Q1 2025 Tesla All-Hands Meeting

Highlights from Elon's comments:

- have produced over 7 million vehicles globally.
- will surpass 10 million next year.
- at times there are rocky times, a little bit of stormy weather.
- but the future is bright.
- Tesla remains the company of choice for people to work for.
- lots of opportunity for upward mobility.
- Tesla's work related injury rate has declined over time.
- where does AI and robots fit into the sustainability picture?
- it's about sustainable abundance for all.
- what does an amazing future look like?
- it sounds impossible.
- the future we are headed for is one where you can literally have anything you want.
- what is key to that is robotics and AI.
- enable the production of goods and services with no limit.
- combined with sustainable energy, can also maintain a great environment.
- what other future would you want? Also, Space travel - let's not forget that!
- Model Y became the best-selling vehicle on earth for two years in a row and will be again this year.
- Cybertruck became the best selling electric pick-up truck, instantly.
- Cybertruck achieved 5-star safety.
- if you read the news it feels like armagedon.
- if you don't like our product, you don't need to burn it down - that's psycho.
- on track to complete the Semi factory - will make millions of the Tesla Semi - will also have the ability to go autonomous down the road.
- the future is autonomous.
- five years from now, autonomous Teslas will be everywhere - regulatory globally.
- almost the entire fleet - which will surpass 10 million vehicles next year - is capable of autonomy.
- an autonomous car could have the usefulness that's 5x to 10x a regular car.
- with a software update, we could turn 10 million cars into the usefulness of 50 to 100 million overnight.
- "what I'm saying is hang on to your stock."
- shout out to Tesla service team - they sell the cars long-term.
- Superchargers: great for trips - "the car's battery will last longer than your bladder."
- The Megapack and Powerwall team is knocking it out of the park.
- Megapack can more than double the total power output of a given grid and excellent for stablizing the grid.
- Long-term more than 90% of all power on earth will be solar + batteries.
- Cell manufacturing - we're making the most efficient cell in the world - lowest cost per kWh.
- built the first Optimus on the production line in Fremont.
- Cortex 1 - used for AI training. Over 50,000 active GPUs - soon to be 100,000 GPUs - making it top five in the world.
- Have Dojo 1 active now - handling 5% to 10% of the training load. Dojo 2 - will be 10x better than Dojo 1. Optimistic about Dojo - "have a real shot at a breakthrough."
- have the cars doing useful work for the first time with no one in them - driving from end of line and park themselves in Frement and now in Austin.
- Tesla self-driving will be 10x better than human drivers.
- Optimus is going into production this year - the new 22 DOF hand is now in production.
- "most sophisticated humanoid robot on earth"
- "our robot has a real brain"
- "Tesla is the leader in real-world AI - what we learned from the cars we transferred to the bot."
- Tesla is the only company that can make intelligent humanoid robots at scale.
- "Optimus will be the biggest product of all time by far - nothing will be even close - I think it will be 10x bigger than any other product ever made."
- the Cybercab production line looks like a high speed consumer electronics line - moving so fast that people can't get close to it - cars coming off the line in 5 seconds.
- we need even bigger casting machines - 50,000 tons - "how big can a casting machine be - what are the limits of physics? - let's find out!"
- hope make about 5,000 Optimus (parts for 10k to 12k) this year.
- 50,000 Optimus in 2026.
- available outside of Tesla in second half of 2026.
- offering Optimus first to Tesla employees.
- our goal is to make great products/services that people love, and then service those products.
- profit is the difference in value between the output versus the input.
- we're by far the most innovative company in the car industry.
- the stock market is a very strange thing - Tesla stock goes up and goes down - based on peoples' perception of the future - very emotional.
- the future of Tesla is incredibly bright.
- An employee asked: is a robot going to steal my job? Elon: people will manage a flock of robots. Same will be true for self-driving cars - people will manage a fleet of cars.
- interesting opportunity to make an electric VTOL jet - "maybe at some point we'll do that."
- Hyperloop - vacuum tunnels - high speed autonomous pods from city center to city center.
- ideas are the easy part - execution is the hard part.
- future new mission statement: "it's all about sustainable abundance."
- Master Plan 3 + abundance for all = Master Plan 4
- Optimus production in Fremont + an even bigger production line in Austin. "We'll be making tens of millions of robots a year - serious volume - maybe one hundred million robots a year."
- "one thing is for sure - the future is going to be very interesting."

