Prediction Made - Tesla Stock to $950. Potentially $1,500

A frequent question I get asked, I notice it's popping up on Twitter quite a lot. Where is my Model 3? Sometimes not phrased quite as nicely. In terms of production, I think that's going to be the major challenge for us over the next six to nine months, is how do we build a huge number of cars? Frankly, we're going to be in production hell.

Welcome. Welcome. Welcome to production hell.

We're building the cars as fast as we can. When you have 10,000 unique items in a vehicle or any object, any one of them can slow down the production process. So the production rate will move as fast as the slowest and least luckiest components in the whole mix.

So we've got giant factory making battery packs and powertrains, giant factory making cars, and giant supply chain. And so all of those have to work together in cadence in order to get to our initial target of 5,000 cars a week, and then hopefully by the end of next year, towards 10,000 cars a week. You're probably wondering, OK, will I be able to charge my car? Well, this is probably the second most common question I get on Twitter.

The supercharger is full. What is wrong with you? By the end of next year, there will be three times as many superchargers as there are today. So that should really help out a lot.

OK, so let's talk about the specs for the Model 3. There are two main variants. There's the standard and long range. The standard is going to be $35,000 for a 220-mile range.

It's going to be a fast car. So the acceleration will still be well under six seconds, 130-mile-an-hour top speed. And you can also get the long range one, which will have a range of 310 miles, and be about roughly five seconds, zero to 60, 140-mile-an-hour top speed.

So it's going to be a really great car. I think you will not be able to find a better car, gasoline or electric, in that price range that is anywhere near as great. So let's head over to some cars.

We have the first 30 production cars here, being charged right now, right there. Those are actual owners getting actual production cars. To give you a sense, if you order a Model 3 now, you'll probably get it towards the end of next year.

But because the S and the X are in production, if you order them now, you can get them in about one or two months. I'd like to thank all the customers who own a Model S and X, and those who buy a Model S and an X, because in doing so, you make the three possible. The money that we make with an S and X all goes into building a Model 3. So thank you for doing that.

I want to just say to those that have lined up to buy a Model 3, I just want you to know that that really matters to us. We really care. We're going to do everything we possibly can to get you the car as soon as possible.

So we're going to work day and night to do right by the loyalty that you've shown us. Thank you. Thank you for our longtime supporters.

And thank you guys for making it. Thank you. About two-thirds come from North America, and about a third from the rest of the world.

But as you can see with this chart, which looks like we're being shot with ICBMs. I think that is the ICBM chart, actually. We need missile command.

Okay, so that was the presentation. Subsequent to this, on the morning of August 2nd, the stock dipped to as low as $311 per share ahead of the earnings release after the market closed. But Tesla beat all estimates, reporting a loss much less than expected at $1.33 per share non-gap and $2.04 under generally accepted accounting principles on revenues of $2.79 billion.

Analysts had forecast a loss of $1.88 on $2.51 billion of revenues. So the miss to the upside was very compelling. They spent $1 billion of their $4 billion cash reserve in the last quarter on Model 3 production tooling.

And during the quarter, Tesla produced 25,708 Model S's and Model X vehicles and delivered a total of 22,026 of them to customers. The stock opened August 3rd at $348 per share and by Friday morning it was trading at $3.51. Tesla as a company is now valued at over $65 billion. And that makes Elon's personal 27% holding worth a little over $17 billion.

This valuation exceeds the combined valuations of both General Motors and Ford. A couple of things became clear during the earnings call and the Model 3 rollout. The first impression is I have never seen Elon Musk so relaxed, confident and enthusiastic, almost ebullient in the entire history of the company.

He was waxing poetic at a couple of points and he even referred to the production hell as if you purchase a ticket to hell you shouldn't complain about the nature of the place once you get there. Second, true to form, there is no such thing, I repeat, no such thing as a $35,000 Tesla Model 3. If you will recall, the Tesla Model S was slated to be $55,000. It wound up being nothing of the sort.

The mine I paid $107,000 for. And I would challenge anyone to show where they actually purchased a Tesla Model S from the factory at $55,000. I do not believe a single car ever sold at $55,000.

Nor do I believe that a Model 3, not one vehicle, will be sold at $35,000. For one thing, all the early deliveries will be the $44,000, 310-mile version with the 220-mile version available vaguely sometime later. And then there's the options.

Now, all automotive manufacturers upsell their cars and they do it with add-on options. Tesla didn't invent that, but they have brought it to kind of an art form. $1,500 for 19-inch wheels.

This is kind of interesting in that we cannot find a single video or a single photograph anywhere of a Tesla Model 3 with 18-inch wheels. They always show the 19-inch wheels. And then they have a $5,000 tech package.

This has your upscale radio, your 12-way power seat, heated mirrors, and so forth. But it also includes this amazing skyroof thing, which is kind of a sunroof that extends from the front to the back of the car. But it's a special kind of UV-blocking glass, and it makes for a very nice addition.

This is basically good news. The package is so compelling in the options that you would be an idiot not to spring the extra $5,000. There's just too much value there.

It's $7,000 or $8,000 worth of perceived value in a $5,000 vehicle. And then there is autopilot. The Model 3 comes with eight cameras, one radar sensor, 12 ultrasonic sensors, and a new NVIDIA DRIVE PX2 supercomputer to support Tesla's second-generation autopilot system dubbed Enhanced Autopilot.

