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00:00Well, would you look who it is, Tony Sakanaki.
00:03Some of you might recall the boring, bone-headed questions on a Tesla earnings call, the very
00:07same guy.
00:08Now, Tony, if you don't know, historically has been rather bearish on Tesla, thinking
00:12the stock's massively overvalued and all the competition's coming.
00:15It didn't, by the way.
00:17So I'm looking forward to hearing his take on Tesla's RoboTaxi event.
00:21Right now is Bernstein Senior Research Analyst, Tony Sakanaki, good morning to you.
00:25What do you expect we're going to hear?
00:26We've been waiting for this news for a long time.
00:29I think it's exciting to many, but also for many, there's some skepticism about when it
00:34will actually arrive.
00:35Good morning, Andrew.
00:36Yes, I think the consensus is that Tesla will announce a dedicated RoboTaxi model, likely
00:45to be available at some point in the future, let's say 27 or 28.
00:50So I mean, obviously we are going to see a dedicated vehicle, specifically design, engineered,
00:57built for autonomy.
00:58Assuming that Tony threw out some predictions when this vehicle, I guess, would be on roads,
01:03which I guess that then tacitly is his own estimate of when Tesla has solved autonomy
01:07and is legally operating RoboTaxis.
01:09Let's listen again to those dates.
01:12Announce a dedicated RoboTaxi model, likely to be available at some point in the future,
01:19let's say 27 or 28.
01:21So 2027 or 2028, that appears to be Tony's estimate for when Tesla has solved autonomy,
01:26at least to the point where it would make sense for them to manufacture a dedicated
01:30vehicle.
01:31So three to four years from now, my estimates are somewhat more aggressive than that.
01:34I think Tesla's are as well, but it is worth taking a moment.
01:38Even Tony here, a Tesla bear, a skeptic, who's long been skeptical and long been bearish on
01:43the company.
01:44Although in fairness, more bearish on the stock price than the company.
01:48Even Tony now sees RoboTaxis as in autonomy happening in just a few years.
01:53A question I would have is, does Tony have any estimates for future cash flows from this
01:58business in his Tesla valuation model?
02:01Because it seems at this point, the vast majority of analysts covering Tesla stock, Tony, among
02:05them, do not have Tesla RoboTaxi revenue or profits in their valuation models at all,
02:11because it hasn't happened yet.
02:12Therefore, it's against the laws on Wall Street.
02:13You get thrown in prison for life if you actually model something before it's happened, because
02:17that would require courage.
02:19I expect that Tesla will demonstrate a application whereby a ride-hailing app, that it will provide
02:29some kind of update on where they are on full self-driving and maybe also potentially announce
02:34that it's doing some RoboTaxi trials.
02:37I expect if they did that, those would have to be with a company and driver.
02:43But nevertheless, starting trials in one or more cities in the US.
02:46I think that's generally what's expected amongst investors.
02:51There are big questions about whether Tesla will provide updates on Optimus Robot or whether
02:57it will provide an update on new models, particularly, you know, the revamped models expected.
03:05I've heard this a few times.
03:06It leaves me scratching my head.
03:07I mean, there's an extremely low, but non-zero probability there'd be an update on Optimus.
03:11And the only reason that would happen is if it had something to do with autonomy, e.g.
03:17Let's just say, random example, Tesla wanted to demonstrate how you might deliver an item
03:20to somebody.
03:21You know, Tesla RoboTaxi, you put an Optimus in the vehicle as well.
03:24So after the vehicle's got to its destination, the Optimus Robot can walk out and deliver
03:29a parcel.
03:30I'm giving this an extremely low probability, but that's the only kind of context where
03:33it would make any sense to discuss the Optimus Humanoid Robot in any detail, let alone show
03:37it.
03:38As for mention of new vehicle models, I'm giving this a 0.00000000420690% chance.
03:47Why on earth would Tesla tell investors, who are predominantly investors, at an event that's
03:51going to get a lot of media coverage, and it will eventually reach general consumers,
03:55why would they tell them about a product we already know about in any more detail, take
03:59the shine off the RoboTaxi, and inevitably shoot a fucking cannonball through their current
04:04order flow?
