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Tesla Q4 2021 Earnings Call Talks FSD, 4680 Cells, Denies New Cars in 2022

Tesla finished its Q4 2021 earnings call in a very predictable way. Elon Musk promised Level 4 autonomy this year while stuttering and repeating “yeah,” “so,” and “huh,” blamed a focus on output to postpone new products, gave a name to Tesla’s humanoid robot, and answered only the questions that did not touch on difficult subjects. The question is who believes what was presented.
Tesla Semi fleet, which should be in production since the end of 2020Giga ShanghaiGiga AustinGiga AustinTesla said this Model Y made in Austin has a structural battery pack with 4680 cellsGiga Gruenheide
Telling stories in a favorable light is a natural human tendency. Still, Musk exaggerated when he said he would not present new Tesla vehicles in 2022 because the company is focusing on “scaling output.” Arguing that “total vehicle output would decrease” if it introduced vehicles last year, the Tesla CEO failed to explain why people expected them. The reason is simple: because he said they could.

On November 21, 2019, Musk promised the Cybertruck would be manufactured by the end of 2021. He said that the Roadster would enter production in 12 to 18 months at the Q2 2020 earnings call, and the Semi might be made by the end of 2020.

Instead of admitting his responsibility for that, Musk said, “this is a point that a lot of people do not understand.” It is as if everybody was just too stupid not to realize Tesla was not making other models because it was focusing on increasing production numbers. It seems that it was the Tesla CEO who did not understand how manufacturing works in the first place.

First of all, because Tesla is building two other factories apart from the ones it currently has. Whenever these plants start producing vehicles, they can be dedicated to new models. Yet, Giga Austin will begin its career with the Model Y, and Giga Grünheide will start manufacturing… the Model Y.

If the Cybertruck had its 4680 cells ready, it could be produced in Texas. If Musk believes he will be able to sell 250,000 electric pickup trucks per year, that would be the sensible decision to take. The question is that Tesla cannot take it.

Apart from not having these batteries yet, the Cybertruck development process is far from complete. The prototypes have not even defined yet how their windshield wipers will be, and they carry a ridiculously large component that seems to have been placed there as a temporary solution.

For Europe, a smaller vehicle than the Model Y would be ideal. However, Tesla also has not developed an EV that would be more suitable for this market. The Model Y will be made in the Old Continent because it is all that Tesla currently has to offer. Curiously, it was supposed to be substantially different than the vehicle made in the U.S. or China.

Musk said it would be “actually a radical redesign of the core technology of building a car” when he visited Grünheide in September 2020. However, he said on the Q4 2021 earnings call the first vehicle with the 4680 cells would soon be made in Austin and that the Model Y made in Germany will use 2170 cells. In other words, it should have the same battery pack it has in the U.S. and China.

The plan Musk disclosed was that Giga Austin would produce the same Model Y made in Fremont and the Cybertruck. It changed for no apparent reason, which is what “a lot of people do not understand.” They deserved a better explanation from Tesla, but it did not emerge this time.

Musk also insisted that FSD (Full Self-Driving) will be available this year as a Level 4 system. Curiously, autonomous driving companies changed the name of their association not to be related to Tesla’s efforts in any way.

The reason is that “self-driving” does not work as promised. It does not deliver. In fact, it is considered a hazard by traffic safety specialists, and Tesla just said 60,000 people are using it in their cars. “Self-driving” demands human assistance and blames the human in charge if they do not act as responsible drivers would. Ironically, Musk said it would be safer than humans. While it isn’t, it relies precisely on them not to hit pedestrians, obstacles, and other cars.

Although Musk repeated the same old story, he was candid when he said that FSD will be “the most important source of profitability for Tesla.” Sure it will: charging thousands of Tesla owners $12,000 for a feature Tesla decides if they can use or not must be incredibly profitable. Imagine charging that much for something that people do not get to keep if they sell their cars and that the ones who buy them also do not retain. It simply vanishes into Tesla’s pockets.

One of the investors’ questions was if Tesla would change this sales model for FSD and Musk said it would be too complicated to assign this software to a driver or the car. We wonder why. Possibly because charging subscriptions from people who have their cars waiting for repair – as Rich Rebuilds recently presented – is a gold mine.

Musk was quick to deny on the call that FSD will demand Dojo to work. If that were the case, all current Tesla vehicles would require a computer upgrade to work with the software. It would not be the first time the Tesla CEO promised the cars would work with specific hardware only to present the one that would finally do the trick. None ever did.

The last unbelievable story Musk dared to tell was that he is not developing a $25,000 EV because autonomy will drop "the cost of transport by a factor of four or five.” He really said that when an analyst asked him how he plans to sell 3.2 million cars by 2024 without a high-volume EV in Tesla’s lineup.

Musk downplayed the question by stating the analyst did not grasp how crucial Full Self-Driving cars would be. In his words, a $50,000 car would actually cost $10,000 if it could be put to work on its own instead of being sitting in a parking lot. It seems Musk is the one that misses the impact on vehicle sales that genuinely autonomous cars could have.

If people did not need to buy a car to ride in one, the demand for new vehicles would drop. More than that, why would anyone buy a car if they were willing to share it with everybody? If that were the case, it would not be a private vehicle: it would be an investment. An EV that did not stop running for being “self-driving” would have charging costs and parts that would degrade much more quickly, such as tires, brakes, and so forth. This revolution would be limited to the ones willing to make investments.

Most people just want to have a car that only they can use. It is their private space in traffic, the moving room where they keep their stuff. They would still be happy with a $25,000 EV, and somebody will eventually offer it if Tesla does not have the means or the interest to build one. It should worry more about this than about its Optimus, its humanoid robot. Yes, that’s the name of Tesla’s new business. We wonder how it will call the ventilators it would produce to help COVID-19 patients.

Many companies have an eye on affordable EVs. They are automakers who know the advantages and dangers of mass production. Engineers who understand the risk of not testing a vehicle or software to exhaustion to avoid costly recalls. Tesla is currently facing some with a more-than-deficient network of Tesla Service Centers, as we have already written about here.

After listening to the same promises and the arrogance that they entail, it is no surprise Tesla’s results made almost no difference in its stock price. People do get what is happening with Tesla, even if its leading executives are in denial. Good financial results cannot come at the expense of products with poor build quality.

For a company without a marketing department, Tesla needs to keep its promises, deliver what it is committed to producing, and stop underestimating people’s intelligence. It is already presenting signs that customers are not buying its stories anymore. They may decide that buying its cars is also a bad deal. Think how bad that could be in future earnings calls.

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 Download attachment: Tesla's Q4 and FY2021 Update report (PDF)

 
 
 
 
 

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