It costs $5,000 to activate autopilot features at the time of purchase. But you have to have that in the car so that later when the autonomous driving software is released, for an additional $4,000, that will only work on cars that have the $5,000 autopilot function. That's basically $9,000 for full autonomous driving eventually on a $35,000 car that ostensibly always had it in the first place.

The bottom line is the 220-mile model will be more like $50,000. And a loaded 310-mile version will run over $58,000. That's $3,000 more than the Tesla Model S was supposed to intro at, at $55,000.

As I say, all automakers offer options in upsell. Tesla's just better at it than anybody I've ever seen. Still, it's a lot less than I paid in 2013 for a Model S. And frankly, you get a lot more car in the Model 3 version.

Musk is very quick to point out that the Model S is the luxury car and is a lot better car than the Model 3. As best I can tell, certainly for my purposes, you know, I have to say the jury's not in on that. I could very easily like the Model 3 more than the Model S. I don't need to be anywhere 0-60 in 3.8 seconds or any of that. They've simply built a better car, electric or not.

Let's take a look at a video that Elon showed during the presentation of the handover. Volvo is recognized by the entire insurance industry as the safest automobile brand you can buy. And you will have the lowest insurance rates and the highest survival rates in a Volvo of any car made by anyone.

Here is a side impact video showing the Model 3 versus the Volvo Model 9. Tesla, meanwhile, they do some strange things. While they talked about a 220 mile range version and a 310 mile range version, they refused to disclose the battery size. And he does these coy little things that make no sense because the information cannot be kept secret.

Somebody found an EPA document which you have to submit the car for range testing to the Environmental Protection Association so that it has an EPA mileage rating. So you can't really keep any of this secret. This EPA document is from a June 30th test drive, which in itself is kind of amazing because the car got 495 miles in the range test.

Now that's fully discharged of the pack, which as it turns out is a 230 amp hour pack, 350 volts, and that's 80,500 watt hours any way you cut it. And the full drain down test was to 208 volts. It used 222.81 amp hours, so we know it's at least that big.

And they were saying that it got a 495 miles during the test drive. Now again, when you say a 310 mile range or a 220 mile range, this is true of all electric vehicles, it's how you drive it. And you have to come up with kind of an average.

And that's the average that they're sort of announcing. But any of our cars that we've built here, any of the small cars we've built here, if we don't go out on a freeway and face that wall of air at 60 or 70 miles an hour, we can get 135, 150 miles. One case we got 186 miles on a single charge in a Speedster.

And so this is a... And in fact, a guy just broke 1,000 kilometers in a Tesla Model S, and he did it by driving it 24 hours marathon at 25 miles an hour. And that just happened this month. But in this EPA test, the Model 3 went 495 miles at a very modest pace cycle, designed to bring the battery completely down.

And in this case, they got it down to 208 volts and used 222.81 miles, and the pack was 350 volts and 230 amp hours. So they got the good out of it. The other thing I found interesting in this EPA document, which has gone largely unnoticed, they list a 258-horsepower AC motor.

During the test drive with Motor Trend, if you notice, they specifically asked if this was one of the earlier motors, like the front-wheel-drive motor from the D models of the S and X. Franz Holzhausen's reply was, no, it was a brand-new motor designed for the Model 3. And it appears to be so. But more interesting is that Tesla has always been about using the Tesla motor, an AC induction motor, which is much simpler and much sturdier and requires the use of no rare-earth metals. There is another kind of AC motor, the permanent magnet motor, that typically uses neodymium permanent magnets to develop the rotor field rather than the induced currents from an AC inductive motor.

According to this EPA document, it's a 258-horsepower permanent magnet motor. And according to Franz Holzhausen, it's a new motor, not one of those used in the Tesla Model X. And so it appears we've gone permanent magnets in the Model 3 motor. And so that's kind of the thing.

Was there anything else notable in this EPA document? Not really. A lot of it's about stuff that doesn't apply even to— it has regenerative braking, of course, 230 amp hours. I don't know.

I don't really see much. That was the thing that jumped out on me. It was the battery size.

They got such a range out of the vehicle. And the new motor, which appears to be a permanent magnet AC, 258-horsepower motor. I am not a stock analyst.

I don't even play one on TV. And I don't even like the ones that do. In the case of the Tesla, they have consistently missed most of the show.

There's a whole entire group on Seeking Alpha who are probably diminishing in numbers because they can no longer afford to be on Seeking Alpha because they've been short-selling Tesla for so long they don't have a house now and are living under a bridge or in their own internal combustion engine car. However, I have shared some of my personal investments with our viewership. And from the email I get, apparently a number of you have taken that to heart sufficiently to buy your own Teslas usually from the proceeds.

In an early EVTV video, I was reminded this week by a viewer that with a stock around $30 per share, I indicated that it was potentially a $350 stock. It now clearly is. We're there.

With the addition of the SolarCity BlueSky and Tesla's leadership position in autonomous driving along with the unrecognized but huge advantage in their proprietary charging network, the only one that works and can be relied on, I'm going to revise that upwards to $950 share target price in 60 months. And we're probably looking at potentially $1,500 in 10 years. And I'm going to have to discuss, not that these guesses will be accurate or on time, but I wanted to share my reasoning with this.

