and anode. So, it should come as no  surprise if he actually lays out a shopping   list of all the materials and specifically how  many millions of tonnes of each that we need.  As we know, it’ll require 20 TWhs of steady state  production at a global level to transition the   world to sustainable energy, which would be  about 14 million tonnes of lithium carbonate   equivalent per year. And those factories will need  to be running for about 15 years to complete the  

transition, for a total of about 300 TWhs  or 200 million tonnes of lithium carbonate   equivalent. And bear in mind, that’s just  lithium, which makes up less than 5% of   the weight of a battery pack. These numbers  aren’t just extreme, they’re super colossal.  But, if as a civilization we can secure all  those materials rapidly, the future is indeed   bright. Cheap, clean, and abundant energy on a  global scale can solve a lot of what ills most  

societies. This isn’t just a money making venture  for Elon, he’s obsessed with actualizing a utopian   sci-fi future. Failing that, I think he’s hoping  humanity at least survives, even if it’s a Blade   Runner type dystopia. Not as inspiring, but at  least you can have a missile launcher for an arm. 

Moving along from raw tonnage, the next big  question mark for me on Master Plan Part 3 is: How   will it incorporate the Boring Company and SpaceX? Are the sections on the Boring Company and   SpaceX going to be a subset of the plan for  materials or are they going to have their   own standalone goals separate from materials? For example, is the Boring Company going to be   involved in the mining raw materials or will  it be included in Master Plan Part 3 because   it will eliminate soul sucking traffic jams? I’m not sure how SpaceX would fit as a subset   of the materials ambitions other than reducing  the wiring required for global internet through   Starlink. But as for standalone goals it’s pretty  clear Starlink will bring internet access to   the people in the world that need it most, while  Starship will provide an inspiring multi-planetary   future, and make global point to point travel  possible to anywhere in the world in half an hour.  Either way, I don’t specialize in either  SpaceX or the Boring company. My interest   is more in Tesla. With that in mind, the next  big question mark for me is what level of   detail the plan will provide for Tesla. I see three broad areas where Tesla can   contribute: First, AI and robotics. Second,  manufacturing expertise. Third, finance and  

project support. Let’s go through each. Tesla’s obviously setting itself up to be   a robotics behemoth. The point of that is to  increase the total amount of work humanity can   do which, like energy, has the potential  to massively improve peoples’ lives. But,  

beyond that, those robots can continue to extend  Tesla’s lead in manufacturing and do difficult,   dangerous, and dirty jobs in factories and mines. So, Master Plan 3 may simply state something like   the following for AI and Robotics: Tesla  will develop a robot for industrial use   cases and then expand the portfolio to general  commercial and domestic robots. This will free   people from doing monotonous and dangerous jobs  and make cheaper labour available to everyone.  The second and biggest part Tesla can play  in Master Plan Part 3 is manufacturing. Every   part of the supply chain has to be maximally  optimised to grow rapidly at extreme scale.  

That’s because scaling unoptimized processes  sucks up valuable engineering resources that   could otherwise leveraged to build additional  capacity, and that effect compounds over time.  As I’ve said in past videos, Tesla’s slowly  working their way up the supply chain and   at each step they’re ripping out inefficient  processes and replacing them with processes   that are cheaper and easier to scale. First  it happened with vehicles, then batteries,   now it’s cathode production and lithium refining. After refining is of course mining. Tesla will   only get into mining if they need to, but  that’s looking more likely by the day.   Mining doesn’t pose the technical challenge that  chemical refining and vehicle manufacturing do,   but it faces other challenges. No one wants a  mine in their backyard, so mining regulations   and public pushback are a challenge to opening  new mines. The question is, can Tesla find a way  

to innovate around that? I think so. They can make the process of mining   a range of materials cleaner, simpler,  and lower impact by using lower toxicity   processes with lower energy requirements. For lithium specifically, Tesla can develop   technologies to directly extract lithium from  brines. If they make comments about this at   Investor Day, I’ll do a deep dive. Not only is  extracting lithium from brines a clean process,   it could be done in ways and locations where  there’s less political resistance. For example,   in areas that are already environmental  write-offs like the Salton Sea in California   or tapping oil field brines left over from  mining operations like E3 Metals is doing.  

The politics and environmental concerns around  those locations would be far easier to navigate.  With that said, Elon may not get into that  much detail in Master Plan Part 3. Although   the key points of Elon’s Master Plans tend to  mention products and technologies, he doesn’t   get lost in the weeds with specifics. Another  challenge with the Master Plans is that it’s  

often difficult to know what will be included  because Tesla is always quietly developing   technologies behind closed doors. For example,  Tesla’s grid control software that allows them to   become a grid operator. That’s a significant  piece of technology to Tesla’s mission,   but it was never mentioned in a Master Plan. With that in mind, I’m going to lay out what  

