Back to the earnings call, Tesla was asked
about potential energy issues in Berlin and
Germany that might create issues with production
Tesla don’t see this is a large risk, even
if the production went down for a time it
would just be near term anyway, and not have
any major implication for the company.
Elon then interjects and says that they have
no indication whatsoever that they will have
to cut out production in Germany.
But Tesla have faced similar issues in the
past in Shanghai, along with lock downs and
supply chain issues, and all the rest of the
chaos that we have seen with issues facing
the world as of late, that we are still not
yet recovered from.
And now Tesla keep extra inventory in Shanghai,
rather than a just-in-time delivery, as a
buffer in case there are supply chain issues
It may cost 100 million dollars or something,
keeping extra inventory of components, but
if Tesla lose production for a week or so,
it costs a lot more.
Tesla don’t want to risk losing production,
not when they are so profitable, so it is
worth investing in buffers and safeguards
to prevent any risk of production loss.
And even despite Tesla not expecting any similar
scenarios due to energy shortages in Germany,
they are still not going to risk it, and have
put backups in place for just in case, and
they haven’t stopped there either, but done
the same for their suppliers too.
I keep saying, Tesla are not messing around.
Then we are asked many questions about Cybertruck
They say they are still on track to enter
production at the middle of next year, in
other words nothing has changed, and Tesla
are still on track with everything as far
as Cybertruck is concerned, not set backs
have occurred, supposedly.
I mean Tesla and Elon have a reputation of
delivering late, but bear in mind we did just
go through a massive global pandemic that
was tough for all businesses.
Yet remember Tesla still managed just about
50% growth still through that time.
They started their beta builds of battery
and body, which is going well.
And they plan on ramping up throughout the
year into 2023.
Then Elon says that the Cybertruck is going
to be sick, a next level hall of famer.
Elon even says sorry that it took longer than
expected, but there were a few things that
got in the way.
Namely what I just mentioned.
And Elon wants to bring up the Tesla semi
too whilst we are on the subject of new trucks.
Which be handed over to Pepsi on December
I don’t believe there has been an announcement
of how many, I wouldn’t have thought that
One thing to bear in mind is that they require
all new infrastructure with the megachargers,
that are about 1.5 MW, so they can charge
the semi trucks enormous battery at a fast
enough speed, aiming for charging when they
Therefore I would guess that the initial infrastructure
will likely be some popular routes that Pepsi
currently use, where the roads are also level
If there were hundreds of trucks then they
would need a lot of chargers, so another reason
I wouldn’t have thought there were too many.
Also we don’t know anything about the production
line of the Semi Truck, other than it is currently
being built in Nevada.
I am surprised they are not building a larger
factory already perhaps in Texas for them,
with a larger production line.
And they will be ramping the production from
And this is a max load heavy class a truck,
with no sacrifice to cargo capacity yet still
capable of a 500 mile range with the cargo.
A long range truck even with heavy cargo.
So many people have doubted this was possible,
everyone thought it would only be possible
with hydrogen, not electric.
Seeing this truck working will remove a lot
of doubt as to Tesla’s capabilities.
Then Elon says that they are tentatively aiming
for 50,000 units in 2024 for Tesla semi.
Now Elon does say in 2024, not by 2024, but
most people have inferred this to mean by
2024, so make up your own mind.
And this was just for north america.
But want to eventually expand beyond America
Now 50,000 semis, at almost a mega watt hour
of battery per semi truck, is going to be
close to 50 gigawatt hours of cells required.
Now bear in mind they are also expanding giga
The capacity there may be about 40 GWh a year.
So what if the 2170 cells are for that truck?
I would have thought that Tesla would want
to eventually expand production of the semi
truck a lot to potentially hundreds of thousands
a year, so I think inevitably they will end
up using 4680 cells.
But the advantage of getting structural battery
pack saving, doesn’t really make as big a
deal when you weight 80,000 lbs or so, as
it’s a much relatively smaller weight saving
when compared to a compact.
This could also mean that Tesla may want a
lot of these semi trucks for themselves, it
would appear right now we are seeing new bottlenecks
in logistics, and there not being enough ways
to deliver the vehicles.
Tesla are renowned for vertical integration,
if they make their own transportation trucks,
then this is just one more level of vertical
The load would be fine, they could carry almost
20 Model 3s and Ys on each truck of equivalent
Although I am not sure there would be a big
enough trailer for that.
Elon then says each semi truck sacrifices
several Model Ys, which I assume he is referring
to opportunity cost of cells.
Given that the battery is probably about 10
times the size of a Model Y, then this is
not surprise really.
The thing is, 10 Model Ys is possibly around
$200,000 gross profit, so this is quite a
large opportunity cost.
I mean unless they are using 2170 cells only.
And that Tesla want to move Model 3 over to
LFP, and move Model Y and Robotaxis over to
I am not sure.
Although the next question does ask, what
factors determine which vehicle gets 4680
or 2170 cells, along with the 4680 progress
We hear again that total output is up 3x quarter
And production is tracking to exceed 1000
car sets a week this quarter.
Which might mean about 336 MWh a month, which
come to 4 gigawatt hours a year.
This is not really what I would call high
They say the focus is now shifting from 100%
ramp to cost and further expending production
capacity in North America.
Presumably because the dollar is so strong
and there are so many incentives for building
batteries in North America.
I mean they seem positive about the 4680 cell,
but there is nothing really that concrete
here about the cracking the process yet.
It’s not quite the break through I am hoping
to see, that we were promised.
So much of the company’s future relies on
this cell being sorted.
I guess we have to keep waiting.
4 gigwatt hours still isn’t great.
Even if we were at 10 times that then its
not even enough cells for Texas when ramped.
But if it is exponential growth and they can
keep getting 3 times the output every quarter
then after 2 quarters we are nearly at 10
times as much.
Which would mean by about Q2 next year, there
would be enough cells for Model Y and Cybertruck
in volume production.
Although personally I think we are waiting
for some sort of engineering break-through,
likely something to do with the dry battery
electrode process for the cathode.
Unfortunately no one asked any sort of timelines,
like when do you expect to be at 100 GWh run
rate for the 4680 cells?
That would have been good to know.
However, I think we can assume that most of
these cells are all coming from the Kato Road
Well that fab was meant to have a capacity
of 10 GWh with one line.
Texas has 4 lines with each line supposedly
with a capacity of 25 GWh.
They are also using next generation manufacturing
equipment compared to Kato Road.
This would imply that Kato Road is perhaps
at around 30% or so capacity.
Well if they can get Texas to about that perhaps
in Q2, then we are going to be at a run rate
of probably closer to 40 GWh a year.
That’s close to enough for volume production
for the Cybertruck and Model Y.
Elon then says in a nutshell 4680 ramp is
And it’s going well, it’s looking good.
It’s going to have a very major impact in
Then Elon repeats that the goal is to strive
towards 1000 GWh a year of annual production
in United States alone.
We don’t know when though.
Some people think he is talking about 2030.
There isn’t really enough lithium available
in the world today for Tesla to achieve that.
However, apparently Tesla’s lithium refinery
will be complete in 2024, so who knows when
Tesla might achieve this milestone.
Then they say that there needs to be 300 to
400 TWh of batteries, of which we have heard
in the past.
That is a big number, and even at a rate of
1000 GWh a year, it will take 300 to 400 years
to achieve that.
So let’s hope Tesla can ramp up significantly
higher, along with all their suppliers and
other battery manufacturers.