And let's start with this autonomous driving, because I have to fall on my sword and say I just did not think it was possible. I still don't see how it's to be done, but that's probably because I can't do it. The driving environment is just ferociously variable, and there's just a lot of new situations you can come across.

Elon Musk still claims he's shooting for a fully autonomous cross-country drive by the final day of 2017. We have further information about the churn in autonomous driving personnel. It appears that Elon Musk himself is haunting the place.

He's not just a management type. Understand he wrote a lot of the code that went in PayPal and some of the earlier online ventures that he did, HTML coding, C++. He was writing video games when he was 10 years old and selling them, as I recall.

He got $500 for some video game when he was still in grade school. So while they tend to focus on his CEO and management style, Elon Musk is a hacker himself. He's a code writer, code chopper, and he can do it.

And I'm told by a little birdie that he's spending about 80% of his Tesla time now down in the autonomous driving lab. I'm sure he's driving everybody down there crazy. So the churn in personnel down there becomes a little more understandable.

I believe he has picked up something that I failed to, and that is that autonomous driving could be huge. It could make cars great again. And I had an eye-opener, as I said in the last episode, in a document at Intel noting a $7.5 trillion disruption to the U.S. economy in the event of autonomous driving.

A couple of factoids lie underneath all this, and one of them is that the use of the average American car runs right about at 4%. And that means 96% of its time, it's parked at the parking lot at work, or in your garage, or in front of your house, or at the grocery store, and it is actually operating at 4% of the time. And so it's a curiously inefficient deployment of a huge capital investment to mostly set.

If we could make it autonomous, we could dispatch it. You could have it drive you to work and send it off back to the house to drive her to work, for example. But you could also rent it out during the day, loan it to the church, but there's any number of ways to keep the car operating and improve that 4%.

So how are they going to do it? Yes, I've been an autonomous driving skeptic, but I'm also a Tesla engineering fanboy, and that's come from taking apart some of their engineering and seeing what's inside, and it's pretty interesting. The two main people in their autonomous driving lab who have defected have actually gone to NVIDIA. Now, I think of NVIDIA as being a video card producer.

Not entirely so anymore. They do a whole computing platform now for autonomous driving specifically. It's specifically aimed at autonomous driving and a whole development kit at $15,000.

For OEMs, it's called the NVIDIA Drive PX2, and all Model Ss and Model Xs for the last year have them already built in. All future models will, too. Of course, in the video car world, NVIDIA became famous.

In processing video, you're doing a lot of the same thing over and over again. Rather than make the processor faster, they made it do parallel operations, and so first it would do 50 operations all at the same time, parallel computing under what they called a GPU. That grew to 100 and then 500 processes in parallel.

So they achieve phenomenal operations per second by doing them in a massively parallel fashion. This little PX2 is capable of 24 trillion operations per second. More commonly among supercomputer guys, they refer to teraflops.

Teraflops are trillions of floating point operations per second, which is where supercomputers tend to be employed in massive problems that, of course, require floating point calculations. This little card can do 8 teraflops, or floating point calculations per second. I'll do the usual timeline comparison of how much cheaper and faster computing is, because everybody, and particularly all journalists, do that.

This one's particularly striking. The first teraflop computer was named ASCII Red. It was installed at Sandia National Laboratories in Beaverton, Oregon in December of 1996.

It was installed to do high-fidelity 3D simulations, computer modeling of high-speed impacts, and the effects of nuclear explosions. The Department of Energy, Sandia, and Intel worked on this together. They touted it as the world's first ultra-computer, a term which did not survive.

We still refer to large computers as supercomputers, not ultra-computers. But this one consisted of 76 large 72-inch server cabinets, 72 inches tall and probably 20 inches wide. It had 9,072 200 MHz Intel Pentium Pro processors.

Some of you may remember those of the day. And it occupied 1,600 square foot of space. The computer itself cost $46 million.

The facility was $55 million. Today, NVIDIA is providing an 8-teraflop computer in a size of a car stereo at an OEM price of about $300. It's $15,000 to get the unit and the software suite and the documentation and support.

But in quantity, you can get the units to put in a car for between $250 and $300. They refer to this as neural net hardware and software with the term deep learning. Be afraid.

Be very afraid. Your car could become self-aware and launch World War III if it develops a poor impression of humanoids from your driving and behavior. I don't know how to put this much power in context.

Consider the Apple Mac Pro. Very few people know anything about it. I added AVTV on one.

It's a black cylinder about the size of a small waste can. They start at about $20,000, I think, fully loaded. Mine has 64 gigabyte of RAM, 12 processors, and uses all electronic SD-type hard drives, but they're not really disk drives.

They're simply memory drive units. It's an impressive amount of power. Not the MacBook, not the laptop, but the Mac Pro.

This NVIDIA card is the equivalent of 150 of those. Again, I bought this computer three years ago, maybe four years ago, $20,000, and here's a $300 device that's 150 of them. Autonomous driving is basically, the problem is being attacked with a brute force application of almost unimaginable processor power.

A lot of advanced interface with video cameras, radars, lidars, ultrasonics, and combining that with TomTom and Google Maps, highly detailed maps of the infrastructure that cars drive on. And so that's kind of an amazing thing. Tesla and Elon Musk, I think, are as they are with the electric car generally, way out in front in the first mover position against the entire automotive industry.

I think that holds true in autonomous driving. And Google and Apple and Chevrolet and everybody who want to play and can readily purchase an NVIDIA PX2 are going to be playing catch up for 20 years. We talked about the advantage of autonomous driving for personal transportation.

