Episode Transcript
[00:00:00] Speaker A: You know, some filipino woman comes up to us, and she's like, oh, my God, cybertruck. I have a model Y. Like, I want to get this. Can I take a picture, please? We're like, sure. She starts taking a picture of our cybertrucks, and she comes up to me, she gives me her phone. She goes, can you please take a picture of me with your cybertruck?
You know, there's this really interesting characteristic about Elon and Tesla, I think, where they do things that just seem crazy a lot. I mean, even just starting an ev company, people said, you're crazy. No one wants an eevee. Look at how the industry's changed now.
[00:00:38] Speaker B: Ladies and gentlemen. Gentlemen. Oh, my God.
Ladies and gentlemen, welcome back to the Wolf podcast. Today we are joined by Omar, but you might know him as whole Mars blog on X. Hey, Omar, how are you doing?
[00:00:50] Speaker A: Hey, great to be here. Thanks for having me.
[00:00:52] Speaker B: Awesome. Well, as you, as many people probably know, you and story are the two top Tesla fans on X. And you even have a direct access to Elon sometimes on X, as we saw last week with all that drama that happened. But I'm GLad it worked out. Do you want to tell us about when you got into Tesla?
[00:01:14] Speaker A: Yeah. So I think I've been covering Tesla now for about six years, first part time, and now its really my primary source of income. And it all started in about 2018.
My dad bought his first Tesla Model S in 2013, and in 2018, I got my first Tesla model three. That was when they first launched the affordable Tesla, and I got it. I love the car. It came to me in a time where I was really going through a lot of changes in my life. I was struggling with a lot of things, and, you know, this amazing car just kind of just made my life a lot better. I just REALLY fell in love with the thing and, you know, the vision for the future. It presented things like AUtopilot and just the supercharger network.
It was just, you know, so much better than anything I'd ever experienced before and just a lot of fun to drive. So I started tweeting ABOut it, and there were, at the time, a lot of short sellers who were betting against the company. They were betting that Tesla would fail to ramp the model three and that the company would go bankrupt.
And so basically, there was what I think of as a massive, shortened, historic campaign pushing a lot of negative info against Tesla. I mean, these were really incredible investors, people like Jim Chanos and really well respected guys who were legendary investors. And they were saying, this things a fraud. This thing's going to zero. He had the Elon Musk funding secured incident and his thing with the SEC, which just added fuel to the fire.
And a lot of them really thought that the company would fail, that it was going to go bankrupt, that it would never be profitable. And so I just started tweeting about the company, tweeting about the arguments the short sellers were making, and kind of got into a battle with them. Things got. One of Them even sued me and Elon, claiming.
Yeah, claiming that he was secretly paying me and I was a Tesla employee and not a real customer.
[00:03:28] Speaker B: Oh, my God.
[00:03:29] Speaker A: Pretty crazy.
The shorts lost, and in 2020, it ended with one of the most epic short squeezes in the history of the market, as Tesla did achieve profitability and was added into the s and P 500. And at that point, everyone was sort of forced to close their short. And we saw that explosive move that we got going into the pandemic.
[00:03:55] Speaker B: How different was the FuD back then to what it is right now? Because I feel like I'm a new Tesla investor, and the FUD is pretty disgusting, past year or two. So how is it different from back in 2018, 2019?
[00:04:07] Speaker A: Well, it's different, but similar.
There's a lot of people who are just threatened by Tesla, whether you're a legacy automaker who doesn't want to invest in EV's, or whether you're a dealer and your dealer models being disrupted by this direct to consumer model, or whether you're, you know, an autonomous software provider, a lidar software provider. And these people are obviously heavily incentivized to spread negative information, say this disruption isn't happening. No, we need hybrids. We don't need Ev's.
And so there's always been a lot of that. Then. You know, there's people betting against the company. There's unions, you name it. I mean, anytime there's disruption, there's going to be a lot of people who are challenged by that disruption, and we're going to lash out.
But it's different in the sense that the company is more secure now. I mean, people are talking about sales growth challenges.
We saw a year over year decline in sales, for example. But nobody's really talking about the company going bankrupt. Like, that was the main conversation back then. Would this company actually survive as a going concern? And they've done very well. They've fortified their balance sheet. They've got a record level of cash.
So bankruptcy isn't really part of the conversation anymore. But the bull and debate, bull and bear debate just so do you think.
[00:05:41] Speaker B: This will always be the case for Tesla for something as disruptive as what Tesla is to so many different industries or so many different legacy type of industry, industries that have been around for decades? Like, will this always be an issue where they're so big and they're scaling so quickly on top of like, how disruptive they are that there always just be this many bears and fud around that name?
[00:06:07] Speaker A: I think over time they are earning more credit. They're taken more seriously than they were even a few years ago. I think the things they're going to do in the coming months and years are going to earn them even more credit. But there's always going to be haters. I mean, you saw it in Apple too. Apple was another stock I built a big position in when I was in middle school and high school and that a lot of time with the introduction of the iPhone. And you saw people say, hey, these guys have a 5% share of the computer market. They're inconsequential. They have this problem and that problem and people don't want the iPhone because it doesn't have a keyboard. And you saw, I think you look back at history, any disruptive technology that were naysayers saying it wouldn't work or it was stupid, people would never fly the ipod, would there? And that's just part of the reality of doing something new, is there's going to be a lot of people who say that it's stupid or it's pointless. But I think you just look at some of the trends in the cost of batteries, you look at the role of AI in cars. Nitsa now starting to mandate automatic emergency braking for the first time.
