There’s usually a lot of excitement on Tesla’s announcement days, like Battery Day 2020 and AI Day 2022. There was also great anticipation before Investor Day 2023, as details on Project Highland and the Next Generation Platform were expected. The latter was regularly mentioned in passing, but there were no major presentations. The disappointment caused share prices to fall, killing Tesla’s valuation by $44 billion. But didn’t investors spot the gems in the avalanche of information?
This was an unusual event. Not only was it longer than usual at over four hours, Elon Musk was only seen occasionally. On stage, too, he was noticeably more hesitant than usual as a moderator – and he wasn’t Steve Jobs from the start. But what he presented was as bold and (literally) world-changing as ever. Looking well beyond cars, Master Plan 3 saw direct electrification as fundamental to decarbonization and capable of delineating a “clear path to a sustainable earth in abundance”.
This plan would require 30 TW of renewable energy generation worldwide and 240 TWh of storage – which would of course be battery-based, preferably Tesla Megapacks. There would be some use for hydrogen, but not in transportation. Of course, everything except rockets would be battery-powered, although electricity would be used indirectly to produce rocket fuel from captured CO2. E-fuels of this type would also initially be needed in aviation and shipping, but Musk reckoned that batteries would eventually take over.
Only 0.2% of the world’s land area would be needed to provide all the required renewable energy. Heating would come from heat pumps, and although high-density applications like electric vehicles might require batteries with rare minerals like cobalt and nickel, static storage could use lithium iron phosphate (LFP) chemistry, made from abundant minerals. Musk argued that a sustainable electrified future is “within reach” and would only require a $10 trillion investment in manufacturing — just 10% of global GDP by 2022.
This was a bold and upbeat presentation, but clearly shareholders wanted to see more concrete product-related news. Over the many hours of presentations, select tidbits surfaced. The Tesla team discussed how the company uniquely designs vehicles for streamlined, automated manufacturing. This reduced the footprint of the factory by 40%.
There were references to the Next Generation Platform. The design would contain 75% less silicon carbide, support any battery chemistry and further manufacturing synergies would enable a 50% reduction in factory footprint. The power unit would cost around $1,000 and, unlike the Tesla Model Y’s engine, would not contain any rare earth minerals. All controllers are designed in-house, compared to just 20% on the original Model S.
Tesla has simplified its controller architecture over the years, eliminating wiring harness complexity and shaving 17kg of wire weight. The low-voltage battery was also switched to lithium-ion instead of lead-acid in 2022, so this will last the life of the vehicle rather than the four years of current 12V units. The big change, not necessarily limited to the next-gen platform, will be a move to 48V, allowing for lower currents and thinner wires, further reducing weight. But the next-gen platform will also include further controller optimization to reduce weight and complexity, as pioneered in Cybertruck design.
Other tidbits included video footage of recent Optimus humanoid robot designs building each other (this version couldn’t even walk during last year’s AI Day). Starting in July, Tesla owners in Texas will be able to enjoy unlimited overnight charging at home for a flat rate of $30 per month thanks to renewable energy optimization. The dry electrode production system showcased at Battery Day was shown in full swing, dramatically reducing the factory footprint for the 4680 cells using it compared to typical 2170 cell production.
However, as always, you had to wait for one of the most important announcements. At Battery Day 2020, the big news was that the $25,000 Tesla was teased towards the end of the presentation. That hasn’t happened yet, but there was an announcement hidden at the end of Tesla Investor Day that suggested it’s on the way. The next-gen platform will be the foundation that will enable the $25,000 platform, and just before the questions and answers during the endless four-hour presentation, Elon Musk announced that Tesla’s fifth gigafactory will be in Mexico near Monterey.
The top of the slide mentioned that this gigafactory would “manufacture next-generation vehicles.” Unfortunately, aside from Musk saying that the Gigafactory Mexico would involve a $5 billion investment and be the world’s largest electric vehicle manufacturing facility, there were no further details — and no mention of the timeline. But many expected the next-gen platform to come from China, so given the current trend in world politics, it’s reassuring to see the focus on Mexico instead.
Markets would have been much happier if there had been more details about Project Highland, Project Juniper (the equivalent of Highland for the Model Y), and the next-gen platform. Although Tesla’s cars continue to sell well, a new car with the four million lifetime production milestone also announced at Investor Day seems to be becoming urgent. But at least for four hours, Elon Musk was back to doing what he does best – disrupting the transportation and energy businesses – and not amplifying far-right conspiracy theories on Twitter. Let’s hope he can keep that focus a little longer. Tesla stock prices could really benefit from this.