Thread by @ReflexResearch

The remainder of 2020 is looking increasingly pivotal for Tesla’s future & the (lack of a) future for the fossil fuel industry.

1) So far Tesla’s EV lead has primarily been:
A) EV powertrain - efficiency (far >miles per kWh), performance & cost...

2) ...- achieved by intense hardware & software innovation and vertical integration. See thread:

https://twitter.com/ReflexFunds/status/1207686110769483776?s=20

3) B) Business model - No advertising, online first sales model, vertical integration, no legacy ICE liabilities - all leading to much higher profit per car & agility for innovation

4) C) Brand & infrastructure lead - Tesla synonymous with EVs, supercharger & service network.
D) Smart car software advantage - Superior driver assist, infotainment, OTA updates etc

5) These are all huge leads & go a long way to defeating fossil fuels (and there is no clear sign Tesla are letting their advantage vs EV competitors slip in any of these areas), however Tesla is planning to soon add several weapons to its armoury:

6) A) Roadrunner battery cell - Fundamental bottom up physics first principles in-house redesign of battery cells (but still based on tried & tested li-ion tech). See thread:

https://twitter.com/ReflexFunds/status/1283794628660137985?s=20

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7) Tesla's new cell factory in Kato road is nearing completion & I expect it to lead to huge step change progress in volumetric energy density, cost per kWh, Capex per kWh capacity, footprint per kWh capacity, speed of new capacity ramp.

8) Tesla’s current battery advantage is largely via how its battery pack software & manufacturing methods allow for use of cheap to manufacture high energy density NCA cylindrical cells. See thread:

https://twitter.com/ReflexFunds/status/1207687744752930816?s=20

9) Roadrunner cells are likely to be a leap many years ahead of all competition on cell tech - solving cell supply bottlenecks. Not only accelerating new car capacity & reducing EV cost but also allowing ramp of cell intensive business lines (Megapack, Semi) with high cell cost %

10) B) New 4D neural net Autopilot infrastructure (hopefully in Q4) which could be a huge leap in Tesla’s vision system to matching Lidar at object distance & velocity measurements & significantly exceeding Lidar based systems at path prediction. Thread:

https://twitter.com/ReflexFunds/status/1292887757879222272?s=20

11) This could significantly increase perception of Tesla’s probability of success for its Robotaxi strategy. A successful release of Robotaxis rapidly accelerates the demise of fossil fuels because it has far higher utilisation rates than customer owned cars...

12) ... - leading to a 3-5x reduction in the number of EVs that need to be built to replace the polluting miles driven by the existing 1 billion global car fleet.

13) C) Non EV powertrain related auto manufacturing innovation & superiority: Tesla has always experimented with new auto manufacturing methods but it is only with Model Y & Cybertruck that it is likely to break out into a significant Capex & production cost advantage vs ICE OEMs

14) The huge new Y casting machine is a game changer in auto body production, new paint shops are a all new design & the key driver of CyberTruck design decisions & consequent aesthetics were for huge reduction in production cost, largely eliminating body shop robots & paint shop

15) D) Deliveries and operating cash flow breakout. Tesla is targeting an ~80% increase in deliveries in 2H20 over 1H20. SG&A & R&D costs are largely fixed so delivery growth means huge operating leverage. This provides organic cashflow to step up expansion project investment.

16) E) Rapid expansion, diversification & localisation of manufacturing capacity.
By year end Tesla is likely to be manufacturing Model Y in 2 factories on 2 continents & have made significant progress to building a further 2 Model Y factories (Berlin & Texas).

17) So, 2020 could be nearing endgame in Tesla's quest to drive an inevitable global Clean Energy transition - where progress on cells, auto COGs, capacity & Autopilot architecture lead to rapid repricing of probability of success in its business lines: Autos, Energy & Robotaxis.

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