https://x.com/CernBasher/status/1877860811579777346

Tesla - Next Five Year Growth
On March 1st Elon said that a "1,000% gain (in profit) for Tesla in 5 years is possible."
And on the Q4 2024 earnings call he said that 2026 would be "epic" and 2027 & 2028 looks "ridiculous."
So I set out to put numbers "to paper" and find out what epic and ridiculous might mean for Tesla's financials.

Let's see if we can answer these questions...
continued...


First, let's take a look at Nvidia - which is the first example of an "AI compounder."

Five years ago it was a Gaming company, but now it's an AI infrastructure company, with Data Center revenue 37x'ing over the last five years. Total revenue 12.7x'd.
Operating income 24.3x'd.
The market cap 19.3x'd - all in just five years!
And the astounding thing: you could have purchased Nvidia stock five years ago for about 2x Q4 2024 annualized earnings!
Of course, it's only with the benefit of hindsight, that we can see how incredibly cheap Nvidia was five years ago.

What if Tesla, which is also on a path to becoming an AI compounder with real-world AI services like Robotaxi and Optimus, is similarly cheap now?

Instead of hindsight, can we have foresight?

continued...

A Message to Tesla Investors
Recently, I received this reply to one of my posts:

"I don't think I can mentally or emotionally deal with it anymore. Maybe foolishly waiting for 10/10 to make a move, though at this point I'm sick of predictions and missed timelines."

As someone who's been an investment advisor for 30 years, I recognize this sentiment as a tell - a sign that this person might not fully grasp the true nature of investing.

So, here are ten things Tesla (all) investors need to hear:

1) Most of the time stock price fluctuations are just noise. The stock just marks time. In the 3,568 trading days since Tesla's IPO, 2,893 of those days or 81% of the time the stock bounced around between -4% and +4%.

2) Most of the big gains, even for long-term investors, can come over a relatively short period of time.
3) Because most of the big gains come quickly, this leads many people to falsely believe that trading a stock is the road to riches.

4) But trading isn't investing - these are two completely different activities. Farmers don't harvest their crops every day, so investors shouldn't seek short-term gains. Over the last year, the average Tesla share has only been held for a mere 23 days!
5) Investing isn't easy - if it was, everyone would be rich. It’s as much a mental and emotional challenge as it is a financial one, and many people are simply not prepared for it.

6) Investors in all the successful companies could have said "I'm sick of predictions and missed timelines." Every successful company has faced predictions that didn’t pan out and timelines that slipped. For companies like Tesla, breaking new ground means facing setbacks. But setbacks and missed timelines do not equate to a lack of progress.

7) We are our own worst enemy when it comes to investing - our instincts tell us to do something, when we really should do absolutely nothing.

8) We want to take action to relieve the pain that we feel - if you touch a flame, remove your hand - that's simple! With investing, if you lose money, then you want to sell "the dogs" (no disrespect to dogs!) But it's very likely that the timing of that action coincides with a low-point in the stock - so most people end up buying high and selling low. This a recipe for financial pain and often leads to abandoning investing.

9) The news media and most financial market observers (including many here on X) are all working against us - they all focus obsessively on the daily price movements. They offer a narrative for everything, but it changes so often that it's difficult to know what to believe.

10) Every successful company has similar periods of big drawdowns and weak returns. Such periods are opportunities - gifts - for investors.

If you believe other investors could benefit from this message, I encourage you to share it and add your thoughts.

Below are links to some of my previous posts with more detailed insights.