I think it's pretty clear when you just look at these long term trends that we're moving into a future where the most foundational infrastructure of our economy is going to be replaced. All of the future, I think, is going to be autonomous and electric, and I think thats becoming pretty clear.
[00:07:50] Speaker B: So going off of what you just said right there, lets talk about the changes that Tesla has gone in the past couple of weeks where for me as an Investor, I got into Tesla. This is an AI software play.
Whole interest is exactly what Elon's doing of his reorgang towards people who are part of that vision. That's like transitioning from like the legacy ev to what the future of Tesla will be.
Do you think that, what's your take on what the changes are? Is it more? There isn't the talent that Elon wants in order to push some of these like, go to market products quicker or is it more just there? I hate to say it's dead weight and it's want to make a lighter for like the high use cases for AI and software rather than the talent for superchargers and like the EV specific part of the company.
[00:08:40] Speaker A: Yeah, it's difficult to really understand fully what's going on. I think we don't have all the information yet, but it's not atypical. When you look at Tesla's history in 2019, for example, when Tesla saw a sequential decline in sales in Q 120 19, they implemented a 9% layoff following a previous 9% layoff in 2018.
It's kind of just his management philosophy. He believes really curating small teams of exceptional people, and he believes a small team is better than a big team. And he believes in a flat organizational structure. He doesn't want a ton of middle managers reporting to other middle managers. Hed rather just have really smart engineers who are driving the progress themselves without a lot of supervision. So I think its a massive realignment of the business around AI, literally robotaxis. He said, look, weve had a breakthrough on full self driving. Weve seen breakthroughs across the industry in our understanding of AI. Weve seen a tremendous buildup in computer. I think he's seeing the light at the end of the tunnel, and many of us are too. With the self driving software, it's now able to drive me around, do pretty much all of my drives without intervention, which wasn't true even just a few months ago.
So they're really reorganizing the business around this, and they have to really ask themselves, what is this more important? Anything I'm spending money on, is this more important than buying another h 100 and really looking at the business seriously cutting the dead weight? When you ask yourself, okay, who's the least important 10% of the company? You end up, I think, with a stronger team, you end up with cost savings that they can then realign into their AI investments. And when you look at the core business, I mean, we have to face reality that EV growth is slowing. You're not seeing on the past few years when there were no cars to buy. So when there were no cars to buy and you saw car prices shoot up and interest rates were low, evs looked like a great deal by comparison. Now the supply of the other cars has returned to the market. There's an overcapacity of EV's, people dumping these EV's that aren't sold on the market, it's a much weaker environment. You look at the environment in China and the US pretty much across the board, it's a weaker environment. So if they want to avoid swinging into a loss, which would be obviously catastrophic, I think, and they also want to invest, Elon said in a reply to me, $10 billion in AI compute this year. Between the compute in their cars and their training data center, then you have to make some tough cuts, and that's a tough decision to make. People are going to be upset. The people who let go are going to be upset. They're going to go to the media and they're going to say, this is a disaster, this is going to ruin the company. The guy has lost his mind and you're going to get some bad press. It's going to scare people, particularly when you're talking about things like the supercharger network, which are so near and dear to people's heart. We depend on this network to get around.
There's going to be that negativity. But ultimately this is the, the difference between a business that dies when times get tough and survives. And this guy has been through 2008, he's been through, you know, many different downturns before, and it's made him a little bit paranoid. But, you know, as Andy Grove says, only the paranoid survive in Silicon Valley.
[00:12:30] Speaker B: Yeah, I love that. They also, just this week, they made a lot of changes in the supercharger team.
Do you think that's at the tax of the momentum FSD and like, the autonomy driving has, where supercharging will have to change due to there might not be people driving the cars anymore, this might be driving itself. So they kind of have to adapt, maybe go the wireless route or maybe, who knows what. But right now, the current place in supercharger doesn't align with potentially the future vision that Elon has for the company. Do you think that's what's caused, like, the movement on supercharger? Or if so, what do you think the supercharger needs to become in order to, like, mesh well, the autonomous driving?
[00:13:13] Speaker A: Yeah, it's a good question.
First off, I think a lot of people look at layoffs on the supercharger team and they think, well, the supercharger network's going to disappear or Tesla's not going to invest in it. I think the supercharger network obviously is here to stay, keep running. They're going to focus on making sure they continue to run. Well, the team that was laid off was not the team that makes the superchargers they're in Buffalo, New York. It's not the engineers who design the technology behind the superchargers there in Silicon Valley, in Texas, it was sort of the project managers who managed the construction of the supercharger network. Now, charging is kind of a brutal business. It's not that lucrative. You have a chicken and the egg problem. You have to build it, and then you pay back the cost of that station over time.
So I think when you have sales growth thats slowing, and youve been building out the supercharger network for a level of sales that did not actually materialize, then it makes sense to take a pause. And if you take a pause on building new sites, well, then you might not need a team of 500 people who are building new sites. So I think that's kind of the gist of it. And they said they're going to continue to build new stations. Were critical finish construction of the existing stations, but just build out a little slower, spend a little less until some point when they want to expand. But to your point, just reorienting the business around autonomy. These stations are not really equipped for an autonomous car, and you have to plug the car in yourself. Right. So one of them actually investing in is wireless charging. And Franz von Holzhausen, who's the head of design at Tesla, has confirmed that they're doing this wireless charging. So this is wireless charging of EV's is again, a little bit of a chicken and the egg problem. The carmakers don't want to add wireless to their uvs because there's no wireless stations, and the wireless built because there's no cars with it. So Tesla's confirmed they're building a wireless charging solution. And you can actually see in the bottom of the Cybertruck. When Sandy Monroe tore the Cybertruck apart to analyze it, he saw that there was a port for a wireless charging pad there. So think a wireless charging solution, which is actually much more efficient than the wireless charger for phones.