I’d like to see from Tesla in the next 5-10  years that relates to scaling sustainable energy   technology at a global scale. I’d be surprised if  more than one or two of these are actually listed   in Master Plan Part 3, but whether they’re in it  or not, they’re the types of things that would   fit and that Tesla could be working on. First, Tesla will begin manufacturing   factory equipment for use by third parties that’s  critical for the transition to sustainable energy.  Second, Tesla will develop clean and  rapidly deployable lithium extraction   and refining technology. This might include  other metals as well; I’m just targeting  

lithium because it’s the most important. Third, Tesla will implement a fully closed   loop in-house recycling system for all  the materials in their vehicles that   can be recycled. This one may be redundant  because we know that Tesla already has a   certain amount of in house recycling capability. Fourth, develop in house versions of non-toxic   earth abundant alternative chemistries  such as LFP, LMFP, and Sodium Ion.  Fifth, Elon has been teasing a Tesla Home HVAC  system for years now. Although this doesn’t so   much relate to scaling, it would fall into  the bucket of creating a brighter future. 

Finally, some people are thinking that Tesla  should get into water and air transport options,   but I think that’s something that’s  best left for Master Plan Part 4.   Tesla still needs to create buses, vans,  more than one pickup truck size, and more.  As a side note, I’ve of course made an entire  video on Tesla’s raw materials strategy. I haven’t  

included the key points from that video here for  two reasons. First, going through all of them   again would be redundant. Second, many of them  are too tactical or specific for a Master Plan.  That is, I don’t think Master Plan  Part 3 will reveal too much about the   actions Tesla will take or the specific  technologies they have in their toolkit.   Technology announcements are better suited to  standalone events and large scale corporate   actions are better suited to press releases. The last way Tesla might be able to help with   Master Plan Part 4 is through finance and  project support. That is, funding new mines,   partnerships, and clearing red tape. In the last  7 years, underinvestment in the mining space has  

been an issue and it’s been happening at a time  when it needed to be increasing. Besides that,   it never hurts to have a big wallet to back  a project and it certainly doesn’t hurt to   have Tesla’s clout around to grease the wheels. That covers all my thoughts on Master Plan Part 3,   but what about Investor Day  itself? What can we expect?  As the invite says, “investors will be able to  see our most advanced production line as well as   discuss long term expansion plans, Generation  3 Platform, Capital Allocation, and other   Subjects.” Let’s go through those one by one: The tour of the most advanced production line most   likely refers to the Model Y line in Texas because  the Cybertruck line is still under construction. 

Long term expansion plans hopefully includes the  number Cybertrucks they’ll produce each year in   Austin, what other vehicles might be produced  there, and battery production plans. Beyond that,   Tesla’s overdue for one or more new  factory and factory expansion plan   announcements so I wouldn’t be surprised  if they made announcements to that effect,   such as the highly rumoured Mexico factory. As for Capital Allocation, I expect Tesla   talk about what they plan on doing with their pile  of cash. I know some people want stock buybacks,   but I think that’s a poor use of capital  if they could buy out mining companies or   expand instead. I think there’s actually a good  possibility of this in the next year or two. But,   I’d be surprised if Tesla made an announcement  like that on Investor Day. If they do,   as investor, nothing would make me happier. As for the other subjects the invite refers to,  

my view is that’s the bucket that  Master Plan Part 3 falls into.  That just leaves the Generation 3, or Gen 3  Platform highlighted in the invite. Although   I’d love to see Tesla unveil a new vehicle at  investor day, that seems better suited to a   standalone event. Platform typically refers  to a technology suite rather than a specific   vehicle. For example, the battery and powertrain  skateboard introduced in the Model S and the  

gigacasting technology introduced in the Model Y. Besides, in my view, it still seems too early to   unveil a new vehicle with so many vehicles yet to  be ramped like the Semi, Cybertruck and Roadster,   as well as vehicles that aren’t yet fully ramped,  like the Model Y. As usual, I’d love to be wrong   here. With that said, although I don’t think  it’s likely we’ll see a full unveiling of a   new vehicle, we could see the following: a) They could tease the upcoming Robotaxi   or Mini vehicle like they did with the Cybertruck b) They could announce they’re upgrading the Model   3 lines for higher production efficiency  along with new full self driving hardware  c) They could announce that  they’re starting production   of the Tesla Roadster along with its final specs. d) Or, they could reveal the final cost and specs   of the Cybertruck along with the finalized design. Overall, although new vehicles are exciting,  

I’m actually more excited about the way that  Tesla will be simplifying and accelerating   vehicle manufacturing. So, I’m hoping that’s the  focus of the Generation 3 discussion. I’ve already   mentioned in the Q4 earnings call video what  could be meant by Gen 3, from electric brakes that   remove the need for hydraulic lines, to increasing  the voltage of the high and low voltage systems,   to dramatically reducing the amount of  wiring in Tesla’s vehicles through either   wireless or power over ethernet technologies. On that note, on January 22nd Elon said that no   change in copper production is necessary for the  transition to sustainable energy. If that’s true   a big part of achieving that would be to remove  most of the non-battery copper from the vehicle   in the wiring loom, but even then, it’s a stretch.  To hazard a guess, I think reasoning here is that   robotaxis will each do the work of 5 vehicles, so  each unit of copper will do more in each vehicle. 