A multi-part post on Tesla's stock performance since the Jun 29, 2010 IPO...

https://x.com/CernBasher/status/1830339120461140163

Tesla Stock Since the IPO
Some things you probably didn't know:

IPO HODLER: If you would have invested just $100 in Tesla stock at the market close on the day that Tesla first started trading (June 29, 2010) and held until now, your $100 would now be worth $13,443.

Note: This excludes the 40% gain on IPO day, but realistic since most people can't get IPO shares.

$10,000 invested would be worth $1.3 million.

$1 million invested would be worth $134 million.
COMPOUNDING CAPITAL: The average annual return since Tesla's IPO has been 41% per year - albeit, a bit lumpy. This would be improved to 46.6% per year had you been lucky enough to get shares at the IPO price (and had the fortitude to hold on to them).
BEST TRADER: If you could have invested in Tesla stock for just the 35 best days you would have captured all of the stock's gains over the 14-year period.

That's less than 0.01% of the 3,568 trading days since Tesla's June 29, 2010 IPO!
ONLY POSITIVE: If you could have invested in Tesla's stock for only the positive days (1,883 days or 52.8% of the total trading days) you could have turned $100 into $20 sextillion (ignoring the fact that every trade you made would materially move the stock).

continued...


Let's compare Tesla's stock to Nvidia's over the same time period.

The distribution of daily returns looks very similar.
But, Nvidia's annual return is quite a bit higher, averaging 61.5% per year for 14.2 years.
Both companies' stocks are more volatile than the S&P 500 Index. This makes sense, as the index is made up of 500 different companies - and on any given day some go up and some go down, smoothing things out a bit -- diversification at work!
continued...

How Important is Q2 for Tesla?

Operationally speaking - every quarter is critical - as the company builds upon the work done each quarter, but...

Financially speaking - it's not very important - a single quarter is not important as it only accounts for a tiny percentage (perhaps 0.25% to 0.5%) of a company's total future discounted expected earnings.

I'll explain...

Let's say we have a company that we expect will grow its earnings by 20% per year over the next 20 years - and this company will cease to exist in year 21. And let's say that we discount those earnings by 12% per year (because alternatively we could buy a stock index fund and expect to earn that type of return).
Then the present value of the earnings in the first year is only 2.8% of the value of the total earnings over the full 20 years - even though this company will disappear in year 21.

Now let's assume that the company will continue to produce earnings beyond 20 years - so for simplicity's sake we'll assign a P/E multiple of 15 to year 20 earnings and discount those back to the present.
Now, the present value of the earnings in the first year is only 1.3% of the value of the total future earnings, with the vast majority of the value (54.4%) for year 21 and beyond.

See below for other illustrations for 15% growth and 10% growth, as well as what happens when the earnings discount rate (interest rates) goes down.

Spoiler Alert: The higher a company's expected earnings growth rate, the lower short-term earnings are as a share of the company's total present value.

Also, if the discount rate goes lower, this further reduces the financial significance of short-term earnings results.

Thus - quarterly earnings reports are far more helpful in determining a company's business progression than they are in determining a company's valuation.

I hope this helps you to put Tesla's short-term earnings results in their proper perspective.
Lower long-term growth means that short term earnings matter more...

Now let's say we have a company that we expect will grow its earnings by 15% per year over the next 20 years - and this company will cease to exist in year 21. Our discount rate is still 12% per year.
Then the present value of the earnings in the first year is goes up to 4.5% of the value of the total earnings over the full 20 years - even though this company will disappear in year 21.

Let's assume that the company will continue to produce earnings beyond 20 years - so for simplicity's sake we'll assign a P/E multiple of 12.5 (lowered from 15 to reflect the lower growth expectations) to year 20 earnings and discount those back to the present.
Now, the present value of the earnings in the first year is 2.6% of the value of the total future earnings, with 41.1% of the value for year 21 and beyond.

Robotaxi in the USA - How large does the fleet need to be?

According to the Federal Highway Adminstration, drivers in the USA traveled 3.267 trillion miles over the 12 months ended March 2024.

