#403: Tesla Daily's Rob Maurer on Tesla Battery Day

Rob Maurer is the man behind Tesla Daily, a media platform focused on covering all things Tesla. This includes news on Tesla Motors, Tesla Energy, Tesla Solar, and Tesla Network and is discussed in a concise and consistent manner, making it easy to stay up-to-date on the latest from Tesla. In this conversation, we discuss Tesla, battery day, automobile industry disruption, electric vehicles, and the media platform that Rob has built. ============================== Nifty Gateway is the premium NFT platform. They release content from the best NFT artists in the world twice weekly, and have featured many world famous artists including Kenny Scharf, Trevor Jones and WhIsBe. NFTs on Nifty Gateway are in extremely high demand. Sign up for an account in advance to participate in the drops, and browse around on the secondary market to find art you like. http://www.niftygateway.com ============================== Smart investors know being early is critical to success in crypto, and we built CoinList to give you access to the best crypto projects before other exchanges. CoinList is where early adopters invest in, earn, and trade the best new crypto before other exchanges. Sign up for CoinList Pro today and be ready to trade on day 1. New users who sign up with coinlist.co/pomp and earn $10 in BTC after you trade $100 in a single trade on CoinList Pro. ============================== Pomp writes a daily letter to over 50,000 investors about business, technology, and finance. He breaks down complex topics into easy to understand language, while sharing opinions on various aspects of each industry. You can subscribe at https://www.pompletter.com

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Anthony Pompliano?

  What's up everyone, this is Anthony Pompliano. Most of you know me as Pomp. You're listening to the Pomp Podcast, simply the best podcast out there. Let's kick this thing off. Rob Maurer is the man behind Tesla Daily, a media platform focused on covering all things Tesla. This includes news on Tesla Motors, Tesla Energy, Tesla Solar, and Tesla Network. And it's discussed in a concise and consistent manner, making it easy to stay up to date on the latest from Tesla. In this conversation, we discuss Tesla, Battery Day, automobile industry disruption, electric vehicles, and the medium platform that Rob has built. I really enjoyed this conversation, and I hope you do as well. Before we get into the episode, though, I want to quickly talk about our sponsors.

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• 2:54Anthony Pompliano?

  down complex topics into easy to understand language while sharing my personal opinion on various aspects of each industry. You can subscribe at pompletter.com. Again, pompletter.com. All right, let's get into this episode with Rob. I hope you guys enjoy this one.

• 3:11Speaker 01

  Anthony Pompliano is a partner at Morgan Creek Digital. All opinions expressed by Pomp or his guests on this podcast are solely their opinions and do not reflect the opinions of Morgan Creek Digital or Morgan Creek Capital Management. You should not treat any opinion expressed by Pomp as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion. This podcast is for informational purposes only.

• 3:37Anthony Pompliano?

  All right, guys. Bang, bang. I've got an awesome treat with you today. Rob is here. Thanks so much for doing this, man.

• 3:44Speaker 02

  Yeah, thanks for having me.

• 3:45Anthony Pompliano?

  So you are like Mr. Tesla now. There's like Elon Musk, and then there's you. Maybe let's start with with just your background and kind of how did all of this happen?

• 3:57Speaker 02

  Yeah, I don't know that I would rank it in that order, but as far as the background of Tesla Daily goes. So I run a podcast, now YouTube channel called Tesla Daily. And the podcast started just as an audio podcast, you know, published on Apple Podcasts, Stitcher, things like that, back in sort of mid 2017. The reason I started the podcast was because I think, you know, probably similar to how you feel with Bitcoin, there's just so much, you know, misinformation and misunderstanding around Tesla at the time. And the media reporting was, you know, only amplifying that misunderstanding. So you would see articles in mainstream media like CNBC complaining about, you know, oh, there's like another Tesla accident today and the Tesla caught on fire. So like, obviously, the company is doomed.

• 4:41Speaker 02

  And then the stock would go down, you know, five, 10% on that news. When if you actually look at the data, a Tesla vehicle, even at that time, was much safer in terms of the number of fires happening per, you know, mile driven by the, you know, five to 10 times safer. So things like that just weren't really getting out there. And I'd been a Tesla investor since sort of early 2013, in 2013. So I'd been, you know, sort of obsessing about the company for the better part of almost, you know, four or five years at that point, reading everything I could, you know, probably three hours a day after I got done with my normal job, just spending everything I could on every amount of time that I could, absorbing everything possible about the company.

• 5:22Speaker 02

  So seeing that information out there was frustrating. And, you know, over time, I'd convince some friends to also invest in Tesla. And every time articles like that would come out, there would be, you know, I'd probably have like five or 10 texts being like, okay, is this a big deal? Like, what's, should I sell my stock? What's going on?

• 5:38Speaker 02

  So I figured, okay, I'm spending all this time about Tesla. I'm not quite learning as much anymore because I kind of understand the vision of the company at this point. But I could probably be helping other people sort of, you know, fit all this information, contextualize all this information and make sure that it's accurate for people. So that's when I had the idea to start the Tesla Daily Podcast. I did it daily because everything, you know, as we've seen over the last few years is changing so rapidly with Tesla that, you know, by the time two days have gone by, there's already three new stories on Tesla and the news is already old and people have absorbed it and traded on it and things like that. So I didn't know if it would stay that way forever. I didn't know if there was enough demand for Tesla information, but over time, you know, the story has just gotten bigger and bigger. There's been more and more news, more and more people following Tesla closely.