Beyond that, for the Gen 3 platform, in my  gigacasting finale video I already talked   about the ways that Tesla can expand Gigacasting  beyond front and rear underbodies. So, I won’t   cover all those again today. Basically, Tesla can  expand their gigacastings into the roof rails,   rockers, and pillars. Or, they can do the front  and rear castings in one machine. It is possible   they could cast the body panels, but it would seem  to be as much or more effort than stamping them. 

Regardless, I hope that the Cybertruck is  the first vehicle that uses the Generation   3 technology suite. Why? Because the earlier  Tesla can introduce the new technology platform,   the better. And of course the sooner we get to see  a tear down by Sandy Munro to see how it works.  On that note, a lot of people are speculating  on the invite itself. As Cory from Munro and   associates points out, the background image is  thousands stampings for vehicle side bodies. In  

my view there isn’t any numerology, hidden  meanings, or new technology shown here. It   just illustrates extreme scale, which is the  theme of Master Plan Part 3 and Investor Day.  Finally, what other things could we hear  about or see at Investor Day that fall   under the broad banner of “other subjects”?  In my view, there are two, and although I   don’t expect these to be major themes, even a  sentence or two would be helpful for investors.  First, we’ve seen a lot of leaks in the past few  weeks on Full Self Driving Hardware Version 4.   In my view, it’s unlikely that they get into  that at Investor Day in detail. But if they   do discuss Hardware 4, it would be good if they  address whether it’s a requirement for Robotaxis. 

Second, as I touched on earlier, Tesla is  rumoured to be buying a lithium project.   Even if that’s not discussed, it would be  great to get some details about Tesla’s raw   material strategy. We’ve seen wave after wave  of announcements from other companies and as   an investor, I’d love to see Tesla do the same. In summary, my view is that Master Plan Part 3   will be the first Master Plan that doesn’t focus  solely on Tesla. It’s going to be a planetary   scale plan to the secure the raw materials we need  for a bright sustainable future; the sci-fi utopia   that Elon has in mind. To achieve that end, I  expect the plan to call out the millions tonnes of  

each material that are required to get us there. If we zoom out for some context, it’s a crescendo   Elon’s been working towards for the last 15 years  with the introduction of the Tesla Roadster in   2008. Even at an exponential growth rate, this  is how long it takes to hit the scale required   begin to create global impact. Master Plan 1 was  released in 2006 and lasted till 2016. Master Plan  

Part 2 was released 2016 and lasted to 2023.  And now Master Plan Part 3 will for the most   part complete Tesla’s mission of accelerating the  world to sustainable energy over the next decade.  But, Master Plan Part 3 has to be more than  just about digging up materials and avoiding   the worst effects of climate change. And that’s  why Elon’s wrapping it in hope and optimism. A   sustainable future isn’t just about avoiding  being lobstered, it’ about creating greater   abundance in the world, improving the quality  of our lives, and freeing us from monotony. 

As a side note: If Elon is including  other companies now in the Master Plans,   is he working on a unifying theme  and vision for those companies?  There’ve been teases in the past that Elon  will combine all of his companies into a   super conglomerate called X Holdings. I doubt an  announcement like that will happen on March 1st at   Investor Day, but I do think that Master Plan Part  3 will carry the spirit of X holdings and serve   the purpose of providing some unity between the  different arms of Elon’s empire. At some point,   Elon will no longer be around and he’ll want all  of his companies to share a vision of achieving   the highest possible good for humanity. Regardless, besides the fact that Master   Plan Part 3 will include sections  on SpaceX and the Boring Company,   I expect Tesla to remain the star. Tesla is the  best positioned in terms of AI and Robotics,   Manufacturing, and Financing to increase  the global output of raw materials. 

The manufacturing expertise will be the heavy  lifter here. Moving, refining, and building raw   materials into products takes engineering  expertise from chemical to electrical to   mechanical, and Tesla’s an engineering juggernaut. Although the master plan will have a global focus,   Tesla is still a company that needs to  make a profit. So, Tesla will also be   playing out strategies in the background to  secure battery supply for their own needs,   whether that means buying battery cells  from other suppliers or going as far as   buying or partnering with mining companies. And of course, besides revealing Master Plan  

part 3, Investor Day will contain some  tactical information about what Tesla   is doing in the next few years in terms of  products and factory expansions. Outside of   the expected gen 3 platform update, there’s  quite a few possibilities for bonus topics.  Regardless, even if don’t get any bonus updates,  Tesla’s working on all these things and we’ll   find out more in due time. It’s exciting times for  Tesla and I’m sure investor day won’t disappoint. 

If you enjoyed this video, please consider  supporting me on Patreon with the link at   the end of the video or as a YouTube member.  You can find the details in the description,   and I look forward to hearing from you. A special thanks to YouTube members and all the   other patrons listed in the credits. I appreciate  all of your support, and thanks for tuning in.

2023-03-03 01:41

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