Testing Limits: What if a robotaxi network eventually becomes the lowest cost of transportation available - so low that everyone decides to ditch their vehicles (both ICE and EV) and just uses transportation as a service?

How many autonomous vehicles would be needed in the USA to travel 3.267 trillion miles per year?

To answer that question we need to figure out how many miles a robotaxi can travel in one year, and in order to determine that, we need to make some assumptions about vehicle utilization - because there are peak and off-peak demand periods.

Using the utilization-based mileage numbers from my robotaxi model, we can see that the number of vehicles needed would range from 25 to 55 million - or just 9% to 20% of the current fleet of about 275 million vehicles in the USA.

Objection: I hear you saying: "But, you dunce, what about rural driving? It's going to take a very, very long time before rural driving is autonomous, if ever!"

Okay, let's exclude all rural miles - which account for about 32% of all miles.

Excluding rural miles, we can see that the number of vehicles needed would range from 17 to 37 million - or just 6% to 14% of the current fleet of about 275 million vehicles in the USA.

Conclusion: this quick analysis shows that robotaxis are an enormous long-term (20-yr) opportunity in the USA, not to mention in the rest of the world.

Note: I understand that not all urban driving will become autonomous - even it's it so much cheaper - I'm just "exploring limits" here.
Now, let's look at what could happen when transportation becomes so cheap that people decide to travel more miles - when price goes down, demand always goes up.

Let's say our 3.267 trillion miles traveled rises to 5 trillion miles.

In that case, we can see that the number of vehicles needed would range from 38 to 84 million - or 14% to 30% of the current fleet of about 275 million vehicles in the USA.
And then if we factor out rural miles again...
...the number of vehicles needed would range from 26 to 57 million - or 10% to 21% of the current fleet of about 275 million vehicles in the USA.

At some point, if the cost per mile gets low enough, then autonomous vehicles will operate in rural areas too.

And, most certainly, it will encroach on short-haul air travel - why fly when you can skip security and take a nap in a robotaxi for a few hours?

For those that may have missed my earlier posts on humanoid bots, here's a compendium of some relevant posts... a 23 part thread...
1) A deflation machine
2) An economic reboot
3) Humanoid bot motto
4) Bot napkin math at massive scale
5) Bot market vs EV market
6) Humanoid bots in warfare
7) A Zero-trillion dollar market
8) Bot deployments - fast or flow - does it matter?
9) Thoughts on humanoid bot deployment
10) How big could the market become?
11) Scott Walter defines useful work
12) Humanoid bots will address major labor issues
13) The advantages of humanoid bots
14) What could capable humanoid robots do for Wal-Mart?
15) Tesla bot thought experiment
16) Tax the bots!?
17) What could Tesla's Optimus bot be worth to Tesla working in their own operations?
18) A call option on the survival a business.
19) If you could buy a machine that could save you $615,000 over ten years, what would you pay today?
20) Bots for as little as $40 per day
21) Why should we bother making a humanoid robot?
22) A paradigm shift in computing platforms
23) Robots as a Service
24) Links to a few videos discussing bots... 1) A deflation machine

https://twitter.com/CernBasher/status/1734945442511687768

Bot Napkin Math at Massive Scale

Per Elon, if there are 1x, 2x, 3x or 4x bots for every human on the planet, what might the humanoid bot industry look like?
Well, let's just say, it would be a colossal industry - nothing like we've ever seen (warning this gets extremely nutty).

1X Human Population: If the bot cost $3.50 per hour to operate, that's $24,500 per year for 7,000 hours of work. Annual gross profit per bot might be $17,000. The bot industry would collect almost $200 trillion in revenue annually and about $100 trillion in profit.

2X Human Population: If the bot cost $3.00 per hour to operate, that's $21,000 per year for 7,000 hours of work. Annual gross profit per bot might be $15,000. The bot industry would collect about $340 trillion in revenue annually and about $180 trillion in profit.

