Musk declined to be brought up to talk about details of new Tesla electric vehicles beyond those we already know. “It’s reasonable to assume that we would make a compact vehicle… at some point,” he said, before pointing out that the company still has a long way to go with the Model 3 and Model Y.
Biggest increase in asset value in history
Musk still believes the introduction of a fully autonomous driving system will be a game-changer for Tesla, and he predicted that this would result in a five-fold increase in a car’s value through much higher usage. Regarding this program, “the major milestone is the transition of the range system – or the car’s AI – from thinking like 2.5D, making image recognition, partially correlated in time, to 4D. What we’ve done so far is really mostly 2D and not well correlated over time. It’s hard to say how much better a fully 4D system would perform, ”Musk said.
This architectural change has yet to be rolled out to customer cars, but Musk predicted it would happen later this year. “Then it’s going to be a long walk over to nine,” he said, referring to the quest to improve the safety margin from (for example) 99.999% to 99.999999%. “How much better than humans do we have to be? ”He asked, adding that“ every order of magnitude is very expensive ”. Musk then said we should be worried about the direction AI research is going and that “smart people can’t imagine a computer being much smarter than them.”
As the Tesla robotaxi service becomes available, commercial insurance coverage will be provided by Tesla.
Build cars more efficiently
Tesla is improving “well” at making cars, Musk said when asked about the “alien dreadnought.” However, he noted that there is “10,000% more engineering to build a factory than the product itself.” Production in Shanghai is more efficient than in the United States, a trend that would accelerate with the company’s third plant in Germany. Getting there will require making cars that could look like those made in the United States or China, but Musk said they would be very different under the skin to make production easier. “The architecture of the Model Y built in Berlin will be fundamentally different,” he revealed.
Further redesigns of existing vehicles could occur due to Tesla’s experience as an insurer. Citing the high costs of repairing in the event of an accident, he said that in the future “we can adjust the design of the car and the way the repair is done”. (Other insurance information included a future car UX that could warn drivers not to accelerate unless they wanted their premium to go up and Tesla’s desire to hire “high-energy actuaries, revolutionary actuaries ”.)
The current supply chain efficiency – or lack thereof – was also raised when Musk was asked about the current demand for Tesla’s electric vehicles. “The costs were related to having to use planes to transport parts,” he said, adding that near-term improvements include changes to the rear body molding of the Model Y at the California plant. , going from two pieces to one piece. “Demand is exceeding supply right now,” Musk said.
To make every factory more efficient, more components must be sourced locally. At the Shanghai Gigafactory, he said local content was growing 5-10% per month and “should be 80% by the end of the year.” And the Berlin gigafactory is in a good location – “a ton of our suppliers are a few hundred kilometers from the factory,” he said. In addition, the battery cells for Berlin will be produced locally.
Finally, Musk had some thoughts for EU lawmakers. “Labor mobility in Europe is low. I would recommend changing it. Someone wants to go and join another business – they have to spend six months doing nothing, that’s called a gardening leave, ”he said.
Iron Phosphate vs Nickel Based Cells?
Some of the more interesting information in the call followed a question about the Tesla Semi. Production of this heavy-duty electric battery is still scheduled for this year, and Tesla will use the first in-house production Semis to transport the batteries from the Nevada Gigafactory to its automotive plant in Fremont, California. And in order to have enough energy-dense cells for the Semi (and other vehicles), Tesla will switch to using cheaper iron-phosphate cell chemistry in vehicles made in China.
“It’s very important to have a mass efficient, long range pack,” for the Semi, said Musk. “What we are seeing with passenger vehicles, the overall efficiency of our vehicles has become good enough that we are comfortable with an iron phosphate battery. [in Chinese Model 3s]Indeed, no other company can currently match Tesla when it comes to the efficiency of electric powertrains. The change in Chinese chemistry will occur in 2020, and Musk predicted that these vehicles would have a range of “nearly 300 miles.” “. The new standard for the range under the terms of the US EPA [for a new BEV] will be around 300 miles – call it 500 km, or so, ”he says.
Musk called for more raw materials for battery production. “All mining companies, please mine more nickel,” he asked enthusiastically, adding that it must be operated in an efficient and environmentally friendly manner.
The future of Tesla
In the long run, Tesla’s energy will be the same size as the auto industry, Musk predicted. “Tesla’s mission is to promote sustainable energy. Battery and solar will both be huge, and they need to be huge for us to have a sustainable future. The real limitation to Tesla’s growth is the production of cells at an affordable price, ”he said. calling it the “fundamental scaling constraint” of the business. Lithium-ion batteries are already cheaper than they’ve ever been, but the price is still high enough that 300-mile BEVs remain more expensive to produce than their conventionally powered cousins.
“Everywhere, from mining and refining to cathode and anode formation, cell formation – whatever term you use, that will determine the rate of growth. We plan to expand our business with CATL and LG – there is a lot more to say on Battery Day, ”he said, referring to an event Tesla is hosting in mid-September.
Musk was asked about the trade-off between cost efficiency and making cars more affordable as a way to drive EV adoption. “We can go beyond the industry margins and still have the affordable car for almost everyone,” he said. “There is good value for money, and then there is an affordable price. If people don’t have enough money in their bank account then you have this great thing that nobody can buy, ”he explained, adding that“ our cars aren’t affordable enough – we have to. remediate. We are making progress in this regard. We don’t have to go bankrupt, of course, but we’re not trying to be too profitable. One or 2 percent isn’t too crazy. cars as affordable as possible, ”Musk said.