04:05Because many customers today who are opting to buy a Model 3, or why?
04:09Because it's exceptional value, learn about a more affordable version of essentially the
04:13same vehicle, that they can just wait a little while and buy instead.
04:17Meaning many people go, well fuck it, I will just wait.
04:19Tesla would be insane to do this.
04:21It boggles the mind that anyone expects this might actually take place.
04:24Of course I could be wrong, I just don't understand why the fuck Tesla would detail new vehicles
04:28that are more affordable.
04:29We already know about this, they've told us on earnings call.
04:31The interim range of vehicles, using some of the learnings from the modular manufacturing
04:34system for the next gen vehicle, will be implemented, get them to roughly 3 million units per year
04:38without needing to build new factories or new production lines in any meaningful scale.
04:41Am I the only one who thinks this would be absolutely fucking mad?
05:11Now this is nice to hear, the idea that investors would be thinking about this probabilistically,
05:20which they should by the way, the question is, is Tony?
05:23Because remember, it's against the law, breaking the rules, he'll go to prison for a very long
05:27time if he takes the huge risk of modelling out possible implications of this business
05:32before it's already operational.
05:34And so I think it's widely anticipated, but as you noted at the outset, there are lots
05:40of questions.
05:41There are technical questions about whether Tesla can get to the reliability level with
05:46a more limited sensor suite, they only have cameras.
05:50Other competing autonomous vehicles have LiDAR and radar, so there's a technical question.
05:55I think there's a regulatory question, there's a timing question, and you know, how competitive
06:00is this space going to be, are prices going to be driven down, and how much value will
06:04there be to be captured?
06:06So regarding the technology, as I've said before, there's a billion-ish examples of
06:11a dual-camera neural net system driving vehicles fairly safely, they're called humans, so we
06:15can throw that idea in the bin, obviously it's technically possible.
06:18In terms of regulatory approval, this is also a non-issue, Tesla is collecting mountains
06:22of data.
06:23At some point, they'll have enough data to prove, beyond a shadow of doubt, that their
06:28vehicles in XYZ region are XYZ times safer than human drivers.
06:32At that point, regulators have no choice, it's not a matter of personal opinion, it's
06:36a matter of the fucking data.
06:37So again, put that in the bin, inevitable.
06:39In terms of cost, let's think about this, Waymo spending six-plus figures, over $100,000
06:46on vehicles, plus expensive sensors, needing to pre-map everywhere in high-definition first.
06:52Not a solution that scales, which is the biggest issue, but importantly, to Tony's point regarding
06:58cost, Tesla's about to unveil a vehicle that, when scaled, is probably going to cost them
07:02about $15,000, $18,000, at worst, maybe $20,000 to produce, let's say a fifth the cost, and
07:08this is being conserved, it's probably a sixth, seventh of the cost, of a competing
07:12so-called robotaxi.
07:14You do not need to be a genius like Tony here to realise that, if a company can put an equivalent
07:19product or a superior product on roads, for a fifth the cost, then that product will repay
07:23its cost significantly faster, meaning you have a huge cost advantage, meaning you can
07:28actually charge a lot less per mile to customers, and still print crazy amounts of money.
07:33Tesla has a huge cost advantage here as well, it's important to understand.
07:36And as I touched on, their ability to scale massively, they've built a generalised solution
07:41for autonomy, in essence, pick up a Tesla, drop it anywhere on earth, even if it's never
07:45been there before, and it'll know how to drive, because it knows how to drive.
07:48I'm going to say that again, because it knows how to drive.
07:52Companies like Waymo don't have products that know how to drive, they have products that
07:56know how to move throughout a pre-mapped circuit, an impressive party trick, but not something
08:03that will widely scale.
