[00:00] But don't forget, it is Coupon Code Exploration Day today. Okay. It's the morning after the CyberCab event that Elon Musk did not show up to, and there are some bullish and some bearish things that we have to evaluate for Tesla and CyberCab.
[00:16] Most importantly, this process that I call edge mapping, and I think that's going to be the critical component going forward for Tesla. So thinking about this a little bit with the event we heard yesterday,
[00:29] or listened to yesterday, listened to it multiple times, a key that stood out to me was the reiteration by the cybercap crew that they do not map, that they use a vision-based only strategy.
[00:43] And so this is where I'm introducing a concept, or what I believe what they're doing, so I'm calling it this, I don't know if this is what it's called, but I think this is exactly what they're doing. I think what they're doing is they're vision-based edge mapping.
[00:59] and there are some comparisons to Waymo here that we have to know because it's going to factor into what we think about a Tesla future price target in the stock, which we'll also talk about in just a moment. So, let's think about this.
[01:13] Waymo is deemed to be Waymo expensive for the vehicle, which is a fair assessment by Elon Musk. We think the unbox process for the Tesla CyberCab, and frankly, it's a no-frills car, no glass roof on the inside,
[01:27] no back seat, no glove box, it's a monitor, flat dash panel, plastic, like, back of cop car kind of shell in the back, you can hose off, great for sleep, like, this is, you know, pretty no-fail, so we just put it straight that way.
[01:44] And the unboxed manufacturing process is supposedly going to reduce the overall assembly line length by 50%, and then make it faster, we don't know how much faster. We know installed capacity is about 125,000 per year to manufacture cybercabs.
[02:01] That's the estimate Tesla's giving us, which is great, and that'll be important in just a moment. So we do expect that cybercabs are much less expensive. So I put $1 sign, so it's kind of like, you know, cheap fast food versus, you know, a $3 sign meal,
[02:17] or maybe even a $4 sign meal, right? Obviously, Waymo uses a whole suite of sensors. LIDAR, vision, radar, and full mapping of the areas that they are operating in.
[02:31] Tesla, on the other hand, doesn't utilize that strategy. They utilize a vision-only strategy, but it introduces the big concern for Tesla, which is expensive, $3.00 expensive, not on the car, but expensive human edge mapping.
[02:49] Edge mapping is basically where you have a supervising driver, and they think this is exactly why they've also updated the FSD software in Tesla vehicles. If you're not familiar with it, every time you disengage FSD now,
[03:03] they have a persistent pop-up, which means it doesn't go away until you vote. And what they want is every time you disengage FSD, you press, oh, I'm disengaging FSD because I'm parking.
[03:16] Tesla don't really care about that that much. It helps a little bit for parking, but less important. Other, they don't really care about that much either. Safety, your critical alerts, your navigation alerts. That's what they care about.
[03:28] So you can hit critical they wanna fix all of those education areas And navigation useful as well All of these are useful in their own right Infamous parking is useful Navigation is useful But killing all of those edge case scenarios with critical interventions of FSD
[03:44] is really, really expensive to do with only Tesla employees. So they basically enlisted every single Tesla driver to deal with those edge case scenarios. So a lot of people I see in comments, they're saying,
[03:57] Hey, I see cyber cabs in Houston. I see them in Texas. I see them in Vegas. Great. The problem with these vehicles in these other states where edge mapping has not been completed yet
[04:09] is Tesla is actually manually edge mapping. You can see in this Florida shot here a clear steering wheel in the vehicle. And so I think what they're doing is they'll deploy, you know, maybe 20 of these with human Tesla drivers.
[04:24] and they'll basically use the cybercap to go edge map themselves the areas they want to expand to. That's an example of a Florida one. There are, here's another South Florida example.
[04:39] I think the last one was Orlando. And this example as well, you can see a steering wheel here. So I don't think it's a surprise. I don't think they're hiding this. Kill that music there.
[04:51] I don't think that's necessarily a bad thing. But what it is, is it's low. And that's the issue. Do I really think it's that expensive to hire 20 people to drive these vehicles with these steering wheels here?
[05:03] No. The problem is time. And that's probably the biggest issue that we face right now in edge mapping. I think manufacturing, we're good. I think on the technology, we're good.
[05:16] But only once the time-consuming edge mapping has been completed. And the part that I really think a Tesla investor should pay most attention to right now is that it took Austin 12 months to get to basically full self-driving global cabs, right, on a steering wheel and pedal-less vehicle.
[05:43] That's Austin. What you really need to see now is you need to see those dots compressed to like three-month validation cycles for cities. That would be ideal because I think we're going to hockey stick past Waymo's robo-taxi manufacturing.
[06:02] And so what we have is we have some estimates that we've put on a spreadsheet. so Waymo reportedly had 700 robo taxis on the road July 2024 2,500 on the road by December 25 and 3,700 on the road by May of 26
[06:20] I'm just interpolating and throwing in a 1,500 here so I can actually get a chart but this gives you the Waymo ramp graph if you will the Tesla cyber cab has you know really moved up like 20 to 100 roughly
[06:35] and these are like actually driverless vehicles. So you have a little bit more of a hockey stick bend here. Not that this is really particularly useful because these are very small numbers, but it does highlight something very important.