An autonomous car can do that. It can just park over the pad or enter your garage, park over the pad, and it just automatically charges. You never have to worry about plugging it in or anything like that.
I think some type of solution for self charging is needed.
Also, I think Elon just came back from China.
When you look at the chinese EV market, Tesla's got about 22,000 superchargers there. And there's actually a million EV fast chargers in China. 1 million? What? Yeah, yeah. So most Tesla users in China, they don't use the supercharger network. They use other networks. And these are owned by utilities. They're owned by other companies who've made that investment.
And it all works fine because they all have the same plug, they all have the same standard. So Tesla just last year got the whole industry to move to their charging plugin. Now everybody's standardized the same charger charges, the same EV, no matter the brand.
So I think they're really looking at this and saying, okay, this may have been a huge investment need when we were jump starting EV's today, where it's a standard, anyone can build a charger, and there's a lot of chargers out there.
We may not need the same level of capital expenditure we did in the past. So I think all those factors are probably bouncing around.
And I think also it was just about sending a message. If you read the leaked email, he said, look, I want you guys to let go of anyone who's not necessary, excellent, and trustworthy. If you have more than three people on your team who are not those things, then I'm going to let you go. You the manager, so you better make the cuts and take it seriously, or else you're going to get cut. Oh, I'm so, you know, I'm not kidding about this. You know, Rebecca Tanucci came up to him and she said, hey, you know, I don't think I can make a 10% cut to my team. My team is super important. So he said, okay, then you're fired and your entire team is fired. Let's see.
And guess what? I mean, the chargers are still working even without them, a lot of people are panicking. But for now, everything's pretty much the same. Whether they'll build out slowly, we have to see. But really, this is a message to the entire company. He emailed the entire company, said, look, I'm letting them go. We need to get serious about cost cutting in every corner of this company to prepare for a potential recession that's ahead, to prepare for rates staying higher for longer, which has obviously impacted the auto business negatively, and to continue to invest in AI even while we're seeing these troubles in our core business. And to do that, we need to get really serious about cost cutting. So I think it's the entire organization.
Get serious about this Cut, or We will do the cutting for you. And, I mean, it's tough love, but that's the leadership that's going to get this company through this storm without posting a loss.
[00:19:05] Speaker B: I mean, Elon's full time in wartime CEO mode, which, again, if you're not a Tesla investor. You love to see what a CEO like Elon's capable of when he's in that kind of mindset. It's interesting timing because he started becoming wartime CEO when he acquired X. And then obviously right after X, it was Tesla. So it was like, maybe X, like, tickled him enough. We're like, wow, I missed this and went hard again in Tesla. Who knows? But I do know there's not many CEO's who can travel across the whole world, make a revolutionary deal, and bring FSD technology in China. So I want to talk about that. What's your take on, like, how revolutionary that deal actually is? Is it more noise where it's nice, it's good progress? It's not going to be really tangible in the near term. Or is it something like, wow, this is an inflection point for FSD globally.
[00:20:01] Speaker A: Yeah, it's absolutely a big deal. And I don't think the market has really absorbed the impact of the story fully.
You have this FSD software. It can run on any Tesla that's been produced since October 2016. And I can drive the car. The other day I went to Best Buy with my dad. We got in the parking lot of Best Buy. We got in the car, we said, take me home, pushed one button. It drove us all the way home and parked.
People don't realize that this is possible today.
And the problem is, Tesla's invested over $10 billion to create this technology. $10 billion. But the problem is they can only sell it to the US and Canada. You can only actually in those jurisdictions. So the United States and Canada make up about a third of Tesla sales. Another third comes from China and another third comes from Europe. So 66% of Tesla's customers have not been able to buy the software that they've been spending billions of dollars on that they believe future of the company.
Now, we've now seen in the last week video of FSD running in Germany for the first time, and them showing the swiss transport minister, who is actually an ex Apple guy and hopefully understands tech pretty well, and they were giving a demo to him. You saw a video of it driving through a roundabout in Germany. And that's the incredible thing about this software. Most of these autonomous stacks, like Waymo, they require the whole city to be pre mapped. They require a ton do that. This just works with cameras. It just looks at the road with the camera and it knows how to drive through it. It looks other stuff, but nobody has something like this. And that allows them to take the same AI model and it can drive in Germany, it can drive in the US, and now it's going to be able to drive in China too. Now that they've gotten the security clearances and the mapping data they need, which China restricts, mapping data, those are really critical steps to taking it worldwide. So if they can launch it in China, if they can actually get this software out there, first of all, it's going to boost sales of their vehicles.
You've got this $8,000 or $99 a month FSD package you can add onto the car, which over the lifetime of the vehicle, I estimate is actually going to generate more gross profit for the company than the sale of the vehicle itself.
Think selling the iPhone cheap so that you get them to sign up for the data plan.