08:04At this point, I feel like I'm the only person, I'm not, obviously, many of you guys and girls
08:09agree, but I'm one of the few people covering Tesla, talking about Tesla, thinking about
08:12Tesla, and looking at their autonomy, who is adamant, there's no fucking hope in hell,
08:17companies like Waymo, Cruise, rest in peace, are going to have a chance of competing with
08:21Tesla on cost, or scaling, even close to as fast as Tesla, or having vehicles that are
08:25as capable in terms of the safety profile, long term, and they just don't have viable
08:30business models.
08:31But there are very few analysts, if any, saying the same things, they all seem to be under
08:36the impression that it's a huge pie, and everyone's going to take an equally large slice, even
08:40though some of them have hardware, that's four, five, six times the cost, there's only
08:45one company that has a generalized solution that'll scale rapidly, I just, I just don't
08:48understand.
08:49And imagine this was like 20 years ago, and you had a bunch of analysts talking about
08:53Netflix, who are about to unveil their online streaming day, but then going on to explain
08:58that it wasn't really clear that they'd have an advantage over traditional video rental
09:02stores where customers have to waste time, physically go to the store, rent a video,
09:07drive back home, watch it, rewind it, bring it back, and don't be late, because you'll
09:11pay a massive fee.
09:12I think folks are getting a little bit confused, in that analogy, they'd be like, well, it's
09:16just movies, right, movie rental, some online, in person, what's the difference, it's the
09:19same stuff, it's unclear to me, I don't, versus looking at the robo taxis, autonomy, and thinking,
09:24oh, well, it's the same stuff, right, it's a vehicle that drives people, I'm going to
09:28ignore the LIDAR, the pre-mapping being necessary, kind of lost for words here.
09:33Is there a single analyst out there that's under the impression that Tesla has an unassailable
09:37lead here, that they're going to absolutely dominate autonomy?
09:39Is there one?
09:40And you've got to feel for people like Tony, if they, you know, nudge or feel they're extremely
09:44intelligent Wall Street colleagues, working at other firms, hey, what do you think about
09:48Waymo and Tesla and robo taxis, they all think the same shit, say the same shit, then why
09:51would they have any reason to doubt?
09:53It's just so obvious to me that they've got it wrong.
09:56Those are ascribing different probabilities and timing of these scenarios.
10:00What probabilities are you ascribing to those things, and how are you doing the valuation
10:03there?
10:04Well, here's an excellent question from Andrew.
10:07Here's how I think about it, Andrew, is I think it will be difficult for Tesla to leapfrog
10:12existing players, Uber, Waymo, and others are doing level four robo taxi service today
10:18in multiple cities, even if Tesla is able to leapfrog.
10:23So here's a controversial and accurate hot take, whenever you hear anyone discussing
10:27autonomy and they mentioned level one, level two, level three, right, any of that shit,
10:31they're admitting that they have outsourced their thinking to some dimwits to do the thinking
10:35for them.
10:36Instead of actually observing the capabilities of the software itself in the real world,
10:41actually operating the ground source, the truth, they're like an NPC who watches the
10:45fake news to learn what they should believe or what they should be scared of, or how long
10:50they should stay at home, hiding in a corner, fearing for their life.
10:54Wait, what?
10:55This is the box ticking mindset in a nutshell.
10:57And let me explain.
10:58There'll come a point where Tesla knocks on a regulator's door and says, hey, Dick, here's
11:03a bunch of data.
11:04Our software is way safer than humans, approve, thanks.
11:06And they say, oh, good point, it's definitely safer than human, you have approval.
11:10Suddenly all the box tickers now will have a massive shift in the way that they see and
11:14perceive Tesla or an autonomy, because suddenly there's a new categorization on the exact
11:19same fucking software that existed before the door knocking took place.
11:23Put simply, watch what the software is doing, know how it's doing what it's doing, and note
11:29the rate of improvement.
11:31That's it.
11:32You don't need to rely on somebody else telling you what category, what level this autonomy
11:36is.
11:37It's irrelevant.
11:38And after that short tirade, the summary of which is think for yourself, don't outsource
11:42your thinking.
11:43I'm looking forward to determining whether or not Tony, who was just asked the question,
11:48why are you modeling?