And really changing the model of car ownership. We just don't need as many cars when lots of people can share a car. I don't know that that's going to be accepted by Americans very well, but I think they'll like having autonomous driving and being able to dispatch a car somewhere without being in it.

I think that's going to be a trick that people are going to love to play for a long time. In September, Tesla has another announcement. And that is for a semi-truck.

An over-the-road, not a local, but an over-the-load heavy lifter to haul freight around the country. Electric drive. And when you start contemplating the economic impact of an autonomous driving truck that can drive 24 hours a day, that doesn't need a rest, that doesn't have an 8-hour or 10-hour limit on how long they can legally be on the road, and that you don't have to pay Medicare, Medicaid, and Social Security on them when in fact they don't draw a salary, and are undoubtedly in that application simply much safer than any pill-popping cowboy truck driver who's fighting to stay awake on our nation's highways with 65,000 pounds of rolling mass.

And so I particularly like that concept and that idea, and I think it has a deep economic impact and a huge, huge blue sky for Tesla if they can bring together a truck that can charge along the way and that can drive itself and be dispatched itself and doesn't use any fossil fuels. I think they will never work off the backlog. They will never produce enough of these to actually fill demand in Elon's lifetime.

The trucking industry would just go apeshit over such a thing if it could actually be done. And so my first concept that I'm trying to get across here is that Tesla is not a car company. You can't compare their capitalization to such historic dinosaurs as General Motors and Ford.

They're a technology company, and they can be worth $65 billion based on autonomous driving alone if they didn't even make the cars, if they just did the autonomous driving part. But that's not all they've got. They've got more blue sky.

That is ill understood, and the one, of course, nearest and closest to my heart is batteries. The petard upon which all of us are hoisted is, of course, the batteries. Electric automobiles from the end of the 19th century have been about batteries.

Henry Ford absolutely, and by his own admission and declaration, would have introduced the Model T as an electric car if his friend, Thomas Edison, had been able to deliver the batteries he promised that he would deliver to him by the time that he was in need of them. That's true today. My estimation in 2008 was that I believed that batteries had reached the point where we could actually build the car that was usable as a car, not as a science project or demonstration by a university or an auto manufacturer, but that you could drive as a car and it would make sense, and it's all about the batteries.

Today, going forward, we have a new realm of solar, and we are going to quickly learn that that is all about batteries. I, like my small group of viewers, I don't want a bunch of viral people who watch videos online, watching EVTV. They are so painful with their suggestions for my survival and their comments.

Of course, we've had solar and in solar homes for 20 years. What they don't know is, yes, I was one of the pioneers in that. I had a 15 kilowatt, very significant, largest at the time in the world residential photovoltaic array in 1998.

Solar in the home is not new. It also doesn't make much sense, and it's not because the solar panels have been so expensive. It's been because the batteries have been so pathetic, and it just shines during the day as the sun shines, and at night it does not.

It also does not in a snowstorm, a hurricane, or even a thunderstorm. We're just now getting there in the perfect storm where things are coming together with batteries, and specifically with batteries from electric vehicles that have served their useful life there or otherwise available in a salvage event, a wreck, or so forth, I think is the chrysalis dropped into the supersaturated solution that will suddenly gel. Solar is making sense for homes and commercial properties, and it's all about batteries.

Tesla is all over batteries. He was really viewed as a crank and really a crazy person when he announced a $5 billion investment in a battery factory. Let me put up a video of the August flyover by the drone guy that does drone pictures of the Gigafactory and let you take a look.

Understand that that one factory built by Tesla right now doubles the world's production of lithium batteries. Half of the lithium batteries produced in the world will be produced in that factory. That kind of puts Tesla in the catbird seat going forward.

I read analysts all the time that apparently understand factories, and they certainly don't understand lithium batteries. This is bizarre. Procter & Gamble's factories don't go obsolete when they introduce a new line of pampers.

They cart out some equipment, cart in some new equipment, and don't miss a lick, much as Tesla made Model Ss and Model Xs in their Fremont factory. With the addition of a bit of equipment and a few more people, they can now make Model 3s. The Tesla Gigafactory is not wed to any particular battery chemistry.

Tesla monitors all battery chemistries and let me assure you of one thing. Tesla is the largest single customer for lithium batteries in the world. Nobody breathes a breath about battery development without running and showing it to Tesla first.

Anything you think you know about batteries, they've already known about for weeks. And that's because nobody makes a move worldwide in battery research without seeing if Tesla might be interested in it first because they're the largest consumer of lithium batteries in the world. If there is a new chemistry, they can adopt it and they can have it in production faster than anyone on the planet, including LG Kim, Sanyo, and Panasonic.

It's just that away. The other thing that I hear discussed is a horrible shortage of lithium. It's not even possible to have a shortage of lithium.

It's the 14th most abundant element on the planet. The reason you don't realize that is number one, there's no market for it. Number two, is lithium so readily combines with everything.

It's 14 parts per billion in seawater. We can take seawater and pull lithium out of it probably economically. Why should we? Lithium is in Bolivia and China.

Lithium is not any kind of a supply problem for batteries. It simply isn't. I'm sorry.

Actually, the critical input to battery production is the metal nickel. Nickel is readily traded. It's a common metal and not available in any huge quantity and its price is somewhat volatile.