The FSD is the data plan, and it's addictive. Once you get used to having it, you don't want to go back to having to drive yourself into traffic jam. So if they can actually sell this into China and Europe, this investment, instantly, two to three XS its financial returns, and Wall street starts to wake up to, I think, what the potential of this could be. A lot of people talk about autonomy, but I think what they miss is this supervised system, I think has a lot of potential. Goldman Sachs estimated that last year they did one to $3 billion in revenue from FSD well before autonomy, while the software still sucked. So people are buying into this, they're paying, they're subscribing for dollar 99 a month because they like what it is today and they like the software updates. And that is a business that other automakers just don't have.
[00:23:31] Speaker B: What's the timeline on? Like the China, like how, like the momentum, like once FSD goes to China, like, is there a timeline in place of by like mid Q 220, 25? Like we're going to see like actual FSD within the vehicles? Or is this no timeline in place? It's just discussions right now.
[00:23:50] Speaker A: I think the goal is before the end of the year to get out supervised FSD in China. So you'd still need to have watching it. Who's ready to take over, but they could use the feature on their cars and basically drive around with it. So that's the first step. Then after that, once the software is ready, applying for a license for driverless and starting to give some driverless rides as well. There's also going to be obviously the robotaxi unveil on eight. Eight. And I think we details about the launch on that day.
[00:24:23] Speaker B: So I get this question all the time. And I kind of want to hear your answer on it for the tech, just pure tech autonomy. How is FSD different than mobile I and Waymo?
[00:24:35] Speaker A: Yeah, good question.
So, mobile I and Waymo, they require you to pre map out an area. So they essentially take a laser and they scan the entire area so they know, for example, where is the curb exactly at a centimeter level. They scanned it with lasers. And how far away is that curb from this lane? How many lanes are there? All the data is out there. So Google started the Google self driving car project, which became Waymo in 2009. And the primary advance that let them do it was mapping. They had the Google Street View cars out there, again, mapping the world. And they realized we could probably program a car to drive just by following this map. We know where all the lanes are. We know where everything is. We can get it to drive itself. But of course, handling the dynamic elements that aren't on the map, what the weird things people do, you know, someone running into the road. That proved to be a lot more challenging. So in 2012, we got Alexnet, which was the first time that the imagenet competition was beaten. They had a best score using deep learning on an Nvidia GPU. So that kicked off the modern AI revolution.
Waymo was really started before this deep learning boom kicked off. And today, you still see Waymo and Mobileye relying on mapping, relying on sensor modalities like radar and Lidar to tell the difference, rather than pure AI. And this has led to a situation where they've created systems that are far less scalable. Although to a casual observer, it's difficult to tell the difference between a Waymo and, for example, Tesla, because the Waymo requires the city to be pre mapped. There's only a finite area it can work in. It's limited, it is costly.
By contrast, Tesla can build this into a car at, you know, just $1,000, probably worth the parts. Each of the cameras, you know, they have eight cameras on the car. Each of the cameras cost, like, less than, you know, $10, like, and the computer costs about $1,000. So they figured out how to do this on, like, a normal computer. You can fit in a car. You don't need some giant data center. And they've essentially devised a solution that's low cost enough and generalized enough that you can build it into a car today and still have that car be competitively priced. It doesn't look weird. It doesn't have stuff sticking out of it. And it's the only system that can run in the US, Europe and China. So when we're really talking about building a global robotaxi service, nobody else is doing that. The chinese companies, they're not in the US. The US companies, they're not in China. They're the only one who's really doing pure AI, self driving on a global scale. It's not entirely obvious to a non technical observer. When you start looking into the technical details, you realize that nobody is really approaching self driving quite like this. And if it works, it's going to be a fraction of the cost of everybody else's solution. Which is why I think there's an enormous licensing opportunity and it has the potential to just break every analyst's model of the business.
It can be integrated into the car very cost effectively. There aren't really alternatives. If they could get say 20% of global auto sales to license their technology for self driving, it would eclipse the earnings from their auto business.
Now your model for Teslas future earnings becomes not how many cars can they produce, whats demand for their cars? Like what are the macro conditions in these markets, but how many cars are sold times what percentage of them attach FSD. And that's, you know, that's when things start to get really interesting from a revaluation perspective.
[00:28:49] Speaker B: I mean, the gross margins alone, like Tesla go to close to 60% gross margins. Once that happens, where that's just unheard of right now. No analysts in their models have Tesla close to 60%. It's always going to be 45 tops. That's a game changer. And that's pure like 80% gross margins. The software side. And so essentially for the listeners, like 80% of whatever FSD revenue is will go straight to the earnings and gross profit. And that alone is an absolute game changer. It's if you guys are Amazon investors back in the day, what AWS provided Amazon on like the pure profits to actually invest in the infrastructure, invest in like all these other growth avenues. That's what Tesla's FSD is for. Tesla, like, it's purely like, wow, it's a game over move. Or it goes from 500 billion to close to $2 trillion real quickly before you can even anticipate what's happening.
But to go off of for the, do you think for Waymo Mobile? I. Do you think their tech will always be limited? Or is it just more like they don't have the miles tested yet and like for, specifically for like FSD, they need to be five to $6 billion a billion miles in order for them to feel comfortable to scale it. Is that the similar issue for Waymo Mobile? I wear like, they just need a longer time, more miles to test it, or is it just something like their tech right now is just. It's a band aid for a stab wound and they really have to come up with something brand new.
[00:30:20] Speaker A: Well, they absolutely could adopt a pure vision end to end AI approach, and they may even be working on it behind the scenes. But there's a, you know, the formula is well known. You take a bunch of compute, you take a bunch of data, you train, you get them all.