[06:49] I think, this is my opinion, I believe that the situation for Tesla is we are now at a critical inflection point on how fast we can edge case map.
[07:01] That's it. I agree. They probably not fully mapping They just edge mapping Okay It different Don call it mapping Fine Edge casing You know we just simplify it Edging okay Tesla is in the edging phase
[07:20] and what we're really looking forward to is their ability to accelerate edging, so getting from edging to completion. That's what's critical here for Tesla. In Austin, it took 12 months.
[07:34] Maybe in South Florida, it'll get down to eight months. The faster those ramps go, so basically time to, you know, time from we just started testing in Vegas and we just started testing in, you know, Houston or whatever,
[07:49] to we are now launching fully self-driving robo-cabs or cybercabs, that's your inflection point for Tesla. That's when things get really bullish. Why? Because they can actually manufacture a whole lot faster than Waymo.
[08:03] it would not be unreasonable for, you know, if we go out over here and, you know, we end up seeing Waymo go something like, you know, 4,000 to maybe 5,000, call it end of 27, right?
[08:18] So we'll call it 1231, 20, you know, I'll even be generous, I'll call it 2028. You could potentially get to 100,000 of Tesla. So your ramp here is going to, let's see here, let's adjust the data reference a little bit.
[08:35] Your ramp right here is kind of going to look relatively consistent, you know, pretty stable line across. But the ramp over here, edit those data references, this is going to go kooky.
[08:48] You know, this is going to look exponential because you're starting at such a low base. It's literally going to look insane. But this inflection point is entirely dependent on how fast they could get through the edging phase.
[09:08] Once we know that, that's when you can really underwrite Tesla stock, in my opinion, more cleanly. So if I go to my capital stock analysis, I actually think, you know, I previously removed CyberCab as just a safety net.
[09:29] You can, in my opinion, add it back in after yesterday's event. And yesterday's event is a short-term negative catalyst because people are going to see it as vital rumors, because honestly, they dropped the ball on them.
[09:41] Like, Elon should have been there. Elon should have said exactly what I'm saying right now. Okay? If Elon just had a damn presentation, put his pants on, got up on stage, and said,
[09:53] Look, we don't map. We do vision only. It took us 12 months to do it in Texas and Austin. We think we could do it in 8 months in Houston. We think we could do it in 4 months in Orlando.
[10:07] And guess what that means? That means every subsequent city we go into, Vegas, Denver, Utah, this, that, boom, boom, boom, here's a map on the background on the chart or whatever.
[10:19] We can now get these things from edging to done in three months. If you went up there and said that and then said this means by the end of 2027 we can have 100 vehicles on the road because we have now compressed the time it takes to edge and we good to go this stock would be up 20 today Now what is you know cyber cab revenue actually look like
[10:53] If you underwrite this as maybe taking 10% market share from Uber, which has, you know, obviously a global operation, at a 20% margin, hey, it adds maybe $1.2 billion of operating income. That's good.
[11:05] It adds maybe $50 to the stock for a 2030 valuation. It's not actually where most of the money, I think, comes from, the unboxing process. I actually think selling the cybercaps and then letting lead operators do it is the most profitable thing for Tesla.
[11:20] I think Tesla should validate the technology and sell it. I don't think they should be in the business of operating these cabs, let other people take the depreciation. Sell these. Take the money up front. Sell them the full self-driving, put them on a full self-driving subscription
[11:34] and literally manufacture high-margin cybercaps, sell high-margin FSD, don't operate the bullcrap of driving people around, just validate it and sell the damn car.
[11:46] I think that's the future. Now, I'm already underwriting, you know, 4 million vehicle sales over here, so I think there's a lot built into the $605 price target for Tesla for 2030. It requires the semi-truck to ramp
[11:59] to operating income of $3.5 billion, FSC subscriptions to roughly double on operating income Tesla bought I want to see 200,000 bought sales I think that's actually conservative by 2030
[12:11] and I want to see the unboxed or cybertax, robo-tax revenues of about a billion bucks that could end up being higher if we just sell these to others
[12:23] and we actually get that inflection point but we didn't have Elon to give us the guidance which of course we know Elon's time frames can be a little loony you know he says one year is probably going to be three years. That's why we're underwriting for 2030. But
[12:35] I actually think the stock would have done really well if they did what I just said. But I'm not employed by Tesla. I don't think they even want to talk to me. I don't really care. Because this could actually create an opportunity for people who are seeing this.
[12:51] Like, if you're in South Florida, if you're in Orlando, if you're in Houston, and you're like, and you're seeing full self-driving cybercabs actually get deployed there, you should be tracking. When did they start? When did they deploy?
[13:03] As soon as that compresses from one year down to three months, that's when we get to escape velocity for robotaxis. Until then, it's a very time-consuming process to map out
[13:16] all of the edge scenarios. And I think that's what they just went through with Austin, and that is the biggest test for Tesla stock. That's the most important thing for Tesla stock going forward. Now, yes, today It is Coupon Code Expiration Day, so if you have not yet joined us,
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[14:09] People love you. People look up to you. Kevin Passer, FF. Nice to meet you. And you too, but meet Kevin. Always great to get your take.