Tesla should prioritize Cybercab and Optimus over affordable consumer vehicles due to higher ROI from autonomy.

Here are the boys on the Moonshots podcast talking in more detail about Tesla's Cyber Cab. Remember, Tesla was originally teasing that it was going to launch a Model 2, which was going to be their highly coveted $25,000 car. That never happened.

Now, to be clear, Tesla themselves never used the name Model 2. This was a bunch of Tesla fanboys coming up with the idea, and this was surely on the cards initially.

There's only so much cost you can squeeze out of the Model 3 and Y platform. So, we all presumed long ago with Tesla's initial expectation of getting 10 20 million vehicles produced per year that they have to continue to massively drive cost down.

My expectation originally was that the modular manufacturing system developed for cyberc production would also be implemented into a future generation of Tesla vehicles for consumers.

And I don't think this plan has changed. However, it was certainly dep prioritized rightly so.

As I said at the time, the initial signal here was when Giga Mexico, the factory that Tesla was likely to produce a more affordable vehicle at massive scale. When that was announced and then very soon after put on hold, that was the immediate signal. out.

They're going all in on their robo taxi. And this makes sense.

As I also said at the time, Tesla only has so many gigab brain engineers. You don't want them focused on too many desperate problems at the same time, especially when the technology is looking viable for mass- prodducing a robo taxi.

Do you really want people pissing around wasting time and brain cycles that could be focused all in on autonomy and the humanoid robot? Do you really want them [ __ ] around on a more affordable vehicle to sell to consumers for still very automotive industry-esque margins when instead they could be focusing 100% of their brain cycles on solving autonomy finishing the design the manufacturing systems for CyberCap the economics of Tesla's robo taxi CyberCap if they can produce these things for sub20 $20,000 a single year of operation doing comparable miles to a full-time Uber or taxi today they could bring in 20 30 40 $50,000 of revenues entirely covering their costs in a single year.

Or you can sell a vehicle to customers for call it maybe $25,000, maybe 30, make a 56 7 $8,000 margin on that once. And then if you're lucky, maybe they subscribe to FSD2.

at the time. I also said I would be extremely pissed off as a Tesla investor if they were simultaneously focused on a new generation of more affordable vehicles while at the exact same time spreading their resources, their intellectual resources too thin by having a bunch of designers, engineers, gigabrains also working on the dedicated robotaxian autonomy.

The analogy was Tesla has a limited number of extremely high IQ individuals capable of solving monumentally challenging problems such as a massively more affordable vehicle and scaling production autonomy and the Optimus humanoid robot.

Given the massive constraint on their extremely limited resource gigabrains, you don't want your gigabrains walking through doors are going to produce piss poor financial returns when there are other doors available for those same big brains to go through.

They'll produce 10, 100, a thousand times the financial return on investment.

A future generation of consumer vehicles will come from Tesla. Implementing the modular manufacturing system from the Cyber Cap. But I'm extremely confident that Tesla's strong and clear priority right now deploy CyberCap at massive scale globally and scale up production of the Optimus humanoid robot.

These two projects alone will utterly dwarf in terms of finances, profits, anything the company could do in automotive vehicle sales. It's very important to understand how challenging general autonomy is and how extremely high the stakes are.

And my best read of the the situation is what was originally planned as the Tesla Model 2 became this robo taxi because at some point once the the car the value of the car or the sales value I should say of the car crosses below some threshold it makes more sense to monetize it via autonomous ride sharing or robo taxi services than it does to actually sell the car.

Not that Tesla would or should stop selling vehicles to consumers. But if they were to do this, as autonomy scales, it would not move the needle financially for the company. You wouldn't notice the loss of the automotive sale business whatsoever.

That's how profitable autonomy is going to be at scale.

The math is real simple. Let's say Tesla makes a profit of 50 cents per mile and each Cyber Cab travels 50,000 m per year, which is about the same as a full-time taxi. That's $25,000 per year off profits.

If they can manufacture a cyber cap for less than $25,000, which by the way, they'll be able to. They pay for themselves in a single year. In year two, you've now paid for another cyber cap.

You could produce an asset for $25,000 or less that over 10 years. And these are in extremely conservative estimates brings in a4 million or more. That's a crazy return on investment.

You can't do everything at once. And companies like Tesla, their biggest constraint, their most scarce resource, big brain engineers. So where can you deploy those big brains of your big brain engineers to get the best return on the intellectual capital the investment and the answer is autonomy and the humanoid robot projects

If a company such as Tesla were to massively and rapidly scale safe autonomous vehicles, and if I was completely cooked, I'd be so desperate that I'd be willing to do just about anything to not die.

And just to go back to Tesla's more affordable vehicle, I'm sure it will come, but it should be a very low priority. Not until Cybercap is rapidly and widely scaling throughout the US and the world and Optimus production is underway, first customer deliveries have taken place, and then the Giga Brains are sitting around going, "Well, everything's going swimmingly now on autonomy and Optimus.

What should we focus our massive brains on next?"

My new 20-year Tesla and SpaceX valuation model is now also live on Patreon to supporters at the investor level and above.