So Google's got some incredible AI engineers. I mean, some of the best AI engineers in the world. I have no doubt they could build a pretty good solution. But you need a ton of compute, which they have, but you also need that real world data. You need millions and millions of clips. You need clips of weird situations, and that's just very difficult for them to do because they don't have a fleet now. Rely on mapping, rely on other things, rely on Lidar as a way to get around that. But ultimately, you just need to build a ton of data. Now, others can do that, and they will do that eventually. I think in ten years, self driving will seem easy, and there will probably be two or three great self driving solutions that are competitive with Tesla from a cost perspective in time, right?
But there's a tremendous amount of network effects in this type of thing. You have this model put out there on a million cars right now. There's a million cars running Tesla full self driving.
And each of those million cars is providing feedback. When the system makes a mistake or does something weird, the user turns it off and that sends, and they say, here's this video of the weird thing, and here's how the user did it correctly. And then they take that and they train on that. They put then, as it gets better, people use it more. As people use it more, it gets better faster. Right? You have kind of this flywheel that's created. And people, when it comes to self driving, they want the best self driving. Nobody wants the second, safest self driving or the third.
You want the one that's not going to crash because people use it every day. It's tested for billions and billions of miles, right? Like, if a billion miles were driven and nobody crashed, what's the chance that I, with the billion in one th mile, I'm going to crash? You know, probably one in a billion.
So you see this in, for example, I think, social networking, right? You have network effects. Someone can go and clone Facebook, but you can't clone Facebook community, you can't.
All the feedback of people liking that tells you what people actually like to see and allows you to hone those algorithms and continue to dominate. So I think in self driving and AI, there are pretty powerful network effects similar to social networking and other markets where it gets tough to catch the leader and it really becomes a winner take most situation. Now, this is very counterintuitive. You got the auto market, which is really Tesla's core business today. And the auto market is pretty close to perfectly competitive. If you think about it. There's not a lot of differentiation. All the cars do the same things. They even use a lot of the same parts.
So people are used to an auto market that's really perfectly competitive where there's 20 or so players that are all putting out pretty similar products.
But that may not be the case when we talk about self driving. A lot of people think about self driving as a feature of the car, but it's not really, it's not a car you're building. You're building the driver you're trying to build. The intelligence pulls the car and that's very different.
So assuming that the market is going to look like the auto market has looked for the last 100 years is maybe not the safest assumption.
[00:34:34] Speaker B: No, you're absolutely right.
Let's move on to the other car that nobody really is talking about as much as I thought they would. Cybertruck.
I think that's one of the most polarizing vehicles out there where you love or hate it, for example. I love it. My fiance hates it. Uh, but you're also seeing these celebrities like posting on it for absolutely free. So like, we're, Tesla's not spending any marketing dollars. And you kind of feel the aura around this cyber truck. Like, wow, this is like the nice thing to have. The celebrities like Kim K and these athletes are like, they own it. And it's something that's like not half a million dollars. Like it's attainable. Like the cost. Isn't that through the roof?
What's the momentum in the cyber truck right now? Cause I haven't really heard that many details about, like the estimates, what's beating against it? Or like, is the ramp up slower than anticipated? Like, what's your take on the Cybertruck progress in the first, like, what? It launched like less than six months ago maybe. I can't remember the date, but like, what's the progress so far on it?
[00:35:34] Speaker A: Well, so they've built about 4000, 5000 units so far, so not a ton of units, but they're starting to get out there. They disclosed in their last earnings call that they got up to a burst rate of about 1000 a week. So if they're able to that pace, they could jump to about 12,000 a quarter. So they are ramping up slowly. Maybe not as quick as some of us would like, but, I mean, I think the product is just a smash hit, and it's becoming kind of iconic. I got one in my garage here, and, you know, friends, too, who said, oh, my God, the Cybertruck. It's so stupid. It's so ugly. I can't believe you're going to get that. And then I got the Cybertruck. They wrote it, and they're like, oh, my God, we love this thing.
They're just, like, in love with it. They're telling me, like, hey, can you come bring the Cybertruck over? I missed the cybertruck. Like, let's go take it over here. And, you know, it's just crazy. I mean, it's the best Tesla they've ever made. It's smooth and comfortable. Like, honestly, it rides better than.
[00:36:40] Speaker B: Well. You also feel like a celebrity in it. Like, when you drive it, everyone stops what they're doing. Like, stairs. Like, that's like, wow.
[00:36:47] Speaker A: Yeah. Just driving down Sunset Boulevard in weho, and there was, like, a paparazzi standing in the media, and he took a picture of me in the Cybertruck, thinking I might be Kim Kardashian or something.
So, you know, yesterday I was shooting a video with somebody, this flower shop owner, he's got a Cybertruck, too. And so he sponsored my channel, and we had these two cybertrucks, and we're taking some videos outside his flower shop. And, you know, some filipino woman comes up to us. She's like, oh, my God, Cybertruck. I have a model. Why? Like, I want to get this. Can you. Can I take a picture, please? So we're like, sure. She starts taking a picture of our cybertrucks. Then she comes up to me, she gives me her phone. She goes, can you please take a picture of me with your Cybertruck?
Filipino brothers, this picture. And I'm like, oh, my God, this made my day. I'm so excited. Then this other black guy comes up, and he's like, damn, he's taking pictures, too. Literally, everywhere you go. I've never seen this reaction from a product before. And it just.
There's this really interesting characteristic about Elon and Tesla. I think where they do things that just seem crazy a lot. I mean, even just starting an EV company, people said, you're crazy. No one wants an EV, right? And look at how the industry's changed now. So they came out with it and everybody said, oh, my God, this is so crazy. This is ugly. This is going to flop in the marketplace.