3X Human Population: If the bot cost $2.50 per hour to operate, that's $17,500 per year for 7,000 hours of work. Annual gross profit per bot might be $13,000. The bot industry would collect about $435 trillion in revenue annually and about $235 trillion in profit.

4X Human Population: If the bot cost $2.00 per hour to operate, that's $14,000 per year for 7,000 hours of work. Annual gross profit per bot might be $10,000. The bot industry would collect about $450 trillion in revenue annually and about $250 trillion in profit.

Note: this is just an illustration based on Elon's comments - this is not a prediction! And how might this look for Tesla?

(Or any other significant player in the bot market?)

Can you say Quadrillion?

If we assume that Tesla is able to hold a 25% market share... using the same pricing assumptions as above (the same nutty warning applies)

1X Human Population: With a deployment of 2 billion bots, it would generate $50 trillion in annual revenue and about $24 trillion in annual net profit. With a P/E ratio of 30, that's a $942 trillion market value.

2X Human Population: With a deployment of 4 billion bots, it would generate $85 trillion in annual revenue and about $40 trillion in annual net profit. With a P/E ratio of 30, that's a $1.6 quadrillion market value.

3X Human Population: With a deployment of 6 billion bots, it would generate $106 trillion in annual revenue and about $52 trillion in annual net profit. With a P/E ratio of 30, that's a $2.1 quadrillion market value.

4X Human Population: With a deployment of 8 billion bots, it would generate $113 trillion in annual revenue and about $62 trillion in annual net profit. With a P/E ratio of 30, that's a $2.5 quadrillion market value.

I must say, even for me, the idea of a company worth more than a quadrillion dollars seems completely nutty.

For those that may have missed my earlier posts on Tesla's Robotaxi future, here's a compendium of the relevant posts...

1) Robotaxi Implications
2) What happens to the value of existing Tesla EVs
3) Saving lives and saving $340 billion/yr
4) Transformation from an Auto company to an AI-powered company
5) What Wall Street is intentionally missing
6) Recovering 216 hours/yr
7) How autonomy accelerates the decline of gas stations
8) Thoughts on valuing Tesla
9) Revisiting April 22, 2019 Autonomy Day
10) The Conceived Estimate of Robotaxi Network ("CERN") Model (original version - since refined) 1) Robotaxi Implications - First, Second & Third Order

https://twitter.com/CernBasher/status/1777709906461675595

How much is a used Tesla worth on Day 1 of a robotaxi network?

More than you might realize...
Once a robotaxi network is up and running, a used Tesla - one without purchased FSD - goes from being a depreciation machine to a money printing machine.

This means that the value of a used Tesla will suddenly jump.

Depending on a vehicle's utilization rate (the % of time it's generating revenue in a robotaxi network) and the vehicle's useful life, the value of a used Tesla could see anywhere from a 10%-30% increase in value (with only 1 year of operation) to a 70%-130% jump in value (with 8 years of operation).
In other words, a Tesla that's selling for $32,000 as a used vehicle, if it only had one year of useful life in a robotaxi network, would be worth $36,783 (assuming 30% utilization) to $40,610 (assuming 40% utilization).

And if it had eight years of useful life, it would be worth $55,196 (assuming 30% utilization) to $73,759 (assuming 40% utilization).

Why? How did I arrive at these numbers?

First of all, let's discuss the concept here...

Tesla's have been depreciation machines (like all vehicles): Over the last two years the average price of a used Tesla has fallen from nearly $68,000 to just above $32,000 (not adjusted for mix shifts or inflation). Important side note: this "depreciation" ignores the fact that the cost of a new Tesla has also dropped dramatically.

Once a robotaxi network is up and running, and if Tesla owners put their vehicles into the network, their EVs transform into money making machines.
I used the net profit outputs from my Conceived Estimate of Robotaxi Network or "CERN" Model.

At a 30% utilization, the model generates an annual profit of about $5,600 and at 40% utilization the annual profit is about $10,000. Note: this assumes that FSD costs $500 per month.