• 6:23Speaker 02

  And I think, you know, some of the mainstream media coverage has gotten better over the years. But there's definitely still missing context and missing information out there that, you know, my whole goal is to try to help people contextualize and understand that. So that's sort of the, the essence of Tesla Daily. About a year ago, I started, you know, doing it full time, took the audio podcast with the help of just listener support, honestly, on Patreon. It's a full time, started the YouTube channel. So I think that's been great in terms of, you know, helping get more good information out to more people, which is really the point. And then, you know, that's just seen crazy growth over the last year, almost up to 100,000 subscribers now, which is, you know, I never thought that it would be anything close to that one starting out. So it's been really cool to just sort of, you know, follow the journey and kind of help people follow along with me.

• 7:08Anthony Pompliano?

  So when I said early on, you know, there's Elon Musk and then there's you when it comes to Tesla, I was joking a little bit and alluding to this situation on the earnings calls. Maybe talk a little bit about what the hell happened there?

• 7:22Speaker 02

  Yeah, sure. So I think Tesla has done a really good job with sort of bringing retail investors along. A lot of companies, they just, you know, they'll take the questions from the analysts every quarter, or maybe they'll take like five or six. They'll get their company update and then, you know, radio silence for the next, you know, 90 days or whatever the case is. Tesla's done a really good job of sort of making, giving the opportunity to retail investors to be more interactive. You know, they, I think they took, I think the pivotal moment for this was when they took a call from Galileo Russell of Hyperchange. I don't know if you're familiar with him at all, but you know, similar sort of stuff that I'm doing, covering Tesla really closely on YouTube.

• 8:03Speaker 02

  He's been doing that for a few years and he managed to get on one of the conference calls and Elon said, okay, like the analyst questions are, you know, boring and boneheaded right now. Let's cut to YouTube and then Galley comes on and shoots off five or 10 questions. Elon keeps letting him ask questions and stuff like that. So that was sort of the pivotal moment of retail investors sort of becoming involved. And then Tesla is also a part with a company called Say that allows shareholders to sort of connect to their brokerage and vote their shares for questions to be asked each quarter. So for, you know, the last few quarters, I've been able to sort of, you know, come up with good questions and then my audience has supported those questions and voted them to the top to the point where I can get, you know, one, two or three questions. Last quarter was, you know, sort of the first three questions on that platform

• 8:48Speaker 02

  on the earnings call. So it's just something that Tesla has done, you know, they're disrupting in so many different spaces, but I think they're also disrupting and sort of investor relations and investor communication, especially as it relates to retail investors, which I think is really important for a company like Tesla that is so, you know, consumer focused and obviously has such massive interest in the retail investment community. So, yeah, it's been really cool to have sort of those opportunities and get to ask questions that I think oftentimes are a little bit more insightful than what we might hear from the analysts on the call that are just really trying to get to the information to update their models.

• 9:21Anthony Pompliano?

  Yeah. And how much of that is driven by Elon and kind of just his very different way of approaching a lot of this versus it's a corporate strategy or anything like that?

• 9:32Speaker 02

  Yeah, I think I think it starts at the top. Obviously, you know, if Elon didn't want to do it, it wouldn't happen. I think Tesla's got a really good team in place around Elon that sort of has that same mentality of, you know, let's start from scratch. Let's build things up from the bottom. Let's not really conform to the norms that, you know, have existed in the past, whether that's in automotive manufacturing or whether that's in investor relations. It's just sort of the company culture that Tesla has. And obviously, that starts with Elon. But I think it permeates throughout the rest of the organization, throughout the management team. And I think we see that, you know, play out all across the business line.

• 10:04Anthony Pompliano?

  Yeah. And so I know that we were going to spend a bunch of time talking about Battery Day, which just happened and kind of all the updates there. But before we get there, let's just, for those who maybe don't know so much about the company, just give kind of an overview of, you know, why is Tesla so important and kind of why is this company specifically seem to be always in the crosshairs of headlines, you know, some positive, some negative, but it just seems like people can't, you know, look away, right? They're always paying attention to it. So it's kind of, tell us a little bit about the company and why you think that is?

• 10:34Speaker 02

  Yeah, I mean, Tesla's a fascinating company. Like I said, for me, I became aware of the company back in 2013, made a small investment at that time and just started learning more and more about the company and really just, like I said, became fascinated with. And I think a lot of other people have felt similarly. I think it's, you know, I always compare it to Apple. They're the very different companies and very different goals and things like that. But for me, I was really captivated with Apple. Apple was sort of my first investment. And for me, it's really about disruptive technology. You know, I saw my friends with iPod touches and it was just like, oh, my gosh, this is, people love these. And this is obviously where things are going. And you know, they're going to make a phone and then, you know, they come out with iPhone and it just, you know, snowballs from there.

• 11:15Speaker 02

  I think, you know, there's similar sort of passion around the products that Tesla has created. People really, really, really love the product. And that's where it starts. That we, that's what Elon's focus always is, is we start with the product. We put every single thing that we can into the product. You know, even to this day, they still don't advertise conventionally. They obviously do some marketing, but you know, they don't pay for ads on TVs. They, they prefer to put all of that money into reinvesting and making the product better. So that's where it starts. That's where the product focus happens. And that allows them to create this disruptive product that we saw with, you know, the Model S back in 2012. So Tesla's original sort of master plan that Elon published back in 2006 was, okay, we're going to build a really expensive sports car.

• 11:57Speaker 02

  That was the Tesla Roadster built on the Lotus Elvies sort of chassis. They look almost identical. That was like 120, 130,000, you know, and up type of vehicle. Just because it's a new technology, you know, electric vehicles at that time, there wasn't, there was really no 200 plus mile range electric vehicle. This was sort of first in the category. And obviously people are interested in that. That's disruptive technology in and of itself, but it's not very affordable. Not a lot of people can buy $120,000 cars. And, you know, Tesla knew that, but their whole goal has been to accelerate the transition to sustainable energy and to sustainable transportation. So what they said is, okay, we're going to take this expensive car. We're going to take the profits from this. We're going to reinvest it in the business and try and build a more affordable car.

