March 1 Was Tesla Day
Tesla's 2023 Investor Day on March 1, 2023
Tesla’s 2023 Investor Day Recap.
While not a legal holiday on anyone’s calendar, it is a highly anticipated annual event for those who follow Elon Musk and electric vehicle manufacturer Tesla, Inc. Hosted by the company, this year’s event, an investor day presentation, was held in Austin, Texas. As I am always interested in technological advances, entrepreneurship, and cars, I paid close attention to what he and his colleagues had to say.
During the presentation, Musk himself came on stage to share his “Master Plan 3” as well as to talk about his plans to scale up to meet increasing competition. The next day the stock (TSLA) dropped by about $11 per share, or 5.75%, perhaps reflecting the opinion that Tesla Day may not have lived up to expectations as far as news goes.
Close to the beginning he discussed something I believe is vital to our future: Sustainable Energy. This all ties into the announced “Master Plan 3,” his strategy to convert the world to renewable power from the sun and wind, stored on massive Tesla batteries, and to get drivers out of carbon-fueled cars and trucks and into ever more affordable EVs. Of course, reaching such an ambitious goal would take a vast and expensive commitment from every nation on Earth. Let’s hope he has a real plan for accomplishing it.
“There is a clear path to a sustainable-energy Earth. It doesn’t require destroying natural habitats. It doesn’t require us to be austere and stop using electricity and be in the cold or anything. In fact, you could support a civilization much bigger than Earth, much more than the 8 billion humans could actually be supported sustainably on Earth.””
Sales will determine Tesla’s future.
Another interesting comment that impressed me was in answer to a question about how Tesla could grow its market share in China. Fielded by head of global production Tom Zhu, who also has run the China and APAC businesses for Tesla for years, he said “As long as you offer a product with value at affordable price you don’t have to worry about demand. We try everything to cut costs and pass down that value to our customers.” Then Musk added, “Demand is a function of affordability, not desire. Even small changes in the price have a big effect on demand.”
As entrepreneurs, we should heed that advice. What he’s saying is that pricing a product properly, making it affordable, can increase sales, but a desirable product, once it reaches too high a price point, may kill demand.
Zhu also announced that as of Wednesday, Tesla had produced 4 million cars in total. He said Tesla plans to construct new car and battery cell factories, and also to produce more cars per year at its existing factories.
Rendering of Tesla’s Gigafactory Mexico | Courtesy: Tesla
What about the future of Tesla’s manufacturing facilities?
Already the world’s biggest maker of electric cars, Musk announced plans to build Tesla’s next large vehicle assembly plant in Mexico, near Monterrey. Left unsaid is the cost of the new factory, which vehicle or vehicles it will manufacture, nor how many people it will employ.
That’s good news for workers in Tesla’s Fremont, California operations that Musk would close or cut back on production there. The 60-year-old plant has been the company’s main production site for 10+ years but operates in a higher-cost location. This proposed fifth plant is key to Musk’s goal to increase annual production capacity to 20 million cars and trucks by the end of the decade. Compare that figure to Toyota, the world’s biggest automaker, which manufactures only half that proposed number. As Tesla has much more competition for EVs, and in 2022 sold just 1.3 million vehicles, it would seem that’s more dream than reality – at least at this time.
“The most significant announcement of the day is that we’re excited to announce that we’re going to be building a Gigafactory in Mexico. This is not, to be clear, moving output from anywhere to anywhere. It is simply about expanding total global output.”
What other information did Tesla Day provide?
Here are a few high points of the presentation:
Tesla is planning a number of manufacturing changes to improve the efficiency of Tesla vehicle production, hoping to cut the manufacturing cost of making its vehicles by 50%.
Colin Campbell, the company’s powertrain vice president, said that Tesla’s next powertrain factory will be 50% smaller than the one in Austin but will have the same capacity.
Campbell also said the company is working on a new kind of drive unit that is compatible with any battery cell type.
Another innovation being worked on is a motor that will be built without any rare earth metals, a shortage of which could negatively affect the EV industry, among others.
Conclusion
A lot of announcements and verbiage were given at the event, but the drop in stock price tells me that skepticism about Musk’s aspirations remains. There was very little substance as to how these goals would be achieved – or even if some of them were possible. Twenty million vehicles per year? Eliminating the need for rare earth metals?
All in all, Tesla Day 2023 tells me we’ll need more information and proven results.