11:49How are you modeling this stuff out?
11:50Actually has a pair of nuts and is willing to take the risk of probabilistically waiting
11:55this opportunity, or if he's given himself an excuse because he's just said that it's
12:00not clear to him if Tesla will be able to leapfrog companies like Waymo.
12:04I think it'll be a limited, you know, a limited year advantage.
12:09So let's say in a year Tesla has level five robo taxis, they can go anywhere.
12:14They have a ride hailing service.
12:16My guess is competitors are going to catch up reasonably quickly.
12:20So this notion of having sustained outside profits, even if Tesla were to leapfrog, given
12:26the technical hurdles and the regulatory hurdles, I think are difficult.
12:30And the valuation of Uber is $150 billion.
12:33I feel so bad for this guy, like he's just such a poindexter, he just doesn't get it.
12:37Why does the valuation of Uber have anything at all to do with this?
12:41Oh, wait, I know, because Uber has a service that uses vehicles with people driving them.
12:46To move people from point A to point B. Therefore, it will be a comparable valuation to another
12:50company that has vehicles moving people from point A to point B, except spoiler alert,
12:54it doesn't because in autonomy, the most expensive thing, the driver, who needs to
12:59be paid, doesn't exist.
13:01The unit economics are just so different.
13:02The cost per mile is so different, it's, oh God, I really think Tony's trying his best
13:06and I just think he just doesn't fucking get it.
13:08The poor guy.
13:09Remember the earlier analogy, Netflix online streaming versus say traditional video rental
13:14store like Blockbuster.
13:15Imagine thinking it made sense to compare the valuations of the two companies, which
13:18have completely different cost structures.
13:20The valuation of Uber, you know, probably in the US is half of that, $75 billion.
13:26Tesla stock today embeds, we think $600 billion beyond the core auto business.
13:33Much of that ascribed to RoboTaxi.
13:35So we struggle with that, that differential, given the probabilities that I have.
13:39Let me ask you this.
13:40Wait a second.
13:42Andrew asked how Tony was modeling out Tesla's RoboTaxi business, right?
13:46I didn't hallucinate, did I?
13:48Like if and how are you modeling this out?
13:51Because Tony just finished saying that many investors are modeling this out in terms of
13:56probabilities and then discounting it back, right?
13:59Then Andrew asks, well, basically, are you doing this?
14:01How are you modeling this out?
14:03To which Tony responds, we struggled to see how Tesla would leapfrog Waymo.
14:07Cool story, bro, but that doesn't, it doesn't answer the question.
14:10This is some Kamala Harris shit right now.
14:12How are you modeling this out?
14:14And then Tony goes on to talk about how Uber's valuation is X, Y, Z, who cares, irrelevant,
14:18and that they believe that Tesla's stock currently has embedded a huge amount of valuation
14:23for Robo...
14:24That's not the question.
14:25He didn't ask what investors, he asked you, what do you model?
14:30Do you model?
14:31How do you model this?
14:32It is okay, Tony, to just say, oh, we don't think it's going to happen, therefore we ignore
14:34it or we're scared of breaking the rules because we don't want to go to prison for life for
14:38having some testicles, therefore we're not going to model it until it happens.
14:41I hope Andrew's pushing back right now.
14:43But at this point in time, it appears to me that Tony has just tacitly admitted he's a
14:48gigantic fucking pussy when directly asked how he, e.g. Bernstein, are modeling out future
14:55cash flows from Tesla's RoboTaxi business.
14:57Instead of answering the question, he just deflected, why?
14:59Why is it so hard to just say, oh, I'm a pussy and I just, I don't model it out?
15:03Oh, actually, I kind of understand why it would be hard to admit you're a fucking pussy.
15:06Yeah, fair enough.
15:08This in terms of the competition piece of it, which is to say, you made the argument
15:11that you think that Uber and Waymo will have an advantage, maybe given LiDAR and other
15:17things over Tesla.