• 12:40Speaker 02

  So that was the second car, the Model S that came out in 2012. You know, starting price around 50,000, that's sort of the low end. They eventually cut that low end version just because consumers weren't really happy with the range that it was providing, which was like 160 miles. But the higher end models had, you know, maybe an $80,000 price for 250 miles of range, something like that. So, you know, kind of a step change from where they started with the Roadster. Then I think as people know, they took the profits from the Model S and they reinvested that to eventually build the Model 3. And that's sort of been the step change. And I think that's where a lot of the interest recently has come in from Tesla. Is this car is actually affordable now. It starts at, you know, $35,000, $38,000 roughly in that ballpark. And that's pretty close to what the new average selling price of a new vehicle in the United States is.

• 13:25Speaker 02

  So it gets in more in the mainstream. People can start to afford it. People can start to use it. Their neighbors, their friends have it. And you just, you experience the product and you, you know, take it out for a drive. You see the seventeen inch touchscreen across the, across the dash. You see, you know, autopilot handling ninety-five percent of your driving on the highway. You feel the electric powertrain, the instant torque of the vehicle. You see these high safety ratings that can't be achieved with an internal combustion engine vehicle because of the structure of the vehicle. There's just all these different advantages that sort of pile up and then you start to get it. You just say, oh, this is disruption and no one else is doing it. And Tesla is so far ahead because they've been laser focused on this since two thousand and three. And, you know, the other carmakers, they, they've been pushing this can, kicking this can down the road.

• 14:09Speaker 02

  Because if they invest in electric vehicles that are better than their internal combustion engine vehicles, the customer is going to see that and they're going to stop buying this technology, internal combustion engine technology, that these automakers have put a century of research and development, capital expenditures and investment into. So Tesla is sort of uniquely positioned in that they're an electric vehicle pure play. That's all they're focused on. And pretty much the entire, you know, auto industry is trying to push that back as far as they can. And that just leads to this wide gap where Tesla is, you know, growing rapidly and everybody else is declining. And, you know, my perspective as a bullish investor is that that's going to continue. So sort of getting into the second part, catching us up to today. Tesla's delivered the Model Three.

• 14:51Speaker 02

  That's a high volume vehicle. They're shipping, you know, three hundred, three hundred and fifty thousand of those a year. The Model Y is next. So that's sort of the crossover version of the Model Three. Uh, and that is, um, should be a bigger market because crossovers have just become more popular than the sedan form factor. So Tesla thinks they can grow that to, you know, outsell all the other vehicles that Tesla offers combined, which would be Model S, the Model X, which is sort of a luxury SUV type of vehicle and then the Model Three. So. Basically Tesla's plan and always has been and always will continue to be just accelerate the advent of sustainable energy by making electric vehicles more affordable. So similar to what they're doing, you know what they did from Model S to Model 3, making things more affordable. They're going to do the exact same thing again with the Model 3 to

• 15:34Speaker 02

  the next version of the of whatever comes next. So at Battery Day, they said, you know, in three years, probably they're going to be able to sell a Tesla for, you know, $25,000. And that's probably going to have a range around 300 miles. And that's going to be even more disruptive than what the Model 3 has been, when the Model 3 has already taken, you know, greater than 50% of the market share in the luxury premium sedan space in the United States. So if you introduce a $25,000 vehicle and that takes, you know, 50% of that market share, you can start to see why Tesla is so highly valued because there's just so much opportunity for them to grow. And there's so little competition in this electric vehicle space that is competitive. Now, the other automakers are definitely starting to try. But again, they haven't been focused on it for the last, you know,

• 16:19Speaker 02

  better part of 20 years like Tesla has. There's just so much catching up to do. And it might just be a little bit too late for them to be competitive at this point. So that's sort of the long and short of it. We can get into more of the details, but that's sort of the the goal Tesla is just continue to ramp up volume.

• 16:34Anthony Pompliano?

  Yeah. And I think that what's so interesting about the company is it started out as there's no way they can create one type of car. And it's almost like the detractors move the goalpost over and over and over.

• 16:43Speaker 02

  Absolutely.

• 16:43Anthony Pompliano?

  Right. It's like, hey, look, they can't create the first car. Okay, they created it. Oh, they can't scale it. Then they scaled it. There's like, okay, they can't do a second one. Then they did that, right? They can't reduce the price point. Then they did that. Then they can't. And like, you just kind of unpack this and you're like, what is the credible kind of critique? And one of my favorite questions to ask people is like, the people who would disagree with your view, right? So the people who actually say, look, this is all, you know, bogus and it's going to zero or whatever, like, what is their argument? And kind of from your perspective, does any of their argument have validity? Or is it all just complete nonsense?

• 17:16Speaker 02

  Sure, I think there's definitely sort of a spectrum there in terms of sort of the bear argument. I think a lot of things that are put out there on the bearish side are complete nonsense, but there are definitely people that have good points. And I think a lot of the, you know, the more bearish arguments that I can tend to see the argument for centers around valuation. So, you know, Tesla's hovering anywhere around $350 billion to $450 billion in terms of the valuation, the most valuable automaker, even though they sell, you know, 1% of the vehicles out there today, not even. So that's, that's a legitimate question of, okay, should Tesla be this valuable at this stage of the company? And I can't fault for anybody for saying that they aren't because based on their profitability today, obviously they're not. They're trading at something like 700 to 1,000 times earnings. No one would