By applying a discount rate of 15% to the profits in years 1 thru 8, I calculate the present value of all FSD (robotaxi) cash flows. This number becomes the amount that a used Tesla increases in value.

The increase in value is even greater for those vehicles where FSD has already been purchased. Those numbers/charts are shown in the comments...

Here are the charts/calculations for the vehicles where FSD has already been purchased. This results in a larger jump in value.

As electric vehicles become mainstream, how will this impact gas stations in the USA?
Let’s explore using the Fueling Usage & Market Extinction of Service-stations "FUMES" Model.

Rather than trying to predict when service stations will go out of business, let’s try to understand how many fueling locations will be needed as the fleet of internal combustion engine (“ICE”) vehicles declines.
There are about 145,000 gas station locations in the US today and on average each station sells about 1.24 million gallons per year (about 3,400 gallons per day).

The speed of the decline is worth thinking about as the number of fueling locations needed is directly proportional to the number of gallons of fuel used, … which is directly linked to the number of miles driven by ICE vehicles, … which depends on the total number of ICE vehicles on the road, … which is ultimately tied to how quickly EVs replace ICE vehicles.
In addition to EVs reducing the number of ICE vehicles on the road, the amount of fuel needed to move the remaining ICE vehicles is declining over time because fuel efficiency (miles per gallon) has been increasing about at 2% to 3% per year - with some advocating for 5% annual increases in fuel efficiency standards in the future - so the amount of fuel consumed per mile is steadily decreasing over time.

By mapping out various scenarios for EV adoption we can work back to the number of fueling locations needed.

Again, I'm looking at the number of fuel locations "needed", not at how many of them remain economical - these are two different things - because a modest 10% to 20% decline in foot traffic into the convenience store part of a gas station could render the entire business uneconomical.
To keep things relatively simple, I look at two scenarios - with their assumptions shown above – FUMES without autonomy and FUMES with autonomy...


FUMES without Autonomy – a steady decline:
2022 – ICE vehicles drove 3.6 trillion miles and consumed 180 billion gallons of fuel.
There were 145,000 gas stations each selling 1.24 million gallons per year.

2025 – EV adoption rises to 16%. ICE vehicles drive 3.5 trillion miles and consume 158 billion gallons of fuel. 128,000 gas stations are needed – a drop of 12%. Gas station operators notice a drop in customer traffic and business isn’t as good.
2030 – EV adoption rises above 50%. ICE vehicles drive 3.0 trillion miles and consume 122 billion gallons of fuel. 98,000 gas stations are needed – a drop of 32% from 2022 levels. Gas station operators feel the pain, but try new ways of attracting EV drivers by installing charging stations, improving their food options and creating fancy (clean) bathrooms. But, many discover that their local store location isn’t optimal for EV drivers who mostly charge from home.

2035 – EV adoption reaches 87%. ICE vehicles drive 2.5 trillion miles and consume 83 billion gallons of fuel. 67,000 gas stations are needed – a drop of 54% from 2022 levels. Gas stations are closing rapidly and it’s getting harder to find gas pumps that dispense fuel. Oil refineries are shutting down. People, especially those who live near busy roads, are enjoying cleaner air.

2040 – EV adoption has plateaued at 90%. ICE vehicles drive 1.7 trillion miles and consume 51 billion gallons of fuel. 41,000 gas stations are needed – a drop of 72% from 2022 levels. The business of removing old tanks from gas stations is booming

2045 – ICE vehicles drive 1 trillion miles and consume 26 billion gallons of fuel. 21,000 gas stations are needed – a drop of 86% from 2022 levels. It’s getting very hard to find gasoline and when you do it’s very expensive.

2050 – ICE vehicles drive 330 billion miles and consume 7 billion gallons of fuel. 6,000 gas stations are needed (they will be really hard to find) – a drop of 96% from 2022 levels.

Humanoid Bot Market - Who are the Players?