Nickel is the key component to these lithium batteries, not lithium. 2%, 3% of the whole battery might be lithium salt, including that that's in the electrolyte, that's in the cathode, and that's in the anode. Nickel isn't a big portion of it either, but it's more problematical as far as a source stream than lithium.

Nothing unmanageable. If everybody knew you needed it, it could be produced in almost any quantity, but you could have some pipeline distortions based on sudden changes. And that's batteries.

Tesla has their new 2170 cell. What have I learned about that recently? They are talking really about six amp hours per cell in this thing. You were at 3,400 milliamp hours at the very top for the 18650s and apparently 5,750 milliamp hours to 6,000 on the 2170, which is 15% larger and double the capacity.

It's a function of the miracle of cylinders. I learned about the heady and twisted logic and counterintuitive nature of this by putting whiskey in different sized barrels. Go look at cylinders.

Cylinders have magical properties based on their geometry. In this case, it has come to play. Not only can you make better whiskey quicker in smaller barrels, but you can make better whiskey The next aspect I would like to discuss regarding Tesla and its valuation and why it's absurd to consider it a car company has to do with solar power.

Last year, they completed their acquisition of a company that Elon Musk had helped found called SolarCity. And SolarCity is in the solar power business. I would say their model of leasing people's roofs to them over time as I kind of predicted with changing interest rate environment, it becomes untenable.

SolarCity's position became increasingly untenable and Tesla bought them. Along the way, they got what technology they had, but also a deal to build a solar panel factory in Buffalo, New York. Building a solar panel factory right now seems to be a suicidal idea.

All of the Chinese panel factories and most of the American ones are currently selling solar panels at less than the variable cost of a solar panel, ignoring entirely the capital expense, which appears to be stranded of the plant to produce solar panels. So why would he buy a company and be building a factory for solar panels? Actually, he's got a great concept that's ceramic roof tiles that are themselves solar power producing. And of course, he has the battery factory with the gigafactory and can produce a battery.

The Power Wall is the second generation of that at 13.4 kilowatt hours for $5,500. It's a trivial demonstration of things to come. And as we noted last episode, he has a contract in hand to install a 127 megawatt hour massive battery installation in St. James, Australia.

And the project so he, again, is beyond first mover to 800 pound gorilla, in fact, owns the space about batteries for solar applications and is working on a new type of rooftop concept, which is a solar tile that will outlast the life of the structure as far as durability and power production and will be visually appealing as well, and so hopes to disrupt two industries in one fell swoop and if successful, would probably totally disrupt both of them, and that is roofing materials and solar panels. If you could, at some price, and it really doesn't have to be a very competitive one, combine the two and get a durable roof along with a solar photovoltaic array, it can be more expensive than either one of them separately, and if you can make that roof so durable that it outlasts the basic 15 to 20 year lifetime of our current roofs, you can wipe out the roofing industry, and if you can make that roof so durable that it outlasts the basic you can wipe out the roofing industry, and if you can make that roof so durable that it outlasts the basic 15 to 20 year of our current roofing you can that roof so that it basic roofing outlasts 20 year lifetime of our current you can make that roof so durable that it outlasts lifetime of our and if you can make that durable that it outlasts 15 to 20 year lifetime of our current roofing and if you can make that roof so durable that it outlasts the basic 15 to 20 year lifetime of our current roofing industry, and if you can make that durable that it outlasts the basic 15 to lifetime of our current roofing and if you can make that durable that it outlasts 20 year industry, and if you can make that durable that it outlasts the basic 15 to of our current roofing and if and if make that durable that it outlasts 15 to of our roofing and if you can make that durable that it outlasts the 15 to of our industry, and if you can make that durable that it outlasts the basic 15 to current roofing you can durable that it outlasts lifetime of our and if you can durable that it outlasts the basic current roofing industry, and if make that that it outlasts the basic 15 to current roofing you can make that durable that it outlasts have 909 locations. Tesla has converted, talking about superchargers, as in the charge ports, because Chateaumont constantly compares them to the number of Chateaumont charge ports.

And so they have 6,000 something charge ports now. But 909 locations, over 300 in the U.S. and over 300 in Europe, and almost 200, I think, 195 in Asia. And this is completely underrated.

The OEMs don't get it. The analysts don't get it. Or maybe I've got something terribly, terribly wrong here.

If so, get my ass straightened out. This seems so obvious. Of course, I've touted for years it could be more obvious if he would simply sell Ho-Hos, Funyums, and Big Gulps.

This would be a profit center. But it's discounted by the analysts because it's a cost, and it doesn't generate any revenue. In the August 2nd earnings call, one of the analysts again berated Elon.

Would he ever consider charging money for this and getting, you know, turning it into a revenue center? Musk, of course, didn't know quite how to answer since he'd already said that the Model 3, you will have to pay for supercharger access. Certainly beyond the basic amount. They'll all be supercharger capable, by the way.

It's not an option. It comes that way. But you'll have to pay as a Model 3 owner for electricity.

Commencing at 12 cents a kilowatt hour. They kind of missed the point. Yeah, 381 in the U.S., 323 in Europe.

Asia has 195. The concept appears absurd to GM. Why would we build the gas stations? Other people can do that.