• 18:01Speaker 02

  buy a company based on that. So it's all about the future growth. So the bull versus bear case really comes down to how likely you think that future growth is and how much profitability Tesla can extract on that growth versus the profitability outlook for current automakers. So, you know, Tesla trades at two to three times what Toyota's market cap is. So the big question is, okay, even if Tesla does eventually grow to be this, you know, multi-million vehicle deliveries per year type of company, Toyota delivers about 10 million, Tesla aspires to grow to about double that. People say, okay, even if they achieve their, you know, their wildest ambitions, they're still only fairly valued today. But I think what a lot of people miss, you know, from the, from the bearish perspective

• 18:44Speaker 02

  is that Tesla's not just selling cars. They're selling technology. There's, they're a tech company mixed with a manufacturing company, mixed with, you know, an insurance company. There's all these things that Tesla is doing that other automakers aren't. And that's why Tesla, in my point of view, deserves a premium valuation. And I think probably the easiest way to explain that to people is, right now Tesla sells an $8,000 software option on every car they sell. Not everybody opts for that, but the option is available. About, you know, 25% of people take that. So if 25% of people are taking an $8,000 option, that's adding $2,000 to every car they sell. So and that's software margin. So that goes straight to the bottom line, obviously, after accounting for the research and development costs and things like that.

• 19:27Speaker 02

  But from just a gross margin perspective, that pretty much falls straight to the bottom line, super high margin. No other automakers are able to capture that sort of high margin revenue from software. So that's where Tesla's premium valuation comes in. And if you extend that to the future and you say, okay, I do think Tesla can sell 10 million vehicles per year, 20 million vehicles per year. And you know, okay, let's just hold everything else steady. Let's say that they continue to sell that option for $8,000. And let's say 25% of people continue to opt for it. Then you have an average selling price increase of $2,000 on 20 million vehicles. That's $40 billion in revenue or pretty much in pure gross profit. That Tesla is able to capture every single year on the vehicle sales.

• 20:09Speaker 02

  And that's assuming that autopilot doesn't get any better, that they don't actually achieve full self-driving, which is something that Elon is, you know, highly confident in achieving. Obviously, the timelines on that are always questionable, but even if we just sort of hold steady state, $40 billion a year in gross profit. You know, you put a 20 multiple on that and that's already $800 billion in market cap. So that would be Tesla, you know, 2Xing or 3Xing before accounting for. You know, the stationary storage business, the solar business, Tesla insurance, like all these other things. A full, fully autonomous robotaxi network, which obviously just sort of breaks the valuation to the upside. There's just so much, so much that Tesla is doing that these other carmakers aren't really positioned to do.

• 20:49Speaker 02

  And that's why you see the premiums to the valuation now. As far as the bear case goes, it's pretty simple. It's okay. Tesla's not going to achieve that. And if you look at some of the comments that Elon has made in the past, like he's not always delivered on time. Almost everything that he has said will happen, has happened eventually. So he's got a really good track record of achieving. It's just sometimes late. So when Tesla says they're going to deliver, you know, 20 million vehicles per year by 2030. Maybe they won't do that. Maybe it'll be 5 million, 10 million, you know, put whatever number in there you want. But then if you go forward five years, okay, well, the odds are getting even more increased there that, you know, Tesla does accomplish what they set out to accomplish. And a great example of that is back in, you know, 2014.

• 21:31Speaker 02

  Elon Musk said that in 2020 Tesla would deliver 500,000 vehicles that year. And you know, even with a global pandemic this year, they're on track for pretty much achieving right around that somewhere between, you know, 480,000 and 520,000. So it doesn't always happen on time, but Elon's track record is is pretty good in terms of delivering what he sets out to do. But yeah, the bear case is just that that won't happen. And if if it doesn't, then yeah, Tesla's way overvalued right now.

• 21:57Anthony Pompliano?

  And so when we think through this, there's kind of two schools of thought. One, you know, people will yell and scream and say Elon is a scammer. He's lying. He's trying to pump the stock, kind of, you know, all the like, again, really extreme bear type arguments. The other that would be like the technological optimist would say, hey, they're trying to do something that's never been done before. And therefore you need people who are constantly pushing the pace. They're putting these, you know, really big audacious goals out there, really driving the team to kind of accomplish almost the impossible. And therefore, of course, you're not going to be 100% every time. But if you hit 50% of those goals, the progress you make is going to be incredible. You know, and kind

• 22:39Anthony Pompliano?

  of if you eventually get there, but you're just off on timing, then this is going to be a really, really valuable company. And to me, it's always felt like you're trying to hold somebody to you said X number by Y date, you know, perfectly. And it just always felt more like we were in the the ladder bucket of like, no, this is somebody who is incredibly ambitious and they're pushing the pace and and they're trying to push a team to literally create the future. And so sometimes they may be a little late, but actually, we shouldn't almost like ask them to temper their expectations. We should be cheering them on and say like, can you go further and faster and bigger and and

• 23:20Anthony Pompliano?

  kind of, you know, even more ambitious? How do you kind of balance that with he is running a public company, though, right? And there are investors that are kind of paying attention. Like, how do you just think through? The goal setting, the milestones, the ambition, but also you got a public company, you got to be able to represent things to shareholders.