It's a rapidly evolving space, but here are the top contenders as Scott Walter and I see it today.
We haven't ranked the companies on the list, so please don't get upset if your favorite humanoid bot is not listed at the top.

Note: There are many other milestones and metrics to consider - and we will be adding more to this list over time.

Observations:

1) Figure @Figure_robot appears to be leading the way in efforts to commercialize bots - announcing an agreement with BMW.

2) Tesla @Tesla_Optimus has made rapid progress with its bot and with Tesla's manufacturing prowess, many consider Tesla to be in the lead - but it is still early days.

3) Sanctuary @TheSanctuaryAI has posted 63 videos of its bot doing all kinds of useful things - check out Sanctuary's YouTube channel for the series of "Robots Doing Stuff"

4) Seven of the companies on the list are Chinese.

5) So far the Chinese bot companies have focused on walking (and kicking their bots!) - this is a bit odd as walking isn't critical in order for bots to do useful work. That said, we expect to see rapid progress in the capabilities of the Chinese bots.

Please share your thoughts and observations with @GoingBallistic5 and I ... Figure @Figure_robot

Is Tesla an Auto Company or an AI-powered Robot Company?

The answer depends on whether you’re looking at today versus the future. Or whether you rent ("trade") or own ("buy and hold") the stock.

Currently, Tesla derives most of its revenues from selling EVs, as the company will deliver about 1.8 million cars this year and produce about $80 billion in automotive revenue. Tesla's Energy business is growing rapidly and may, one day, rival the auto business in size.

In spite of the rapid growth in Auto and Energy, Tesla will earn most of its revenue from AI-powered robots – primarily from both autonomous vehicles and humanoid robots.

Tesla – a dozen technology startups

On October 21, 2020 Elon Musk said that: “Tesla should really be thought of as roughly a dozen technology startups, many of which have little to no correlation with traditional automotive companies.”

Let’s take a look at five of Tesla’s Internal Startups…

1) Superchargers
2) Autobidder
3) Distributed Inference Compute
4) Autonomous Vehicles
5) Humanoid Robots

I have built business models for each of these internal startups, and it's clear that two of these five - the robots with wheels and feet - are going to transform Tesla from an Auto Company to an AI-Powered Robot Company.

Note: there are more than five promising Internal Startups within Tesla. Recently I discussed Tesla's various sources of current and future revenue streams - see:


An updated table from that post is below:

Collectively, the five Internal Startups could quickly create $1 trillion in value for Tesla by 2025, surpassing the value of Tesla's Auto and Energy businesses combined.

Today, the five Internal Startups account for about 5% of Tesla's market value. By 2030 they could account for 95% of the company's market value.

$tsla






Three of the five Internal Startups - Supercharging, Autobidder and Distributed Inference Computing for both EVs and Bots could account for almost $1 trillion in market value by 2030.

1/ As electric vehicles become mainstream, how will this impact gas stations in the USA?

Let’s explore using the Fueling Usage & Market Extinction of Service-stations "FUMES" Model.

Rather than trying to predict how many service stations will go out of business, let’s try to understand how many fueling locations will be needed as the fleet of internal combustion engine (“ICE”) vehicles declines.

The speed of the decline is worth thinking about as the number of fueling locations needed is directly proportional to the number of gallons of fuel used, … which is directly linked to the number of miles driven by ICE vehicles, … which depends on the total number of ICE vehicles on the road, … which is ultimately tied to how quickly EVs replace ICE vehicles.

By mapping out various scenarios for EV adoption we can work back to the number of fueling locations needed. But more important than that is autonomy – once fleets of autonomous vehicles are operating, this will dramatically decrease the number of miles driven by ICE vehicles and therefore gas consumption.

To keep things relatively simple, here are two scenarios – FUMES without autonomy and FUMES with autonomy.

FUMES without Autonomy – a gradual decline:

2022 – ICE vehicles drove 3.6 trillion miles and consumed 180 billion gallons of fuel. There were 145,000 gas stations each selling 1.24 million gallons per year.

