Anticipating Tesla’s 2023 Investor Day On March 1

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Tesla announced in a press release that it would be hosting its 2023 Investor Day on March 1, 2023. The event will be live streamed from the company’s Gigafactory Texas, and some institutional and retail investors will be invited to attend in person. All investors, the company says, will be able to see Tesla’s “most advanced production line as well as discuss long term expansion plans, generation 3 platform, capital allocation, and other subjects with our leadership team.”

Let unpack what we know about these major topics ahead of the March 1 Investor Day and make some educated guesses about Tesla’s upcoming advances.

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Long-Term Expansion Plans

Demand for Tesla all-electric vehicles continues to increase. Even with the company’s recent price cuts and commensurate profit declines, Tesla can still increase revenue and maintain its gross profit superiority over other brands. That’s because the company has the capacity to manufacture more than a million vehicles every year, in addition to energy products, battery cells, and other sustainable energy products.

Economies of scale and increased battery supply are helping Tesla to find equilibrium between pricing and profit. The result is the company is ramping up production around the world. It’s likely that new manufacturing facilities will open in North America and in Asia in 2023 and 2034.

Asia is an appealing production location for Tesla, with the company positioned well to grab rapid sales growth on the world’s largest and fastest growing continent. Tesla seemed to be getting close to signing a deal to build a plant in Indonesia earlier this month, according to sources familiar with the matter in a report from Bloomberg. The news came after Tesla negotiated with the country for months, especially discussing the Southeast Asian nation’s rich supply of nickel — a crucial mineral for building electric vehicle batteries.

China will become particularly important as both a production hub and sales revenue generator. Even with the backdrop of Covid shutdowns, Shanghai is Tesla’s largest and most productive factory, with appealing supply chain networks feeding into it. The company’s Q2 2022 update shows the importance of the Shanghai Gigafactory and its role as the company’s main export hub. Moreover, Musk’s confidence in Shanghai is symbolized by the appointment of Zhu Xiaotong, also called Tom Zhu, to oversee Tesla’s US assembly plants and sales operations in North America and Europe. Zhu was previously Tesla’s vice president for Greater China.

Tesla’s footprint in California is made up of Megapack production and vehicle castings in Lathrop, hardware and software engineering in Palo Alto, vehicle and battery manufacturing in Fremont, battery development and testing in San Diego, and vehicle design in Hawthorne. In 2012, the first Model S rolled off the assembly line at Tesla’s factory in Fremont, California. The Fremont factory has limited room to expand, though, with the maximum potential to produce up to 550,000 Model 3/Model Y a year plus up to 100,000 refreshed Model S/Model X a year.

With Tesla’s Gigafactory Berlin now producing EVs, the automaker is looking to significantly increase output and sales. While it’s currently producing and selling far fewer units than legacy automakers in the country, Tesla is targeted to grow to 500,000 in Berlin by 2024.

On January 24, Tesla announced it will be investing over $3.6 billion more to continue growing Gigafactory Nevada, adding 3,000 new team members and two new factories: a 100 GWh 4680 cell factory (with capacity to produce enough batteries for 1.5 million light duty vehicles annually) as well as its first high-volume Semi factory. The Semi is the company’s fully electric combination truck, with 500 miles of range and energy consumption of less than 2 kWh per mile.

Today, we’re announcing $3.6B of new investment in Giga Nevada.

– 4M sq ft of new manufacturing footprint
– 3k additional team members
– 2 new manufacturing facilities: a 100 GWh 4680 cell factory & our first high-volume Semi factory 

Details → https://t.co/4CBOIFLwAW pic.twitter.com/rqXzyE7eRK

— Tesla (@Tesla) January 24, 2023

Generation 3 Platform

Musk has claimed its next-generation vehicle platform — the Generation 3 Platform — will be “the primary focus of the vehicle development team” from now on.

During the Q2 2022 investor call, Musk said, “It’s obvious you can guess what we’re working on, which is this next-generation vehicle, which will be about half the cost of the 3/Y platform. It’ll be smaller, to be fair, but it will I think swiftly become — swiftly exceed the product of all of our other vehicles combined.” Thus, this will be a new platform, different from the one on which Model 3 and Model Y are built. Musk also seems to confirm that this lower-cost Tesla will also be for robotaxi service.

When Tesla moved from the Model S/X platform to the Model 3/Y platform, the cost of production fell sharply. The production transition opened up numerous possibilities for the company, making it accessible to a large number of consumers (like me), and therefore introducing all-electric transportation to a whole new segment of society.

Anticipated Capital Allocation for Tesla in 2023

Various communications from the Tesla organization suggest that the company is working on:

• Fulfilling the 1.3 million (or so) Cybertruck reservations on file harnessing the full potential of production enhancements such as the Giga Press. Tesla has pioneered the use of these massive casting machines to make large single pieces of vehicle underbodies, streamline production, and reduce the work of even robots. Several 9,000-ton Giga Casting machines may be needed to achieve this Cybertruck target.
• A refreshed version of the Tesla Model 3: This will be the first time in the Model 3’s nearly-6-year history that its design has been refreshed, and reports say Tesla is aiming to begin production of the vehicle in 2023. One focus of the redesign codenamed “Highland” is to reduce the number of components and complexity in the interior of the Model 3 while focusing on features that Tesla buyers value, including the display.
• A robotaxi designed to be a shared vehicle: In the Q2 2022 call, Musk stated that Tesla would have fully autonomous robotaxis with no steering wheels or brake pedals in service by 2024. [Editor’s note: We’ll see.]
• A $25,000 Tesla: In 2021, Tom Zhu, then president of Tesla’s operation in China, spoke in an interview with Xinhua Net, the Chinese state media outlet, that Tesla China is developing a $25,000 vehicle. Several pundits jumped on the $25,000 Tesla bandwagon afterward, but, since it has yet failed to materialize, media outlets like Forbes are walking back their predictions. (Instead, they’re leaning toward affordable electric car models from Asia that are coming — soon.)
• The new 4680 battery, which is finally starting to appear in volume. The 4680 cells are 5.5 times the size of the 2170 cells by volume. Tesla needs about 4,400 of the 2170 cells to power the Model Y and there are 17,600 points that need to be welded — four per cell — to create a pack that can be integrated into the car. Musk’s promised improvements in battery cost and performance are seen by investors as critical to Tesla’s quest to usher in an era where it can sell a $25,000 EV for a profit.
• Autonomous driving at some level in all vehicles: This has been an integral part of Musk’s dreamscape for years. Last year about this time, Musk said that Full Self Driving is really complex. “They have no idea how hard FSD is. Only path to success imo is hardcore real-world AI software with dedicated NN inference acceleration ASICs in car, multibillion dollar NN training supercluster and 10+ billion miles of vehicle data. Good luck.”
• The energy storage line is kicking into gear and will become a significant revenue earner for the company. Tesla is increasingly focusing on renewable energy as a whole, rather than just electric vehicles, offering a broad range of solar and energy storage products for clean energy purposes.