• 23:39Speaker 02

  For sure. Yeah. And that's a great, that's a really great, you know, I think that's a lot of people share that perception of Tesla of like, okay, they keep missing all these targets. They keep putting these things out there to, you know, pump the stock and they raise capital on those, you know, goals that they're never going to achieve. You know, that's a, I wouldn't say it's a fair criticism, but it makes sense why it exists. But to your point, you know, stretch goals exist for a reason. You're trying to push your organization, you know, 40,000 people, 50,000 people at Tesla to try to accomplish something that's never been done before. And to do that, you need to set lofty goals and, you know, swing for the fences. Maybe you come up with a double, but you know, at least you, you made progress along the way. And I think from sort of Tesla's inception to maybe the last, probably about

• 24:23Speaker 02

  a year, 18 months ago, that's really been how they've managed things internally and also how they have communicated with Wall Street. They've been very public about sort of their internal targets. And inevitably they end up missing some of those internal targets. I think we've seen a shift in the last 18 months and this is reflected in the stock price now where Tesla has started to be more conservative in the guidance that they share with Wall Street so that they can overachieve it. And for whatever reason, Wall Street really loves to have sort of that, okay, you said you're going to do this. You've delivered on this stuff in the past, so I can count on at least not getting my model wrong. If you tell me you're going to do this. So Tesla, I think has adopted that strategy of, okay, we're just not even going to give that much guidance and the

• 25:05Speaker 02

  guidance that we do give is going to be sort of, you know, worst case type of scenario. So 2020 annual delivery guidance is a perfect example of that. They said they should comfortably exceed 500,000. That was really their only guidance for the year. And even with the pandemic shutting down their factories for, you know, a couple of months, they're still likely to be able to achieve that. So if we assume that that hadn't happened, obviously they would have been well above their targets. So Wall Street really likes to be able to, you know, have confidence in what management is saying and Tesla hasn't really given that to them historically. But I think they've sort of shifted in how they've started operating. And I think that's a big part of what we've seen with the stock price this year.

• 25:45Anthony Pompliano?

  One of the things that has always confounded me when people talk about Tesla is they focus on the cars and it's been pretty obvious for a long time that this is very much a battery company and if they get the battery right, the car works, but there's also potential for other things around that battery technology. You were just at Battery Day, maybe give us kind of an overview of just how important is the battery technology and kind of the ambitions there and then what did you learn at Battery Day recently?

• 26:12Speaker 02

  Yeah, so Battery Day is, I think, an inflection point. I think the world changed this week for the better significantly and I don't think a lot of people really fully understand that or realize that yet. The reason that I say that is Tesla presented a path to reducing the costs of batteries per kilowatt hour. So, you know, the cost of energy by 54%. And Tesla still has some work to do to make sure all this happens and can scale to volume production, but they have a clear fundamental engineering, scientific approach to be able to do this that they're highly competent in being able to achieve. So if you think about, you know, the cost of a Tesla battery pack today, most estimates are that Tesla's

• 26:52Speaker 02

  producing each kilowatt hour costs them about $120, $110, something like that. So if you have, you know, 100 kilowatt hour pack, you're at a $12,000 pack. If Tesla can achieve these things that they set out to achieve, they're going to be able to deliver that $12,000 pack for $6,000. And if we look at, you know, the pack in the Model 3, that goes from maybe $8,000 or $9,000 all the way down to about $4,000. So that's where you can start to see this really clear path of, okay, if Tesla can cut out $5,000 on the battery cost of the Model 3 and they, you know, if they take a 20% margin on that vehicle, then really they should be able to lower the price of that by $6,000. So then you're looking at the vehicle with the performance of the Model 3 available for $30,000 and then you factor

• 27:37Speaker 02

  in the cost of ownership savings from, you know, fueling up with electricity versus fueling up with gasoline, you're saving, you know, $1,000 a year probably on that, depending on how many miles you're driving and what your gas prices are. So it really quickly starts to become competitive with vehicles that cost, you know, $20,000 and these are the bare bones type of vehicles that are really just the opening price point of, you know, a Honda Civic or something like that. You know, a lot of people are going to opt for a Tesla Model 3 versus a Honda Civic. And that's where you can start to see a really clear path to Tesla, basically just taking as much market share as they can happen to manufacture. So if if we start to go down that path, then we can see, you know, how Tesla grows,

• 28:20Speaker 02

  how the internal combustion engine becomes obsolete. And that's why I say this is an inflection point because Tesla's not saying this is something that we, you know, that we're targeting to achieve. This is Tesla saying that we have a plan in place that we have, you know, already have in pilot line type of operation that we're going to work towards and hopefully achieve in two to three years. So the the other thing that they have also said, so that's sort of the cost, they're going to bring costs way down. The other thing that they've also done is increase the range that they can get out of the vehicles. So there's a number of different changes, both within the battery cell and then in terms of the actual design of the vehicle. So I'll give you an example of just how how the design of the vehicle has impacted what Tesla feels like can achieve from a range perspective.

• 29:05Speaker 02

  Because obviously, historically, electric vehicle ranges have been sort of the prohibiting factor. You know, you need to be able to get far enough, you need to be able to charge it. That's that's the big differentiator from a gasoline engine perspective. So what Tesla has done over time, they've tried to push those ranges higher and higher for more, you know, in a more affordable way. So we talked about the cost. In terms of the range, they've found ways to increase the range by 54%. So then if we stack that on with the cost savings, you're looking at, you know, the Model 3 today, if it gets 300 miles a range, that's going to be bumped up to, you know, 450 miles of range for about the same same price. Or you can bring the cost down, etc. There's just a lot of flexibility there. And one example of the way that they of a way that they've been able to do that, there's

• 29:50Speaker 02

  a multitude of different things here. But they've really Tesla really approaches things from a first principles design point of view. So they're trying to, you know, build things from the ground up every time and find the best way to do it, rather than just sort of assembling these different components together. So one example that they gave a battery day of how they plan to do that is they sort of took a lesson from the airplane industry. Historically, airplanes Had stored the fuel inside the wings, but there was sort of a fuel tank process in that. So there'd be like the wing of the airplane that, you know, sort of has a shape like that. And then they put a little smaller tank in there that has the fuel on it. And with that sort of design, you've got the fuel tank, you know, that adds weight, that adds space. You're just not getting as much fuel in the wing as you possibly could.