15:19There is an argument to be made, and maybe you'll disagree with it, which is that, you
15:23know, they have a number of the, number, they have thousands, tens of thousands of these
15:26cars on the street today that have cameras on them, they're taking in data that can't
15:31really be matched.
15:32Uh, just wanted to point out Tesla's got roughly 7 million vehicles on roads today.
15:38Seven million is a little bit more than 10 or 20,000.
15:41If you look at some of their self-driving features right now, they clearly seem to be
15:46the leader or the most advanced in terms of where that would be if you were to sort of
15:50set aside what Waymo is doing.
15:53Is there an argument you made that they will leapfrog everybody and that they in some ways
15:57already have?
15:58Well, I think the bold case is they will leapfrog.
16:00I think it's very difficult to say they already have, because we, you know, um, Waymo is doing
16:06100,000 rides a month right now with essentially a perfect safety record in multiple cities.
16:14Um, Tesla's nowhere close to that.
16:17Now, surely I'm not the only one that noticed when asked how Tony was modeling robotaxis,
16:21he didn't actually answer the question.
16:23And to his claim that he can't suggest that Tesla's ahead of companies like Waymo, I understand
16:29Tony's argument.
16:30On paper, if you're a binary thinking poindexter, you ask the question, is Waymo operating any
16:36robotaxis services anywhere on planet earth?
16:39Yes.
16:40Is Tesla?
16:41No.
16:42Therefore, Tesla cannot possibly be ahead of Waymo.
16:43But we've got to look a little bit deeper here.
16:45Instead of looking at what's going on with the services and thinking, yes, no, black
16:49and white, look at the capability of the software.
16:52We can see countless videos online of intervention-free drives lasting 5, 10, 15, 20, 50 minutes,
17:01two and a half hours, not touching the wheel once to intervene in Tesla vehicles today.
17:07Not everywhere.
17:08And interventions still occur.
17:09But the tiny pockets of the United States in which Waymo is currently operating its
17:13robotaxis service, reliant upon pre-mapping and HD, lots of safety nets and guardrails.
17:18I mean, bro, you could train a blind person to walk through a maze, right?
17:23Enough practice where you know where every obstacle is, almost like you've pre-mapped
17:27in HD because you've got a mental model in your head.
17:29And suddenly you can impress people by having somebody who has no vision whatsoever, apparently
17:34almost miraculously being able to navigate their way through a maze.
17:37This is what Waymo is doing right now.
17:39You pre-map everything in HD with LiDAR down to the millimeter or the inch, and then you
17:42bounce lasers off everything to make sure nothing's moved and everything's fine.
17:46It's basically like being on rails.
17:48And this is only happening in a few pockets.
17:50Then you look at Tesla vehicles in huge swaths of the United States doing intervention-free
17:55drives and you ask yourself, hang on a minute, would it be possible today that Tesla perhaps
17:59could in theory be operating a robotaxi service in a few small pockets, much like Waymo?
18:05The answer to that question is obviously yes, they're not yet.
18:07So in Tony's world, is Tesla operating a robotaxi service legally anywhere yet?
18:11No.
18:12Okay.
18:13Therefore, Waymo must be ahead.
18:14Let's look at the ground source truth, the actual capabilities of the software operating
18:19in the real world.
18:20Tony's thinking process appears to be, is Tesla operating any robotaxis?
18:23No.
18:24Well, I'll ignore what my eyes show me because that wouldn't be useful.
18:28Therefore, Tesla's behind Waymo.
18:30The end.
18:31Boggles the mind.
18:32Let me flip this argument on its head.
18:33If we were to take a Waymo vehicle and place it on one of the many thousands of different
18:40routes, a Tesla vehicle can take intervention-free now in the United States and have the way
18:44my vehicle attempt to drive that same path, reach the same destination.
18:48How would the Waymo vehicle fare?
18:49And the answer is it would immediately pull over and ask for daddy to come and help or
18:53alternatively just start mowing people down.
18:56Tony has to be one of the dumbest smart people I know.
18:58Can't wait to see the Wall Street reactions to Tesla's 1010 autonomy event.
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