And instead, people are just really drawn to it. There's something just really beautifully simple about the form. I think people just play it safe so much in automotive design that people thirsty for something new, and they're just like, wow, okay. They're just drawn to it. Right? So there ended up being a little bit of unconventional genius there, I think. And I think people are going to be surprised at how well it does. I think probably as soon as Q two or Q three, I think they're going to be the best selling electric truck in the world, which is not a tall bar.
Ford F 150 Lightning, which is the top right now, only did 7000 units last quarter. So if they're at 1000 a week and they got 13 weeks in a quarter, they could conceivably beat that Q two or Q three, which isn't bad if you think about it. A few quarters into production, they're number one. But I think they can ultimately go much higher than that. I really want to see them get into a place where people are replacing their gas cars and getting an EV truck. But really, if, you know, I think the appeal is much broader than that because, yeah, there's truck people like my uncle, who's a contractor, he works in construction. He ordered a cybertruck after seeing mine. But you've also got celebrities, women, people who just want a comfortable ride. It has appeal than that. Honestly, I could see them getting to a place long term where they're producing, you know, 500,000 to 900,000 of these a year globally. And I could actually see it outselling the model y in the United States.
[00:39:50] Speaker B: Well, you brought up a great point. Like, typically, women don't drive trucks. Like, that's a demo that just never got. Trucks never got into clearly different cybertrucks. So, like, that's an unleashed demo. Like, they can, like, absolutely penetrate. Do you actually think, though, like, my difficulty heartburn over the cybertruck is, can the working class actually, will they use it like, the construction? Like your uncle saw it firsthand and saw you using it, but like, Joe Schmo, who works in, like, San Bernardino, who's has a construction company, do you see them using, or is it too flashy that they're going to stick with the Ford trucks because that's like, they're used to that. Reliable and safe in their minds of, like, not flashy. Nobody's going to put their eyes on, like, what I'm doing.
[00:40:36] Speaker A: I mean, Ford has some of the most loyal customers out there. A lot of them will continue to buy Ford. But I think some of them will look at this and say, this is futuristic. This has full self driving. I can save a boatload on fuel. I mean, that was what my uncle said. He said, look at how much I'm spending on gas. I drive 25,000 miles a year in my f 150, and it's often loaded up. It gets even worse fuel efficiency when I'm hauling stuff. If I could just charge this thing at home, it could essentially pay for itself in fuel savings. So I think right now the Cybertruck starts at $100,000. So your Joe Schmo is not going to buy it at $100,000 when it's only a few thousand people. Kim Kardashian, Katy Perry, Justin Bieber, they'll buy it, but your average guy is not going to buy it. But I think that's actually kind of a good product introduction strategy to make it in a ball, to make it kind of cool. But then you look at their plan. Within one year, the $100,000 truck I bought is going to drop down to 80,000. At that point, it'll qualify for the $7,500 federal tax credit. That brings it down to 73. And then they've got a base model with 250 miles of range instead of 340 like mine has, and that's going to be $60,000. So with the point of sale credit, that comes down to 53,000. And this new point of sale credit, they take it right off the top of the invoice. You never see it. So the average selling price of a truck was about 60,000. And some of them, like the Denali's and the high end, trims, the platinums, they can get into the six figures, right? So people, businesses, and if you can get into the $60,000 price point, I think it absolutely becomes attainable for an average person. I mean, this is what Tesla does. They just keep driving down the price of these products. And, you know, I think that's probably what's going to happen with the Cybertruck as well.
[00:42:37] Speaker B: No, I mean, it's the same thing with the model three where, like, you can. A COROlla was more expensive than a model three, like, right? Am I going to drive a Toyota CoRoLla or feel like an absolute g driving a TEsla for cheaper, that's similar, faster, the CybertrucK. Like, I can be like, feel like a celebrity at cheaper price than someone who's driving a Ford, where you just feel like a normal, like, citizen. So I think that's like the Beauty of like, what Elon does. And that's why, like, Elon has this, like magic dust he puts on all his products. That exactly why Tesla will always have a premium, because he has that thing where he can transform any Product that he has.
[00:43:14] Speaker A: Yeah, it's so true. And you know, the Twitter Corolla, that was the best selling car in the world for years. But last year, the Tesla Model y actually outsold it, which is crazy. And the Corolla is like, what a $20,000 car Model Y is in the $40,000 range. It's almost the price of two corollas.
They sold more units. And a big part of that is the fact that, of course, you don't have to pay for fuel. You can just charge, you can even make your own electricity at home and use that. But then also consumer reports, they just reported, and they do not like Tesla, by the way, but they had to admit it's got the lowest cost of maintenance out of anything else on the market. So you got low maintenance cost, you don't have to buy fuel. That's why people are choosing a $40,000 Model Y instead of a $20,000 Corolla. Because ultimately, when you look at the cost of ownership across the lifetime, it's just actually cheaper. Counterintuitively. And that's even more true for trucks which are 20 miles per gallon than it is for compact suv's so broadly. And there's a big debate right now about EV's versus hybrids. A lot of the legacy manufacturers are trying to back down from EV's and say hybrids are the way forward.