• 30:34Speaker 02

  So at a certain point in time, that design was rethought. And nowadays, modern airplanes have the entire sort of wing structure act as the fuel tank. So instead of having this fuel tank inside this wing structure, it's just all this. So you get more gravometric energy density, you get more volumetric energy density. So some more thing has been taking place in the automotive electric vehicle design space, where people are taking these battery cells and just sort of placing them inside the structure in the floor of the vehicle. And what Tesla's planning to do in sort of their next iteration of their vehicle design is say, okay, we're going to do the same thing that airplane said, we're going to take that. And instead of placing these battery cells inside the structure of the vehicle, we're going to actually make the battery cells the structure of the vehicle.

• 31:19Speaker 02

  So they're going to turn the battery casing into a structural component that actually provides, you know, stiffness to the vehicle and rigidity and things like that. So they can get more of the actual active materials because they're eliminating those parts that before were providing structure. And instead, just having the battery cell perform that function. So that's adding like a 15% increase in range. And there's just a whole lot of lists of a whole long list of ways that Tesla's planning on doing this that they walk through. And battery day that sort of add up to that 54%. So I think a lot of that stuff is not appreciated. And again, that's where, you know, Tesla continues to show that they're sort of leaps and bounds ahead of competitors, which really aren't thinking about anything like that.

• 32:02Speaker 02

  Because they have to figure out, okay, how can we make this vehicle fit? You know, a gas powered engine and also batteries and things like that. It's just not the design approach that they have.

• 32:11Anthony Pompliano?

  What's so interesting to me is what you're talking about here is a fairly technical, kind of in the weeds type innovation, for example, right? And that would be uninteresting to 99% of people, except Tesla has made a really, really cool car, and it's become a status symbol and almost been an aspirational type product now. And it feels like if that wasn't the way that the company was built, the brand and things like that, this would have been over a long time ago, right? Like this was the only way to do that. Do you get the same sense or do you have a different view?

• 32:47Speaker 02

  Yeah, I think so. I mean, the Tesla's really the only automaker in sort of the last 100 years that has been able to sort of get to volume production and be profitable. And that was always a critical argument for Tesla as we talked about before, you know, the moving goalposts of the criticisms against Tesla. It's always been, okay, Tesla's not profitable. Now, the last four quarters, they have been profitable. They have been profitable in part due to regulatory credit sales that they have sold to other automakers, which are, you know, offset penalties that those other automakers would have because of emissions requirements that they weren't able to meet. So Tesla's not getting government money. They're just selling it to competitors that, you know, failed to meet those requirements. But that has a period of profitability. So now it's, okay, Tesla's not profitable without the regulatory credits.

• 33:30Speaker 02

  But when we go to next year, you know, that's not going to be a factor anymore. Well, it'll still be a factor, but it's not going to be the driving source of profitability. So there have been those criticisms against Tesla over time. But back to the original point, there hasn't been an automaker that has been able to be successful. And I think Tesla sort of threaded that needle in a very unique way. And a lot of that has been due to, you know, Elon Musk as sort of the original financier of the company. He was willing to put sort of every last dollar that he had to make sure that Tesla was able to survive, you know, that really painful period of being a startup, not having capital, not having investors believe in the long-term mission, not being able to, you know, have that money available to make sure you can get through to the next, to the next level.

• 34:12Speaker 02

  And Tesla has kind of had to do that for the, you know, the 17 years that they've existed prior to sort of the last year where they finally started to become profitable through just economies of Scale. So, you know, that's a 15 year long process. A lot of companies don't have the ability to go that long without being profitable, especially at sort of that scale where, you know, you're manufacturing vehicles. That's really expensive. You don't have the luxury of of having those software margins that like an internet startup might have. Uh, so it's, it's really difficult. And I think Tesla was, I don't want to say fortunate, but sort of uniquely positioned in that they were creating that disruptive technology. If we think about, you know, other electric vehicle startups today, they have to compete with Tesla. Tesla didn't have to compete with Tesla.

• 34:56Speaker 02

  So it's just, I think it's going to be really tricky for any, you know, other new electric vehicle mark, uh, makers to sort of follow that same path because Tesla's already there and they have to compete with the specs that Tesla has been able to achieve already with the economies of scale. So, yeah, it's, it's a really tricky path. And I think Tesla was sort of all the stars aligned to be able to carry them through that path.

• 35:18Anthony Pompliano?

  Where are we going? Right? And what I mean by that is if you would talk to a Kathy Wood at Arc Invest or some of these other folks who are ultra, ultra bullish on Tesla and the battery technology and Elon, uh, they'll tell you that this is, you know, the next great uh, company and, uh, not even car company, but just the next great, uh, company. How do we get there and kind of how big do you think this gets? Just kind of walk me out, you know, 10 or 20 years from now, like, what does this look like? Is, you know, what is the company still around? Right? You know, or do they not make it? Uh, and, and kind of like, what, what do you envision? Um, that this turns into, uh, fully understanding that, uh, you're, you're commenting from the outside, but, but kind of how do you see it?

• 36:03Speaker 02

  Yeah, for sure. I think the first part is, yeah, I expect Tesla will be around. I think they've, they've made it through sort of those difficult time periods. I think the model three was sort of that, you know, sort of inflection point of will Tesla make it or will they not? The demand is proven now. The profitability is proven now. They obviously can access capital very easily now with the market cap that they have. So I think assessed to her success to some degree is assured. Maybe that's not reflected necessarily the return in the market, but I think Tesla will. That's sort of the base case. As we look at, you know, why I'm invested significantly in the company. It's really because I do believe that Tesla can continue to scale and that the competition is going to continue to struggle to deliver a product that can be competitive with Tesla.

• 36:46Speaker 02

  You know, even today, they're not really delivering electric vehicles that are competitive. And that's before considering that they're probably not even profitable on those vehicles. And a lot of the, you know, funding for those vehicles is provided again because they need to offset those. Those regulatory credit requirements across different countries. So.