2025 – EV adoption rises to 16%. ICE vehicles drive 3.5 trillion miles and consume 175 billion gallons of fuel. 141,000 gas stations are needed – a drop of 3%. Gas station operators don’t think EVs will hurt them.

2030 – EV adoption rises above 50%. ICE vehicles drive 3.2 trillion miles and consume 160 billion gallons of fuel. 128,000 gas stations are needed – a drop of 12% from 2022 levels. Gas station operators notice a drop in customer traffic and business isn’t as good.

2035 – EV adoption reaches 87%. ICE vehicles drive 2.5 trillion miles and consume 127 billion gallons of fuel. 102,000 gas stations are needed – a drop of 30% from 2022 levels. Gas station operators feel the pain, but try new ways of attracting EV drivers by installing charging stations, improving their food options and creating fancy (clean) bathrooms. But, many discover that their local store location isn’t optimal for EV drivers who mostly charge from home.

2040 – EV adoption has plateaued at 90%. ICE vehicles drive 1.8 trillion miles and consume 90 billion gallons of fuel. 72,000 gas stations are needed – a drop of 50% from 2022 levels. Gas stations are closing rapidly and it’s getting harder to find gas pumps that dispense fuel. Oil refineries are shutting down. People, especially those who live near busy roads, are enjoying cleaner air.

2045 – ICE vehicles drive 1 trillion miles and consume 53 billion gallons of fuel. 43,000 gas stations are needed (they will be hard to find) – a drop of 70% from 2022 levels. Only 3 out of 10 gas stations remain – the business of removing old tanks from gas stations is booming.

2050 – ICE vehicles drive 350 billion miles and consume 18 billion gallons of fuel. 14,000 gas stations are needed (they will be really hard to find) – a drop of 90% from 2022 levels. Only 1 out of 10 gas stations remain – It’s getting very hard to find gasoline and when you do it’s very expensive.

$tsla

2/ FUMES with Autonomy – a rapid decline:

2022 – ICE vehicles drove 3.6 trillion miles and consumed 180 billion gallons of fuel. There are 145,000 gas stations each selling 1.24 million gallons per year.

2025 – EV adoption rises to 16%. ICE vehicles drive 3.5 trillion miles and consume 174 billion gallons of fuel. 140,000 gas stations are needed – a drop of 3%. Gas station owners remain optimistic, but…

2026 – Autonomous driving is commercialized and the average number of miles driven per year by each EV rises over the next six years from 12,500 to 47,500 – this accelerates the displacement of ICE vehicles. In addition, because the utilization of EVs is rising, the total number of vehicles needed in the USA fleet falls, causing the total number of new vehicles sold to fall by 3% per year.

2030 – EV adoption rises above 50%. ICE vehicles drive 2.8 trillion miles and consume 140 billion gallons of fuel. 113,000 gas stations are needed – a drop of 22% from 2022 levels. Gas station operators discover that most riders in autonomous vehicles don’t stop at their stores – as they prefer drive-thrus or dine-in restaurants.

2035 – EV adoption reaches 87%. ICE vehicles drive 1.1 trillion miles and consume 57 billion gallons of fuel. 46,000 gas stations are needed – a drop of 68% from 2022 levels. Gas station operators turn their locations into ICE vehicle recycling stations.

2040 – EV adoption has plateaued at 90%. ICE vehicles drive only 12 billion miles and consume 61 million gallons of fuel. At this point only 500 gas stations are needed (good luck finding one) – a drop of 99% from 2022 levels. A few gas stations are preserved as museums – the rest are repurposed as every intersection in America will have a Chase bank, CVS, Walgreens and Starbucks!

Yes, this model will be wrong. The decline in the number of service stations will play out quite differently than I’ve modeled. But make no mistake, service stations are going to be disrupted. I’m not making any predictions here – just showing two potential scenarios given a series of assumptions.

Thank you to @jamesdouma and @GoingBallistic5 for your input and feedback.

$tsla