But just look at the long term trend of battery costs. It's held for decades. I mean, over the last ten years, you've seen battery decline more than 90%. It's just crazy. And a little bit of a spike due to commodities and inflation in the pandemic period, many people said the long term trend of battery cost declines is not going to hold because of inflation. And that turned out to be wrong. Commodities in 2023 and they maintained that long term cost decline. So what you're seeing happen in the market is EV's are just getting cheaper and cheaper and cheaper at the same time. The cost of building an ice car and complying with pollution standards is going up where EV's are more expensive. Consumers will often go for a hybrid or a gas car. But look at what's going on in China. They got $10,000 EV's, really good EV's that are getting really cheap. Battery costs are just in a spiral. And I think when you just look at that data, it becomes really clear that long term consumers are going to choose EV's because they're actually more affordable than gas cars.
[00:45:46] Speaker B: No, I fully agree with you. It's. Oh, get there. Right now. The perception is really weird about that. But I'm in LA. I live in LA. You're currently in LA. Let's talk about the Kobe event, aka eight for Tesla. What should everyone be looking forward to at that event? What do you predict actually being revealed at that event? Is this maybe more noise? There's been previous events where Elon kind of has these kind of innovation product launches where it was sell the news event. Or do you think this is gonna be an absolute game changer and complete different story from the past?
[00:46:22] Speaker A: Well, I don't know if it'll be a sell the news event. I'm not sure what they're gonna announce. But what I do know that they're going to show off is a brand new vehicle that they've designed. They've designed it using something that they've talked about in the past called the unbox process.
This is an entirely new way to build a car. We've been building them on a moving assembly line for 100 years. This. They say we're going to build it in a more distributed, modular way where you have different pieces of the car that can connect together. Everything hooks up to local sub assemblies. It's, you know, they call it a revolution in manufacturing a car. And the first vehicle they're going to produce on this new manufacturing process is a driverless vehicle with no controls. So we're essentially going to see the Tesla design team's vision for what a car with no controls would look like.
And I'm expecting it to be actually smaller than the three NY, maybe a two seat vehicle. But that really lets you use the full interior space, has amazing entertainment, touchscreens and the latest technology.
Needs less battery to go the same range, but is designed to have no controls and to give rides to people.
This is essentially how I think we can get the world to move to electric rides very quickly if they've got a gas truck, but they keep it at home and keep it in the garage. But they take one of these things because it's just the lowest cost per mile possible. That's really what this is all about, driving the cost per mile down as low as possible.
And I think it could be more disruptive than the model three and Model Y. Really, this could be a platform that, at scale produces more volume than their entire other vehicle lineup combined. They intend to eventually produce multiple vehicles on this unbox platform, and they're really gearing up to produce millions of units. They're going to build a Mexico factory, a Berlin factory line, and also choose an asian location for a new gigafactory before the end of the year to build this process.
So it's pretty significant. It'll be interesting to see their design for a driverless vehicle, too. I don't think it necessarily means the software will be ready or they'll be ready to launch a robotaxi network, but it's going to be essentially a couple years from the time it's unveiled to the time this is produced. What they're essentially saying is, once the software is ready, this is the vehicle we're going to be able to put out there. The other vehicles will be able to drive themselves, too. But this is the interior and exterior of the car reimagined for what driverless looks like. And we have the name of the car. They're calling it the Tesla Cyber cab. So that kind of makes me think it could be stainless steel like the Cybertruck, but we'll see. It's definitely going to be interesting.
[00:49:32] Speaker B: Well, we're coming up at the end of the hour. I do want to ask you a question. The year is 2030. Rest of the decade, what do you envision at the end of this decade? What do you envision Tesla being a company? What's their company going to be like in 2030, in your opinion?
With all these, like we just talked about, so many different tailwinds of like, they're all kind of synergizing, having the same time where it's going to completely disrupt so many industries and their fundamental profile be so much juicier. Like, what do you think they're going to be like? The year 2030.
[00:50:07] Speaker A: In the year 2030, Tesla will no longer report automotive production and deliveries at the first day of the new quarter.
Analysts will no longer care what production and deliveries were. They can wait until the earnings release for that automotive will become a smaller part of the business.
FSD. FSD licensing, and Tesla Cloud will probably all be larger than the automotive business.
And I believe the largest business will be the humanoid robot business.
And, I mean, you think about really what the potential of this is. It's the entire global labor market. That's the TAM.
So potentially, it's much bigger than automotive, potentially much bigger than even self driving.
And this is the thing about Elon and Tesla. You can say a lot of things about them, you can levy a lot of criticisms, but the guy is always thinking about how to ten x the business.
They built an EV company and they ended up becoming the number one EV brand in the world. Most CEO's probably would have patted themselves on the back and said, good job. We built one of the number one EV companies in the world. Then they probably would have been slaughtered when companies like BMW and Mercedes and Volkswagen entered the market.
But Elon said, no, we're actually going to leverage this fleet of cars and pull in data with the permission of our customers and train a model that can actually drive the car and take the company to a new level with AI.
Then that started to work. It started being able to complete drives for customers. Most CEO's then would have patted themselves on the back and said, okay, great. I took this business and built this massively valuable self driving technology.
But they didn't stop there. They said, you know what?
If we can get a car to drive around and move through the city, why can't we get a humanoid robot to walk around and perform tasks? It's kind of the same thing, right? Figuring out where to move, you know, moving your feet, moving your wheels, whatever. Making sure you don't hit anything.
So they started doing that. And, I mean, a big part of why I'm invested in Tesla is not just for all of these initiatives that we know about, but what are they going to think of next? That we don't know about 100% business after that. And that's really the difference between a mature business that's easy to value and a business that is just growing in ways that the market can't even anticipate.