• 37:06Speaker 02

  I think, I think the gap between Tesla and competitors is continuing to grow, and I think that will allow them to. Sort of as fast as they can scale production, continue to grow deliveries, continue to grow revenue, continue to grow profit. And reinvest that for future growth. So that's really what they walked through at Battery Day. They said that they plan to scale battery production. Internal Tesla battery production to three terawatt hours per year by 2030. So I think a lot of people don't really fully understand what that means. A Tesla battery pack in the Model three or the Model Y is 75 kilowatt hours. Three terawatt hours is 40 million of those per year. Like that's, that's, that's absolutely insane. The amount of energy capacity that Tesla is trying to target.

• 37:52Speaker 02

  By 2030. So not all of that is going to go to producing 40 million vehicles. Tesla has aspirations to, you know, they sell energy storage products that can be tied in with the grid to, you know, help buffer. You know, spikes and legs and energy production capacity, things like that. But even at your house, you can, you know, if you have solar production, obviously that's only producing energy. For, you know, 12 hours a day, and then you have to store that energy so you can use it overnight. In an energy storage product. So the grid can act as that, or you can have it on site and sort of a Tesla battery product. So Tesla believes that that, that business is going to grow as well over the next decade and maybe. 50% of their battery production, you know, sort of end state would go to sort of those energy storage products. 50% to, to vehicles.

• 38:36Speaker 02

  So they're really targeting more around long-term producing about 20 million vehicles per year, which as we talked about before will be sort of two times the scale of, of Toyota. So. Because of Tesla's advantages and how they're positioned right now and how there is this clear path to Tesla producing a $25,000 electric vehicle that's really not all that different from the Model 3 today. I think I'm pretty confident that Tesla can achieve that and can take as much market share as they can produce. So that's sort of my perspective. I think Tesla will get to somewhere around that 10 million, 20 million vehicle mark. Within a decade, maybe it's a couple of years longer like we talked about before. But that, as we talked about, when you start to add in the software margin, there's a very clear path to Tesla being a multi-trillion dollar

• 39:20Speaker 02

  valuation company. And on three terawatt hours of battery production, that should pretty easily get them to, you know, a trillion dollars in revenue per year when we mix automotive and energy storage. So right now, the, you know, the highest generating, highest revenue generating company in the world is Walmart at about half a trillion, you know, 520 billion per year. So I believe Tesla's got a really, really clear path that they walked through at Battery Day to sort of double the highest grossing company right now.

• 39:48Speaker 02

  So that's sort of my perspective. And then the other, the other bullish layer, which, you know, Arc Invest is very excited about is the potential for Tesla to deliver, you know, an autonomous robot taxi network type of situation that would really just take the place of what Uber and Lyft do today, but cut out all the labor and then cut out all the costs of the internal combustion engine, you know, vehicle, as we talked about before, electric fuel or electric, you know, energy is about five times cheaper than what it would cost for gasoline. So Tesla, if they can achieve sort of this autonomous vehicle that they're working really hard to achieve, they should have a very clear, you know, clear cut grasp on that entire sort of transportation as a service type of market,

• 40:30Speaker 02

  which can be extremely high, high margin for Tesla, which again, sort of just breaks the valuation. And that's why you see these, you know, really bullish price targets for, for Tesla from companies like Arc Invest. I think pre-split, they had a, their, their highest case price target on Tesla was like $24,000 a share, which would be, you know, for $4,500 a share now, something like that, post-split. So.

• 40:54Speaker 02

  Yeah, I mean, that's that's sort of the the bull cases Tesla scales up to be this massive player in the automotive market. They develop autonomy, which we can, you know, talk, talk for hours about that alone. But really, the the whole bull case on Tesla and autonomy is that Tesla's got these this fleet of, you know, a million vehicles out there right now, and that's going to double every year or two as Tesla grows production, with eight cameras, radars, ultrasonics on them, that are just collecting all this data from all these customers driving around all the time. Nobody else has that. A company like Waymo, maybe they've got, you know, a couple thousand vehicles that they're managing. They have to pay to produce them. They have to pay engineers to drive them around, things like that. Tesla actually gets paid by their customers to get these vehicles on the road.

• 41:38Speaker 02

  And then the the customers just drive them around for them. So Tesla has a very clear path to scaling to acquire that data. And it really is, at the end of the day, you know, a data problem that Tesla is, you know, positioned to acquire the most data. So I feel good. I don't know when Tesla will get to an autonomous vehicle type of situation. What matters to me is that Tesla's strategy appears to be the one that would be the leading strategy. So whether it's 2025, 2030, 2035, doesn't really matter too much to me as long as I see Tesla positioned in sort of that leadership space.

• 42:09Anthony Pompliano?

  Makes a makes a lot of sense. Before we move into the rapid fire questions that I ask everyone, talk a little bit just about Tesla Daily and and kind of how you've built what you've built and where people can find you and and the various platforms you're on.

• 42:21Speaker 02

  Yeah. So like I said before, Apple Podcasts is sort of the original Tesla Daily Podcast. I'm on YouTube, so just search for Tesla Daily should come up. And then I also write a column at The Street, also under the sort of the Tesla Daily brand. So I've been doing that for a few months now, and that just sort of every day gives really the most important thing that happens in Tesla that that day and sort of a 300 word article or something. So if you don't have time to listen to 10, 15 minute podcast each day, which, you know, that in and of itself is pretty quick. But if you've only got a couple of minutes every morning to just read something, that's what I recommend. I try to just hit the highlight, you know, every single day as best I can.

• 42:57Anthony Pompliano?

  Got it. I asked the same two questions to everybody and then you'll get to ask me when to finish up. The first is, what is the most important book that you've ever read?