Other people have in the case of EV charging. Let's talk about a dirty little secret here among my brethren who promote electric cars. And some of them do so in an alt-left libtard fashion, citing global warming and, of course, not allowing any discussion of any negatives about electric cars or about the charging infrastructure.

They have a map and anyone can register their charge station on the map. And they do. And they put it up.

And would you believe that the number of chargers just keeps growing across the land? It just keeps growing because they don't ever take any off the map. And most of these charge stations either no longer in operation or they're broken. Somebody's chopped the cable off of it and taken it down to the the metal yard and turned it in for the copper that's in it.

There was a electric car driver pulled up to a series of six charge stations at a Costco. None of them worked. He went in and asked the people inside.

None of them knew that they had charge stations. Nobody in the store could remember them being installed or anyone ever using one. And they don't use them because they don't work.

And so there was a recent story of a woman in a Chevy Bolt who planned a long-distance drive and used this map. But every time she would show up at a charge station it wouldn't work and she wound up with a ticket to a ride on a flatbed truck. And that's pretty much the case.

Nikki Gordon Broomstick, who when she lived in England, Nikki is a blogster about EVs and has been actually as long as we have. Been a very persistent advocate for this stuff. Went to drive her leaf from England to Stuttgart for the largest gathering of electric vehicles in history and got to France.

She charged at Chateaumaux stations across the UK. Got to France and went from one charge station to the next that they either wouldn't let her use or was broken until she wound up riding around two o'clock in the morning on the back of a flatbed truck to find a hotel. The next day she got up and drove back to England where they had charge stations.

And this is the dirty little secret about charging networks. Tesla has the only network that matters because it's the only one that works. I've not heard of anybody going to a Tesla charge station and just not working.

Some of them in California you get there and they're full up now and that's why the gross expansion, rapid expansion right now in both the number of charge ports and the number of charge stations at Tesla. They're in a panic because with the rollout of the Model 3 they are going to need a lot of them. When they first came out with this I predicted that it wouldn't be two months.

Elon Musk said he would gladly welcome participation by other OEMs who would have to help pay for the network of course, pro rata type thing, so that their cars could adopt the Tesla technology and share the supercharger network. No takers and I consider it the largest most horrendous case of corporate fiduciary malfeasance in the history of corporations that they did not. Now walk with me, talk with me, let's be a consumer.

Here's a Tesla Model 3. I can drive it from coast to coast for free or at 12 cents a kilowatt hour, doesn't matter. I don't even care. Here's a Chevy Bolt.

I can't. Which one am I going to buy? Now understand that Jack Rickard and EVTV had the position from the beginning and kind of biased by our location in a town of two and a half miles wide, but recognizing that 90% of all American personal mobility trips are within two 25 miles of home. 90% of the automotive accidents happen within 25 miles of home.

And if you would just use an electric car for 90% of your miles, it would be a huge saving and you can still keep your Cadillac Escalade ESV or Suburban to drive across country whenever you want. But it doesn't do any good for me to talk sense to people in their mind a car is a freedom device that would let them drive to California. When we first returned to Cape in 2000, we went out and had dinner and was met with a delightful waitress named Vanessa.

And we ate there for some time and then Vanessa changed restaurants to a new restaurant and went to work there and we went and tried that and we liked it. And again, Vanessa was our waitress. She married the bartender.

They finally started their own restaurant and this has all gone on over a period of 15 or 20 years and now she runs one of the most successful restaurants in Cape Verado. I went in and to be nice, she asked me about electric cars and how my thing was going. I told her I was having the time of my life and she said, well, are those electric cars to the point where I can drive to California yet? I said, you know, some of them are and some of them aren't.

I said, how often do you drive to California in a year? She said, well, not really often. I don't know. I said, well, how many times did you drive to California last year? And she said, well, we didn't go to California last year.

I said, Vanessa, have you ever been to California? Well, no, not yet, but I really like California. I like to go. Now, I didn't bother to point out that she works 20 hours a day, seven days a week making this business go.

It'll be sometime before she ever sees California or drives to California. But in her mind, electric cars will be a viable option when you can get in it and drive to California. Does she need to drive to California? No.

Has she ever driven to California in any kind of car? No. Has she ever been to California? Well, not really yet. The facts do not matter, guys.

In her mind, not being able to drive to California in an electric car is a, what would you call it, a strike against the car such that it cannot be considered. It is a simply thrown out of the value proposition because it's disqualified from consideration because it can't drive to California. There's no amount of education or acculturation that I or anyone can do to fix that.

And Elon Musk brilliantly recognized this early on. And using his super network, you can drive now anywhere in the United States. There are no stranded places anymore.

He's got it all covered. You're within the range of Model S or Model X and apparently Model 3 and can drive anywhere in the continental United States without restriction. And if you're a Model S or Model X, entirely free of charge.

Who can sell an electric car against that that doesn't have that ability? It is such an overwhelming competitive advantage. It is ludicrous for Chevrolet to have ever introduced the Bolt. It was dead not on arrival but on inception because they do not understand the customers who buy electric cars.

At this point, understand that all the EV crackpot nutcakes like Jack Rickard already have an electric car. The low-hanging fruit is gone. All advances in the sale of electric cars in the future will be into a group of people that don't really care about electric cars that much.

They're kind of like the idea, well maybe, maybe not. But you have to make the value proposition. And one of the key questions is no longer how long does it take to charge or how far can it go.

