Published on April 21st, 2019 | by Zachary Shahan0
Tesla’s Long-Term Hardware & Software Play — CleanTech Talk with Tasha Keeney, Part 2
April 21st, 2019 by Zachary Shahan
For our hot new CleanTech Talk podcast interview series, I recently sat down with ARK Invest Analyst Tasha Keeney to discuss various aspects of autonomous vehicles, Tesla, Tesla, and Tesla. Tasha is focused on autonomous cars and 3D printing in her position at ARK Invest.
Tasha and ARK Invest CEO Cathie Wood recently hosted Tesla CEO Elon Musk in the studio for their new podcast series, so we built off of that chat and I also brought in several key autonomy topics that I’m always eager to learn more about.
The conversation was approximately 45 minutes long, so to cut it down into more manageable portions, I split it into two episodes. This article covers the second episode, and the first episode was published here: “Tesla Autopilot, Full Self Driving, Elon Musk, ARK Invest — CleanTech Talk with Tasha Keeney.”
Listen to the second portion of the discussion on your favorite podcast platform (11 options are linked below the CleanTech Talk banner) or via this embedded SoundCloud player:
To start off this second part, I noted the somewhat hidden or undiscussed point that, while a Tesla Model 3 might cost as much as a BMW 3 Series or Mercedes-Benz C-Class (or €10,000 less), it has a ton more computer hardware and software packed into it that will pay off down the road. “A Tesla’s the only car on the road that actually improves when it leaves the lot. … A traditional automaker’s never had control of the full software stack of all the hardware decisions and their sort of piecing together decisions from other separate outside companies — in terms of which hardware to use. Overcoming that — we think in the next 10 years a lot of companies could just go out of business.
“On the cost side, we’ve heard, you know, Porsche and Audi did a teardown of the Model 3 and were surprised at how inexpensive Tesla was able to create these components. Now that they’ve released the lowest priced version, I think other automakers should — and probably are scared at this point.”
I then discussed Maarten’s analysis of the clearly faulty UBS analysis of Tesla Model 3 production costs. That article is a must read and helps to explain not only why UBS got the story so wrong but also how it is that Tesla is leading so much on EV and autonomous driving costs. (I published a follow-up about the UBS analyst’s history on Tesla and GM, too, that I have to recommend.) Tasha then went deeper into the hardware side of that and Tesla’s leadership on hardware computing.
We talked a bit about valuation — or lack thereof — of Tesla’s autonomous driving arm, especially relative to other players in the business.
Further, we discussed how Tesla is innovating in manufacturing — in terms of hardware as well as software — and how that also ties to Tesla’s strong vertical integration.
Tasha brought up the potential for other automakers to go bankrupt in the coming years, which brought me back to something I wrote about in mid-March. “Remember that it wasn’t a 100% collapse in auto sales that caused GM and Chrysler to go bankrupt approximately a decade ago. Overall, US auto sales dropped 11.7% from 2007 to 2008.” If you look at how much vehicle sales have been dropping at several automakers as Tesla sales have soared, the idea of impending bankruptcy sounds much more realistic. Look at automaker sales drops in January, February, and March and really reflect on this.
We also talked inflection points, how they come about, and why we so often don’t see them coming. Tasha brought in their use of Wright’s Law to model a lot of their technology cost decline curves. She also noted that a lot of the analyses they see that are dramatically different (more bearish) than ARK Invest’s are backward-looking analyses that basically don’t even consider coming inflection points.
To close the interview, I asked Tasha a bit about ARK Invest’s approach to investing and scoping out the market. Rather than quarter to quarter, ARK aims for a price return in 5 years. Looking 5+ years out, it’s just hard to see how Tesla doesn’t come out ahead of the competition and continue to ride on top of the EV market — as the market gets much bigger.
To close, Tasha had some excellent words of takeaway that stepped back to look at a bigger picture. They didn’t specifically focus on Tesla but instead on the overall growth of AI. “I think we’re at a time where we’re undergoing these dramatic transformations in AI, and that doesn’t just affect vehicles — we think this could affect every industry. And it’s very hard to predict, but if anything, we’ve sort of seen so far that it comes much sooner than you expect.”
For much more, listen to the full podcast via the embedded player above or on your favorite podcast platform.
Again, you can listen to the first portion of our conversation on one of these channels: Anchor, Apple Podcasts / iTunes, Breaker, Google Podcasts, Overcast, Pocket, Podbean, Radio Public, SoundCloud, Spotify, and Stitcher. Or you can read a summary of it here.
You can also listen to my podcast discussion with Ross Gerber (in three parts — one, two, three), and coming episodes will be interviews with Galileo Russel of HyperChange TV, Nancy Pfund of DBL Partners, Mark Z. Jacobson of Stanford University and The Solutions Project, Zac from the popular YouTube channel Now You Know, Tomek Gać of Quriers and Tesla Shuttle, and perhaps a special feature with a top Tesla executive. Stay tuned!
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