• 43:05Speaker 02

  Honestly, I don't read a ton of books, which I think is probably not an answer you get a lot on this podcast. I definitely, you know, I do read books, but I read constantly, but I'm reading online. Everything that I can, everything I've learned from Tesla has pretty much been online, just from, you know, hearing different owners talk about.

• 43:23Anthony Pompliano?

  What do you read?

• 43:25Speaker 02

  So just everything, honestly, everything. So forums for Tesla, it's Tesla Motors Club forum, Reddit, you know, all the different blogs like Electract, Tassarati. So I'm constantly reading these things and then just constantly trying to find new informative people that I can follow and understand. And I think Twitter's a great, a great place for that. There's so many people sharing so much valuable information that is extremely timely. And that's where I think, you know, I lose a little bit of interest in sort of the, the book sort of infrastructure is, it takes, and like, books are important too. I don't want to sell them short, but

• 44:05Speaker 02

  you know, my interests are more in like, what is happening right now? And things are changing so fast that the process of writing a book might take a year or two. And by the time you publish it, all that information might be out of date. And there's so much good information that people are sharing, you know, whether it's on YouTube, whether it's on Twitter, whether it's in their blog, whatever the case is. People are sharing awesome stuff every single day. And I feel like there's, by the time I catch up with all that stuff, there's no time left in the day for me to sort of go through and, and sit down and read a book. So I should probably change that. And it's something I think a lot about, but you know, that's where my time gets captured is just reading everything online.

• 44:40Anthony Pompliano?

  I'm actually very similar. I read books, you know, kind of really important ones I want to sit and like really, really go through. But for the most part, I consume podcasts, audiobooks, and then basically screw around on the internet, look for, look for cool stuff, right?

• 44:53Speaker 02

  Exactly.

• 44:54Anthony Pompliano?

  I don't think that that is, that, that abnormal, if you will.

• 44:59Speaker 02

  Let's go. Makes me feel better.

• 45:01Anthony Pompliano?

  Since we are speaking of Elon, this second question is more fun, but also somewhat related, which is aliens. Believer or non-believer? And, and you could also throw in any comments you have about SpaceX and the other work he does.

• 45:14Speaker 02

  Sure. Yeah. So aliens.

• 45:17Speaker 02

  It's tough, you know, I think the the likelihood that there's not some sort of intelligent life form out there in the galaxy is or in the universe is extremely low. But then you run into Fermi paradox of like, okay, if if they exist, why have they not contacted us?

• 45:34Speaker 02

  But I think, you know, probably the solution to that is, okay, somebody has to be first in sort of exploring the universe. So why can't we be the one the first ones to do that? So, yeah, I don't know, I kind of go back and forth, but I think it's I think it's unlikely that we're sort of the only ones.

• 45:50Speaker 02

  What are your thoughts? If I could ask a question, what are your thoughts on that?

• 45:53Anthony Pompliano?

  Absolutely. I think from a mathematical perspective, just very probable aliens exist. The two questions are, are they close enough or technology progress going to hit? So like in our lifetimes, will we ever come in contact? Right? Probably less likely. And then also are humans and aliens here in our, you know, kind of on the same time continuum, if you will, or time spectrum. So, yeah, aliens maybe existed, but they were here a million years before humans got here, right? Humans are here for our, you know, million years or whatever. And then there's something else. So it's definitely kind of hard to to unpack. But from a pure existence, forget time, forget contact.

• 46:38Anthony Pompliano?

  I think that you got to say, look, there's got to be life, you know, somewhere else, right?

• 46:42Speaker 02

  Yeah. It just seems extremely unlikely that it wouldn't be the case.

• 46:46Anthony Pompliano?

  Absolutely. You can ask me one more question. Usually everyone gets to ask me a question. So if you want, if you got one more, great. If not, we can we can end it.

• 46:54Speaker 02

  Yeah, I think, you know, you're also a content creator. I would just be curious to hear sort of your perspective on, you know, what? What's what's the favorite part for you of what you do?

• 47:04Anthony Pompliano?

  Learning by far, like not not even close. I joke all the time and I tell people I would do this if no one was watching. Right? Because it's just, I get it. I mean, right? I just got a crash course on Tesla from somebody who spends all day thinking about, learning about, reading about Tesla. And it's kind of a cheat code for life, right? And learning. Now, most people wouldn't come on the podcast. If I didn't have the audience, right? So it's kind of the, the, uh, you know, the value prop is hey, you come teach me everything and you also be teaching which other people at the same time. But I think that's definitely the thing I get, you know, most enjoyment out of is just learning kind of on a daily basis. And I'm assuming that you're, uh, you're, you're pretty similar yourself.

• 47:42Speaker 02

  Yeah, absolutely. And you know, that goes back to the start, you know, what you said you'd be doing it if there wasn't an audience, you know, we all start out that way. You start doing it. There's no audience. The audience builds over time because I think we, you know, probably have this passion for, uh, for learning and then also helping people sort of understand, um, things. And, uh, you know, back to the point about what we spend our time doing on the internet, like we're, we're so fortunate to live in a time where all this information is just so accessible to everybody that really if, if you want to learn about something, you can, you just got to go out and do it. You got to do the work. Um, so I, I'm, I count myself as being lucky to help people start to, you know, learn in whatever small little segment of the internet that I'm on. So yeah, that's definitely the best part.

• 48:24Anthony Pompliano?

  I love it. All right, Rob. Listen, thank you so much for doing this. Uh, I heavily suggest everyone go check out Tesla daily podcast, YouTube, uh, or the column at the street. You're doing an amazing job and I've learned so much from you. So thanks so much for doing this.

• 48:37Speaker 02

  Yeah, thanks so much for having me. Great talk.