The question is, can I drive it to California? If you can, you're a prospect. And if you can't, you're off the board, man. They don't care what else is in the car.

You've been disqualified on one of the very basic questions. And Tesla has this managed and maintained supercharger network that's not only tied in with your map on your car, but when you get there it will actually work. And they have people who monitor these things and dispatch repair teams to them and maintain them.

And that is a competitive advantage that is, I mean, it's absolute. They win on every single comparison based on the supercharger network. And all the analysts view it as a cost and a detraction.

And the more me has, the bigger the lead becomes, the more impossible it gets to overcome the Tesla advantage of the installed base. At this point, it's cascaded. It's gone into thermal runaway.

There is no technology. It can be better. It can be different.

It doesn't matter. It's not going to happen. You're going to use whatever technology Tesla uses, and you're kind of going to use it the way Tesla uses it.

And you're going to have to beg to even be included in it at this point. I'm not sure why he would honor his original offer to share. But he might.

But it's going to be the single aspect of the electric car value proposition that is unassailable. It's a huge competitive advantage. Again, this isn't first mover.

This isn't 800 pound gorilla. This is total market dominance. Ownership.

He owns it. I don't know how you would say Volkswagen is going to spend a billion dollars on their own charging network. You won't be able to find it without test equipment.

It doesn't exist. You'll have to have a map, a compass, and a phone app to find a VW charger. Let's talk about general process.

In 1994, with the introduction, not of the World Wide Web, but the first web browser for Windows, Mosaic, within months, I predicted that in the future, this would change all commerce. And the example I used actually was cars. And I said at the time, you'll be able to get online on a website and actually design your car.

Pick the colors of the paint job, the interior, the wood, the leather, the radio system, the whole thing, the engine size and horsepower, and so forth. And design your car, pay for it online, and have it delivered to your house six weeks later. Everybody thought I was nuts.

Actually, that's how I bought my Tesla Model S. That process is so much more efficient in so many ways that there's huge economic advantages to me, to the manufacturers, to everybody involved. It just wipes out tons of middlemen and tons of inefficiency by itself. Tesla's actually wound up in this weird legal battle to even be able to have showrooms in states.

This makes so little sense. I don't even know what these people are thinking. They think they're defending the existing dealership base.

You can't. Tesla doesn't need a showroom to sell the cars. Anybody can get on the web and buy a car from Tesla, and there is not a dim damn thing anybody in the state of anywhere can say about that.

It's against the Constitution of the United States to restrict interstate commerce. You cannot ban the sale of a car off of the internet. So all they're doing is restricting their ability to have a presence, a store.

And Tesla's been in one legal battle over this, over the next. But understand that anyone clinging to the models of the past are doing an act of gravity defiance. And this is one example of what I call process advantages that Tesla has.

Obviously this extends far beyond that. The design of a Tesla car, we took one apart here, completely disassembled it down to the bare aluminum frame, separated all the parts, categorized them, hung all the wiring harnesses up on a wall. We did the whole car.

And the thing that struck me is you would never design a car this way if you didn't have a software program to let you fit those parts the way they had them on screen first. You just wouldn't go there mentally if you were doing it for real. You would have to have done this on a screen that had been translated to real, or it wouldn't be that way.

And of course that's how they design their cars. I would say all the automotive manufacturers use CAD CAM now, but not to the degree and with the fluency that a Silicon Valley software culture does. And that extends to the robots in the factory floor.

All automotive manufacturers use robots now. They don't use them the way that Elon Musk does. He times the robot line in inches per fortnight, millimeters per millisecond, and he's tuning it for speed and to eliminate the use of humanoids in the process.

And it's a designing machine to make machines. I've described automotive manufacturers being this way for a long time, but Elon Musk now conceptualizes it that way. And this has been a new revelation for him in the last year, but he's gotten with it quickly.

And you're not, a number of cars you can turn out per employee and per square foot of that Fremont plant, within the next two years, it'll be treble. What any auto manufacturer is doing in the world is just an efficiency. And finally on the value proposition, none of that matters.

The only thing that does matter in my conclusion in the future is passion. One of the biggest surprises to me personally, in a lifelong career following technology, totally dedicated to it, was the alarming realization that in the end, all businesses are people businesses. They can appear to be anything you want to imagine them to be.Their success and failure is a direct function of the people involved. And that has to do with three relationship sets. The relationship you have to your supplying vendors, the relationship you have to your employees, and the relationship you have to your customer base.

To the degree where you win on that, you win. And to the degree that you do not, you do not win. Let's talk about the customer base.

Tesla owners are passionate about their car and about Tesla itself. They actually wear Tesla t-shirts. Gag.

You will never see allegiance to an automobile manufacturer approaching this level of zealotry. Porsche and Bayerish Motor and Works and Volvo have great brands and loyal customers. They're not in the same league with Tesla.

Tesla owners are loyal. They're passionately loyal. They overlook any transgression, any inconvenience, and any mistake that Tesla makes.

And they have been abused by Tesla in many ways, and they continue to defend it vociferously. Two years ago, Tesla had 10,000 employees. Today, they have 33,000 employees.

The lowest paid janitorial employee in the building, sweeping the floor and taking out the garbage, is convinced he is working to change the world for the better. He's part of a mission to actually change the entire automotive world and save the planet from absolute destruction through some sort of global warming. He understands, but passionately believes in all evidence to the contrary.