[00:52:53] Speaker B: No, I mean, I forgot. Even bringing up humanoid as a service, like, what's the timeline on that, actually? Is it like year, like 2028 and beyond? Or is it something like, I remember mentioning on the conference call that they're going to be trying to use it in their labor, their warehouses, like in the year, potentially, yeah.
[00:53:13] Speaker A: Yeah. So, I mean, you think about it, the factory is a great place to train a robot to do economically valuable work.
More difficult than it seems, because it not only needs to do the task, but needs to do the task at a very high quality. But you think about it, you have the potential to really build a car that's perfect every time, because the robot, you know, sort of exceeds human with its quality and everything like that. So they said on the last earnings call that they're now practicing in the lab with it, performing factory tasks. I imagine relatively trivial tasks, like moving something or maybe connecting a wire or something like that, or things that it could do, and they hope to have it out in the factory by the end of the year, performing simple tasks. Now, I don't think this is, you know, I wouldn't expect a massive improvement in cogs or anything like that. I don't think it's going to be doing any work that's actually material to the cost of building a car. It's more just helping the robot practice. Right. And hopefully way that doesn't impact the quality of the products that are coming out. But then they say by the end of next year, they want to actually start selling this to other companies to do with, you know, whatever they want with and to program for and all that. So Elon's usually pretty ambitious with his timelines. He says if this timeline is long, it's wrong, and if it's tight, it's right. So they may miss that end of the next year deadline. But, you know, even if they get something out in 2026, that'd be pretty amazing. I would definitely want to buy one of those robots, have it, you know, clean up after me, do my laundry, all that good stuff.
[00:55:09] Speaker B: Also, I forgot to mention this part as well. Do you think once they figure out autonomy and, like, the vehicles can drive themselves, will people use that as a tool, as an investment, where, like, I'm going to buy ten cars and they're going to work for me, driving Uber, doing all these tasks, for me to essentially create an ROI on my investment on these cars. Do you think that's going to be capable in the future? Or is it more like there's gonna be handy? Uh, there's gonna be rules against that or what? That's how capitalism works. Like, they find a vehicle, like an innovative product. How can we use this for my own personal gain and for me to make Prof. Like money off of it?
[00:55:46] Speaker A: Yeah, I do, actually. I mean, I think it's pretty amazing. When you look at vehicles today, they're essentially an asset that depreciates until it's worthless. Right. You can get some cash flow out of them, renting them or giving rides, but it's essentially a depreciating asset. And of course, vehicles will still depreciate when they're autonomous. But the cash generation profile becomes very different. So since it is like an investment property, you might buy, you might buy a house and rent it out or just be betting on the appreciation of the property market. A lot of people do that, and I think it'll be the same way with cars. It's not everybody who's a real estate investor, but certain people are, and many people rent from landlords.
I do think the majority of people won't own a car at all. Why buy a car and pay sales tax and pay registration and pay parking tickets and fuel and all these expenses, and then you get a flat tire. You got to replace the tire. Yuck. Who wants to deal with that? Just pay one subscription, get all the rides you want. You know, exactly what you're going to pay is, I think, the model of the future. And there will be investors, maybe people like me, maybe people like you, who own vehicles and generate cash flow from them, but the vast majority of people will probably just consume it. So I do expect people to do that. I expect there will probably be even people who just securitize these rides and sell some type of ride sharing fund, but just like mortgage backed securities type of thing.
So I do see all of that emerging.
Robots will essentially be able to perform many tasks that people want to do. You'll be able to go in and say, okay, my toilet is clogged. Give me some robots here, and they'll come over with a plunger in a cyber truck, and they'll come in and fix your toilet, you know, $10. Or you'll say, okay, I'm I'm gonna step out of the house to go to the grocery store. I want my house cleaned. And a van will show up with 20 robots, and they'll come into your house, and each one will go into a different room and clean it. And in, you know, 15 minutes, your whole house will be clean, and you'll come back and boom, you know, you pay each of them $20 an hour. So it'd be a very different world. You know, I think the labor market's going to change. It's going to be less about people doing things themselves and more about managing, investing, and supervising these robots.
So I think it's really going to be an unrecognizable world, much like the pre smartphone world and the post smartphone world are kind of unrecognizable.
It's going to be sort of the same magnitude of change.
[00:58:51] Speaker B: I mean, you actually absolutely nailed it. That sounds exciting. The future.
Well, Omar, thank you for hopping on our new podcast, the Wolf podcast. And I personally been following you for a long time. Your posts have made me bullish on Tesla, and I'm a new investor. Started four months ago. I didn't see the AI software vision until you started posting a ton. Do you want to tell our listeners where they can kind of find your content via your channel and x?
[00:59:20] Speaker A: Yeah, I mean, you can follow me on x. My username is Wholemarsblog, and you can find me on YouTube. Whole Mars is my username on YouTube. And you can subscribe there and see some of my videos of the car driving itself.
But, yeah, I mean, this is just an incredible time in AI. I mean, you just can't believe what's happening and how fast things are changing. A lot of people say it's a bubble or it's just hype, but it's clear to me that there's something real happening here. This is going to be one of those decades of transformation, much like we saw with the invention of the personal computer, the world wide web, or.
[01:00:10] Speaker B: Well, yeah, I mean, I can't wait. That's why I'm an investor. And for everyone who's non investor, do your research. It's not investment advice, but you're going to miss the bow. Well, anyway, thanks, everyone. Thanks, Omar. See you guys next week.
[01:00:25] Speaker A: Thanks so much. Great to have, great to be here.