I've never seen anything like this since the NASA employees during the race to the moon to put a man on the moon. We don't have here at EVTV any longer. A week that goes by that I don't hear from a long-time EVTV viewer that they have finally got their dream job at Tesla Motors.

They view it as a life-changing event, as the big break in life that they got through the extensive interview process and were added to the Tesla payroll. The realities of having a three-bedroom, 1,200-square-foot ranch on a concrete slab on a quarter acre at a slick $1.2 million in Fremont can't dampen their enthusiasm. Two hours in traffic to get to work means nothing.

Some are actually living in their car in the Tesla parking lot while working there, and they love it. As Tesla sold just over 100,000 cars in their entire existence, just the 33,000 employees at Tesla now become a significant market for electric cars. To Tesla, this is like Ford paying his workers enough where they could afford to buy the cars they were making on the assembly line.

Come on, Musk, with a 28% margin. Most automakers are living on 12. Musk's got a 28% margin on these cars.

Would a discount for your employees who are buying your car be too much to take out of your $17 billion ass? I don't actually have any visibility into Tesla's relationships with their vendors, but I do know that they realize it's important that Musk repeatedly talks about his production line being a victim of the slowest guy in the village among the supplier stream. Apple computer stock sells right now at 50 times its price in 2004, split adjusted of course. I take Tesla at $30 to start five years ago, and if they are an Apple, that would put them in 10 years at about $1,500 a share.

I still think an Apple-Tesla merger with Elon Musk running it is still a logical and almost inevitable outcome. There is a huge cultural gap. Steven Jobs personally dissed Elon Musk at one point.

There is a cultural difference between Apple employees and Tesla employees. Apple desperately needs a visionary leader instead of an accountant. Mr. Cook, you're very able, but that's just simply the facts.

They have $150 billion in free capital, and Elon Musk has a demonstrated ability, a vision, and a demonstrated ability to spend those levels of cash quickly and effectively and put them to work. Finally, I have noted several times that Elon Musk has never met a date or a price set, but understand what I'm really saying. I'll take his misses over the celebrated wins of any other executive in American business.

If you don't shoot for something big, you're going to have to settle for what you get. If you shoot for a human settlement on Mars, for example, and miss, you may just have to accept the bitter consolation prize of say a 4,000 satellite communication network that owns all the internet and so all human communications on the planet Earth as a consolation prize, a well. And so there you go.

Big rant on Tesla and Tesla valuations and where we're at with electric cars, but that's the way I see it. We don't report a whole lot on other electric cars because mostly at this point they almost don't matter. Show me one that can make an impact and we would gladly cover it, but I just keep looking at announcements and saying, so what? How's that going to work? How's that going to compete? I found something I liked on the lighter side.

Ben Sullins is doing very well with a YouTube channel called Teslanomics. You might want to check it out and subscribe to it. This week, he does a bit of video on how Tesla owners really feel.

He insists and apologizes that this is just a joke. After viewing it, we're not so sure. We think he may be pretty much on the mark.

Let's see how Tesla owners really feel. Owning a Tesla isn't just about being better than everyone else. It's about being different in a better way.

It's not that people that drive gas guzzlers are horrible people. They're terrible people. Owning a Tesla requires that you customize your license plate, preferably something that lets everyone else know how much greener you are than they are.

Tesla owners don't look at the price tag of things. We just buy whatever Elon tells us to buy. I'm going to buy a semi later this year and I don't even know why.

Driving a Tesla entitles you to great parking spaces far away from poor people, so you don't have to worry about them touching their car. A Prius is just a hummer in disguise. Driving a Tesla is like driving the future.

If the future were today, and today was awesome. Every part of a Tesla is better than every other car because it's named after a smart person. Teslas are 800% better for the environment than a regular gas car because the batteries are made of lithium, and lithium comes from salt brines.

If people ate that salt, they would die. If Elon tweets, we listen. Tesla doesn't make any sound when they accelerate because noise pollution is the number one cause of global warming.

Charging a Tesla is like filling your car up with gas, except you're not killing the planet. You can't simply just own a Tesla. You have to start a YouTube channel and post every moment about your life to show everyone else how much better it is now than before.

Women love guys with a Tesla. It says that you're rich and that you care about the environment and that you probably have a big dick. Guys love Teslas too.

It says that you're rich but you care about the environment and you probably have a big dick. Now that you're a part of the Tesla family, you no longer have to think for yourself. Just follow along with everything Elon tweets and says and you'll be just like the rest of us.

Every Tesla comes with a guardian angel who protects you from anything bad except when autopilot fails. The best part about owning a Tesla is that you don't have to drive anymore. The car will do it for you, unless it doesn't, in which case you should buy a new Tesla.

Supercharging is a privilege. You'll spend countless hours at Carl's Jr.'s in the middle of nowhere enjoying the free energy that Tesla is giving you, provided by the nearby coal power plant. As a Tesla owner, you'll get a referral code that you can share with your friends to give them a discount and free supercharging on their Tesla purchase, which you'll make it sound like you're doing them a favor, but really you're just in it for yourself.

By the way, go to teslanomics.co.uk to use my referral code. And yeah, so obviously I'm kidding. I love Tesla cars and I think everybody should have one.

So if you are going to buy one, go use my referral code, seriously, and know that this was a joke. Thanks for watching. That's our show for this week.

Stay with us, there'll be more.